Exhibit 10.2
SECOND AMENDED AND RESTATED
REVOLVING LOAN AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 21, 1997
AMONG
SPECIALTY CARE NETWORK, INC.,
SCN OF PRINCETON, INC.
AND
NATIONSBANK OF TENNESSEE, N.A.,
AMSOUTH BANK,
BANQUE PARIBAS,
KEY CORPORATE CAPITAL INC.
AND
NATIONSBANK OF TENNESSEE, N.A., AS AGENT
SPECIALTY CARE NETWORK
SECOND AMENDED AND RESTATED REVOLVING LOAN
AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 21, 1997
TABLE OF CONTENTS
Paragraph Number Page
- ---------------- ----
SECTION I. DEFINITIONS.........................................................1
SECTION II. THE LOANS.........................................................17
2.1 Revolving Loans...................................................17
2.2 Notices, Interest Rates and Payments of Interest..................17
2.3 Letters of Credit.................................................20
2.4 Nonuse Fee........................................................25
2.5 Agent's Fee.......................................................25
2.6 Reduction of Commitment...........................................25
2.7 Alternate Rate of Interest........................................25
2.8 Change in Circumstances...........................................26
2.9 Change in Legality................................................27
2.10 Optional Prepayment - Premiums in Certain Events..................27
2.11 Swingline Loan Subfacility........................................28
2.12 Payment to the Agent..............................................30
SECTION III. CONDITIONS PRECEDENT............................................30
3.1 Documents Required for Amendment and Restatement..................30
3.2 Documents Required for All Subsequent Disbursements...............32
3.3 Information Required for Permitted Acquisition....................32
3.4 Legal Matters.....................................................33
SECTION IV. COLLATERAL SECURITY..............................................33
4.1 Composition of the Collateral.....................................33
4.2 Rights in Property Held by the Banks..............................33
4.3 Rights in Property of the Borrower and Subsidiaries...............33
4.4 Priority of Liens.................................................33
4.5 Financing Statements..............................................34
4.6 Service Agreements................................................34
4.7 Collection of Receivables.........................................34
4.8 Mortgagees' Waivers...............................................35
SECTION V. REPRESENTATIONS AND WARRANTIES....................................35
5.1 Due Organization and Qualification................................35
5.2 No Conflicting Agreement..........................................35
5.3 Capacity..........................................................35
5.4 Binding Obligations...............................................36
5.5 Pledged Instruments...............................................36
5.6 Litigation........................................................36
5.7 Title.............................................................36
5.8 Financial Statements..............................................36
5.9 No Other Indebtedness.............................................36
5.10 Taxes.............................................................36
5.11 Compliance with Laws; Reimbursement Audits .......................36
5.12 Environmental Compliance..........................................37
5.13 Full Disclosure...................................................37
5.14 Consents..........................................................37
5.15 Existing Borrowings...............................................37
5.16 Material Contracts................................................37
5.17 No Commissions....................................................38
5.18 ERISA.............................................................38
5.19 Survival..........................................................38
SECTION VI. AFFIRMATIVE COVENANTS............................................38
6.1 Use of Proceeds...................................................38
6.2 Financial Statements and Reports..................................38
6.3 Good Condition....................................................39
6.4 Insurance.........................................................40
6.5 Taxes; Copies of Returns..........................................40
6.6 Records and Inspection............................................40
6.7 Maintenance of Existence and Business; Licenses...................40
6.8 Ordinary Course; Pledge of Notes..................................40
6.9 Notice of Litigation..............................................41
6.10 Payment of Indebtedness...........................................41
6.11 Notice to Banks of Default........................................41
6.12 Notice of Name Change or Location.................................41
6.13 Environmental Compliance..........................................41
6.14 Fraud and Abuse...................................................42
6.15 ERISA Compliance..................................................42
6.16 Financial Ratios..................................................42
SECTION VII. NEGATIVE COVENANTS..............................................43
7.1 Merger or Reorganization..........................................43
7.2 Sale of Assets....................................................43
7.3 Encumbrances......................................................43
7.4 Guarantee.........................................................43
7.5 Debts and Other Obligations.......................................43
7.6 Dividends and Distributions.......................................44
7.7 Redemptions and Capital Stock.....................................44
7.8 Prepayments.......................................................44
7.9 Subsidiary........................................................44
7.10 Loans and Advances................................................44
7.11 Investments.......................................................44
7.12 Sale-Leaseback....................................................45
7.13 Acquisitions......................................................45
7.14 Management........................................................46
7.15 Untrue Certificate................................................46
7.16 Margin Stock......................................................46
7.17 Affiliate Transactions............................................46
SECTION VIII. DEFAULT........................................................47
8.1 Events of Default.................................................47
8.2 Acceleration......................................................48
8.3 Remedies..........................................................49
SECTION IX. THE AGENT.......................................................50
9.1 Authorization.....................................................50
9.2 Standard of Care..................................................50
9.3 No Waiver of Rights...............................................51
9.4 Payments..........................................................51
9.5 Indemnification...................................................51
9.6 Exculpation.......................................................51
9.7 Credit Investigation..............................................52
9.8 Resignation.......................................................52
9.9 Proration of Payments.............................................52
9.10 No Liability For Errors...........................................53
9.11 Offset............................................................53
SECTION X. MISCELLANEOUS.....................................................53
10.1 Construction......................................................53
10.2 Further Assurance.................................................53
10.3 Enforcement and Waiver by the Banks...............................53
10.4 Expenses of the Banks.............................................54
10.5 Notices...........................................................54
10.6 Waiver and Release................................................55
10.7 Indemnification...................................................55
10.8 Participations and Assignments....................................55
10.9 Applicable Laws...................................................58
10.10 Binding Effect, Assignment and Entire Agreement...................58
10.11 Severability......................................................58
10.12 Counterparts......................................................59
10.13 Arbitration.......................................................59
SCHEDULE OF EXHIBITS
EXHIBIT
- -------
A Form of Notes
A-1 Notice of Borrowing
A-2 Notice of Conversion
A-3 Acquisition Certificate
A-4 Compliance Certificate
B Existing Indebtedness and Liens
C Subordinated Indebtedness
C-1 Form of Subordination Agreement
D Real Property
E Form of Amended and Restated Pledge Agreement
F Form of Amended and Restated Guaranty and Suretyship Agreement
G Form of Opinion Letter
H Corporate Matters
(States of Incorporation and Qualification;
Stock and Membership Ownership)
I Addresses
J Litigation and Claims
K Compliance with Laws
L Material Leases, Contracts and Commitments
M Management
N Assignment and Acceptance
O West Central Ohio Loan Terms
P Specialists-SCN, LLC Loan Terms
SECOND AMENDED AND RESTATED
REVOLVING LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT is
made as of the 21st day of November, 1997, by and among Specialty Care Network,
Inc. (the "Borrower"); the Guarantors, jointly and severally, as such term is
defined herein; the various banks and lending institutions on the signature
pages hereto together with all the assignees of such banks and lending
institutions (each a "Bank" and collectively the "Banks"); NationsBank of
Tennessee, N.A., as the Swingline bank (in such capacity, together with its
successors in such capacity the "Swingline Bank"); and NationsBank of Tennessee,
N.A. (the "Agent"), individually and as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, NationsBank of Tennessee, N.A., and
Agent entered into a certain Revolving Loan and Security Agreement dated as of
November 1, 1996 (the "Original Loan Agreement"); and
WHEREAS, pursuant to an Amended and Restated Revolving Loan and Security
Agreement dated as of July 24, 1997 (the "Amended and Restated Revolving Loan
and Security Agreement"), the Borrower, the Guarantors, NationsBank of
Tennessee, AmSouth Bank, and the Agent amended and restated the Original Loan
Agreement; and
WHEREAS, pursuant to Amendment No. 1 to Amended and Restated Revolving Loan
and Security Agreement dated as of September 19, 1997 ("Amendment No. 1"), the
parties to the Amended and Restated Revolving Loan and Security Agreement
amended it to, among other things, increase the amounts available thereunder
from $35,000,000 to $45,000,000; and
WHEREAS, Borrower has requested that the Banks increase the Commitments by
$30,000,000 to an aggregate of $75,000,000 and create a separate facility for a
Swingline Loan;
WHEREAS, Banks, Borrower, Guarantors and Agent desire to provide more
specifically for their obligations with respect to the revolving credit
facility;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations herein contained, and each intending to be legally bound hereby,
the parties agree to amend and restate the Amended and Restated Revolving Loan
and Security Agreement as amended by Amendment No. 1 in its entirety as follows:
SECTION I. DEFINITIONS
As used herein:
"Accounts", "Chattel Paper", "Contract Rights", "Documents", "Equipment",
"Fixtures", "General Intangibles", "Goods", "Instruments" and "Inventory" shall
have the same respective meanings as are given to those terms in the UCC.
"Accounts Receivable" means all rights to payment for goods sold, leased or
otherwise marketed in the ordinary course of business or for services rendered
in the ordinary course of business, and all sums of money or other proceeds due
or to become due thereon pursuant to transactions with
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Persons, except for that portion of the sum of money or other proceeds due
or to become due which relate to sales, use or property taxes levied in
connection with such transactions, recorded on books of account in accordance
with generally accepted accounting principles consistently applied.
"Acquisition" means any transaction, or any series of related transactions,
by which any Person, in the transaction or as of the most recent transactions in
a series of transactions, directly or indirectly acquires any going concern or
all or a substantial part of the assets of any corporation, partnership or other
entity or any division of any such entity, or any such entity or any division of
such an entity becomes a Subsidiary of such Person.
"Acquisition EBITDA" means, with respect to a Practice acquired by the
Borrower or any Subsidiary and covered by a Service Agreement, ninety-five
percent (95%) of the annual Base Service Fee due under the applicable Service
Agreement for the first year thereof, calculated and prorated (if the period of
determination is less than a year) as if the Practice had been acquired
effective as of the beginning of the relevant financial period.
"Adjusted Consolidated Cash Flow" means, for any period of determination,
Consolidated Cash Flow plus Rental Expenses less Capital Expenditures and the
sum of non-expensed loan advances made to physicians.
"Adjusted LIBO Rate" means for the Interest Period for each Eurodollar Loan
comprising part of the same borrowing (including conversions, extensions and
renewals), a per annum interest rate equal to the per annum rate obtained by
dividing (a) the rate of interest determined by the Agent to be the rate for
deposits in U.S. dollars for the applicable Interest Period which appears on the
applicable Telerate Page at approximately 11:00 a.m. London time, two (2)
Business Days prior to the first date of the applicable Interest Period, or if
such rate is not available, the rate per annum at which, in the reasonable
opinion of Agent, U.S. dollars in the amount of the borrowing are being offered
to leading reference banks in the London interbank market for settlement at
approximately 11:00 a.m. London time, two (2) Business Days prior to the first
date of the applicable Interest Period, by (b) a percentage equal to 100% minus
the Eurodollar Reserve Percentage, if any, for such Interest Period.
"Affiliates" means as to any Person (a) any other Person which, directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with such Person, or (b) any other Person who is a
director or executive officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, "control" of a Person shall mean the power, direct or indirect,
(i) to vote or direct the voting of more than five percent (5%) of the
outstanding shares of voting stock of such Person, or (ii) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise. In no event shall any of the Banks be deemed to be Affiliates of
the Borrower.
"Agent" means NationsBank of Tennessee, N.A. in its capacity as agent for
the Banks pursuant to Section IX hereof, and not in its individual capacity as a
Bank, and any successor Agent appointed pursuant to Section IX.
"Agreement" means this Second Amended and Restated Revolving Loan and
Security Agreement, as it may be amended, restated, renewed or extended from
time to time.
"Amendment and Restatement Closing Date" means November 21, 1997, or such
later date as the Borrower, Guarantors, Banks and Agent may agree on which all
of the conditions set forth in Paragraph 3.1 have been fulfilled.
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"Applicable Margin" means the number of basis points per annum determined
in accordance with the following table for the purpose of calculating the
interest rate for any day for any Revolving Loan or Swingline Loan or the
applicable per annum rate pertaining to a Letter of Credit Fee or the Nonuse
Fee; provided, however, as of the Amendment and Restatement Closing Date through
the approval of the Compliance Certificate accompanying Borrower's fiscal year
end 1997 audited financial statements, the Applicable Margin shall be the higher
of: (a) the actual level prescribed by the table set forth below, or (b) the
level that would prevail if the Borrower's Funded Debt to Consolidated Cash Flow
Ratio were equal to or greater than 2.00 but less than 2.50:
Applicable Applicable
Funded Debt to Margin for Margin for
Consolidated Cash Flow Eurodollar Base Rate Letter of
Ratio Loans Loans Credit Fee Nonuse Fee
----- ----- ----- ---------- ----------
Equal to or greater than 225 basis points 75 basis points 225 basis points 35 basis points
2.50 per annum per annum per annum per annum
Equal to or greater than 175 basis points 25 basis points 175 basis points 30 basis points
2.00 but less than 2.50 per annum per annum per annum per annum
Equal to or greater than 150 basis points 0% 150 basis points 25 basis points
1.50 but less than 2.00 per annum per annum per annum
Equal to or greater than 125 basis points 0% 125 basis points 25 basis points
1.00 but less than 1.50 per annum per annum per annum
Less than 1.00 100 basis points 0% 100 basis points 20 basis points
per annum per annum per annum
The Funded Debt to Consolidated Cash Flow ratio shall be confirmed by the
Agent on the basis of the Compliance Certificates delivered pursuant to
Paragraph 6.2(D) and the quarterly financial statements of the Borrower and its
Subsidiaries delivered to the Agent and Banks pursuant to Paragraph 6.2(B) and
year end consolidated financial statements delivered pursuant to Paragraph
6.2(C). The "Effective Period" shall be the period commencing after review and
approval of such Compliance Certificate computations by the Agent (which review
shall be completed within three (3) business days following delivery to the
Agent of the Compliance Certificate and financial statements of Borrower and its
Subsidiaries pursuant to Paragraph 6.2), which certificate and financial
statements indicate that the applicable test set forth above has been satisfied
as of the end of the immediately preceding fiscal quarter. If the Borrower fails
to timely furnish to Agent any financial statements and related Compliance
Certificate as required by this Agreement, then the maximum Applicable Margin
shall apply from the date those financial statements and related Compliance
Certificate were required to be delivered and shall remain in effect until the
Borrower furnishes them to the Agent and the same are reviewed by the Agent.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit N.
"Base Rate" means, for any Interest Period or any other period, the greater
of either (i) the annual interest rate most recently publicly announced by Agent
as its Prime Rate (which may not necessary represent the lowest or best rate
actually charged to any customers) in effect at its principal office in
Nashville, Tennessee, automatically fluctuating upward and downward as specified
in each
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announcement without special notice to any Borrower or any other Person, or
(ii) the sum of the Federal Funds Rate plus one-half of one percent per annum.
"Base Rate Loan" means a Loan which bears interest based on the Base Rate.
"Base Service Fee" means that minimum Service Fee to be paid by a Provider
to the Borrower or one of its Subsidiaries under a Service Agreement.
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday in the States of Tennessee, North Carolina, Ohio, or New York or a day
on which banking institutions in such states are authorized by law or other
governmental action to close except that, in the case of Eurodollar loans, such
day is also a day on which dealings between banks are carried on in U.S. dollar
deposits in the London interbank Eurodollar market.
"Capital Expenditures" means all amounts paid by the Borrower and its
Subsidiaries in connection with the purchase of property, plant, machinery,
equipment or other similar expenditures (including capital leases of any of the
foregoing) which would be required to be capitalized and shown on the
consolidated balance sheet of Borrower and its Subsidiaries in accordance with
generally accepted accounting principles consistently applied.
"Change of Control" means the occurrence, after the date of this Agreement,
of (i) any Person or two or more Persons acting in concert acquiring beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of Borrower (or other securities convertible into such
securities) representing 51% or more of the combined voting power of all
securities of Borrower entitled to vote in the election of directors; or (ii)
commencing after the date of this Agreement, individuals who at the beginning of
this Agreement were directors of Borrower ceasing for any reason to constitute a
majority of the Board of Directors of Borrower unless the Persons replacing such
individuals were nominated by the Board of Directors of Borrower; or (iii) any
Person or two or more Persons acting in concert acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of
Borrower (or other securities convertible into such securities) representing 51%
or more of the combined voting power of all securities of Borrower entitled to
vote in the election of directors.
"Collateral" has the meaning set forth in Paragraph 4.1.
"Collateral Documents" means the documents specified in Paragraphs 3.1 (C)
through (E).
"Commitment" means, for any Bank, such Bank's Commitment to make Revolving
Loans and to participate in Letter of Credit Liabilities to the Borrower
hereunder.
"Commitment Percentage" means each Bank's respective percentage of the
Total Commitments then in effect, or, in the case of any Person who hereafter
becomes a Bank, the percentage and/or amount as reflected on the signature page
of the Assignment and Acceptance executed by such Person; and provided further,
that the Commitment of each Bank and its Commitment Percentage shall be
decreased to reflect any assignments in accordance with Paragraph 10.8 hereof.
4
"Committed Amount" means, for each Bank, the amount identified as its
Committed Amount opposite such Bank's name on the signature pages hereto as such
amount may be reduced pro rata based on reductions in the Total Commitments made
in accordance with the terms hereof.
"Compliance Certificate" means an Officer's Certificate in the form
attached hereto as Exhibit A-4 demonstrating in such detail as the Agent may
reasonably require the Borrower's calculation of the Applicable Margins and its
compliance with the covenants set forth in Paragraph 6.16 hereof and delivered
to each of the Banks by the Borrower pursuant to Paragraph 6.2(D).
"Consolidated Assets" means, as to the Borrower and its Subsidiaries, all
assets as shown on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Consolidated Capital" means, as to the Borrower and its Subsidiaries, all
Funded Debt plus Stockholders' Equity.
"Consolidated Cash Flow" means, as to the Borrower and its Subsidiaries,
the aggregate of: (A) Consolidated Earnings Before Interest and Taxes, (B)
amortization of intangible assets; and (C) depreciation; all as shown by the
consolidated statement of operations of the Borrower and its Subsidiaries,
calculated in accordance with generally accepted accounting principles
consistently applied. The Acquisition EBITDA of Practices acquired pursuant to a
Permitted Acquisition shall also be included in Consolidated Cash Flow.
Notwithstanding any other provision hereof, the Consolidated Cash Flow
attributed to Non-Corporate Unperfected Subsidiaries shall not be included in
Consolidated Cash Flow if Non-Corporate Unperfected Subsidiaries would account
for more than ten percent (10%) of total Consolidated Cash Flow.
"Consolidated Earnings Before Interest and Taxes" means, for any period of
determination, the consolidated net earnings (or net loss) of Borrower and its
Subsidiaries exclusive of all write-ups, gains from sales of assets, or other
extraordinary or nonrecurring gains whether of a cash or noncash nature, but
after all expenses and other proper charges other than Interest Expense and
taxes, determined for any period in accordance with generally accepted
accounting principles consistently applied.
"Consolidated Liabilities" means all Indebtedness that, in accordance with
generally accepted accounting principles consistently applied, are classified as
liabilities on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Consolidated Net Income" means, for any particular fiscal period, the net
earnings (or net loss) of the Borrower and its Subsidiaries on a consolidated
basis, determined in accordance with generally accepted accounting principles
consistently applied, excluding however (A) any gains resulting from the sale or
write-up of assets, and (B) any other extraordinary or non-recurring non-cash
gains or losses.
"Contingent Obligation" means, with respect to any Person, any direct or
indirect liability of such Person with respect to any Funded Debt, lease,
dividend, guaranty, letter of credit (other than a standby letter of credit with
no reasonable likelihood of draw, in the reasonable opinion of the Agent) or
other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligations or any property constituting direct or indirect
security therefor, (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level
5
of income or financial condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor in respect
thereof to make payment of such primary obligation, or (d) otherwise to assure
or hold harmless the owner of any such primary obligation against loss or
failure or inability to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Debt Service" means for any given period, the sum of the payments made by
the Borrower and its Subsidiaries of (A) Interest Expense, (B) Rental Expense,
and (C) any mandatory repayments of principal on any Consolidated Liabilities,
plus (D) one-seventh (1/7th) of the amount then outstanding under the Revolving
and Swingline Loans.
