<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 3)
PHYSICIANS' SPECIALTY CORP.
(Name of the Issuer)
TA MERGERCO, INC.
TA ASSOCIATES, INC.
TA/ADVENT VIII, L.P.
TA/ATLANTIC AND PACIFIC IV, L.P.
TA EXECUTIVES FUND LLC
TA INVESTORS LLC
RICHARD D. BALLARD
GERALD R. BENJAMIN
ROBERT A. DIPROVA
LAWRENCE P. KRASKA
RAMIE A. TRITT, M.D.
PHYSICIANS' SPECIALTY CORP.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
718934102
(CUSIP Number of Class of Securities)
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Physicians' Specialty Corp. TA MergerCo, Inc. TA Associates, Inc.
1150 Lake Hearn Drive c/o TA Associates, Inc. 125 High Street, Suite 2500
Suite 640 125 High Street, Suite 2500 Boston, MA 02110
Atlanta, GA 30342 Boston, MA 02110 (617) 574-6700
(404) 256-7535 (617) 574-6700
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TA/Advent VIII, L.P. TA/Atlantic and Pacific IV, L.P. TA Executives Fund LLC
c/o TA Associates, Inc. c/o TA Associates, Inc. c/o TA Associates, Inc.
125 High Street, Suite 2500 125 High Street, Suite 2500 125 High Street, Suite 2500
Boston, MA 02110 Boston, MA 02110 Boston, MA 02110
(617) 574-6700 (617) 574-6700 (617) 574-6700
TA Investors LLC Richard D. Ballard Gerald R. Benjamin
c/o TA Associates, Inc. 1150 Lake Hearn Drive 1150 Lake Hearn Drive
125 High Street, Suite 2500 Suite 640 Suite 640
Boston, MA 02110 Atlanta, GA 30342 Atlanta, GA 30342
(617) 574-6700 (404) 256-7535 (404) 256-7535
Robert A. DiProva Lawrence P. Kraska Ramie A. Tritt, M.D.
1150 Lake Hearn Drive 1150 Lake Hearn Drive 1150 Lake Hearn Drive
Suite 640 Suite 640 Suite 640
Atlanta, GA 30342 Atlanta, GA 30342 Atlanta, GA 30342
(404) 256-7535 (404) 256-7535 (404) 256-7535
WITH COPIES TO:
John J. Kelley III Richard H. Brody Joseph L. Johnson III
King & Spalding Troutman Sanders LLP Goodwin, Procter & Hoar LLP
191 Peachtree Street 600 Peachtree Street Exchange Place
Atlanta, Georgia 30303 Atlanta, Georgia 30308 Boston, Massachusetts 02109
(404) 572-4600 (404) 885-3000 (617) 570-1000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934. [X]
b. The filing of a registration statement under the Securities Act of
1933. [ ]
c. A tender offer. [ ]
d. None of the above. [ ]
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
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Transaction Value* Amount of Filing Fee
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$99,463,224.......................... $19,893
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* For purposes of calculating the fee only. Assumes purchase of
9,472,688 shares of Common Stock, par value $.001 per share, of
Physicians' Specialty Corp. at $10.50 per share.
Check box if any of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid. Identify
the previous filing by registration statement number, or the form or schedule
and the date of its filing. [X]
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Amount previously paid: $19,893
Form or registration no.: Preliminary Proxy Statement on Schedule 14A
Filing party: Physicians' Specialty Corp.
Date filed: July 14, 1999
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This Amendment No. 3 (the "Final Amendment") on Schedule 13E-3 amends
and supplements the Rule 13E-3 Transaction Statement on Schedule 13E-3 filed by
(i) Physicians' Specialty Corp. (the "Company"), (ii) TA MergerCo, Inc., TA
Associates, Inc., TA/Advent VIII, L.P., TA/Atlantic and Pacific IV, L.P., TA
Executives Fund LLC and TA Investors LLC (the "TA Investors") and (iii) Richard
D. Ballard, Gerald R. Benjamin, Robert A. DiProva, Lawrence P. Kraska and Ramie
A. Tritt, M.D. (the "Management Sponsors") on July 14, 1999, as amended and
supplemented by Amendment No. 1 thereto filed on August 27, 1999 and Amendment
No. 2 thereto filed on September 29, 1999 (as amended and restated, the
"Statement"), in connection with a proposal to approve an Agreement and Plan of
Merger among TA MergerCo, Inc., the TA Investors and the Company, dated as of
June 14, 1999 (the "Merger Agreement").