"Eligible Assignee" means (A) a commercial bank organized under the laws of
the United States, or any State thereof, and having a combined capital and
surplus of at least $300,000,000.00; (B) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $300,000,000.00,
provided that such bank is acting through a branch or agency located in the
United States; (C) any Bank and any Affiliate of a Bank; (D) any Federal Reserve
Bank; and (E) any other Person consented to by the Agent.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) and the Superfund Amendments and
Reauthorization Act (SARA); the Resource Conservation and Recovery Act (RCRA);
the Emergency Planning and Community Right to Know Act; the Clean Water Act
(Federal Water Pollution Control Act); the Safe Drinking Water Act; the Clean
Air Act; the Surface Mining Control and Reclamation Act; the Coastal Zone
Management Act; the Noise Control Act; the Occupational Safety and Health Act;
the Toxic Substances Control Act (TSCA); the Federal Insecticide, Fungicide and
Rodenticide Act (FIFRA); any so-called "Superfund" or "Superlien" law; or any
other federal, state or local statute, law, ordinance, code, rule, regulation,
order, decree or other requirements of any governmental body regulating,
relating to or imposing liability or standards of conduct concerning any
Hazardous Materials or toxic or dangerous chemical, waste, substance or
material.
"Eurodollar Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Loan" means any Loan which bears interest based on the Adjusted
LIBO Rate.
"Eurodollar Rate Reserve Percentage" means the reserve percentage
applicable during any Eurodollar Loan Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for banks with respect to liabilities or
assets consisting of or including Eurodollar Liabilities having a term equal to
such Interest Period.
6
"Event of Default" has the meaning set forth in Paragraph 8.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward
to the nearest 1/100th of 1% per annum, if such average is not such a multiple)
equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such date, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published, on such next
succeeding Business Day, the Federal Funds Rate for such date shall be the
average rate quoted on such date on such transactions as determined by the
Agent.
"Financial Statements" means the consolidated balance sheets of the
Borrower as of December 31, 1996 and September 30, 1997 and statements of income
and shareholders equity of the Borrower and its Subsidiaries for the years or
months ended on such dates.
"Financing Statements" means any one or more filings made pursuant to the
UCC to perfect the security interests in the Collateral granted to Banks
pursuant to Section IV hereof.
"Fiscal Year" means the fiscal year of the Borrower ending on December 31
of each year.
"Fraud and Abuse Laws" means Section 1128B(b) of the Social Security Act,
42 U.S.C. Section 1320a-7b(b) and Section 1877 of the Social Security Act, 42
U.S.C. Section 1877, as from time to time amended; any successor statute(s)
thereto; all rules and regulations promulgated thereunder; and any other Laws
(including any state Laws) relating to the ownership of medical facilities by
providers of medical services or the referral of patients to medical facilities
owned by providers of medical services.
"Funded Debt" means at any date, with respect to the Borrower and its
Subsidiaries, all of the following obligations (without duplication) of Borrower
and its Subsidiaries as of such date: (i) all obligations for borrowed money,
(ii) all obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations to pay the deferred purchase price of
property, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations as lessee under capitalized leases, (v) all
obligations to purchase securities or other property which arise out of or in
connection with the sale of the same or substantially similar securities or
property, (vi) any Contingent Obligation, (vii) all non-contingent obligations
to reimburse any bank or other person in respect of amounts paid under a letter
of credit or similar instrument, (viii) all debt of others secured by a lien on
any asset of Borrower and its Subsidiaries, whether or not such debt is assumed,
and (ix) all debt of others guaranteed by Borrower and/or its Subsidiaries.
"Funded Debt to Consolidated Cash Flow Ratio" means, as of any fiscal
quarter-end of Borrower and its Subsidiaries, their Funded Debt at the end of
such fiscal quarter divided by Consolidated Cash Flow for the four (4) quarter
period ending on such fiscal quarter-end.
"Government Authority" means any governmental or quasi-governmental entity,
court or tribunal including, without limitation, any department, commission,
board, bureau, agency, administration, service or other instrumentality of any
foreign or domestic governmental entity.
7
"Guarantor" individually means any one of the following corporations, each
of which is also a Subsidiary for the purposes of this Agreement, and
"Guarantors" means all such corporations jointly and severally:
(A) SCN of Princeton, Inc., a New Jersey corporation.
"Hazardous Materials" means any hazardous, toxic or dangerous chemical,
substance, waste or material defined as such in any of the Environmental Laws.
"Indebtedness" means, as to the Borrower or any Subsidiary, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including without
limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any manner,
or endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise: (1) to purchase such indebtedness;
or (2) to purchase, sell or lease (as lessee or lessor) property, products,
materials or supplies or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or (3) to supply funds to or in any
other manner invest in the debtor;
(C) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of facilities, goods or
services under leases that, in accordance with generally accepted accounting
principles consistently applied, should not be reflected on the Borrower's or
any Subsidiary's balance sheet.
"Interest Expense" means, with respect to the Borrower and its Subsidiaries
for any period, the gross interest expenses of the Borrower and its Subsidiaries
for such period determined in accordance with generally accepted accounting
principles consistently applied as shown on its income statement.
"Interest Payment Date" shall mean, as to any Loan, the last day of the
Interest Period applicable to such Loan and, in addition, in the case of a
Eurodollar Loan with an Interest Period of six (6) months' duration, the day
that would have been an Interest Payment Date for such Loan if such Loan had an
Interest Period of three (3) months.
"Interest Period" shall mean: (a) as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, and (b) as to any Base Rate Loan, the period commencing on
the date of such Loan and ending on the first (1st) day of the next calendar
month, and (ii) the applicable Termination Date; provided, however, that (x) if
any Interest Period would end on a day that shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless,
with respect to Eurodollar Loans only, such next succeeding Business Day would
fall in the next calendar
8
month, in which case such Interest Period shall end on the next preceding
Business Day and (y) no Interest Period with respect to any Loan shall end later
than the Termination Date. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"Issuing Bank" means NationsBank of Tennessee, N.A. or any successor
thereto, as the issuer of Letters of Credit under Paragraph 2.3, together with
its successors and assigns in each capacity; provided that no successor or
assign may have a letter of credit risk rating less than that accorded to
letters of credit issued by NationsBank or its affiliates.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any government or political subdivision or
agency thereof, or any court or similar entity estab lished by any thereof.
"Letter of Credit" shall have the meaning assigned to such term in
Paragraph 2.3.
"Letter of Credit Documents" means, with respect to any Letter of Credit,
collectively, any application for any Letter of Credit and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations.
"Letter of Credit Interest" means, for each Bank, such Bank's participation
interest (or, in the case of the Issuing Bank, the Issuing Bank's retained
interest) in the Issuing Bank's liability under Letters of Credit and such
Bank's rights and interests in Reimbursement Obligations and fees, interest and
other amounts payable in connection with Letters of Credit and Reimbursement
Obligations.
"Letter of Credit Liability" means, without duplication, at any time and in
respect of any Letter of Credit, the sum of (a) the undrawn face amount of such
Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Bank (other than the Issuing Bank) shall be deemed to hold a Letter
of Credit Liability in an amount equal to its participation interest in the
related Letter of Credit under Paragraph 2.3, and the Issuing Bank shall be
deemed to hold a Letter of Credit Liability in an amount equal to its retained
interest in the related Letter of Credit after giving effect to the acquisition
by the Banks (other than the Issuing Bank) of their participation interests
under Paragraph 2.3.
"Loan" or "Loans" means Revolving Loans made by the Banks pursuant to
Paragraph 2.1 to fund the cost of Acquisitions, Capital Expenditures, and
Working Capital, as well as Swingline Loans advanced pursuant to Paragraph 2.11.
"Loan Documents" means this Agreement, the Notes, the Letter of Credit
Documents, the Collateral Documents, any guaranty agreements hereafter executed
with respect to the Obligations or any other document executed or delivered by
or on behalf of the Borrower or any Subsidiary evidencing or securing the
Obligations.
9
"Majority Banks" means those Banks which are then in compliance with their
obligations hereunder (as determined by Agent) and which have sixty-six and two
thirds percent (66 2/3%) or more of the aggregate unpaid principal amount of the
outstanding Loans and the Letter of Credit Liabilities, or, if no such amounts
are then outstanding, Banks having at least sixty-six and two thirds percent (66
2/3%) of the Commitments; provided, Majority Banks shall always require two (2)
Banks, regardless of whether one (1) Bank alone has more than the requisite
percentage, unless one or more of the other Bank(s) is not in compliance
hereunder as determined by the Agent.
"Material Adverse Change" means a material adverse change in the business
or conditions (financial or otherwise) or in the results of operations of the
Borrower and its Subsidiaries (unless otherwise indicated), taken as a whole as
reasonably determined by the Majority Banks.
"Material Adverse Effect" means, when referring to the taking of an action
or the omission to take an action, that such action, if taken, or omission,
would have a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries (unless
otherwise indicated), taken as a whole as reasonably determined by the Majority
Banks.
"Non-Corporate Subsidiary" means a Subsidiary that is other than a
corporation.
"Non-Corporate Unperfected Subsidiary" means a Non-Corporate Subsidiary,
Borrower's interest in which is not subject to a perfected security interest to
secure the Obligations.
"Note" means a promissory note substantially in the form of Exhibit A
attached hereto, duly executed and delivered to the Agent by Borrower and
payable to the order of each of the Banks in the amount of its Commitment,
including any amendment, modification, renewal, extension, or replacement
thereof, and "Notes" means the Notes payable to each of the Banks collectively.
"Notice of Borrowing" has the meaning set forth in Paragraph 2.2(A).
"Notice of Conversion" has the meaning set forth in Paragraph 2.2(B).
"Obligations" means the obligation of the Borrower:
(A) To pay the principal of and interest on the Notes in accordance with
the terms thereof and to satisfy all of its other liabilities to the Agent, the
Banks, NationsBank, N.A., and NationsBanc Montgomery Securities, Inc.,
hereunder, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions, modifications,
and renewals thereof and substitutions therefor;
(B) To pay all Letter of Credit Liabilities, including any Reimbursement
Obligations and any other amounts owed by Borrower under any Letter of Credit
Documents;
(C) To repay to the Banks all amounts advanced by the Banks hereunder on
behalf of the Borrower, including, but without limitation, amounts now or
hereafter owed under Interest Rate Contracts to one or more Banks, advances for
overdrafts, principal or interest payments to prior secured parties, mortgagees,
or lienors, or for taxes, levies, insurance, rent, repairs to or maintenance or
storage of any of the Collateral; and
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(D) To reimburse the Agent, the Banks, NationsBank, N.A., and
NationsBanc Montgomery Securities, Inc. on demand, for their reasonable
out-of-pocket expenses and costs, including the reasonable fees and expenses of
the Agent's counsel in connection with the preparation, amendment, modification,
or enforcement of this Agreement and the documents required hereunder
(including, without limitation, any proceeding brought or threatened to enforce
payment of any of the obligations referred to in the foregoing paragraphs (A),
(B) and (C), or any suits or claims against any Bank whatsoever as a result of
such Bank's execution of this Agreement and making of its Loan); provided, the
expenses and attorneys' fees of all Banks shall be reimbursed in connection with
the enforcement of this Agreement and the other Loan Documents.
"Permitted Acquisition" means any business, enterprise or operation of
any Person unrelated to or unaffiliated with the Borrower which is the subject
of an Acquisition permitted under Paragraph 7.13.
"Permitted Acquisition Indebtedness" means purchase money indebtedness
incurred by the Borrower or any Subsidiary in connection with the purchase of a
Permitted Acquisition approved by the Banks pursuant to Paragraphs 3.3 and 7.13
that:
(A) Is in a principal amount not more than sixty percent (60%) of the
Permitted Acquisition Price;
(B) Is unsecured;
(C) Has a maturity of not less than three (3) years; and
(D) Is not cross-defaulted with and is not more restrictive in its terms
and conditions than the Obligations secured hereby, in the judgment of the
Banks.
In addition, it shall include such other purchase money indebtedness as
has otherwise been approved by the Banks pursuant to Paragraph 3.3 or not
prohibited by Paragraph 7.5(8).
"Permitted Acquisition Price" means the aggregate purchase price of any
Permitted Acquisition, including notes, assumed debt, amounts allocated to
non-compete agreements and the minimum amounts reasonably expected to be paid
under any earn-out agreements.
"Permitted Investments" means all expenditures made and all liabilities
incurred (contingent or otherwise) by any Borrower or any Subsidiary for:
(A) obligations issued or guaranteed as to principal and interest by the
United States of America and having a maturity of not more than twelve (12)
months from the date of purchase;
(B) certificates of deposit, issued by banks organized under the laws of
the United States of America or any State thereof and foreign subsidiaries of
such banks, having a rating of not less than A or its equivalent by Standard &
Poor's Corporation, or its successor;
(C) commercial paper or finance company paper which is rated not less than
prime-one or A-1 or their equivalents by Moody's Investor Services, Inc. or
Standard & Poor's Corporation or their successors;
11
(D) repurchase agreements related to an investment of the type described in
Clause (A) above, provided that the counter-party thereto is a government
securities dealer designated by the Federal Reserve Bank of New York as a
"Reporting Dealer" and whose financial statements indicate that it has a capital
of at least $50,000,000.00 and that the investment which is the subject of such
repurchase agreement shall be at all times during the term of the repurchase
agreement in the possession of the Borrower (or the Agent) or the interest of
such Borrower therein shall be appropriately recorded in accordance with the
United States Federal Regulations regarding Book Entry Treasury Securities;
(E) bankers acceptances issued by banks that qualify for the NationsBank of
Tennessee, N.A. Federal Funds List, not to exceed $500,000.00 per issuer and a
maximum maturity of 180 days;
(F) Eurodollar time deposits with banks having a minimum rating by Keefe
Bankwatch of A for domestic banks and I for foreign banks, provided the maximum
deposit with any bank does not exceed $500,000.00, the concentration in any
individual country does not exceed $250,000.00 or 25% of the total amount of all
Permitted Investments, whichever is greater, and the aggregate amount of
Eurodollar time deposits does not exceed $500,000.00 or 75% of the amount of all
Permitted Investments, whichever is greater;
(G) money market funds which invest in money market instruments consistent
with the guidelines herein set forth for other Permitted Investments provided
the same do not exceed 25% of the total amount of all Permitted Investments nor
exceed $500,000.00 in any one money market fund;
(H) state and municipal general obligation bonds rated A or better by
Standard & Poor's Corporation or Moody's Investor Services, Inc., for long term
issues and Moody's MIG-1 for short term issues, provided no security shall have
a maturity in excess of one year, no more than $500,000.00 shall be invested
with any single issuer, and the concentration in any one type of issue (states,
local governments, school districts, municipal power authorities, hospitals,
housing authorities, etc.) shall be limited to 25% of the total amount of all
Permitted Investments or $250,000.00, whichever is greater; and
(I) Permitted Acquisitions.
"Permitted Liens" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of ten percent (10%) of
the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
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(E) Encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the
use of such property by the Borrower or any Subsidiary in the operations of its
business, and none of which is violated in any material respect by existing or
proposed structures or land use;
(F) Liens in favor of the Agent for the benefit of the Banks;
(G) Existing liens set forth or described on Exhibit B, attached hereto
and made a part hereof, and renewals thereof;
(H) Liens of equipment notes and capitalized leases granted to secure
not more than the amount of the purchase price financed thereby; provided, that
in the case of an Acquisition or assumption the Acquisition or assumption is
either permitted by Paragraph 7.13 or not otherwise prohibited herein;
(I) Landlord's liens on Fixtures retained in any lease;
(J) The following, if the validity or amount thereof is being contested
in good faith by appropriate and lawful proceedings, so long as levy and
execution thereon have been stayed and continue to be stayed; if Borrower or any
Subsidiary has posted such security as may be required by Laws or as is
reasonably satisfactory to Banks; and if the following do not, in the aggregate,
materially detract from the value of the properties of the Borrower or any
Subsidiary taken as a whole, or materially impair the use thereof in the
operation of their respective businesses:
(1) Claims or liens for taxes, assessments or charges due and payable
and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal or real property
or other legal process prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"Person" means any individual, corporation, partnership, limited liability
company, association, joint-stock company, estate, trust, unincorporated
organization, joint venture, court or government or political subdivision or
agency thereof.
"Pledged Instruments" means the stock, membership interests, partnership
interests, notes and other interests and documents pledged pursuant to the
Amended and Restated Pledge Agreement described in Paragraph 3.1, as amended
from time to time to reflect the pledge of newly formed Subsidiaries and/or
Acquisitions.
"Pledgor" means the owner(s) of the Pledged Instruments as set forth in the
Pledge Agreement(s).
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"Potential Default" means a condition or event which, after notice or lapse
of time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"Practice" means a musculoskeletal treatment center or a musculoskeletal or
orthopedic medical practice. Whenever in this Agreement "Practice" is used in
describing an Acquisition by the Borrower or any Subsidiary, and if the
reference relates to a medical practice, such reference is to the Acquisition of
the assets used in the operation of the Practice that can lawfully be acquired
by Borrower or any Subsidiary or to the Acquisition of an interest in an entity
that owns, as of the time of purchase, only those assets that can be lawfully
acquired by Borrower or any Subsidiary.
"Prime Rate" means that rate announced by NationsBank of Tennessee, N.A.
from time to time as the NationsBank Prime Rate. No representation is made
herein that the NationsBank Prime Rate is the lowest rate at which any bank will
lend to its customers.
"Pro-Forma Effect" means, in making any calculation to determine compliance
with Subparagraphs 3.3(D) and 7.13(A), that the calculation will be made
assuming that (a) any Permitted Acquisition made during the twelve-month period
ending on the date of determination (the "Reference Period"), and (b) any
Indebtedness associated with (a) incurred during the Reference Period or to be
incurred as of the date of determination, were made or incurred on the first day
of the Reference Period. Any funds to be used by Borrower or any Subsidiary in
consummating a Permitted Acquisition will be assumed to have been used for that
purpose as of the first day of the Reference Period. Acquisition EBITDA for the
Reference Period associated with the Practice acquired or to be acquired in any
Permitted Acquisition will be included in the calculation of Acquisition EBITDA
for Borrower and its Subsidiaries. Any Indebtedness to be incurred by Borrower
or any Subsidiary in connection with the consummation of any Permitted
Acquisition will be assumed to have been incurred on the first day of the
Reference Period. Interest Expense with respect to such Indebtedness assumed to
have been incurred on the first day of the Reference Period which bears interest
at a floating rate shall be calculated at the current rate under the agreement
governing such Indebtedness (including this Agreement if the Indebtedness is
incurred hereunder). Any Interest Expense incurred during the Reference Period
which was or is to be refinanced with proceeds of Indebtedness assumed to have
been incurred as of the first day of the Reference Period will be excluded from
the calculation for which a Pro-Forma Effect is being given.
"Provider" means an orthopedic doctor or other musculoskeletal doctor whose
specialty is complementary to the practice of orthopedics and who performs
professional services respecting a Practice that is either managed by Borrower
or any Subsidiary or the assets of which are owned by Borrower or any
Subsidiary.
"Quarterly Dates" means the first day of each January, April, July, or
October, the first of which shall be the first such day after October 1, 1997.
"Quarterly Period" means (a) the Period from the date of Closing to the
next succeeding Quarterly Date and (b) thereafter, any period from the first day
after a Quarterly Date to the next succeeding Quarterly Date.
"Real Property" means those leases and other interests in real estate
described in Exhibit D hereto.
14
"Records" means correspondence, memoranda, tapes, books, discs, paper,
magnetic storage and other documents or information of any type, whether
expressed in ordinary or machine language.
"Reimbursement Obligations" means, at any time, the obligation of the
Borrower then outstanding, or which may thereafter arise in respect of any or
all Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Bank and the other Banks with respect to their Letter of Credit Interests in
respect of any drawings under a Letter of Credit.
"Rental Expense" means, with respect to the Borrower and its Subsidiaries
for any period, the gross rental expenses that are paid by the Borrower and its
Subsidiaries for such period determined in accordance with generally accepted
accounting principles consistently applied.
"Revolving Loans" means revolving credit loans made pursuant to Paragraphs
2.1 and 2.2.
"Seller" means the former owner of a Practice that is acquired by the
Borrower or any Subsidiary.
"Service Agreement" means one of those service or management agreements now
or hereafter entered into between a Provider or Providers and the Borrower or
any Subsidiary in connection with the management of an orthopedic or
musculoskeletal practice.
"Shareholders' Equity" means, at any time, the sum of the following
accounts set forth in a consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with generally accepted accounting
principles consistently applied: (A) the par or stated value of all outstanding
capital stock; (B) capital surplus; and (C) retained earnings.
"Specialists-SCN, LLC" means Specialists-SCN, LLC, a California limited
liability company composed of Borrower, Eric E. Bugna, M.D. and John C. Kofoed,
M.D.