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ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Item 6 of the Statement is hereby amended and
supplemented as follows:
As part of the Merger, Physicians' Specialty entered into an Investment
Agreement, dated November 1, 1999 (the "Investment Agreement") with Allied
Capital Corporation ("Allied") pursuant to which Allied provided $15.0 million
to the Company in exchange for the Company issuing to Allied $15.0 million of
senior subordinated debentures and pursuant to which Allied provided $1.0
million to the Company in exchange for 850 shares of the Company's redeemable
preferred stock and 97,411 shares of the Company's convertible preferred stock.
The senior subordinated debentures mature on November 1, 2006, and interest
accrues at a rate of 15.5% per annum, 12% of which must be paid in cash and
3.5% of which is added, at the beginning of each calendar quarter, to the
principal amount due at maturity. The senior subordinated debentures are
unsecured and subordinate to a revolving credit facility (described below) and
any refinancing thereof. In addition, pursuant to the Investment Agreement the
Company is subject to restrictions on affiliate transactions, indebtedness,
dividends, liens, stock repurchases, asset sales and acquisitions. The
obligations and liabilities of the Company with respect to the senior
subordinated debentures are also guaranteed by the Company's subsidiaries.
In order to finance the Merger, the Company drew down $42.5 million of a
new $60.0 million revolving credit facility administered by First Union National
Bank. Borrowings under the revolving credit facility are secured by a first
priority lien on and security interest in (i) 100% of the capital stock of
certain subsidiaries of the Company and (ii) substantially all of the assets of
the Company and its subsidiaries. The revolving credit facility terminates on
November 1, 2004. Interest on current borrowings under the revolving credit
facility is 3.50% over LIBOR.
In connection with the $42.5 million of borrowings, the Company entered
into a fixed rate hedge agreement, converting 30-day LIBOR to a fixed rate of
6.10%. The hedge agreement terminates on December 29, 2000.
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ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Item 10 of the Statement is hereby amended
and supplemented as follows:
As a result of the Merger and the transactions consummated in
connection therewith 3,149,669 shares of the Company's common stock is owned by
the TA Investors representing 58.2% of the Company's outstanding common stock.
The number of shares of common stock owned by the TA Investors includes shares
of common stock issuable upon conversion of shares of the Company's convertible
participating preferred stock owned by the TA Investors. As a result of the
Merger, the Management Sponsors own approximately 1,580,000 shares of common
stock (which includes shares held by Bock, Benjamin & Co. Partners, L.P. of
which Gerald R. Benjamin is a principal of the partnership's general partner)
representing 29.3% of the Company's outstanding common stock. The TA Investors
also own 26,950 shares representing approximately 97% of the Company's
redeemable preferred stock.
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ITEM 16. ADDITIONAL INFORMATION.
The information set forth in Item 16 of the Statement is hereby
amended and supplemented as follows:
The Merger Agreement and the transactions contemplated thereby were
approved by the stockholders of the Company at a Special Meeting held on
October 28, 1999, and the transactions described in this Statement were
consummated on November 1, 1999. The Company filed a Certificate of Merger with
the Secretary of State of Delaware on November 1, 1999, and the Merger became
effective on that date.
Each share of common stock of the Company that was issued and
outstanding immediately prior to the Effective Time (other than certain shares
held by the Management Sponsors, certain affiliated physicians, Bock, Benjamin &
Co. Partners, L.P. and shares held by employees as a result of the exercise of
options in conjunction with the consummation of the Merger) was converted as of
the Effective Time into the right to receive $10.50 per share in cash, in
accordance with the Merger Agreement.
Because the Company, as a result of the Merger, has only 44
shareholders, the Company filed on November 1, 1999 certification on Form 15
pursuant to Rules 12g-4 and 12h-3 to provide notice of termination of the
registration of the common stock of the Company under the Securities and
Exchange Act of 1934, as amended, and to suspend all reporting requirements
thereunder.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(3) Investment Agreement, dated November 1, 1999, by and between
Physicians' Specialty Corp. and Allied Capital Corporation.
(a)(4) Senior Subordinated Debenture, dated November 1, 1999, from
Physicians' Specialty Corp. to Allied Capital Corporation.
(a)(5) Subsidiary Guaranty, dated November 1, 1999, by the Company's
subsidiaries listed on the signature pages attached thereto in
favor of Allied Capital Corporation.
(a)(6) Credit Agreement, dated as of November 1, 1999, among
Physicians' Specialty Corp., First Union National Bank, as
Administrative Agent, CIBC World Markets Corp., as Syndication
Agent and the entities listed as Lenders therein.
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SIGNATURES
After due inquiry and to the best of our knowledge and belief, each of
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
PHYSICIANS' SPECIALTY CORP.
By: /s/ GERALD R. BENJAMIN
--------------------------------------------
Name: Gerald R. Benjamin
Dated: November 9, 1999 Title: Executive Vice President
TA MERGERCO, INC.
By:/s/ RICHARD TADLER
--------------------------------------------
Name: Richard Tadler
Dated: November 9, 1999 Title: President and Chief Executive Officer
TA ASSOCIATES, INC.
Dated: November 9, 1999 By:/s/ RICHARD TADLER
--------------------------------------------
Name: Richard Tadler
Title: Managing Director
TA/ADVENT VIII, L.P.
By: TA ASSOCIATES VIII LLC
Sole General Partner
By: TA ASSOCIATES, INC.
Manager
By: /s/ RICHARD TADLER
Dated: November 9, 1999 ----------------------------------
Name: Richard Tadler
Title: Managing Director
<PAGE> 9
TA/ATLANTIC AND PACIFIC IV, L.P.
By: TA ASSOCIATES AP IV, L.P.
Sole General Partner
By: TA ASSOCIATES, INC.
Sole General Partner
Dated: November 9, 1999 By: /s/ Richard Tadler
----------------------------------
Name: Richard Tadler
Title: Managing Director
TA EXECUTIVES FUND LLC
By: TA ASSOCIATES, INC.
Manager
Dated: November 9, 1999 By: /s/ Richard Tadler
--------------------------------------
Name: Richard Tadler
Title: Managing Director
TA INVESTORS LLC
By: TA ASSOCIATES, INC.
Manager
Dated: November 9, 1999 By: /s/ Richard Tadler
--------------------------------------
Name: Richard Tadler
Title: Managing Director
<PAGE> 10
RAMIE A. TRITT
Dated: November 9, 1999 *
------------------ -----------------------------------
RICHARD D. BALLARD
Dated: November 9, 1999 *
------------------ -----------------------------------
GERALD R. BENJAMIN
Dated: November 9, 1999 /s/ Gerald R. Benjamin
------------------ -----------------------------------
LAWRENCE P. KRASKA
Dated: November 9, 1999 *
------------------ -----------------------------------
ROBERT A. DIPROVA
Dated: November 9, 1999 *
------------------ -----------------------------------
/s/ Gerald R. Benjamin
-----------------------------------
* By Gerald R. Benjamin, as Attorney-in-Fact
for the persons indicated.
<PAGE> 11
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION PAGE NUMBER
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(a)(3) Investment Agreement, dated November 1, 1999, by and
between Physicians' Specialty Corp. and Allied Capital
Corporation.
(a)(4) Senior Subordinated Debenture, dated November 1, 1999,
from Physicians' Specialty Corp. to Allied Capital
Corporation.
(a)(5) Subsidiary Guaranty, dated November 1, 1999, by the
Company's subsidiaries listed on the signature pages
attached thereto in favor of Allied Capital Corporation.
(a)(6) Credit Agreement, dated as of November 1, 1999, among
Physicians' Specialty Corp., First Union National Bank,
as Administrative Agent, CIBC World Markets Corp., as
Syndication Agent and the entities listed as Lenders
therein.