"Specialists-SCN Loan" means the loan in the aggregate amount of not more
than Eight Hundred Thousand Dollars ($800,000.00) to be made by Borrower to
Specialists-SCN, LLC pursuant to sub-paragraph 7.10(2) hereof.
"Specialists-SCN Loan Documents" means that Note as well as the Deed of
Trust and other documents, from time to time, evidencing the Specialists-SCN
Loan.
"Subordinated Indebtedness" means all Indebtedness incurred at any time by
the Borrower or any Subsidiary, the repayment of which is subordinated to the
Loans in form and manner satisfactory to the Banks. All existing Subordinated
Indebtedness is so specified in Exhibit C attached hereto, and a form of
subordination agreement acceptable to the Banks for notes, debentures and/or
convertible debentures to be issued to and held by Providers is attached hereto
as Exhibit C-1.
"Subsidiary" means any Person of which fifty percent (50%) or more of the
outstanding voting securities or other equity interests in such Person shall, at
the time of determination, be owned directly, or indirectly through one or more
intermediaries, by the Borrower and "Subsidiaries" means all such Persons
together with each of the Guarantors, if different.
"Swingline Bank" means NationsBank of Tennessee, N.A., together with its
successors.
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"Swingline Commitment" means the commitment of the Swingline
Bank to make the Swingline Loans in the aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" has the meaning assigned to such term in
Paragraph 2.11(A).
"Swingline Loan" has the meaning assigned to such term in Paragraph
2.11(A).
"Swingline Note" means the promissory note of the Borrower in favor of the
Swingline Bank in the original principal amount of $2,500,000, as such
promissory note may be amended, modified, restated or replaced from time to
time.
"Termination Date" means November 21, 2000, unless extended in writing by
the Banks in their sole discretion.
"Total Commitments" means the aggregate of the several Commitments of the
Banks in the principal amount of up to Seventy-Five Million Dollars
($75,000,000.00) as set forth in Section II of this Agreement, subject to
reduction by the Borrower pursuant to Paragraph 2.6 below.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Tennessee, as it may be amended from time to time; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of a security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Tennessee, "UCC" means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Unutilized Loan Commitment" means, with respect to any Bank at any time,
such Bank's maximum Commitment at such time less the sum of (i) the aggregate
principal amount of all Revolving Loans made by such Bank that are outstanding
at such time, and (ii) such Bank's Commitment Percentage of all Letter of Credit
Liabilities at such time.
"West Central Ohio Group, Ltd." means West Central Ohio Group, Ltd., an
Ohio limited liability company formed pursuant to the Ohio Limited Liability
Company Act, Ohio Revised Code Chapter 1705 as amended from time to time.
"West Central Ohio Loans" means those loans in the aggregate amount of not
more than $7,000,000.00 to be made by Borrower to West Central Ohio Group, Ltd.
pursuant to Subparagraph 7.10(1) hereof.
"West Central Ohio Loan Documents" means those notes as well as the loan
agreement, security agreement, mortgage, financing statements and other
documents from time to time evidencing and securing the West Central Ohio Loans.
"Working Capital" means those funds used for general corporate purposes in
the ordinary course of business, but excluding the costs of the Acquisition of
any Person, permitted or otherwise, and the costs of Capital Expenditures.
The definitions in this Section I shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding
16
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Sections, Paragraphs, Exhibits and Schedules shall be
deemed references to Sections and Paragraphs of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with generally accepted accounting principles
consistently applied, as in effect from time to time; provided, however, if (a)
the Borrower shall object to determining such compliance on such basis at the
time of delivery of such financial statements due to any change in generally
accepted accounting principles or the rules promulgated with respect thereto or
(b) the Agent or the Majority Banks shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Banks as to which no such objection shall have been made.
SECTION II. THE LOANS
2.1 Revolving Loans. (A) Subject to the terms and conditions of and relying
on the representations, warranties and covenants contained in this Agreement,
each Bank severally agrees to make available to the Borrower revolving credit
loans ("Revolving Loans") from time to time until the Termination Date for the
purposes hereinafter set forth; provided, however, none of the Banks shall be
obligated to make any Revolving Loan to the extent that immediately after making
any such Revolving Loan the sum of the outstanding principal balance of all
Revolving Loans, Swingline Loans and Letter of Credit Liabilities would exceed
the then applicable Total Commitments; provided, further, no Bank shall be
obligated to make any Revolving Loan to the extent that immediately after the
making of such Revolving Loan such Bank's pro rata share (based upon its
Commitment then in effect) of Revolving Loans and Letter of Credit Liabilities
shall exceed such Bank's Committed Amount. The failure of any Bank to make its
Committed Percentage of any Revolving Loan shall not in itself relieve any other
Bank of its obligation under this Paragraph 2.1. Prior to the Termination Date,
the Borrower may borrow, repay and reborrow hereunder up to the full amount of
the Total Commitments in accordance with the terms of this Agreement. Revolving
Loans hereunder may consist of Base Rate Loans or Eurodollar Loans (or a
combination thereof) as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
(B) Revolving Loan advances may be used by the Borrower for Permitted
Acquisitions, Capital Expenditures, Reimbursement Obligations, Working Capital,
Provider loans not prohibited by Subparagraph 7.10(2), and the development of
musculoskeletal focused surgery centers. The Banks shall have no obligation to
fund unless Borrower is in compliance with all of the provisions and conditions
of this Agreement.
(C) The aggregate minimum principal amount of each Revolving Loan advanced
hereunder shall be not less than $500,000 (and integral multiples of $100,000 in
excess thereof); provided, Eurodollar Loan advances shall be in the minimum
amount of $2,500,000 and shall be in integral multiples of $500,000 in excess
thereof.
2.2 Notices, Interest Rates and Payments of Interest.
(A) The Borrower shall give the Agent irrevocable notice in the form
attached hereto as Exhibit A-1 (a "Notice of Borrowing") not later than 3:00
p.m. Charlotte, North Carolina time at least three (3) Business Days prior to
the date of any requested disbursement of Eurodollar Loans and one (1) Business
Day prior to any requested disbursement of Base Rate Loans. Each Borrowing
Notice shall be written and may be made by telecopier, telex or cable in
addition to the means set forth for
17
giving notice in Paragraph 10.5. Each Borrowing Notice shall specify the
requested date of such requested disbursement; the aggregate amount of such
disbursement; the type of Revolving Loan, i.e., Eurodollar or Base Rate; and if
a Eurodollar Loan, the designated Interest Period. Upon receipt of a Notice of
Borrowing, the Agent shall promptly advise the other Banks of any Borrowing
Notice given pursuant to this Paragraph and each Bank's portion of the requested
Revolving Loan. Subject to the terms and conditions hereof, each Bank will make
its pro rata share of each Revolving Loan advance available to the Agent by
12:00 p.m. (Charlotte, North Carolina time) on the date specified in the Notice
of Borrowing by deposit in U.S. dollars of immediately available funds to
account number 0112996681 at the offices of the Agent in Nashville, Tennessee
(or at such other address as the Agent may designate in writing), and Agent will
credit the proceeds of the Revolving Loans received by Agent from the Banks to
the Borrower's deposit account with Agent. Each such Borrowing Notice shall
obligate the Borrower to accept the Revolving Loan disbursement requested
thereby. No Bank shall be responsible for the failure or delay by any other Bank
in its obligation to make Revolving Loan advances provided, however, that the
failure of any Bank to fund its Commitments hereunder shall not relieve any
other Bank of its Commitments hereunder. Unless the Agent has been notified by
any Bank prior to the making of any such Revolving Loan advance that such Bank
does not intend to make available to the Agent its Commitment Percentage of the
Revolving Loan advance to be made on such date, the Agent may assume that such
Bank has made or will make such amount available to the Agent on the date of
such Revolving Loan advance, and the Agent, in reliance upon such assumption,
may (in its sole discretion without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Borrower, the Agent shall be entitled to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent will
promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be entitled to recover
from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a per annum rate equal to (i)
if paid by such Bank, within two Business Days of making such corresponding
amount available to the Borrowers, the overnight Federal Funds Rate, and
thereafter the Base Rate, and (ii) if paid by the Borrowers, the then applicable
rate calculated in accordance with Paragraph 2.2.
(B) The Borrower shall have the right at any time, on prior irrevocable
written or telex notice to the Agent in the form attached hereto as Exhibit A-2
(a "Notice of Conversion") not later than 2:00 p.m., Charlotte, North Carolina
time, three (3) Business Days prior to the date of any requested conversion, to
convert any Base Rate or Eurodollar Loan into a Loan of another type, or to
continue any Eurodollar Loan for another Interest Period (specifying in each
case the Interest Period to be applicable thereto), subject in each case to the
following:
(1) Each conversion or continuation shall be made prorata among the
Banks in accordance with the respective principal amounts of the Loan converted
or continued;
(2) No Eurodollar Loan shall be converted at any time other than at
the end of the Interest Period applicable thereto;
(3) Each conversion shall be effected by applying the proceeds of the
new Eurodollar and/or Base Rate Loan, as the case may be, to the Loan (or
portion thereof) being converted;
(4) The number of Eurodollar Loans outstanding at one time may not
exceed eight (8); and
18
(5) No Interest Period may be selected for any Eurodollar Loan that
would end later than a repayment date occurring on or after the first day of
such Interest Period if the aggregate outstanding amount of Eurodollar Loans
with Interest Periods ending prior to such repayment date plus the aggregate
outstanding amount of all Base Rate Loans is not equal to or greater than the
principal amount(s) of the Loan(s) to be paid on such repayment date.
Each notice pursuant to this subparagraph shall be irrevocable and
shall refer to this Agreement and specify (1) the identity and principal amount
of the particular Revolving Loan that the Borrower request be converted or
continued, (2) if such notice requests conversion, the date of such conversion
(which shall be a Business Day), and (3) if a Revolving Loan is to be converted
to a Eurodollar Loan or a Eurodollar Loan is to be continued, the Interest
Period with respect thereto. In the event that the Borrower shall not give
notice to continue any Eurodollar Loan for a subsequent period, such Eurodollar
Loan (unless repaid) shall automatically be converted into a Base Rate Loan. If
the Borrower shall fail to specify in any Borrowing Notice the type of borrowing
or, in the case of a Eurodollar Loan, the applicable Interest Period, the
Borrower will be deemed to have requested a Base Rate Loan. If Agent reasonably
believes that any failure by Borrower to specify the type of borrowing or the
applicable Interest Period shall have resulted from failure of communications
equipment or clerical error, then prior to funding any such borrowing the Agent
shall use reasonable efforts to obtain confirmation from Borrower of the
contents of such Borrowing Notice; however, in the absence of prompt
confirmation by Borrower which specifies the type of borrowing and/or the
applicable Interest Period, the Borrower will be deemed to have requested a Base
Rate Loan. Notwithstanding anything to the contrary contained above, if an Event
of Default or Potential Default shall have occurred and be continuing, no
Eurodollar Loan may be continued and no Base Rate Loan may be converted into a
Eurodollar Loan.
(C) Interest shall be charged and paid on each Revolving Loan from the date
of the initial advance thereunder until such Loan is paid or converted as
follows:
(1) For a Base Rate Loan, at an annual rate equal to the Base Rate plus
the Applicable Margin for such Loan, said rate to change contemporaneously
with any change in the Base Rate.
(2) For a Eurodollar Loan, at a rate equal to the Adjusted LIBO Rate
plus the Applicable Margin for such Loan.
(3) Interest for both Base Rate Loans and Eurodollar Loans shall be
computed on the basis of a 360-day year counting the actual number of days
elapsed, and shall be due and payable without notice on each Interest Payment
Date.
(D) Notwithstanding anything herein to the contrary, upon the occurrence of
an Event of Default interest on all Loans (including Swingline Loans) shall be
charged at the Default Rate as defined and set forth in the Notes, regardless of
whether the Majority Banks have elected to exercise any other remedies under
Section VIII hereof, including without limitation acceleration of the maturity
of the outstanding principal of the Notes. All such interest shall be paid at
the time of and as a condition precedent to the curing of any such default to
the extent any right to cure is given.
(E) All agreements herein made are expressly limited so that in no event
whatsoever shall the interest and loan charges agreed to be paid to the Banks
for the use of the money advanced or to be advanced pursuant to this Agreement
exceed the maximum amounts collectible under applicable laws in effect from time
to time. If for any reason whatsoever the interest or loan charges paid or
contracted to be paid in respect of the Loans or Letters of Credit shall exceed
the maximum amounts
19
collectible under applicable laws in effect from time to time, then, ipso
facto, the obligation to pay such interest and/or loan charges shall be reduced
to the maximum amounts collectible under applicable laws in effect from time to
time, and any amounts collected by the Banks that exceed such maximum amounts
shall be applied to the reduction of the principal balance of the Loans and/or
refunded to Borrower so that at no time shall the interest or loan charges paid
or payable in respect of the Loans exceed the maximum amounts permitted from
time to time by applicable law. This provision shall control every other
provision herein and in any and all other agreements and instruments now
existing or hereafter arising between Borrower and the Banks with respect to the
Loans.
2.3 Letters of Credit. Subject to the terms and conditions of this
Agreement, the Commitments may be utilized, upon the request of the Borrower, in
addition to the Revolving Loans provided for by Paragraph 2.1, for the issuance
by the Issuing Bank of letters of credit (collectively, the "Letters of Credit")
for the account of the Borrower; provided that in no event shall (i) the amount
of Letter of Credit Liabilities exceed Ten Million Dollars ($10,000,000.00),
(ii) the aggregate amount of all Letter of Credit Liabilities, together with the
aggregate principal amount of the Revolving Loans and Swingline Loans, exceed
the aggregate amount of the Total Commitments as in effect from time to time,
and (iii) the expiration date of any Letter of Credit extend beyond the earlier
of the fifth (5th) Business Day preceding the Termination Date and the date
twelve months following the issuance of such Letter of Credit. The following
additional provisions shall apply to Letters of Credit:
(A) The Borrower shall give the Agent at least three Business Days'
irrevocable prior notice (effective upon receipt) specifying the Business Day
(which shall be no later than 30 days preceding the Termination Date) each
Letter of Credit is to be issued and describing in reasonable detail the
proposed terms of such Letter of Credit (including its beneficiary) and the
nature of the transactions or obligations proposed to be supported (including
whether such Letter of Credit is to be a commercial letter of credit or a
standby letter of credit). The Borrower shall be the account party for each
Letter of Credit, including Letters of Credit issuable to a beneficiary having a
claim or potential claim against a Subsidiary of the Borrower.
(B) On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated or, if drawn upon, until the resulting Reimbursement
Obligations have been reimbursed in full by the Borrower (whether by a borrowing
under this agreement or otherwise), the Commitment of each Bank shall be deemed
to be utilized for all purposes of this Agreement in an amount equal to such
Bank's Commitment Percentage of the then Letter of Credit Liabilities associated
with such Letter of Credit. Each Bank (other than the Issuing Bank) agrees that,
upon the issuance of any Letter of Credit it shall automatically acquire a
participation in the Issuing Bank's liability under such Letter of Credit in an
amount equal to such Bank's Commitment Percentage of such liability, and each
Bank (other than the Issuing Bank) thereby shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and shall be
unconditionally obligated to the Issuing Bank to pay and discharge when due, its
Commitment Percentage of the Issuing Bank's liability under such Letter of
Credit.
(C) Upon receipt from the beneficiary of any Letter of Credit or any
demand for payment under such Letter of Credit, the Issuing Bank shall promptly
notify the Borrower (through the Agent) of the amount to be paid by the Issuing
Bank as a result of such demand and the date on which payment is to be made by
the Issuing Bank to such beneficiary in respect of such demand. The Borrower
hereby unconditionally agrees to pay and reimburse the Agent for the account of
the Issuing Bank and the other Banks with respect to their Letter of Credit
Interest for the amount of each demand for payment under such Letter of Credit
at or prior to the date on which payment is to be made by the Issuing Bank to
the beneficiary under such Letter of Credit, without presentment, demand,
protest or other formalities
20
of any kind. Any amounts not so paid or borrowed as set forth in (D)
below shall bear interest at the rate(s) specified in the Letter of Credit
Documents or, if higher, at the rate(s) specified on the Notes (including the
Default Rate, if applicable).
(D) Forthwith upon its receipt of a notice referred to in clause (C) of
this Paragraph 2.3, the Borrower shall advise the Agent whether or not the
Borrower intends to borrow under Paragraph 2.1 to finance its obligation to
reimburse the Issuing Bank for the amount of the related demand for payment and,
if it does, submit a notice of such borrowing as provided in Paragraph 2.2. In
the event that the Borrower fails to so advise the Agent, and if the Borrower
fails to reimburse the Issuing Bank for a demand for payment under a Letter of
Credit by the date of such payment, the Agent shall give each Bank prompt notice
of the amount of the demand for payment, specifying such Bank's Commitment
Percentage of the amount of the related demand for payment, and the Borrower
shall be deemed in default hereunder for breaching Subparagraph 2.3(C) above.
(E) Each Bank (other than the Issuing Bank) shall pay to the Agent for
the account of the Issuing Bank in Dollars and in immediately available funds,
the amount of such Bank's Commitment Percentage of any payment under a Letter of
Credit upon notice by the Agent to such Bank requesting such payment and
specifying such amount as provided in clause (D) of this Paragraph 2.3. Each
such Bank's obligation to make such payments to the Agent for the account of the
Issuing Bank under this clause (E), and the Issuing Bank's right to receive the
same, shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including (i) the failure of any other Bank to make its
payment under this clause (E), the financial condition of the Borrower (or any
other account party), the existence of any Default or (ii) the termination of
the Commitments. Each such payment to the Issuing Bank shall be made without any
offset, abatement, withholding or reduction whatsoever; provided, nothing
contained in the foregoing shall limit the Issuing Bank's liability for its
gross negligence or willful misconduct in improperly honoring a draft drawn
under a Letter of Credit.
(F) Upon the making of each payment by a Bank to the Issuing Bank
pursuant to clause (E) above in respect of any Letter of Credit, such Bank
shall, automatically and without any further action on the part of the Agent,
the Issuing Bank or such Bank, acquire (i) a participation in any amount equal
to such payment in the Reimbursement Obligation owing to the Issuing Bank by the
Borrower under this Agreement and under the Letter of Credit Documents relating
to such Letter of Credit and (ii) a participation in a percentage equal to such
Bank's Commitment Percentage in any interest or other amounts payable by the
Borrower under such Letter of Credit Documents and the other Loan Documents in
respect of such Reimbursement Obligation (other than the commissions, charges,
costs and expenses payable to the Issuing Bank pursuant to clause (G) of this
Paragraph 2.3). Upon receipt by the Issuing Bank from or for the account of the
Borrower of any payment in respect of any Reimbursement Obligation or any such
interest or other amount (including by way of set-off or application of proceeds
of any collateral security) the Issuing Bank shall promptly pay to the Agent for
the account of each Bank who shall have previously assumed a participation in
such payment under clause (ii) above, such Bank's Commitment Percentage of such
payment, each such payment by the Issuing Bank to be made in the same money and
funds in which received by the Issuing Bank. In the event any payment received
by the Issuing Bank and so paid to the Banks is rescinded or must otherwise be
returned by the Issuing Bank, each Bank shall, upon the request of the Issuing
Bank (through the Agent), repay to the Issuing Bank (through the Agent) the
amount of such payment paid to such Bank, with interest at the rate specified in
clause (J) of this Paragraph 2.3.
(G) Borrower shall pay to the Agent for the account of the Issuing Bank
in respect of each Letter of Credit an issuance fee in an amount equal to 0.125%
of the face amount of such Letter of Credit (such fee to be nonrefundable and to
be paid in advance on such date of issuance). In
21
addition, Borrower shall pay to the Agent for the account of each Bank a
letter of credit fee (the "Letter of Credit Fee") in respect of each Letter of
Credit on the daily average undrawn face amount of such Letter of Credit for the
period from and including the date of issuance of such Letter of Credit to and
including the date such Letter of Credit is drawn in full, expires or is
terminated (such fee to be non-refundable, to be paid in arrears on each
Quarterly Date and on the Termination Date and to be calculated, for any day,
after giving effect to any payments made under such Letter of Credit on such
day) in an amount equal to 2.25% per annum or, for any Quarterly Period prior to
the first day of which (and in any event no later than 45 days after the end of
the fiscal quarter most recently ended) the Borrower has delivered to the Agent
a Compliance Certificate of the Borrower calculating the Funded Debt to
Consolidated Cash Flow Ratio as at the last day of such fiscal quarter (other
than such portion of such period during which a Default shall be continuing),
the Applicable Margin pertaining thereto. All calculations of Letter of Credit
fees shall be based on a 360 day year counting the actual number of elapsed
days. Notwithstanding the foregoing, following the occurrence of an Event of
Default hereunder and for so long as any such Default remains uncured, the
Letter of Credit Fee otherwise applicable as hereinabove set forth shall be
increased by two percent (2.0%) per annum.
(H) Upon the request of any Bank from time to time, the Issuing Bank
shall deliver any information reasonably requested by such Bank with respect to
each Letter of Credit then outstanding.
(I) The issuance by the Issuing Bank of each Letter of Credit shall be
subject, in addition to the conditions precedent set forth in Paragraph 3.2, to
the conditions precedent that (i) such Letter of Credit shall be in such form,
contain such terms and support such transactions as shall be satisfactory to the
Issuing Bank consistent with its then current practices and procedures with
respect to letters of credit of the same type and (ii) the Borrower shall have
executed and delivered such applications, agreements and other instruments
relating to such Letter of Credit as the Issuing Bank shall have reasonably
requested consistent with its then current practices and procedures with respect
to letters of credit of the same type; provided that in the event of any
conflict between any such application, agreement or other instrument and the
provisions of this Agreement, the provisions of this Agreement shall control.
(J) To the event that any Bank fails to pay any amount required to be
paid pursuant to clause (E) or (F) of this Paragraph 2.3 when due, such Bank
shall pay interest to the Issuing Bank (through the Agent) on such amount from
and including such due date to but excluding the date such payment is made (i)
during the period from and including such due date to but excluding the date
three Business Days thereafter, at a rate per annum equal to the Federal Funds
Rate (as in effect from time to time) and (ii) thereafter, at a rate per annum
equal to the Base Rate plus 2.0%.
(K) The issuance by the Issuing Bank of any modification or supplement
to any Letter of Credit shall be subject to the same conditions applicable under
this Paragraph 2.3 to the issuance of new Letters of Credit, and no such
modification or supplement shall be issued unless either (x) the respective
Letter of Credit as affected by such action would have complied with such
conditions had it originally been issued in such modified or supplemented form
or (y) each Bank shall have consented to such modification or supplement.
(L) The obligations of the Borrower under this Paragraph 2.3 shall be
unconditional and absolute and shall not be affected, modified or impaired, upon
the happening at any time or from time to time of any event, including any of
the following, whether or not with notice to or the consent of the Borrower:
22
(1) the compromise, settlement, release, modification, amendment
(whether material or otherwise) or termination of any or all of the obligations,
conditions covenants or agreements of any Person in respect of any of the Loan
Documents;
(2) the occurrence, or the failure by the Agent, any Bank or any
other Person to give notice to the Borrower of the occurrence, of any Event of
Default or any default under any of the other Loan Documents;
(3) the waiver of the payment, performance or observance of any of
the obligations, conditions, covenants or agreements of any Person contained in
any of the Loan Documents;
(4) the extension of the time for performance of any other
obligations, covenants or agreements of any Person under or arising out of any
of the Loan Documents;
(5) the taking or the omission of any of the actions referred to in
any of the Loan Documents;
(6) any failure, omission or delay on the part of the Agent, any
Bank, the Borrower or the beneficiary of any Letter of Credit to enforce, assert
or exercise any right, remedy, power or privilege conferred by this Agreement or
any of the Loan Documents, or any other act or acts on the part of the Agent,
any Bank, the Borrower or the beneficiary of any Letter of Credit;
(7) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets of, the marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings which affect, the Borrower or any
other party to any of the Loan Documents;
(8) any lack of validity or enforceability of this Agreement, any
Letter of Credit or any other Loan Document, or any allegation of invalidity or
unenforceability or any contest of such validity or enforceability;
(9) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against the Agent, any Bank or any beneficiary
or any transferee of any Letter of Credit (or any persons or entities for whom
the Bank or any such beneficiary or transferee may be acting), or any other
Person, whether in connection with this Agreement or any of the other Loan
Documents or any of the transactions contemplated by any Loan Document or any
unrelated transaction;
(10) any statement in any certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any such statement being untrue or inaccurate in
any respect whatsoever;
(11) payment by the Issuing Bank under any Letter of Credit against
presentation of a demand or certificate which does not comply with the terms of
such Letter of Credit;
(12) the release or discharge by operation of law of the Borrower
from the performance or observance of any obligation, covenant or agreement
contained in any of the Loan Documents; or
23
(13) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(M) Without affecting the Borrower's liability under Paragraph 10.7, the
Borrower agrees to indemnify each of the Issuing Bank, the Agent and the Banks
and their respective affiliates, directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, damages or expenses incurred by any of them in connection with or
by reason of any actual or threatened investigation, litigation or other
proceeding (including, in respect of the Issuing Bank and the Agent, any such
investigations, litigation or other proceeding between the Issuing Bank or the
Agent and any Bank) relating to (a) the execution and delivery of any Letter of
Credit; (b) the use of the proceeds of any drawing under any Letter of Credit;
or (c) the transfer or substitution of, or payment or failure to pay under, any
Letter of Credit, including the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding, but excluding damages, losses, liabilities or expenses to the
extent, but only to the extent, incurred by reason of (x) the willful misconduct
or gross negligence of the Issuing Bank in determining whether a document
presented under any Letter of Credit complies with the terms of such Letter of
Credit or (y) in the case of the Issuing Bank, such Bank's failure to pay under
any Letter of Credit after presentation to it of documents strictly complying
with the terms and condition of such Letter of Credit. It shall not be a
condition to any such indemnification that the Issuing Bank, the Agent or any
Bank shall be a party to any such investigations, litigation or other
proceeding. Nothing in this Paragraph 2.3 is intended to limit the Borrower's
payment obligations under this Agreement.
(N) The Borrower assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to the use of the Letter of
Credit. None of the Agent, any Bank nor any of their respective affiliates,
officers, directors, employees, attorneys or agents shall be liable or
responsible for: (a) the use which may be made of the Letter of Credit or for
any acts or omissions of any beneficiary of any Letter of Credit in connection
with such Letter of Credit; (b) the validity, sufficiency or genuineness of
documents presented to the Issuing Bank, or of any endorsement on such
documents, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents which do not comply with the terms of any
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; or (d) any other circumstances
whatsoever in making or failure to make payment under any Letter of Credit;
provided that the Borrower shall have a claim against the Issuing Bank to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused by (i)
the Issuing Bank's willful misconduct or gross negligence in determining whether
a document presented under any Letter of Credit complies with the terms of such
Letter of Credit or (ii) the Issuing Bank's willful failure to pay under the
Letter of Credit after presentation to it of documents strictly complying with
the terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
2.4 Nonuse Fee. The Borrower shall pay to the Agent for the account of each
Bank a nonusage fee (the "Nonuse Fee") on the average daily Unutilized Loan
Commitment of such Bank for the period from and including the Closing to but not
including the earlier of the date such Commitment is terminated and the
Termination Date, at the rate of 0.35% per annum or, for any Quarterly Period
prior to the first day of which (and in any event no later than 45 days after
the end of the fiscal quarter most recently ended) the Borrower has delivered to
the Agent a Compliance Certificate of the Borrower calculating the Funded Debt
to Consolidated Cash Flow Ratio as at the last day of such fiscal quarter (other
than such portion of such period during which an Event of Default shall be
continuing), the
24
Applicable Margin pertaining thereto. Nonuse Fees shall be calculated on a
360-day year counting the actual number of elapsed days. Accrued Nonuse Fees
shall be payable in arrears commencing January 1, 1998 and on each Quarterly
Date thereafter and on the earlier of each of the date the relevant Commitments
are terminated and the Termination Date.
2.5 Agent's Fee. The Borrower shall pay to the Agent, for its own account,
and NationsBanc Montgomery Securities, Inc. the fees specified in the letter
agreement dated September 4, 1997 by and between Borrower and the Agent, as such
agreement may be modified and supplemented (upon prior notice to the Banks) from
time to time, the terms of which letter agreement are incorporated herein by
reference.
2.6 Reduction of Commitment. The Borrower shall have the right to reduce
the amount of the Total Commitments, at any time and from time to time, in any
integral multiple of One Million Dollars ($1,000,000.00), which reduction shall
reduce each Bank's Commitment pro rata in accordance with its Commitment
Percentage. Contemporaneously with each such reduction, the Borrower shall repay
to the Agent for the account of each Bank in accordance with its respective
Commitment Percentage the amounts, if any, by which the then outstanding
principal balance of each Note exceeds each Commitment as so reduced. After each
such reduction: (a) the Borrower shall immediately pay the Agent any Nonuse Fee
provided for in Paragraph 2.5 with respect to the amount by which the Total
Commitments are so reduced, but only with respect to the time such Commitment
existed and only to the extent not previously paid; (b) the nonusage fee
provided for in Paragraph 2.5 shall be calculated with respect to the Total
Commitments as so reduced; and (c) the Total Commitments may not be increased
without the written consent of the Banks.
2.7 Alternate Rate of Interest.
(A) In the event, and on each occasion, that on the date of commencement
of any Interest Period for a Eurodollar Loan, any Bank shall have determined:
(1) That dollar deposits in the amount of the requested principal
amount of such Eurodollar Loan are not generally available in the London
Interbank Market;
(2) That the rate at which such dollar deposits are being offered
will not adequately and fairly reflect the cost to Banks of making or
maintaining such Eurodollar Loan during such Interest Period; or
(3) That reasonable means do not exist for ascertaining the Adjusted
LIBO Rate,
such Bank shall, as soon as practicable thereafter, give written or
telephonic notice of such determination to the Borrower. In the event of any
such determination, any request by the Borrower for a Eurodollar Loan pursuant
to Paragraph 2.2 shall, until the circumstances giving rise to such notice no
longer exist, be deemed to be a request for a Base Rate Loan. Each determination
by a Bank hereunder shall be conclusive absent manifest error.
2.8 Change in Circumstances.
(A) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable Laws or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not
25
having the force of law) shall change the basis of taxation of payments
to a Bank under any Eurodollar Loan made by a Bank or any other fees or amounts
payable hereunder (other than taxes imposed on the overall net income of such
Bank by the country in which such Bank is located, or by the jurisdiction in
which such Bank has its principal office, or by any political subdivision or
taxing authority therein), or shall impose, modify or deem applicable any
reserve requirement, special deposit, insurance charge (including FDIC insurance
on Eurodollar deposits) or similar requirement against assets of, deposits with
or for the account of, or credit extended by, such Bank or shall impose on such
Bank or the London Interbank Market any other condition affecting this Agreement
or Eurodollar Loans made by such Bank, and the result of any of the foregoing
shall be to increase the cost to such Bank of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Bank hereunder (whether of principal, interest or otherwise) in respect
thereof by an amount deemed by such Bank to be material, then the Borrower will
pay to such Bank such additional amount or amounts as will compensate such Bank
for such additional costs of reduction.
(B) If either:
(1) The introduction of, or any change in, or in the interpretation
of, any United States or foreign law, rule or regulation; or
(2) Compliance with any directive, guidelines or request from any
central bank or other United States or foreign governmental authority (whether
or not having the force of law) promulgated or made after the date hereof (but
excluding, however, any law, rule, regulation, interpretation, directive,
guideline or request contemplated by or resulting from the report dated July,
1988, entitled "International Convergence of Capital Measurement and Capital
Standards" issued by the Basle Committee on Banking Regulations and Supervisory
Practices), affects or would affect the amount of capital required or expected
to be maintained by a Bank (or any lending office of such Bank) or any
corporation directly or indirectly owning or controlling such Bank (or any
lending office of such Bank) based upon the existence of this Agreement, and
such Bank shall have determined that such introduction, change or compliance has
or would have the effect of reducing the rate of return on Bank's capital or on
the capital of such owning or controlling corporation as a consequence of its
obligations hereunder (including its Commitment) to a level below that which
such Bank or such owning or controlling corporation could have achieved but for
such introduction, change or compliance (after taking into account that Bank's
policies or the policies of such owning or controlling corporation, as the case
may be, regarding capital adequacy) by an amount deemed by such Bank (in its
reasonable discretion) to be material, then, from time to time, the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction attributable to making, funding and maintaining its
Commitment and Loans hereunder.
(C) A certificate of any Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank (or its participating Bank or other
entities pursuant to Paragraph 9.8) as specified in paragraph (A) or (B) above,
as the case may be, shall be delivered to the Borrower and shall be conclusive
absent manifest error; provided however, that the Borrower shall be responsible
for compliance herewith and the payment of increased costs only to the extent:
(1) Any change in Laws giving rise to increased costs occurs after
the date of this Agreement;
(2) Such change in Laws or the application thereof applies generally
to the banking industry and is not the result of one or more of the Banks in
this Agreement having inadequate or substandard capital as determined by its
regulators; and
26
(3) The affected Bank gives notice of the change giving rise to
increased costs within one hundred eighty (180) Business Days after such Bank
has, or with reasonable diligence should have had, knowledge of the change, or
else such Bank can only collect costs from and after the date of the notice.
Subject to the foregoing, the Borrower shall pay the affected Bank
the amount shown as due on any such certificate within ten (10) days after its
receipt of such certificate.
(D) The protection of this Paragraph 2.8 shall be available to each
Bank regardless of any possible contention of invalidity or inapplicability of
the law, regulation or condition that shall have been imposed; provided, if a
court of competent jurisdiction (or a final administrative proceeding which is
not judicially challenged) finally determines that such law or regulation is
invalid or unapplicable, then the protection of this Paragraph shall not be
available.
2.9 Change in Legality.
(A) Notwithstanding anything to the contrary herein contained, if any
change in any law or regulation or in interpretation thereof by any governmental
authority charged with the administration or interpretation thereof shall make
it unlawful for any Bank to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby, then, by written notice to the
Borrower, such Bank may:
(1) Declare that Eurodollar Loans will not thereafter be made by such
Bank hereunder, whereupon the Borrower shall be prohibited from requesting
Eurodollar Loans from such Bank hereunder unless such declaration is
subsequently withdrawn; and
(2) Require that all outstanding Eurodollar Loans made by it be
converted to Base Rate Loans, in which event (a) all such Eurodollar Loans shall
be automatically converted to Base Rate Loans as of the effective date of such
notice as provided in paragraph (B) below and (b) all payments and prepayments
of principal that would otherwise have been applied to repay the converted
Eurodollar Loans shall instead be applied to repay the Base Rate Loans resulting
from the conversion of such Eurodollar Loans.
(B) For purposes of this Paragraph 2.9, a notice to the Borrower by any
Bank pursuant to (A) above shall be effective, if lawful, on the last day of the
then current Interest Period; in all other cases, such notice shall be effective
on the date of receipt by the Borrower.
2.10 Optional Prepayment - Premiums in Certain Events.
(A) The Borrower may, upon three (3) Business Days' prior written notice
to the Agent, and upon payment of all premiums set forth in subparagraph (D)
hereinbelow, prepay any outstanding Eurodollar Loans prior to any Interest
Payment Date for such Eurodollar Loans, in whole or in part.
(B) The Borrower may at any time prepay any outstanding Base Rate Loans
in whole or in part without premium or penalty.
(C) Each notice of prepayment of any Eurodollar Loan shall specify the
date and amount of such prepayment and shall be irrevocable. The Agent shall
promptly notify the Banks of its receipt of a notice of prepayment. Each partial
prepayment of any Eurodollar Loans shall be in an
27
aggregate principal amount which is the lesser of (1) the then outstanding
principal balance of the one or more Eurodollar Loans to be prepaid, or (2) One
Hundred Thousand Dollars ($100,000.00) or an integral multiple thereof. Interest
on the amount prepaid accrued to the prepayment date shall be paid on such date.
(D) Upon prepayment of any Eurodollar Loan on a date other than the
relevant Interest Payment Date for such borrowing, Borrower shall pay to Agent
for the account of each Bank, in addition to all other payments then due and
owing the Banks, premiums which shall be equal to an amount, if any, reasonably
determined by each Bank to be the difference between the rate of interest then
applicable to the relevant Eurodollar Loan and the yield each Bank receives upon
reinvestment of so much of the relevant Eurodollar Loans as is prepaid for the
remainder of the term of the relevant Eurodollar Loan or Loans. Anything in this
section 2.10(D) to the contrary notwithstanding, the premiums payable upon any
such prepayment shall not exceed the amount, if any, reasonably determined by
each Bank to be the difference between the rate of interest then applicable to
the relevant Eurodollar Loan and the yield that each Bank could receive upon
reinvestment in the "Floor Reinvestment" of so much of the relevant Eurodollar
Loan as is prepaid for the remainder of the term of the relevant Eurodollar
Loan. For purposes hereof, "Floor Reinvestment" shall mean an investment for the
time period from the date of such prepayment to the end of the relevant Interest
Period applicable to such Eurodollar Loan at an interest rate per annum equal to
the Federal Fund Rate "offered" as published in the Wall Street Journal on the
date of such prepayment. All determinations, estimates, assumptions, allocations
and the like required for the determination of such premiums shall be made by
each Bank in good faith and shall be conclusive and binding absent manifest
error.
2.11 Swingline Loan Subfacility.
(A) Subject to the terms and conditions hereof and in reliance upon the
representations and warranties herein set forth, the Swingline Bank, in its
individual capacity, agrees to make certain revolving credit loans requested by
the Borrower to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans") from time to time from the Amendment and Restatement Closing
Date until the Termination Date for the purposes hereinafter set forth;
provided, however, (i) the aggregate principal amount of Swingline Loans
outstanding at any time shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000.00) (the "Swingline Committed Amount"), and (ii) the
aggregate principal amount of outstanding Revolving Loans plus the aggregate
Letter of Credit Liabilities plus the aggregate principal amount of outstanding
Swingline Loans shall not exceed the Total Commitments.
(B) Whenever the Borrower desires a Swingline Loan advance hereunder it
shall give written notice (or telephone notice promptly confirmed in writing) to
the Swingline Bank not later than 2:00 P.M. (Charlotte, North Carolina time) on
the Business Day of the requested Swingline Loan advance. Each such notice shall
be irrevocable and shall specify (a) that a Swingline Loan advance is requested,
(b) the date of the requested Swingline Loan advance (which shall be a Business
Day) and (c) the principal amount of the Swingline Loan advance requested. Each
Swingline Loan shall be made as a Base Rate Loan and shall have such maturity
date as the Swingline Bank and the Borrower shall agree upon receipt by the
Swingline Bank of any such notice from the Borrower. The Swingline Bank shall
initiate the transfer of funds representing the Swingline Loan advance to
Borrower's account by 3:30 P.M. (Charlotte, North Carolina time) on the Business
Day of the requested borrowing. Each Swingline Loan advance shall be in a
minimum principal amount of $100,000 and in integral multiples of $50,000 in
excess thereof (or the remaining amount of the Swingline Committed Amount, if
less).
(C) The principal amount of all Swingline Loans shall be due and payable
on the earlier of (a) the maturity date agreed to by the Swingline Bank and the
Borrower with respect to such
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Loan (which maturity date shall not be a date more than seven (7)
Business Days from the date of advance thereof) or (b) the Termination Date. The
Swingline Bank may, at any time, in its sole discretion, by written notice to
the Borrower and the Banks, demand repayment of its Swingline Loans by way of a
Revolving Loan advance, in which case the Borrower shall be deemed to have
requested a Revolving Loan advance comprised solely of Base Rate Loans in the
amount of such Swingline Loans; provided, however, that any such demand shall be
deemed to have been given one Business Day prior to the Termination Date and on
the date of the occurrence of any Event of Default described in Section VIII and
upon acceleration of the indebtedness hereunder and the exercise of remedies in
accordance with the provisions of Paragraphs 8.2 and 8.3. Each Bank hereby
irrevocably agrees to make its pro rata share of each such Revolving Loan in the
amount, in the manner and on the date specified in the preceding sentence
notwithstanding (i) the amount of such borrowing may not comply with the minimum
amount for advances of Revolving Loans otherwise required hereunder, (ii)
whether any conditions specified in Paragraph 3.2 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) failure of any such
request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each Bank hereby agrees that
it shall forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) from the Swingline Bank such
participations in the outstanding Swingline Loans as shall be necessary to cause
each such Bank to share in such Swingline Loans ratably based upon its
Commitment Percentage (determined before giving effect to any termination of the
Commitments pursuant to Paragraph 2.6), provided that (a) all interest payable
on the Swingline Loans shall be for the account of the Swingline Bank until the
date as of which the respective participation is purchased and (b) at the time
any purchase of participations pursuant to this sentence is actually made, the
purchasing Bank shall be required to pay to the Swingline Bank, to the extent
not paid to the Swingline Bank by the Borrower in accordance with the terms
hereof, interest on the principal amount of participation purchased for each day
from and including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such participation, at the
rate equal to the Federal Funds Rate.