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<PAGE> 1
EXHIBIT (a)(3)
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "AGREEMENT") is made as of November 1,
1999 by and between (i) PHYSICIANS' SPECIALTY CORP., a Delaware corporation (the
"COMPANY") and (ii) ALLIED CAPITAL CORPORATION ("Allied"), a Maryland
corporation ("ALLIED").
RECITALS:
A. The Company has requested that Allied invest the aggregate sum of
approximately Sixteen Million and no/100 Dollars ($16,000,000.00) in the
Company, in exchange for (i) certain subordinated debentures of the Company in
the aggregate principal amount of $15,000,000.00, (ii) Warrants to purchase
shares of common stock of the Company, and (iii) $850,000.00 in redeemable
preferred stock and $149,998.00 in convertible preferred stock of the Company.
Allied is willing to make such investment (the "ALLIED INVESTMENT") in the
company on the terms and conditions set forth herein.
B. The parties desire to set forth herein their understandings and
agreements pertaining to this transaction.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Allied and its
successors and permitted assigns with respect to this Agreement and the
Debenture (as these terms are hereinafter defined) (individually, a "HOLDER" and
collectively, the "HOLDERS" if there is more than one Holder) and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the date hereof, by which the Company
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, or all or substantially all of the assets, of any Person, whether
through purchase of assets, merger or otherwise, or (ii) acquires securities or
other ownership interests of any Person having at least a majority of (or fifty
percent (50%), combined with direct or indirect management control of) the
combined voting power of the then outstanding securities or other ownership
interests of such Person. Acquisitions of less than a majority of (or fifty
percent (50%), combined with direct or indirect management control of) the
combined voting power of the then outstanding securities or other ownership
interests of a Person shall constitute a Minority Investment and not an
Acquisition.
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"Act of Bankruptcy," when used in reference to any Person, means the
occurrence of any of the following with respect to such Person: (i) such Person
shall have made an assignment for the benefit of his or its creditors; (ii) such
Person shall have admitted in writing his or its inability to pay his or its
debts as they become due; (iii) such Person shall have filed a voluntary
petition in bankruptcy; (iv) such Person shall have been adjudicated a bankrupt
or insolvent; (v) such Person shall have filed any petition or answer seeking
for himself or itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future Applicable Law pertinent to such circumstances; (vi) such Person shall
have filed or shall file any answer admitting or not contesting the material
allegations of a bankruptcy, insolvency or similar petition filed against such
Person; (vii) such Person shall have sought or consented to, or acquiesced in,
the appointment of any trustee, receiver, or liquidator of such Person or of all
or substantially all of the properties of such Person; (viii) 60 days shall have
elapsed after the commencement of an action against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future Applicable Law without such action
having been dismissed or without all orders or proceedings thereunder affecting
the operations or the business of such Person having been stayed, or if a stay
of any such order or proceedings shall thereafter be set aside and the action
setting it aside shall not be timely appealed; or (ix) 60 days shall have
expired after the appointment, without the consent or acquiescence of such
Person of any trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets and properties of such Person without such
appointment having been vacated.
"Act of Dissolution," when used in reference to any Person (other than
an individual), shall mean the occurrence of any action initiating, or any event
that results in, the dissolution, liquidation, winding-up or termination of such
Person.
"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person. For purposes of this
definition, with respect to any Person "control" shall mean (i) the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise, or (ii) the beneficial ownership of
securities or other ownership interests of such Person having 15% or more of the
combined voting power of the then outstanding securities or other ownership
interests of such Person ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors or
other governing body of such Person.
"Allied Investment" See Recital A.
"Annualized Consolidated EBITDA" shall mean, as of the last day of any
fiscal quarter, Consolidated EBITDA for the fiscal quarter ending on such date,
multiplied by four (4).
"Annualized Consolidated Interest Expense" shall mean, as of the last
day of any fiscal quarter, Consolidated Interest Expense for the fiscal quarter
ending on such date, multiplied by four (4).
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"Applicable Law(s)," when used in the singular, shall mean any
applicable federal, state or local law, ordinance, order, regulation, rule or
requirement of any governmental or quasi-governmental agency, instrumentality,
board, commission, bureau or other authority having jurisdiction, and, when used
in the plural, shall mean all such applicable federal, state and local laws,
ordinances, orders, regulations, rules and requirements.