(D) Subject to the provisions of Paragraph 2.2(D), each Swingline Loan
shall bear interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the Base Rate plus the
Applicable Margin. Interest on Swingline Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other times as may be
specified herein).
(E) The Swingline Loans shall be evidenced by a duly executed promissory
note of the Borrower to the Swingline Bank in an original principal amount equal
to the Swingline Committed Amount substantially in the form of Exhibit A.
2.12 Payment to the Agent.
(A) The Agent shall send the Borrower statements of all amounts due
hereunder, which statements shall be considered correct and conclusively binding
on the Borrower unless the Borrower notifies the Agent to the contrary within
ninety (90) days of its receipt of any statement to which it objects. All sums
payable to the Banks hereunder shall be paid directly to the Agent for the
account of each Bank in immediately available funds prior to 12:00 noon,
Charlotte, North Carolina time, on the date when such sums are due and payable.
Any amounts received by the Agent after 12:00 noon
29
Charlotte, North Carolina time on any Business Day shall be deemed to
have been received on the next Business Day. Alternatively, at its sole
discretion, the Agent may charge against any deposit account of the Borrower
maintained with any of the Banks all or any part of any amount due pursuant to
this Agreement.
(B) Each payment made to the Agent on the Notes or for other sums or
fees due hereunder for the account of the Banks shall be properly remitted by
the Agent to each Bank, pro rata in accordance with the outstanding unpaid
principal amount of the Notes held by each Bank, no later than 2:00 p.m.
Charlotte, North Carolina time on the date on which Agent receives such payment.
(C) Borrower shall give Agent two (2) Business Days notice of payments
of principal and/or interest other than payments on a regularly scheduled
payment date set forth herein.
SECTION III. CONDITIONS PRECEDENT
The obligation of the Banks to fund and/or continue funding the Loans
hereunder is subject to the following conditions precedent:
3.1 Documents Required for Amendment and Restatement. The effectiveness
of this Agreement is subject to the conditions precedent that the Agent shall
have received on or before the Amendment and Restatement Closing Date the
following, each in form and substance satisfactory to the Agent:
(A) This Agreement, duly executed by the Borrower, Guarantors, the Agent
and the Banks;
(B) The Notes;
(C) Amended and Restated Pledge Agreement (collectively the "Pledge
Agreement") in the form attached hereto as Exhibit E, including Schedule A
thereto, duly executed by the Borrower, together with all originals of the West
Central Ohio Loan Documents (with the notes appropriately endorsed to the Agent)
and all certificates representing any stock or membership interests (if in
certificated form) pledged thereby, duly endorsed in blank, and stock powers
duly endorsed in blank;
(D) Duly executed Guaranty and Suretyship Agreement (collectively the
"Guaranty and Suretyship Agreement") of the Guarantor(s), in the form attached
hereto as Exhibit F;
(E) The Financing Statements and mortgagee waivers required by Section
IV;
(F) A copy of resolutions of the Borrower's board of directors,
certified by the corporate secretary of Borrower as of the date of Closing,
authorizing the execution, delivery and performance of this Agreement, the
Notes, the Collateral Documents, and each other document to be delivered
pursuant hereto;
(G) A copy of resolutions of each Subsidiary's board of directors,
certified as of the date of Closing by the secretary of each of such
corporations, authorizing the execution, delivery and performance of any
documents to be delivered by such corporation pursuant to this Agreement,
including without limitation any of the Collateral Documents.
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(H) A copy, certified as of the most recent date practicable, by the
applicable Secretaries of State of, of the Borrower's and each Subsidiary's
Charter, together with a certificate dated the date of the Closing of the
Borrower's corporate secretary to the effect that such certificates of
incorporation have not been amended since the date of the aforesaid Secretary of
State certifications;
(I) A copy of the Borrower's by-laws certified by Borrower's secretary
as of the date of the Closing;
(J) A certificate dated the date of the Closing of the Borrower's
corporate secretary as to the incumbency and signatures of the officers of the
Borrower executing this Agreement, the Notes, the Collateral Documents, and each
other document to be delivered pursuant hereto;
(K) A certificate dated the date of the Closing of each Subsidiary's
corporate secretary as to the incumbency and signatures of the officers of each
of such corporation executing any document to be delivered pursuant hereto,
including without limitation any of the Collateral Documents.
(L) Certificates, as of the most recent dates practicable, of the
aforesaid Secretary of State and the Secretary of State of each state in which
the Borrower is qualified as a foreign corporation as to the good standing of
the Borrower;
(M) A written opinion of Messrs. Baker, Donelson, Bearman & Caldwell,
the Borrower's counsel, dated the date of the Closing and addressed individually
to each Bank, in the form attached hereto as Exhibit G and otherwise
satisfactory to the Banks.
(N) A certificate, dated the date of the Closing, signed by the
president, vice president, chief financial officer, or corporate controller of
the Borrower and to the effect that:
(1) The representations and warranties set forth within Paragraph 5.1
are true as of the date of the Closing;
(2) No Event of Default hereunder, and no event which, with the
giving of notice or passage of time or both, would become such an Event of
Default, has occurred as of such date;
(3) All of the Collateral Documents are and shall remain in full
force and effect.
(O) Copies of all documents evidencing the terms and conditions of any
debt specified as Subordinated Indebtedness on Exhibit C in form and substance
satisfactory to Banks;
(P) Draft copy of the Borrower's Compliance Procedures regarding Fraud
and Abuse Laws;
(Q) A Federal Reserve Form (or Forms) U-1, duly completed and executed
by the Borrower and each Pledgor.
3.2 Documents Required for All Subsequent Disbursements. At the
Amendment and Restatement Closing, and as an express condition precedent to each
disbursement of a Loan or the issuance of a Letter of Credit after the Amendment
and Restatement Closing, the Borrower shall deliver to the Agent a true and
accurate certificate together with any Borrowing Notice and/or Letter of Credit
31
application, dated the date on which such credit is to be extended,
signed by the president, vice president, chief financial officer, or corporate
controller of the Borrower and to the effect that:
(A) As of the date thereof, no Event of Default has occurred and is
continuing, and no event has occurred and is continuing that, with the giving of
notice or passage of time or both, would be an Event of Default;
(B) The Loans and/or Letter of Credit will be used only as permitted in
Paragraph 2.1;
(C) No Material Adverse Change has occurred since the date of the
Financial Statements or the date of the Amendment and Restatement Closing Date,
as applicable; and
(D) All of the Collateral Documents remain in full force and effect, and
Borrower has provided or caused to be provided such additional Collateral
Documents as required by Paragraph 7.13.
If any of the foregoing statements is not true and correct in the judgment of
the Banks, then the Banks shall have no obligation to fund the requested
disbursement and/or issue the requested Letter of Credit.
3.3 Information Required for Permitted Acquisition. Without limiting the
provisions of Paragraph 3.2 above, not less than five (5) Business Days prior to
entering into any Permitted Acquisition, Borrower shall also submit to the Agent
(and to each Bank who requests it) the following information:
(A) A completed Acquisition Certificate in the form attached hereto as
Exhibit A-3;
(B) A copy of the most current letter of intent and a current draft of
the acquisition agreement with all prepared exhibits, including the Service
Agreement, any seller financing documents, and any lease agreements;
(C) A written description of the company to be acquired, including
location and type of centers, key management, and real estate assets (including
legal descriptions of any owned real estate), if any; and
(D) If three (3) or more Permitted Acquisitions have already closed in
such fiscal quarter of the Borrower, then a Covenant Compliance Worksheet
reflecting the computation of and compliance with the financial covenants set
forth in Paragraph 6.16 after giving Pro-Forma Effect to the Permitted
Acquisition.
3.4 Legal Matters. At the time of the Closing and thereafter, all legal
matters incidental to the Loans shall be satisfactory to Messrs. Boult,
Cummings, Conners & Berry, counsel to the Banks.
SECTION IV. COLLATERAL SECURITY
4.1 Composition of the Collateral. The property in which a security
interest is granted pursuant to the provisions of Paragraphs 4.2 and 4.3 is
herein collectively called the "Collateral." The Collateral, together with all
of the Borrower's and any Subsidiary's other property of any kind, both
32
real and personal, held by, assigned to, mortgaged to or conveyed in
favor of the Banks, shall stand as one general, continuing collateral security
for all Obligations and may be retained by the Agent and/or Banks until all
Obligations have been satisfied in full.
4.2 Rights in Property Held by the Banks. As security for the prompt
satisfaction of all Obligations and all Guaranties of the Obligations, the
Borrower and each Subsidiary hereby assign, transfer and set over to the Banks
all of their right, title and interest in and to, and grant the Banks a lien on
and a security interest in, all amounts that may be owing from time to time by
the Banks to the Borrower or such Subsidiary in any capacity, including, but
without limitation, any balance or share belonging to the Borrower or such
Subsidiary of any deposit or other account with the Banks, which lien and
security interest shall be independent of any right of set-off which the Banks
may have.
4.3 Rights in Property of the Borrower and Subsidiaries. As further
security for the prompt satisfaction of all Obligations and all Guaranties of
the Obligations, the Borrower and each Subsidiary hereby assign to the Banks by
and through the Agent all of their respective right, title and interest in and
to, and grant the Banks a lien upon and security interest in, all of the
following, wherever located, whether now owned or hereafter acquired, together
with all substitutions, replacements, improvements, accessions or appurtenances
thereto, and proceeds (including without limitation insurance proceeds) thereof:
(A) Accounts;
(B) Chattel Paper;
(C) Contract Rights;
(D) Documents;
(E) Equipment;
(F) Fixtures;
(G) General Intangibles;
(H) Instruments;
(I) Inventory;
(J) Service Agreements;
(K) The Pledged Instruments, including without
limitation any pledged stock, membership
interests, partnership interests, notes, the
West Central Ohio Loan Documents and the
Specialists-SCN Loan Documents; and
(L) All Records pertaining to any other Collateral.
4.4 Priority of Liens. The foregoing liens shall be first and prior
liens except for (1) any Permitted Liens on assets which have priority or would
have priority by the operation of Laws, and (2) any Accounts that may not be
legally assignable under applicable federal Medicare and Medicaid laws and
regulations.
4.5 Financing Statements.
(A) The Borrower and each Subsidiary will:
(1) Join with the Agent in executing such additional Financing
Statements (including amendments thereto and continuation statements thereof) in
form satisfactory to the Banks as the Banks may specify;
33
(2) Pay or reimburse the Banks for all costs and taxes of filing or
recording the same in such public offices as the Banks may designate, and
performing subsequent verification searches; and
(3) Take such other steps as the Banks may reasonably direct,
including the noting of the Banks' lien on the Collateral and on any
certificates of title therefor all to perfect the Banks' security interest in
the Collateral.
(B) A carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof.
(C) To the extent lawful, the Borrower and each Subsidiary hereby
appoint the Agent as their attorney-in-fact (without requiring the Agent to act
as such) to execute any Financing Statement in the name of the Borrower or such
Subsidiary, and to perform all other acts that the Agent reasonably deems
appropriate to perfect and continue the Banks' security interest in, and to
protect and preserve, the Collateral.
4.6 Service Agreements. The Borrower and each Subsidiary will,
within ten (10) days of the closing of any Acquisition, deliver to the Agent a
copy of the fully executed Service Agreement pertaining thereto together with
copies of any accompanying employment/noncompete agreement with the physicians.
4.7 Collection of Receivables. Following the occurrence of any Event of
Default and for so long as such Event of Default remains uncured, upon demand of
the Majority Banks, Borrower and each Subsidiary shall deposit or cause to be
deposited, all checks, drafts, cash, and other remittances received in payment
of services rendered or inventory sold or in payment or on account of its
accounts, immediately upon receipt thereof with Agent in one or more special
"lockboxed" bank accounts maintained with Agent, over which the Majority Banks
alone have power of withdrawal. The funds in said special bank accounts shall,
to the maximum extent allowed by applicable law, be held by the Banks as
security for all loans made hereunder and all other Obligations of Borrower to
the Banks secured hereby. Said proceeds shall be deposited in precisely the form
received, except for the endorsement of Borrower and each Subsidiary where
necessary to permit collection, which endorsement Borrower and each Subsidiary
agree to make and which Agent also hereby is irrevocably authorized to make on
their behalf. Pending such deposit, Borrower and each Subsidiary agree that they
will not commingle any such checks, drafts, cash, and other remittances with any
of their funds or property, but will hold them separate and apart therefrom and
upon an express trust for the Banks until deposit thereof is made in the said
special bank account. At least twice weekly, Agent will apply the whole or any
part, as the Majority Banks deem appropriate, of the collected funds on deposit
in the said special bank accounts against the principal and/or interest of any
loans made hereunder and/or on Borrower's other Obligations secured hereby, the
order and method of such application to be in the discretion of the Majority
Banks. Any portion of said funds on deposit in the special bank account that the
Majority Banks elect not to apply will be paid over by Agent to Borrower.
4.8 Mortgagees' Waivers. At the request of the Majority Banks, the
Borrower will cause each mortgagee of all real estate owned by the Borrower or
any Subsidiary, to execute and deliver to the Agent instruments, in form and
substance satisfactory to the Banks, by which such mortgagee waives its rights,
if any, to any portion of the Collateral located on such premises, and agrees to
provide Agent notice of and an opportunity to cure any default by Borrower or
such Subsidiary under such mortgage.
34
SECTION V. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, the Borrower and each
Subsidiary jointly and severally represent and warrant to each Bank as of the
Closing and initial funding hereunder as follows:
5.1 Due Organization and Qualification. The Borrower is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware; each Subsidiary is a corporation duly organized, validly
existing and in good standing under the Laws of its state of incorporation, all
as set forth in Exhibit H; the Borrower and each Subsidiary have the lawful
power to own their properties and to engage in the business they conduct, and
each is duly qualified and in good standing as a foreign corporation in the
jurisdictions wherein the nature of the business transacted by it or property
owned by it is both material and makes such qualification necessary; the states
in which the Borrower and each Subsidiary are qualified to do business are set
forth in Exhibit H; the percentage of the Borrower's ownership of the
outstanding stock and membership interests of each Subsidiary is as listed in
Exhibit H; and the addresses of all places of business of the Borrower and each
Subsidiary are as set forth in Exhibit I;
5.2 No Conflicting Agreement. Neither the Borrower nor any Subsidiary is
in default with respect to any of its existing Indebtedness, and the making and
performance of this Agreement, the Notes and the Collateral Documents will not
(immediately, or with the passage of time or the giving of notice, or both):
(A) Violate the charter or bylaw provisions of the Borrower or any
Subsidiary, or violate any Laws (except with respect to the assignment of
Accounts due from Medicare and Medicaid), or result in a default under any
material contract, agreement, or instrument to which the Bor rower or any
Subsidiary is a party or by which the Borrower or any Subsidiary or its property
is bound; or
(B) Result in the creation or imposition of any security interest in, or
lien or encumbrance upon, any of the assets of the Borrower or any Subsidiary,
except in favor of the Banks;
5.3 Capacity. The Borrower and each Subsidiary have the power and
authority to enter into and perform this Agreement, the Notes and the Collateral
Documents, as applicable, and to incur the Obligations herein and therein
provided for, and have taken all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, the Notes and the
Collateral Documents;
5.4 Binding Obligations. This Agreement and the Collateral Documents
are, and the Notes when delivered will be, valid, binding, and enforceable in
accordance with their respective terms subject to the general principles of
equity (regardless of whether such question is considered in a proceeding in
equity or at law) and to applicable bankruptcy, insolvency, moratorium,
fraudulent or preferential conveyance and other similar laws affecting generally
the enforcement of creditors' rights;
5.5 Pledged Instruments. The Pledgor owns the Pledged Instruments; the
pledged stock constitutes one hundred percent (100%) of the issued and
outstanding capital stock of the respective issuers thereof; the pledged
membership interests constitute fifty percent (50%) of the total membership
interests of West Central Ohio Group, Ltd.; the pledged stock has been duly
issued, is fully paid and non-assessable; and both the pledged stock and
membership interests are free of all claims, security interests, liens, charges
and encumbrances;
35
5.6 Litigation. Except as disclosed in Exhibit J hereto, there is no
pending or threatened order, notice, claim, litigation, proceeding or
investigation against or affecting the Borrower or any Subsidiary, whether or
not covered by insurance, that would involve the payment of One Hundred Thousand
Dollars ($100,000.00) or more if adversely determined;
5.7 Title. The Borrower and its Subsidiaries have good and marketable
title to all of their respective assets, including without limitation the
Collateral and the Real Property, subject to no security interest, encumbrance
or lien, or the claims of any other Person except for Permitted Liens;
5.8 Financial Statements. The Financial Statements, including any schedules
and notes pertaining thereto, have been prepared in accordance with generally
accepted accounting principles consistently applied, and fully and fairly
present the financial condition of the Borrower and its Subsidiaries at the
dates thereof and the results of operations for the periods covered thereby, and
there have been no Material Adverse Change in the consolidated financial
condition or business of the Borrower and its Subsidiaries from December 31,
1996 to the date hereof;
5.9 No Other Indebtedness. As of the date hereof, the Borrower and its
Subsidiaries had no Indebtedness of any nature, including, but without
limitation, liabilities for taxes and any interest or penalties relating
thereto, except to the extent reflected (in a footnote or otherwise) and
reserved against in the December 31, 1997 Financial Statements or as disclosed
in or permitted by this Agreement; the Borrower does not know, and has no
knowledge of any basis for the assertion against it or any Subsidiary as of the
date hereof, of any material Indebtedness of any nature not fully reflected and
reserved against in the December 31, 1996 Financial Statements;
5.10 Taxes. Except as otherwise permitted herein, the Borrower and its
Subsidiaries have filed all federal, state and local tax returns and other
reports they are required by Laws to file prior to the date hereof and which are
material to the conduct of their respective businesses, have paid or caused to
be paid all taxes, assessments and other governmental charges that are due and
payable prior to the date hereof, and have made adequate provision for the
payment of such taxes, assessments or other charges accruing but not yet
payable; the Borrower has no knowledge of any deficiency or additional
assessment in connection with any taxes, assessments or charges not provided for
on its books;
5.11 Compliance with Laws; Reimbursement Audits. Except as otherwise
disclosed in Exhibit K hereto, or except to the extent that the failure to
comply would not have a Material Adverse Effect on the Borrower or any
Subsidiary, the Borrower and its Subsidiaries have complied in all material
respects with all applicable Laws with respect to: (1) any restrictions,
specifications, or other requirement pertaining to services that the Borrower or
any Subsidiary performs, including Fraud and Abuse Laws; (2) the conduct of
their respective businesses; (3) the use, maintenance, and operation of the real
and personal properties owned or leased by them in the conduct of their
respective businesses; and (4) health, safety, worker's compensation, and equal
employment opportunity; without limiting the foregoing, if the Borrower or any
Provider with whom Borrower has entered into a Service Agreement has been
audited by Medicare or Medicaid, none of such audits provides for adjustments in
reimbursable costs or asserts claims for reimbursement or repayment by such
Person of costs and/or payments theretofor made by such governmental payor that,
if adversely determined, could reasonably be expected to have or result in a
Material Adverse Effect;
5.12 Environmental Compliance. The Borrower and its Subsidiaries and their
respective assets and operations are in compliance in all material respects with
all Environmental Laws, and the Borrower and its Subsidiaries will comply in all
material respects with all such Environmental Laws and regulations which may be
imposed in the future; all plants, facilities and properties owned by
36
the Borrower and its Subsidiaries are and will be on the date of Closing in
a clean and healthful condition, free of asbestos and of all contamination by
Hazardous Materials and other potentially harmful chemical or physical
conditions, including, without limitation, any contamination of the air, soil,
groundwater or surface waters associated with or adjacent to such plants,
facilities and properties; all storage tanks (whether above or below ground)
located in or on such plants, facilities and properties are in sound condition,
free or corrosion or leaks that could allow or threaten the release of any
stored material; no Hazardous Materials have been or are used, stored, treated
or disposed of in violation of applicable Laws and regulations; and neither the
Borrower nor any Subsidiary is a defendant in any administrative or judicial
action alleging liability under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), nor has the Borrower or
any Subsidiary received a notice that it is a potentially responsible party
under CERCLA or similar state Laws;
5.13 Full Disclosure. No representation or warranty by the Borrower or any
Subsidiary contained herein or in any certificate or other document furnished by
the Borrower or any Subsidiary pursuant to this Agreement contains any untrue
statement of material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the circumstances
under which it was made;
5.14 Consents. Each consent, approval or authorization of, or filing,
registration or qualification with, any Person required to be obtained or
effected by the Borrower or any Subsidiary in connection with the execution and
delivery of the Loan Documents or the undertaking or performance of any
obligation thereunder has been duly obtained or effected;
5.15 Existing Borrowings. All existing Indebtedness: (1) for money
borrowed; or (2) under any security agreement or mortgage from the Borrower or
any Subsidiary is described in Exhibit B, unless the same are immaterial (i.e.,
less than $25,000.00 in amount);
5.16 Material Contracts. Except as described on Exhibit L hereto, the
Borrower and its Subsidiaries have no material lease, contract or commitment of
any kind (such as employment agreements; collective bargaining agreements;
powers of attorney; distribution arrangements; patent license agreements;
contracts for future purchase or delivery of goods or rendering of services;
bonus, pension and retirement plans; or accrued vacation pay, insurance and
welfare agreements) which would be required to be listed as an Exhibit to the
Borrower's Annual Report on Form 10-K; all parties (including the Borrower and
Subsidiaries) to all such material leases, contracts and other commitments to
which the Borrower or any Subsidiary is a party have complied with the
provisions of such leases, contracts and other commitments; no party is in
default under any provision thereof; and no event has occurred which, but for
the giving of notice or the passage of time, or both, would constitute a
default;
5.17 No Commissions. Neither the Borrower nor any Subsidiary has made any
agreement or has taken any action which may cause anyone to become entitled to a
commission or finder's fee as a result of the making of the Loans;
5.18 ERISA. All Defined Benefit Pension Plans, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of the Borrower
and each Subsidiary meet, as of the date hereof, the minimum funding standards
of Section 302 of ERISA, and no Reportable Event or Prohibited Transaction, as
defined in ERISA, has occurred with respect to any such Plan.
5.19 Survival. All of the representations and warranties set forth in
Paragraph 5.1 shall survive until all Obligations are satisfied in full.
37
SECTION VI. AFFIRMATIVE COVENANTS
The Borrower does hereby covenant and agree with each Bank that, so long as
any of the Obligations remain unsatisfied, it will comply, and it will cause its
Subsidiaries to comply, with the following covenants:
6.1 Use of Proceeds. The Borrower will use the proceeds of the Loans only
for the purposes described in Paragraph 2.1 and will furnish the Agent such
evidence as it may reasonably require with respect to such use.
6.2 Financial Statements and Reports. The Borrower will furnish to each of
the Banks:
(A) Within thirty (30) days after the close of each calendar month in
each fiscal year of the Borrower and its Subsidiaries: (a) consolidated
statements of cash flows of the Borrower and its Subsidiaries for such month;
(b) consolidated income statements of the Borrower and its Subsidiaries for such
month; and (c) consolidated balance sheets of the Borrower and its Subsidiaries
as of the end of such month -- all in reasonable detail, subject to year-end
audit adjustments, and certified by Borrower's president, vice-president, chief
financial officer, or corporate controller to have been prepared in accordance
with generally accepted accounting principles consistently applied by the
Borrower and its Subsidiaries, except for any inconsistencies explained in such
certificate;
(B) Within forty-five (45) days after the close of each quarter-annual
accounting period in each fiscal year of Borrower and its Subsidiaries: (a) a
consolidated statement of cash flows of the Borrower and its Subsidiaries for
such quarter annual period; (b) consolidated and consolidating income statements
of the Borrower and its Subsidiaries for such quarter-annual period; and (c) a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such quarter-annual period--all in reasonable detail, subject to year-end audit
adjustments, compared to budget, and certified by the Borrower's president, vice
president, chief financial officer, or corporate controller to have been
prepared in accordance with generally accepted accounting principles
consistently applied by the Borrower and its Subsidiaries, except for any
inconsistencies explained in such certificate;
(C) Within ninety-five (95) days after the close of each fiscal year of
Borrower and its Subsidiaries: (a) consolidated statements of cash flows of the
Borrower and its Subsidiaries for such fiscal year; (b) consolidated and
consolidating income statements of the Borrower and its Subsidiaries for such
fiscal year; and (c) consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year--all in
reasonable detail, including all supporting schedules, notes and comments; the
consolidated statements and balance sheets shall be audited by Ernst & Young or
another independent certified public accountant selected by the Borrower and
reasonably acceptable to the Banks, and certified by such accountants to have
been prepared in accordance with generally accepted accounting principles
consistently applied by the Borrower and its Subsidiaries, except for any
inconsistencies explained in such certificate, and the consolidating statements
shall be internally prepared by Borrower's controller and certified to the Agent
as true and correct. The Banks shall have the right, from time to time, to
discuss the Borrower's affairs directly with the Borrower's independent
certified public accountants after notice to the Borrower and opportunity of the
Borrower to be present at any such discussions;
(D) As soon as reasonably practicable but in any event within forty-five
(45) days after the close of each quarter-annual accounting period in each
fiscal year of the Borrower and its Subsidiaries, a certificate of the
president, vice president, chief financial officer or corporate controller
38
of the Borrower stating that: (i) such officer has individually reviewed
the provisions of this Agreement; (ii) a review of the activities of the
Borrower and its Subsidiaries during such year or quarter-annual period, as the
case may be, has been made by such officer or under such officer's supervision,
with a view to determining whether the Borrower has fulfilled all its
obligations under this Agreement; and (iii) to the best of such officer's
knowledge, the Borrower has observed and performed each undertaking contained in
this Agreement and there is no Default or Potential Default under any of the
provisions hereof or, if the Borrower shall be so in default, specifying all
such defaults and events of which he may have knowledge. Such certificate shall
have attached a Compliance Certificate setting forth the Applicable Margins,
financial ratios and covenants set forth in Paragraphs 2.2, 2.3, 2.5, and 6.16,
including without limitation any antecedent calculations and the source of any
information that was used in such calculations;
(E) Within sixty (60) days of the close of the prior fiscal year, a copy
of Borrower's proposed income, expense and capital budget for the present fiscal
year, including within the capital budget a listing of proposed Capital
Expenditures;
(F) Promptly after the sending or making available or filing of the
same, copies of all correspondence, reports, proxy statements and financial
statements that the Borrower sends or makes available to its stockholders and
all registration statements and reports that the Borrower files with the
Securities and Exchange Commission or any successor Person;
(G) Within ten (10) days of receipt of the same by Borrower or any
Subsidiary, copies of all management letters and any other reports which are
submitted to the Borrower or any of its Subsidiaries by its independent
accountants in connection with any annual or interim audit of the Records of the
Borrower or its Subsidiaries by such accountants; and
(H) As soon as reasonably practicable but in any event within ten (10)
days after the closing of any Acquisition, a copy of the fully executed Service
Agreement pertaining thereto together with any accompanying
employment/noncompete agreements with the affected physicians.
6.3 Good Condition. The Borrower and its Subsidiaries will maintain
their respective Inventory, Equipment, Real Property and other properties in
good condition and repair (normal wear and tear excepted), and will pay and
discharge or cause to be paid and discharged when due, the cost of repairs to or
maintenance of the same, and will pay or cause to be paid all rental or mortgage
payments due on such Equipment or Real Property. The Borrower hereby agrees
that, in the event it or any Subsidiary fails to pay or cause to be paid any
such payment, the Banks may do so and be reimbursed by the Borrower therefor.
6.4 Insurance. The Borrower and its Subsidiaries will maintain, or cause
to be maintained, public liability insurance, medical malpractice insurance, and
fire and extended coverage insurance on all assets owned by them, all in such
form and amounts as are consistent with industry practices and with such
insurers as may be reasonably satisfactory to the Banks. Such policies shall
name the Banks as loss payees under a standard mortgagee loss payee clause and
as an additional insured, as their interests may appear, and shall contain a
provision whereby they cannot be canceled except after thirty (30) days' written
notice to the Agent. The Borrower will furnish to the Agent such evidence of
insurance as the Banks may require. The Borrower hereby agrees that, in the
event it or any Subsidiary fails to pay or cause to be paid the premium on any
such insurance, the Banks may do so and be reimbursed by the Borrower therefor.
The Agent is hereby appointed the Borrower's attorney-in-fact (without requiring
the Agent to act as such) to endorse any check which may be payable to the
Borrower
39
to collect such returned or unearned premiums or the proceeds of such insurance,
and any amounts so collected may be applied by the Agent toward satisfaction of
any of the Obligations.
6.5 Taxes; Copies of Returns. The Borrower and its Subsidiaries will pay or
cause to be paid when due, all taxes, assessments and charges or levies imposed
upon them or on any of their property or which any of them is required to
withhold or pay over, except where contested in good faith by appropriate
proceedings with adequate security therefor having been set aside in a manner
satisfactory to Banks. The Borrower and each Subsidiary shall pay or cause to be
paid all such taxes, assessments, charges or levies forthwith whenever
foreclosure on any lien that attaches (or security therefor) appears imminent.
6.6 Records and Inspection. The Borrower and its Subsidiaries will keep
accurate and complete Records and will, when requested so to do, make available
any of their Records for inspection during regular business hours by duly
authorized representatives of the Banks, and will furnish the Banks any
information regarding their business affairs and financial condition within a
reasonable time after written request therefor.
6.7 Maintenance of Existence and Business; Licenses. The Borrower and its
Subsidiaries will take all necessary steps to renew, keep in full force and
effect, and preserve their corporate existence, good standing, and franchises,
and will comply in all material respects with all present and future Laws
(including, but not limited to, Fraud and Abuse Laws) applicable to them in the
operation of their musculoskeletal clinics and centers. The Borrower and any
Subsidiary shall further use its best efforts to assure the compliance by all
Providers with all applicable Laws, including, but not limited to, medical
licensure and Fraud and Abuse Laws relating to their providing of professional
services. The Borrower and its Subsidiaries will preserve, renew and keep in
full force and effect all material contracts, leases, governmental licenses,
authorizations, consents and approvals, rights, privileges and franchises
necessary in the normal course of business, including without limitation
maintaining in full force and effect Medicare certification for all
musculoskeletal centers and agencies. Within ten (10) days of the Agent's
request therefor, the Borrower will furnish the Agent with copies of federal
income tax returns filed by the Borrower.
6.8 Ordinary Course; Pledge of Notes. The Borrower and its Subsidiaries
will collect their Accounts and sell their Inventory only in the ordinary course
of business. If any Accounts should be evidenced by promissory notes, then the
holders shall immediately deliver the same to Agent, appropriately endorsed to
Agent's order. The Borrower and each Subsidiary hereby waive presentment,
demand, notice of dishonor, protest, notice of protest, and all other notices
with respect thereto.
6.9 Notice of Litigation. The Borrower and its Subsidiaries will give
immediate notice to the Agent of: (1) any litigation or proceeding in which any
of them is a party if an adverse decision therein would require the payment of
more than Five Hundred Thousand Dollars ($500,000.00) or deliver assets the
value of which exceeds such sum (if such claim is not considered to be covered
by insurance) or pay over more than One Million Dollars ($1,000,000.00) (if such
claim is considered to be covered by insurance); and (2) the institution of any
other suit or proceeding involving any of them, or the overt threat thereof,
that might result in a Material Adverse Change.
6.10 Payment of Indebtedness. The Borrower and its Subsidiaries will pay
when due (or within applicable grace periods) all Indebtedness for borrowed
money due any Person, except when the amount thereof is being contested in good
faith by appropriate proceedings and with adequate security therefor being set
aside in a manner satisfactory to Banks. If default is made by the Borrower or
any Subsidiary in the payment of any principal (or installment thereof) of, or
interest on, any such
40
Indebtedness, the Banks shall have the right, in their discretion, to pay
such interest or principal for the account of the Borrower or such Subsidiary
and be reimbursed by the Borrower therefor.
6.11 Notice to Banks of Default. The Borrower and its Subsidiaries will
notify each Bank immediately if any of them becomes aware of the occurrence of
any Event of Default or of any fact, condition or event that only with the
giving of notice or passage of time or both, could become an Event of Default,
or of the failure of the Borrower or any Subsidiary to observe any of their
respective undertakings hereunder.
6.12 Notice of Name Change or Location. The Borrower and its Subsidiaries
will notify each Bank thirty (30) days in advance of any change in (i) the name
of the Borrower or any Subsidiary, (ii) the location of any Collateral, (iii)
the location of any of their places of business or (iv) of the establishment of
any new, or the discontinuance of any existing, place of business.
6.13 Environmental Compliance.
(A) Borrower and its Subsidiary will (i) maintain compliance with any
applicable Environmental Laws, (ii) obtain and maintain, and cause each of its
Subsidiaries to obtain and maintain, any and all material permits required by
applicable Environmental Laws in connection with its or its Subsidiaries'
operations and (iii) dispose of, and cause each of its Subsidiaries to dispose
of, any and all Hazardous Materials only at facilities and with carriers
reasonably believed to possess valid permits under RCRA, if applicable, and any
applicable state and local Environmental Laws. The Borrower shall use its best
efforts, and cause each of its Subsidiaries to use its best efforts, to obtain
all certificates required by law to be obtained by the Borrower and its
Subsidiaries from all contractors employed by the Borrower or any of its
Subsidiaries in connection with the transport or disposal of any Hazardous
Materials.
(B) If the Borrower or any of its Subsidiaries shall:
(1) receive written notice that any material violation of any
Environmental Laws may have been committed or is about to be committed by the
Borrower or any of its Subsidiaries;
(2) receive written notice that any administrative or judicial
complaint or order has been filed or is about to be filed against the Borrower
or any of its Subsidiaries alleging any material violation of any Environmental
Laws or requiring the Borrower or any of its Subsidiaries to take any action in
connection with the release or threatened release of Hazardous Substances or
solid waste into the environment; or
(3) receive written notice from a federal, state, foreign or local
governmental agency or private party alleging that the Borrower or any of its
Subsidiaries is liable or responsible for costs associated with the response to
cleanup, stabilization or neutralization of any environmental activity;
then it shall provide each Bank with a copy of such notice within fifteen (15)
Business Days of the Borrower's or such Subsidiary's receipt thereof. Subject to
the right of the Borrower or such Subsidiary to contest in good faith any such
action or proceedings, the Borrower and its Subsidiaries shall as promptly as
possible resolve, cure and/or have dismissed with prejudice any such action or
proceedings to the satisfaction of the Banks.
41
6.14 Fraud and Abuse. Borrower agrees to deliver to the Agent on or before
June 30, 1998 a copy of Borrower's written compliance procedures and manual
regarding Fraud and Abuse Laws. Borrower further agrees that Agent may from time
to time, but not more frequently than once per calendar year absent a Potential
Default or an Event of Default, request in writing the opinion of in-house
counsel and/or outside healthcare counsel to the Borrower as to the absence,
except as disclosed in the opinion, of such counsel's knowledge of any actual,
threatened or asserted violation of any Fraud and Abuse Laws on the part of the
Borrower, any Subsidiary and/or the Providers, and the sufficiency of
documentation then in use for the acquisition of Practices as complying with
Fraud and Abuse Laws. Absent the existence of a Potential Default or an Event of
Default, such opinions shall require no special diligence on the part of the
opining attorney(s), but only requiring a report of matters then known to such
attorneys as well as a review of the Borrower's compliance procedures (including
manuals and reports), unless Agent specifically inquires about facts that Agent
reasonably believes may raise a Fraud and Abuse Law issue. Such opinions shall
be in form and substance acceptable to Agent, shall be delivered to Agent at
Borrower's expense within fifteen (15) days of the date of request and shall
address specifically any facts inquired of in Agent's request.
6.15 ERISA Compliance. The Borrower and its Subsidiaries will: (1) fund all
their Defined Benefit Pension Plans in accordance with no less than the minimum
funding standards of Section 302 of ERISA and Section 412 of the Internal
Revenue Code; (2) furnish the Agent, promptly after the filing of the same, with
copies of all reports or other statements filed with the United States
Department of Labor or the Internal Revenue Service with respect to all such
Plans; and (3) promptly advise the Agent of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
6.16 Financial Ratios. The Borrower will maintain the following financial
ratios and covenants:
(A) Funded Debt to Cash Flow Ratio. At the end of each fiscal quarter, a
ratio of Funded Debt to Consolidated Cash Flow for the four (4) quarters just
ended of not greater than 3.0 to 1.0.
(B) Shareholders Equity. At all times, Shareholders Equity in the amount
of not less than Fifty-Five Million Dollars ($55,000,000.00) plus (i)
seventy-five percent (75%) of Consolidated Net Income (no decreases for net
losses) on a cumulative basis from September 30, 1997, and (ii) one hundred
percent (100%) of the amount of any new contributions to the capital of
Borrower.
(C) Funded Debt to Consolidated Capital. At the end of each fiscal
quarter, a ratio of Funded Debt to Consolidated Capital of not more than 0.5 to
1.0.
(D) Debt Service Coverage. At the end of each fiscal quarter, a ratio of
Adjusted Consolidated Cash Flow for the four (4) quarters just ended divided by
Debt Service for such four (4) quarter period of not less than 1.25 to 1.0.
SECTION VII. NEGATIVE COVENANTS
Borrower and each Subsidiary hereby covenant and agree that without the
prior written consent of the Majority Banks:
7.1 Merger or Reorganization. Neither the Borrower nor any Subsidiary will
enter into any merger, consolidation, reorganization or recapitalization, or
reclassify its capital stock; provided, however, so long as no Event of Default
and no Potential Default has occurred or will occur immediately
42
thereafter as a result of such: (1) any Subsidiary may transfer assets to the
Borrower following not less than fifteen (15) days prior written notice to the
Agent, (2) the Borrower may merge with any Person in a Permitted Acquisition,
subject to Paragraph 7.13 below and so long as the Borrower is the surviving
corporation, and (3) any Subsidiary may merge into the Borrower following not
less than fifteen (15) days prior written notice to the Agent.
7.2 Sale of Assets. Neither the Borrower nor any Subsidiary will sell,
transfer, lease or otherwise dispose of all or any material part of its assets;
provided, however, Borrower and its Subsidiaries may in the ordinary course of
business sell or dispose of obsolete Equipment, or may replace damaged or worn
Equipment with Equipment of similar value and use; and provided further, any
Subsidiary may transfer assets to the Borrower following not less than fifteen
(15) days prior written notice to the Agent.
7.3 Encumbrances. Neither the Borrower nor any Subsidiary will mortgage,
pledge, grant or permit to exist a security interest in or lien upon any of its
assets of any kind, now owned or hereafter acquired, except for Permitted Liens.
7.4 Guarantee. Neither the Borrower nor any Subsidiary will become liable,
directly or indirectly, as guarantor or otherwise, for any obligation of any
other Person, except for: (1) the endorsement of commercial paper for deposit or
collection in the ordinary course of business, (2) guarantees of Permitted
Acquisition Indebtedness, and (3) leases permitted under Paragraph 7.5(7) below.
7.5 Debts and Other Obligations. Neither the Borrower nor any Subsidiary
will incur, create, assume, or permit to exist any Indebtedness except: (1) the
Loans and Letters of Credit; (2) existing Indebtedness as set forth in Exhibit
B; (3) trade Indebtedness incurred in the ordinary course of business; (4)
contingent Indebtedness permitted by Paragraph 7.4; (5) Indebtedness secured by
Permitted Liens; (6) Indebtedness owed by any Subsidiary of the Borrower to the
Borrower, by the Borrower to any Subsidiary of the Borrower, or by a Subsidiary
of the Borrower to any other Subsidiary of the Borrower, provided that if any
such Indebtedness is evidenced by a document or instrument, the same is pledged
pursuant to an appropriate pledge agreement; (7) lease obligations not otherwise
prohibited by the financial ratios in Paragraph 6.16; and (8) Permitted
Acquisition Indebtedness.
7.6 Dividends and Distributions. The Borrower will not declare or pay any
cash dividends, or make any other cash payment or other distribution of an asset
on account of its capital stock.
7.7 Redemptions and Capital Stock. The Borrower will not redeem, purchase
or retire any of its capital stock, and no Subsidiary will issue, redeem,
purchase or retire any of its capital stock or membership interests or grant or
issue any warrant, right or option pertaining thereto or other security
convertible into any of the foregoing.
7.8 Prepayments. Neither the Borrower nor any Subsidiary will prepay any
Subordinated Indebtedness, or Indebtedness for borrowed money (exclusive of the
Obligations and any Permitted Acquisition Indebtedness), or enter into or modify
any agreement as a result of which the terms of payment of any of the foregoing
Indebtedness are waived or modified.
7.9 Subsidiary. Neither the Borrower nor any Subsidiary will form any
Subsidiary, make any investment in or make any loan in the nature of any
investment to any Subsidiary, except for: (1) the formation of a Subsidiary in
connection with making a Permitted Acquisition which qualifies as
43
such under Paragraph 7.13 below, (2) advances by the Borrower to
Subsidiaries of the Borrower, and (3) advances by Subsidiaries of the Borrower
to the Borrower.
7.10 Loans and Advances. Neither the Borrower nor any Subsidiary will make
any loan or advance to any Person, including any Provider and any officer,
shareholder, director or employee of the Borrower or any Subsidiary, except for:
(1) secured, recourse loans to be made on or before December 31, 1997 in
the aggregate amounts of not more than $7,000,000.00 from Borrower to West
Central Ohio Group, Ltd., said loans to be cross-defaulted and to be
cross-collateralized by a first lien on all assets of the West Central Ohio
Group, Ltd., to incorporate the terms and covenants set forth in Exhibit O
hereto, and to otherwise be in form and substance satisfactory in all respects
to the Agent;
(2) a secured, recourse loan to be made on or before December 31, 1997
in an amount not to exceed $800,000.00 from Borrower to Specialists-SCN, LLC,
said loan to be secured by first lien on all real estate assets of
Specialists-SCN, LLC, to incorporate the terms and covenants set forth in
Exhibit P hereto, and to otherwise be in form and substance satisfactory in all
respects to the Agent;
(3) loans evidenced by recourse promissory notes to Providers not to
exceed in the aggregate Five Million Dollars ($5,000,000.00) in face amount;
provided, however, that neither the Borrower nor any Subsidiary will lend to the
Providers in any Practice the total sum of more than Two Million Dollars
($2,000,000.00) as evidenced by the face amount of executed, recourse promissory
notes; and
(4) temporary advances in the ordinary course of business not to exceed
Fifty Thousand Dollars ($50,000.00) individually or Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate.
7.11 Investments. Neither the Borrower nor any Subsidiary will purchase
or otherwise invest in or hold securities, non-operating real estate or other
non-operating assets, except: (1) Permitted Investments; (2) the present
investment in any such assets, including existing Subsidiaries; and (3)
operating assets that hereafter become non-operating assets.
7.12 Sale-Leaseback. Neither the Borrower nor any Subsidiary will enter
into any sale-leaseback transaction.
7.13 Acquisitions.
(A) Neither the Borrower nor any Subsidiary will make any Acquisition
without first obtaining the prior written consent of the Majority Banks unless
the Borrower has certified to the Agent that the Acquisition satisfies the
criteria for a Permitted Acquisition, as follows:
(1) Borrower has submitted to the Agent on a timely basis the
information required by Paragraph 3.3 above;
(2) the Permitted Acquisition Price does not exceed a multiple of eight
(8) times the annual Base Service Fee as defined and set forth in the Service
Agreement to be entered into with the Provider(s) whose Practice is being
acquired;
44
(3) the cash portion of the Permitted Acquisition Price (including all
amounts thereon due within six (6) months of the closing) plus the sum of any
seller notes delivered by the Borrower or any Subsidiary and the amount of
outstanding Indebtedness for borrowed money assumed or to be assumed, do not
exceed in the aggregate Seven Million Five Hundred Thousand Dollars
($7,500,000.00);
(4) the business of the Person being acquired is in the musculoskeletal
service field;
(5) the acquisition is not opposed by the management and the holders of
a majority of its voting shares or partnership units of the Person being
acquired, as applicable;
(6) no Event of Default has occurred hereunder and not been cured, or
would otherwise occur as a result of or in connection with the Permitted
Acquisition, whether immediately or on a projected basis;
(7) in all cases, whether or not the Banks have been requested to
disburse funds, the Borrower must pledge or cause to be pledged to the Agent for
the benefit of the Banks a first priority lien on any outstanding stock or
ownership interests in the Person being acquired and a first priority lien
(subject only to Permitted Liens) on all of the assets of the Person being
acquired; and
(8) if a new Subsidiary is formed or the Acquisition is of corporate
stock or other ownership interests, the new Subsidiary and/or the acquired
entity must become a party to this Agreement and execute a Guaranty and
Suretyship with respect to the Obligations in form and substance like that
attached as Exhibit F hereto;
provided, however, after three (3) Permitted Acquisitions have been
closed in any fiscal quarter of the Borrower, any additional Permitted
Acquisitions occurring in such quarter shall be closed only if Borrower has
first submitted to the Agent a Covenant Compliance Worksheet demonstrating the
Pro-Forma Effect of the Permitted Acquisition all as more specifically set forth
in Subparagraph 3.3(D) hereinabove. The Agent shall be given not less than five
(5) Business Days written notice prior to the closing of any Acquisition to
prepare all necessary documentation, and the legal structure of the Collateral
and Loans following any Permitted Acquisition must be satisfactory to the Agent
and the Agent's counsel. Notwithstanding anything herein to the contrary, with
respect to West Central Ohio Group, Ltd., Borrower shall pledge all of its
membership interest in such entity but shall not be required to comply with the
other provisions of Subparagraphs (7) and (8) above.
(B) The consummation of each Permitted Acquisition shall be deemed to be
a representation and warranty by the Borrower that all conditions to be
satisfied by the Borrower hereinabove have been satisfied, that the same is
permitted in accordance with the terms of this Agreement and that the
information submitted by the Borrower pursuant to Paragraph 3.3, including that
contained in the Acquisition Certificate, is true and correct in all respects as
of the date such certificate is given, which representation and warranty shall
be deemed to be a representation and warranty for all purposes hereunder,
including, without limitation, for purposes of Paragraph 8.1.
(C) With respect to any proposed Acquisition which is not a Permitted
Acquisition, the Borrower shall submit a completed Acquisition Certificate in
the form attached hereto as Exhibit A-3 to the Agent and each of the Banks, and
neither the Borrower nor any Subsidiary shall
45
close said Acquisition unless the Acquisition has been approved by the
Majority Banks in their sole good faith discretion. The Banks shall have a
reasonable time to review and analyze the material contained in the Acquisition
Certificate.
7.14 Management. Borrower shall not allow or suffer any change of
management effecting a material change in the duties or change in the personnel
presently staffing the positions of Chief Executive Officer, President or Chief
Financial Officer, as set forth in Exhibit M hereto. Notwithstanding the
foregoing, should any of the named managers cease such active participation in
Borrower's management due to their death or disability, Agent shall allow
Borrower a period of sixty (60) days thereafter in which a management succession
plan may be presented to Agent so that Agent may, in its discretion, elect to
accept new management in lieu of prior management, subject to such revisions of
this Agreement as Agent may require.
7.15 Untrue Certificate. Neither the Borrower nor any Subsidiary will
furnish the Agent or any Bank any certificate or other document that will
contain any untrue statement of material fact or that will omit to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
7.16 Margin Stock. Neither the Borrower nor any Subsidiary will directly or
indirectly apply any part of the proceeds of the Loans to the purchasing or
carrying of any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, or any regulations, interpretations
or rulings thereunder.
7.17 Affiliate Transactions. Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including without limitation the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate (other than
any Subsidiary which is wholly owned by Borrower) on terms that are less
favorable to the Borrower or its Subsidiaries than those that would be
obtainable at the time from any Person who is not an Affiliate. Borrower will
not, and will not permit any of its Subsidiaries to, pay or incur any obligation
to pay any management fee, consulting fee, service fee or similar fee or charge
to any Affiliate.
SECTION VIII. DEFAULT
8.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(A) The Borrower shall fail to pay when due any installment of principal
hereunder or, within three (3) days of the date when due, any interest payable
hereunder, or shall fail to pay within ten (10) days of written notice any fee
payable hereunder.
(B) The Borrower shall fail to achieve any of the financial covenants
contained in Paragraph 6.16.
(C) The Borrower, any Subsidiary, or Pledgor shall fail to observe or
perform any obligation or covenant to be observed or performed by any of them,
jointly or severally, under any of the Loan Documents; provided, however, if
such failure is not related to the payment of money, the
46
breach of a financial covenant contained in Paragraph 6.16, or the
breach of any negative covenant in Section VII, Borrower shall have thirty (30)
days to cure such failure before the Majority Banks and/or Agent exercise the
rights and remedies hereunder, with such thirty (30) day period commencing after
notice of such failure from the Agent or Banks.
(D) The Borrower or any Subsidiary shall fail to pay any Indebtedness
for borrowed money (whether direct or indirect, including guarantees of borrowed
money) due any Person and such failure shall continue beyond any applicable
grace period and shall equal or exceed, either individually or in the aggregate,
One Hundred Thousand Dollars ($100,000.00) in amount.
(E) The Borrower or any Subsidiary shall suffer a Material Adverse
Effect from any event of default arising under any agreement binding the
Borrower or such Subsidiary.
(F) Any financial statement, representation, warranty or certificate
made or furnished by the Borrower or any Subsidiary to the Agent or any Bank in
connection with this Agreement or the Loans, or as inducement to the Banks to
enter into this Agreement, or in any separate statement or document to be
delivered hereunder to the Agent or any Bank, shall be materially false,
incorrect, or incomplete when made.
(G) The Borrower or any Subsidiary shall admit its inability to pay its
debts as they mature, or shall make an assignment for the benefit of its or any
of its creditors.
(H) Proceedings in bankruptcy, or for reorganization of the Borrower or
any Subsidiary, or for the readjustment of any of their respective debts, under
the United States Bankruptcy Code, as amended, or any part thereof, or under any
other Laws, whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced by the Borrower or any Subsidiary, or
shall be commenced against the Borrower or any Subsidiary.
(I) A receiver or trustee shall be appointed for the Borrower or any
Subsidiary or for any substantial part of their respective assets, or any
proceedings shall be instituted for the dissolution or the full or partial
liquidation of the Borrower or any Subsidiary, or the Borrower or any Subsidiary
shall discontinue business or materially change the nature of its business.
(J) The Borrower or any Subsidiary shall suffer final judgments for
payment of money aggregating in excess of Fifty Thousand Dollars ($50,000.00)
and shall not discharge the same within a period of thirty (30) days unless,
pending further proceedings, execution has been effectively stayed.
(K) A judgment creditor of the Borrower or any Subsidiary having a
judgment in excess of Twenty Thousand Dollars ($20,000.00) shall obtain
possession of any of the Collateral by any means, including, but without
limitation, levy, distraint, replevin or self-help.
(L) Any obligee of Subordinated Indebtedness shall fail to comply with
the subordination provisions of the instruments evidencing such Subordinated
Indebtedness.
(M) A breach or a default shall occur under any Letter of Credit
Document.
47
(N) Borrower or any Subsidiary shall default in any other Indebtedness
(excluding the Obligations) owed to the Banks, or any of them, or under any
other agreements for credit or borrowed money it may have with any Bank, jointly
or severally, directly or indirectly, whether matured or unmatured.
(O) Receipt by the Borrower or any Subsidiary of a notice from a
Governmental Authority that it (i) intends to disallow requested reimbursements,
demand adjustment or repayment of past reimbursements in excess of five percent
(5%) of the gross revenues of Borrower and its Subsidiaries for the previous
four (4) fiscal quarters in the aggregate respecting amounts submitted for
reimbursement or collected by Borrower, any Subsidiary or a Provider, or (ii)
intends to impose civil money penalties or to seek to exclude Borrower, any
Subsidiary or a Provider from participation in the Medicare or Medicaid programs
due to a failure to comply with Fraud and Abuse Laws.
(P) The occurrence of a Change of Control.
8.2 Acceleration. Upon the occurrence of any of such Events of Default, the
Majority Banks may, at their option, immediately terminate the obligation to
make any further advances under the respective Commitments and/or declare the
principal and interest accrued on the Notes and all other Obligations to be
immediately due and payable, whereupon the same shall become forthwith due and
payable, without presentment, demand, protest, or any notice of any kind except
as set forth above; provided, that in the case of the Events of Default
specified in clause (G), (H) or (I) above with respect to Borrower, without any
notice to Borrower or any act by Agent or the Banks, the Commitments shall
thereupon terminate and the Notes and all other Obligations shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are waived by the Borrower. In addition, and
regardless of whether the Notes have been accelerated, the Majority Banks may
upon the occurrence of any Event of Default elect to charge interest at the
Default Rate set forth in the Notes.
8.3 Remedies. After any acceleration, as provided for in Paragraph 8.2, the
Banks shall have, in addition to the rights and remedies given them by the Loan
Documents, all those allowed by all applicable Laws, including, but without
limitation, the UCC as enacted in any jurisdiction in which any Collateral may
be located. Without limiting the generality of the foregoing, the Banks may
immediately, without demand of performance and without other notice (except as
specifically required by the Loan Documents) or demand whatsoever to the
Borrower, all of which are hereby expressly waived, and without advertisement,
sell at public or private sale, in any manner and at any location authorized by
Laws, or otherwise realize upon, the whole or, from time to time, any part of
the Collateral, or any interest which the Borrower may have therein. After
deducting from the proceeds of sale or other disposition of the Collateral all
expenses (including all reasonable expenses for legal services), the Banks shall
apply such proceeds toward the satisfaction of the Obligations. Any remainder of
the proceeds after satisfaction in full of the Obligations shall be distributed
as required by applicable Laws. Notice of any sale or other disposition shall be
given to the Borrower at least five (5) days before the time of any intended
public sale or of the time after which any intended private sale or other
disposition of the Collateral is to be made, which the Borrower hereby agrees
shall be reasonable notice of such sale or other disposition. The Borrower
agrees to assemble, or to cause to be assembled, at its own expense, the
Collateral at such place or places as the Banks shall designate. At any such
sale or other disposition, the Banks may, to the extent permissible under
applicable Laws, purchase the whole
48
or any part of the Collateral, free from any right of redemption on the
part of the Borrower, which right is hereby expressly waived and released.
Without limiting the generality of any of the rights and remedies conferred
upon the Banks under this Paragraph 8.3, the Banks may, to the full extent
permitted by applicable Laws:
(A) Enter upon the premises of the Borrower, exclude therefrom the
Borrower, any Subsidiary or any Affiliate thereof, and take immediate possession
of the Collateral, either personally or by means of a receiver appointed by a
court of competent jurisdiction, using all necessary and lawful self-help to do
so;
(B) The Issuing Bank and Agent may treat each then outstanding Letter of
Credit as if a draft in the full amount available to be drawn thereunder had
been properly drawn thereunder and paid by the Issuing Bank and the Borrower had
failed to reimburse the Agent, for the account of the Issuing Bank, for the
amount so paid;
(C) Upon demand of the Agent (except no demand shall be required if
there shall have occurred an Event of Default under clause (G), (H) or (I) of
Paragraph 8.1), the Borrower shall deposit in cash with the Agent an amount
equal to the amount of all Letter of Credit Liabilities then outstanding as
collateral security for the repayment thereof;
(D) At the Banks' option, use, operate, manage and control the
Collateral in any lawful manner;
(E) Collect and receive all receivables, rents, income, revenue,
earnings, issues and profits therefrom; and
(F) Maintain, repair, renovate, alter or remove the Collateral as the
Banks may determine in their discretion.
SECTION IX. THE AGENT
This Section IX is between and among the Agent and the Banks only. Neither
the Borrower nor any other creditor of the Borrower shall have any rights under
this section, whether as a third party beneficiary or otherwise.
9.1 Authorization. Each Bank authorizes the Agent to act on behalf of such
Bank or holder to the extent provided herein or in any document or instrument
delivered hereunder or in connection herewith and signed by such Bank, and to
take such other action as may be reasonably incidental thereto. The Agent shall
be considered as acting solely in an administrative and ministerial capacity,
not as trustee or other fiduciary of the Banks. The Agent shall not be construed
as having any agency or fiduciary relationship with the Borrower. The Agent
shall not have any duties or obligations to the Banks other than those expressly
provided for herein. The Agent shall not be required to exercise any discretion
or take any action, but shall be fully protected in so acting or in refraining
from acting, upon the instructions of the Majority Banks (except as otherwise
provided in Paragraph 10.3, for matters which require the consent of all Banks),
and such instructions shall be binding upon all Banks and holders of the Notes,
and the Agent shall not be liable to any party hereto for any consequence of any
such action
49
or refraining from action. Notwithstanding any instructions of the Majority
Banks, the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to any loan document or applicable
law.
9.2 Standard of Care. Neither the Agent nor any of its officers, directors,
agents, employees or representatives shall be liable for any action taken or
omitted to be taken by it or any of them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (a) may treat
the payee of any Notes as the holder thereof and as a Bank hereunder until the
Agent receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Agent (which notice shall be binding
on all parties hereto); (b) may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts and advisors
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants, experts or other advisors; (c) makes no warranty or representation
to any Bank and shall not be responsible to any Bank for any statements,
warranties or representations made in or in connection with this Agreement or
for any failure or delay in performance by the Borrower or any Bank under this
Agreement; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement; (e) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, perfection, collectability, genuineness,
sufficiency or value of this Agreement, the Notes, or any other instrument or
document furnished pursuant thereto or for the accuracy or completeness of any
credit or other information provided to the Banks; (f) shall incur no liability
under or in respect of this Agreement by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties; and (g) shall incur no liability for relying upon any
matters of fact that might reasonably be expected to be within the knowledge of
the Borrower, upon a certificate or other writing signed by Borrower, or upon
telephone communications with Borrower which are reasonably believed to be true
and valid.
9.3 No Waiver of Rights. With respect to the Notes, the Agent shall have
the same rights and powers hereunder as any other Bank and may exercise the same
as though it were not the Agent, and the Agent may accept deposits from, and
generally engage in any kind of business with, the Borrower.
9.4 Payments. The Agent shall use its best efforts to deliver to each Bank
on the same day as received by Agent in immediately available funds such Bank's
pro rata share of all payments received by the Agent for the benefit of the
Banks, but in the event Agent is unable to deliver such payments to any Bank on
the same day of receipt, Agent agrees to pay such Bank interest on the payment
for each day the Agent is unable to deliver the payments after the date of its
receipt based on the overnight federal funds rate of interest. Any payment due
for any reason under this Agreement that is required to be made on a date on
which the Agent is not open for business shall be extended until the next day on
which the Agent is open for the transaction of business.
9.5 Indemnification. The Agent shall not be required to do any act
hereunder or under any other document or instrument delivered hereunder or in
connection herewith or take any action toward the execution or enforcement of
the agency hereby created, or to prosecute or defend any suit in respect of this
Agreement or the Notes or to advance funds hereunder upon the failure by any
Bank to fund its pro rata share of the Commitment hereunder, unless ratably
indemnified to its satisfaction (to the
50
extent not reimbursed by Borrower) by the holders of the Notes against
loss, cost, liability and expense (including reasonable fees and out-of-pocket
expenses of counsel), claim, demand, action, loss or liability (except such as
result from Agent's gross negligence or willful misconduct) that Agent may
suffer or incur in connection with this Agreement or any action taken or omitted
by Agent hereunder. If any indemnity furnished to the Agent for or against any
loss, cost, liability, and expense or for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and not commence or cease to do the acts indemnified against until
such additional indemnity is furnished. Each Bank agrees to reimburse the Agent
promptly upon demand for such Bank's pro rata share of any expenses referred to
in Paragraph 10.4 incurred by the Agent to the extent that the Agent is not
reimbursed for such expenses by the Borrower.
9.6 Exculpation. Neither Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or not taken by it in
connection herewith (a) with the consent or at the request of the Banks or
Majority Banks, as appropriate, or (b) in the absence of its own gross
negligence or willful misconduct. Neither Agent nor any of its directors,
officers, employees or agents shall (i) be responsible for any recitals,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of this Agreement, any Note or any
other instrument or document delivered hereunder or in connection herewith, or
(ii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by Borrower or any
other obligor of its obligations.
9.7 Credit Investigation. Each Bank acknowledges that it has made such
inquiries and taken such care on its own behalf as would have been the case had
the Commitment been granted and the Loan made directly by such Bank to the
Borrower. Each Bank agrees and acknowledges that the Agent makes no
representations or warranties about the creditworthiness of the Borrower or any
other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement, the Notes or the value of any
security therefor and that each Bank has not entered into this Agreement in
reliance upon any action, statement, representation, or warranty of any other
Bank or Agent. Each Bank agrees that it will, independently and without reliance
upon the Agent or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement. Neither the Agent nor any
other Bank shall have any obligation whatsoever to make any such credit analysis
or decisions for a Bank or to provide any credit or other information with
respect to the Borrower now or in the future in the possession of the Agent or
such other Bank, except that the Agent shall promptly forward to the Banks a
copy of any notice received by the Agent from the Borrower of the occurrence of
an Event of Default hereunder and copies of all material documents delivered to
it by the Borrower pursuant to the terms hereof.
9.8 Resignation. The Agent may resign at any time as the Agent under this
Agreement by giving written notice thereof to the Banks and the Borrower, which
resignation shall be effective upon a successor Agent's acceptance of its
appointment. Upon any such resignation, the Majority Banks shall have the right
to appoint a successor Agent hereunder. If no such successor Agent shall have
been so appointed by the Majority Banks, or Borrower shall have reasonably
rejected such appointment, within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof having
assets of at least One Billion Dollars ($1,000,000,000.00) and which shall be
reasonably acceptable to the Borrower.
51
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation as an Agent hereunder, the provisions of
this Section IX shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was an Agent under the Loan Documents.
9.9 Proration of Payments. Except as may be provided in other sections of
this Agreement, all funds received by Banks, or any of them, shall be allocated
pro rata among all Banks in proportion to their respective Commitment
Percentages. If any Bank or other holder of any Notes shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on the Note then held by it in
excess of its pro rata share of payments and other recoveries obtained by all
Banks or other holders on account of principal of and interest on the Note then
held by them, such Bank or other holder shall purchase from the other Banks or
holders such participation in the Note held by them as shall be necessary to
cause such purchasing Bank or other holder to share the excess payment or other
recovery ratably with each of them; provided, however, if all or any portion of
the excess payment or other recovery is thereafter recovered from such
purchasing holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, no Bank shall have any obligation to account for or share any
amount, property or profit of any kind received by it for its own account
arising out of a banking or other relationship with the Borrower apart from the
obligations under the Loan Documents.
9.10 No Liability For Errors. The Agent shall not be liable for any error
in computing the amounts payable to any Bank in respect of any amounts due to
the Banks hereunder or in making payment of such amounts. In the event of an
error in computing any amount payable to any Bank or in the making of a payment,
the Agent, the Borrower and such Bank shall, forthwith upon discovery of such
error, make such adjustment as shall be required to correct such error,
including the payment of interest on any amounts that were incorrectly paid or
not paid from the date paid or of the date due to the date returned or paid, all
as the case may be, at the average daily rate for the overnight sale of federal
funds by the Agent in effect for such period.
9.11 Offset. In addition to and not in limitation of all rights of offset
that any Bank or other holder of any Note may have under applicable Laws, each
Bank or other holder of a Note shall, upon the occurrence of any Event of
Default described in this Agreement or in the Note in question, have the right
to appropriate and apply to the payment of such Notes any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter with
such Bank or other holder; provided, however, all funds received as a result of
such offsets shall be applied pro rata among the Banks in proportion to their
respective Commitment Percentages as set forth in Paragraph 2.1 hereof. Each
Bank agrees to notify the Borrower and other Banks immediately after the
exercise by it of this right of offset.
SECTION X. MISCELLANEOUS
10.1 Construction. The provisions of this Agreement shall be
in addition to those of any guaranty, pledge or security agreement, note or
other evidence of liability held by the Banks, all of which shall be construed
as complementary to each other; provided, in the event of any inconsistency, the
provisions of this Agreement shall control. Nothing herein contained shall
prevent the Banks from
52
enforcing any or all other notes, guaranties, pledge or security agreements in
accordance with their respective terms.
10.2 Further Assurance. From time to time, the Borrower will execute and
deliver to the Banks such additional documents and will provide such additional
information as the Banks may reasonably require to carry out the terms of this
Agreement and be informed of the Borrower's operations, business and condition.
10.3 Enforcement and Waiver by the Banks. The Majority Banks shall have the
sole and exclusive right to administer, amend, or modify the Loan Documents, and
are hereby empowered to act for the Banks with regard to the aggregate
Commitments and the documentation thereof as if said Majority Banks were the
sole lenders or extenders of credit under the Loan Documents; provided, however,
that it shall take an affirmative vote of all Banks to: (i) increase any of the
several Commitments; (ii) decrease any of the interest rates on the Loans; (iii)
extend the Termination Date; (iv) approve prepayments of the Subordinated
Indebtedness; (v) release any Guaranty; (vi) release all or substantially all of
the Collateral; (vii) amend the definition of Majority Banks; and (viii) amend
this Paragraph 10.3. The Banks shall have the right at all times to enforce the
provisions of the Loan Documents in strict accordance with the terms thereof,
notwithstanding any conduct or custom on the part of the Banks and/or Agent in
refraining from so doing at any time or times. The failure of the Banks at any
time or times to enforce their rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of the Loan Documents or as
having in any way or manner modified or waived the same. All rights and remedies
of the Banks are cumulative and concurrent and the exercise of one right or
remedy shall not be deemed a waiver or release of any other right or remedy.
10.4 Expenses of the Banks. The Borrower will, on demand, reimburse the
Agent for all out-of-pocket expenses, including the reasonable fees and expenses
of legal counsel for the Agent, incurred by the Agent in connection with the
preparation, administration, amendment, modification, or enforcement of the Loan
Documents and the collection or attempted collection of the Notes; provided, the
expenses and legal counsel fees of all Banks will be reimbursed in connection
with the enforcement of this Agreement and other Loan Documents.
10.5 Notices. Any notices or consents required or permitted by
this Agreement shall be in writing and shall be deemed delivered when delivered
in person, or when sent by certified mail, postage prepaid, return receipt
requested, by overnight courier service, or by facsimile to the address and/or
telecopy number as follows, unless such address or number is changed by written
notice hereunder:
(A) If to the Borrower:
Specialty Care Network, Inc.
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
Attention: Chief Financial Officer
Telecopy: (303) 716-1298
53
(B) If to the Agent:
NationsBank of Tennessee, N.A., Agent
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Healthcare Group
Telecopy: (615) 749-4951
(C) If to the Banks:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: Healthcare Group
Telecopy: (615) 749-4951
AmSouth Bank
333 Union Street
Suite 200
Nashville, Tennessee 37201
Attention: Cathy Wind
Telecopy: (615) 291-5257
54
Banque Paribas
227 West Monroe Street, Suite 3300
Chicago, Illinois 60606
Attention: Loan Administration
Telecopy: (312) 853-6020
Key Corporate Capital Inc.
127 Public Square, 6th Floor
OH-01-27-0605
Cleveland, OH 44114-1806
Attention: Mr. Rufus Heard
Telecopy: (216) 689-5970
10.6 Waiver and Release. To the maximum extent permitted by applicable
Laws, the Borrower and each Subsidiary:
(A) Waive: (1) protest of all commercial paper at any time held by the
Banks on which the Borrower or any Subsidiary is in any way liable; and (2)
notice and opportunity to be heard, after acceleration in the manner provided in
Paragraph 8.2, before exercise by the Banks of the remedies of self-help,
set-off, or of other summary procedures permitted by any applicable Laws or by
any agreement with the Borrower or any Subsidiary, and, except where required
hereby or by any applicable Laws, notice of any other action taken by the Banks;
and
(B) Release the Banks and their officers, directors, attorneys,
employees, and agents from all claims for loss or damage caused by any act or
omission on the part of any of them except for gross negligence, recklessness or
willful misconduct.
10.7 Indemnification. Borrower and each Subsidiary hereby indemnify and
hold the Banks and their officers, directors, attorneys, employees and agents
free and harmless from and against any and all actions, causes of action, suits,
losses, liabilities and damages, and expenses in connection therewith, including
without limitation counsel fees and disbursements, incurred by the Banks or any
of them as a result of, or arising out of, or relating to the execution,
delivery, performance or enforcement of the Loan Documents or any instrument
contemplated therein, except for any Bank's gross negligence or willful
misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower and each Subsidiary hereby agree to make
the maximum contribution to the payment and satisfaction of such liabilities and
costs permitted under applicable Laws.
10.8 Participations and Assignments.
(A) This Agreement and the other Loan Documents shall be binding upon
and inure to the benefit of Borrower, Banks, and Agent and their respective
successors and assigns; provided, however, that Borrower may not assign,
transfer or delegate any of its rights, duties or obligations under this
Agreement or the other Loan Documents without the prior written consent of Agent
and Banks. Banks may assign, sell and transfer their interests, rights and
obligations under this Agreement and the other Loan Documents only in accordance
with this Paragraph 10.8.
55
(B) With the prior written consent of the Agent and the Borrower, not to
be unreasonably withheld, any Bank may assign to one or more Eligible Assignees
all, or a proportionate part of all, of its interests, rights and obligations
under this Agreement and the other Loan Documents; provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all of the assigning Bank's interests, rights and obligations under this
Agreement, (ii) the amount of each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment) shall not be less
than the lesser of (A) the entire amount of such Bank's Loans or (B) the
principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, (iii) no more than three (3) Banks may be parties hereto without first
obtaining the prior written consent of the Agent and Borrower; and (iv) the
parties to each such assignment shall execute and/or deliver to Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with the Notes subject to such assignment, and a processing and recordation fee
of $3,500 payable to Agent. Upon such execution, delivery, acceptance and
recording, from and after the "Effective Date" specified in the Assignment and
Acceptance, which "Effective Date," unless Agent otherwise agrees, shall be not
earlier than five Business Days after the date of acceptance and recording by
Agent (provided, however, that, as between the assigning Bank and the assignee
thereunder only, the effective date shall be the effective date of execution and
delivery as between such Persons as specified in the Assignment and Acceptance),
(A) the assignee thereunder shall be a Bank under this Agreement and, to the
extent provided in such Assignment and Acceptance, have the interests, rights
and obligations of a Bank hereunder and (B) the assigning Bank thereunder shall,
to the extent provided in such Assignment and Acceptance, be released from its
contractual obligations under this Agreement (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of the assigning Bank's
interests, rights and obligations under this Agreement, such assigning Bank
shall cease to be a Bank under this Agreement). Each Bank shall, in a reasonably
prompt fashion after it has engaged in any material discussions with an Eligible
Assignee that may lead to an assignment referred to in this Paragraph 10.8,
notify Agent and Borrower of the identity of such Eligible Assignee so that they
will have sufficient time to determine if they are willing to consent.
(C) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the Eligible Assignee thereunder shall be deemed
to confirm to and agree with each other and the other parties hereto as follows:
(i) such assignee is an Eligible Assignee; (ii) other than as provided in the
Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any representations,
warranties or other statements made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
or any Collateral; (iii) such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or any Subsidiary or the performance or observance by Borrower or any
Subsidiary of any of its obligations under this Agreement or any other Loan
Document; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent Financial Statements and such
other agreements, documents, instruments, certificates and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (v) such assignee will independently and without
reliance upon Agent, such assigning Bank or any other Bank and based on such
agreements, documents, instruments, certificates and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents;
(vi) such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms
56
hereof, together with such powers as are reasonably incidental thereto;
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement and the other Loan
Documents are required to be performed by it as a Bank; and (viii) such assignee
makes loans in the ordinary course of its business.
(D) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee and the required processing and
recordation fee, Agent shall, if such Assignment and Acceptance is duly
completed and is in the required form, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to Banks and Borrower. Within five Business
Days after its receipt of any such notice from Agent, Borrower, at its own
expense, shall execute and deliver to Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes payable to the order of such assignee in the
appropriate principal amount(s) evidencing such assignee's assigned Loans and
Commitments, and, if the assignor Bank has retained a portion of its Loans and
Commitments, a new Note or Notes payable to the order of such assignor in the
appropriate principal amount(s) evidencing such assignor's Loans and Commitments
retained by it. Such new Note(s) shall be dated the date of the surrendered
Note(s) which they replace and shall otherwise be in substantially the form of
the surrendered Notes, as appropriate.
(E) Each Bank may, without the consent of Borrower, any Subsidiary or
Agent, sell participations to one or more banks in all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Loans or Commitments) held by it; provided, however, that (i)
such Bank shall remain a Bank for all purposes of this Agreement and the
transferee of such participation shall not constitute a Bank under this
Agreement, (ii) such Bank's obligations under this Agreement shall remain
unchanged, (iii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iv) the participating banks or
other entities shall be entitled to the benefit of the provisions contained in
Paragraphs 2.8 and 2.9 to the same extent as if they were Banks, except that no
such participant shall be entitled to receive any greater benefit or amounts
pursuant to Paragraph 2.8 than its assignor Bank would have been entitled to
receive with respect to the rights participated, and (v) Borrower, Subsidiaries,
Agent and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's interests, rights and obligations under this
Agreement, and such Bank shall retain the sole right to enforce the obligations
of Borrower and its Subsidiaries relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement, provided
that such participation agreement may provide that such Bank will not agree to
any amendment, modification or waiver of this Agreement or the other Loan
Documents, without the consent of such participant, that would (A) reduce the
principal or the rate of interest payable by Borrower on any Loan or reduce any
fees payable by Borrower, (B) postpone any date fixed for the payment of
principal of or interest on the Loans or any fees payable by Borrower, (C)
increase any Commitment of any Bank or subject any Bank to any obligation to
make Loans, or (D) amend Paragraph 10.3, 10.8(E) or any other provision of this
Agreement requiring the consent or other action of all Banks.
(F) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Paragraph 10.8, disclose
to the assignee or participant or proposed assignee or participant any
information relating to Borrower or any Subsidiary, the Collateral or the Loan
Documents furnished to such Bank by or on behalf of the Borrower or any
Subsidiary; provided, however, that, prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall
57
agree (subject to customary exceptions) to preserve the confidentiality
of any non-public information received from such Bank.
(G) If (i) any Bank has demanded compensation under Paragraph 2.8 in an
aggregate amount exceeding $5,000 during any calendar year, (ii) it becomes
unlawful, impossible or impractical for any Bank to make or continue to maintain
Eurodollar Loans pursuant to Paragraph 2.9 and such circumstance is not
applicable to NationsBank, or (iii) any Bank is or becomes insolvent or a
receiver, conservator or similar authority is appointed for any Bank, then Agent
and/or Borrower shall have the right, but not the obligation, upon notice to
such Bank and Borrower or Agent, as applicable, to designate, with the consent
of such assignee, an assignee for any such Bank, which assignee shall be an
Eligible Assignee mutually satisfactory to Agent and Borrower, to purchase such
Bank's Loans and Commitments and assume such Bank's obligations; provided,
however, that Borrower shall not have the right to designate any assignee for
NationsBank. Within ten Business Days after any such notice to such Bank and
Borrower or Agent, as applicable, such Bank shall be obligated to sell its Loans
and Commitments, and such assignee shall be obligated to purchase such Loans and
assume such Bank's obligations, pursuant to an Assignment and Acceptance. The
purchase price therefor shall be an amount equal to the sum of (A) the
outstanding principal amount of the Loans payable to such Bank, plus (B) all
accrued and unpaid interest on such Loans, (C) Letter of Credit Interest, plus
(D) all accrued and unpaid fees and other amounts due to such Bank pursuant to
this Agreement.
(H) Notwithstanding anything to the contrary contained in this Paragraph
10.8, any Bank may at any time or from time to time assign as collateral all or
any portion of its rights under this Agreement with respect to its Loans,
Commitments and Notes to a Federal Reserve Bank. No such assignment shall
release the assigning Bank from its obligations under this Agreement.
10.9 Applicable Laws. The Laws of the State of Tennessee shall govern the
construction of this Agreement and the rights and remedies of the parties
hereto.
10.10 Binding Effect, Assignment and Entire Agreement. This Agreement shall
inure to the benefit of, and shall be binding upon, the respective successors
and permitted assigns of the parties hereto. The Borrower has no right to assign
any of its rights or obligations hereunder without the prior written consent of
the Banks. This Agreement and the documents executed and delivered pursuant
hereto constitute the entire agreement between the parties, and supersede all
prior agreements and understandings among the parties hereto. This Agreement may
be amended only by a writing signed on behalf of each party.
10.11 Severability. If any provision of this Agreement shall be held
invalid under any applicable Laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
10.12 Counterparts. This Agreement may be executed by the parties
independently in any number of counterparts, all of which together shall
constitute but one and the same instrument which is valid and effective as if
all parties had executed the same counterpart.
10.13 Arbitration. Any controversy or claim between or among the parties
hereto including but not limited to those arising out of or relating to this
Instrument, Agreement or document or any related instruments, agreements or
documents, including any claim based on or arising from an alleged tort, shall
be determined by binding arbitration in accordance with the Federal Arbitration
Act (or if not applicable, the applicable state law), the Rules of Practice and
Procedure for the Arbitration
58
of Commercial Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "Special Rules" set forth below. In the event of any
inconsistency, the Special Rules shall control. Judgment upon any arbitration
award may be entered in any court having jurisdiction. Any party to this
Agreement may bring an action, including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to which this agreement applies
in any court having jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in the city of the
Borrower's domicile at the time of the execution of this instrument, agreement
or document and administered by J.A.M.S. who will appoint an arbitrator; if
J.A.M.S. is unable or legally precluded from administering the arbitration, then
the American Arbitration Association will serve. All arbitration hearings will
be commenced within 90 days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional 60 days. In any such
arbitration, the prevailing party will be awarded attorney's fees, costs of
arbitration and all out-of-pocket expenses against the defaulting party.
(b) Reservation of Rights. Nothing in this instrument, agreement or
document shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose or any waivers contained in this
Agreement; or (ii) be a waiver by the Agent or Banks of the protection afforded
to them by 12 U.S.C. ss. 91 or any substantially equivalent state law; or (iii)
limit the right of the Agent or Banks hereto (A) to exercise self help remedies
such as (but not limited to) setoff, or (B) to foreclose against any real or
personal property collateral, or (C) to obtain from a court provisional or
ancillary remedies such as (but not limited to) injunctive relief, writ of
possession or the appointment of a receiver. The Agent or Banks may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this instrument, agreement or document. Neither
this exercise of self help remedies nor the institution or maintenance of an
action for foreclosure or provisional or ancillary remedies shall constitute a
waiver of the right of any party, including the claimant in any such action, to
arbitrate the merits of the controversy or claim occasioning resort to such
remedies.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER
SPECIALTY CARE NETWORK, INC.
BY: /s/ D. Paul Davis
----------------------------------------
TITLE: Senior Vice President-Finance
--------------------------------
Address:
Specialty Care Network, Inc.
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
Attention: Chief Financial Officer
Telecopy: (303) 716-1298
59
GUARANTORS AND SUBSIDIARIES
SCN OF PRINCETON, INC.
BY: /s/ D. Paul Davis
---------------------------------------
TITLE: Senior Vice President-Finance
--------------------------------
Address:
SCN of Princeton, Inc.
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
Attention: Chief Financial Officer
Telecopy: (303) 716-1298
60
NATIONSBANK OF TENNESSEE, N.A.,
individually, as Issuing Bank, Swingline
Bank, and as Agent
Committed Amount:
$30,000,000.00
Letter of Credit Sublimit BY: /s/ Walker Choppin
$10,000,000.00 --------------------------------------
TITLE: Senior Vice President
-----------------------------------
Swingline Amount Sublimit:
$2,500,000.00
Initial Commitment Percentage:
40%
Address:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
M-4
Nashville, Tennessee 37219
Attn: Walker Choppin
Telephone: (615) 749-3023
Facsimile: (615) 749-4951
Address as Agent:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
M-4
Nashville, Tennessee 37219
Attn: Walker Choppin
Telephone: (615) 749-3023
Facsimile: (615) 749-4951
61
AMSOUTH BANK
Committed Amount:
$15,000,000.00
BY: /s/ Cathy M. Wind
-------------------------------------
Initial Commitment Percentage: TITLE: Vice President
20% ------------------------------
Address:
AmSouth Bank
333 Union Street
Suite 200
Nashville, Tennessee 37201
Attention: Cathy Wind
Telecopy: (615) 291-5257
62
BANQUE PARIBAS
Committed Amount:
$15,000,000.00
BY: /s/ Russell A. Pomerantz
---------------------------------------
Initial Commitment Percentage: TITLE: Vice President
20% --------------------------------
BY: /s/ David I. Canavan
---------------------------------------
TITLE: Director
--------------------------------
Address:
Banque Paribas
227 West Monroe Street, Suite 3300
Chicago, Illinois 60606
Attention: Loan Administration
Telecopy: (312) 853-6020
63
KEY CORPORATE CAPITAL INC.,
a Michigan Corporation
Committed Amount:
$15,000,000.00
BY: /s/ Rufus D. Heard
---------------------------------------
Initial Commitment Percentage: TITLE: Vice President
20% --------------------------------
Address:
Key Corporate Capital Inc.,
a Michigan corporation
127 Public Square, 6th Floor
Cleveland, Ohio 44114-1806
Attention: Rufus Heard
Telecopy: (216) 689-5970
64