"Assigned Life Insurance Policies" means collectively (i) the policy of
life insurance issued by Zurich Kemper Life on the life of Ramie A. Tritt in the
policy amount of Two Million Dollars ($2,000,000) and (ii) the policy of life
insurance issued by The Equitable Life Assurance Society of the United States on
the life of Gerald R. Benjamin in the policy amount of Two Million Dollars
($2,000,000).
"Assignment of Life Insurance Policies" means the Assignment of Life
Insurance Policy as Collateral from the Company (and any other policyholder or
beneficiary) to the Holders, in form and substance satisfactory to Allied,
assigning to the Holders all of the Company's (and any such other policyholder's
or beneficiary's) right, title and interest in the Assigned Life Insurance
Policies to secure the Indebtedness evidenced by the Debenture.
"Audited Financials" See Section 4.5.
"Business Day" means any day other than a Saturday, Sunday or day on
which banks in Washington, D.C. are authorized or required by law to close.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., (iii) time deposits and certificates of deposit
maturing within 90 days from the date of issuance and issued by a bank or trust
company organized under the laws of the United States of America or any state
thereof that has combined capital and surplus of at least $500,000,000 and that
has (or is a subsidiary of a bank holding company that has) a long-term
unsecured debt rating of at least A or the equivalent thereof by Standard &
Poor's Ratings Services or at least A2 or the equivalent thereof by Moody's
Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above, and
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<PAGE> 4
(v) money market funds at least 95% of the assets of which are continuously
invested in securities of the type described in clause (i) above.
"Change of Control" means the issuance by the Company or Transfer or
series of Transfers of the Capital Stock of the Company or any securities
convertible into or exchangeable for Capital Stock of the Company, which results
in one or more Persons other than the stockholders of the Company that are
existing as of the date hereof either (A) owning in excess of 50% of the
outstanding Capital Stock of the Company or (B) being able to elect a majority
of the board of directors of the Company. For the purposes of this definition,
Transfers by Ramie A. Tritt to a trust established for estate planning purposes
and controlled by Ramie A. Tritt, Transfers to Subsidiaries of the transferring
shareholder, and Transfers to affiliates Controlling, Controlled by or under
common Control with the transferring shareholder shall not trigger a Change of
Control, and each such transferee shall be deemed a "stockholder of the Company
existing as of the date hereof."
"Charges" See Section 8.9.
"Closing" See Section 2.1.
"Closing Date" means the date of the Allied Investment hereunder.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company's Business" means the business of the Company as described in
Section 6.8.
"Consolidated EBITDA" shall mean, for any period, without duplication,
the aggregate of (i) Consolidated Net Income for such period, plus (ii) the sum
of Consolidated Interest Expense, federal, state, local and other income taxes,
depreciation, amortization of intangible assets, PIK Dividends, compensation
charges related to the non-cash exercise of stock options to the extent not
capitalized, and PIK Interest, all to the extent taken into account in the
calculation of Consolidated Net Income for such period and all calculated on a
consolidated basis in accordance with GAAP, minus (iii) the sum of extraordinary
or nonrecurring gains (including in connection with the sale or write-up of
assets), all to the extent taken into account in the calculation of Consolidated
Net Income for such period and calculated on a consolidated basis in accordance
with GAAP, plus (iv) the sum of reasonable extraordinary or nonrecurring losses,
taken into account in the calculation of Consolidated Net Income for such period
and calculated on a consolidated basis in accordance with GAAP. Consolidated
EBITDA shall be deemed to include, without duplication, historical Consolidated
EBITDA of any business acquired and operated by the Company or any Material
Subsidiary after the commencement of the relevant measurement period, as if such
business had been acquired by the Company or such Material Subsidiary as of the
first day of such measurement period; provided that such Consolidated EBITDA is
supported by financial statements, tax returns or other financial data in
reasonable detail. Calculations of Consolidated EBITDA shall exclude the results
of operations of any entity disposed of by the Company or any Material
Subsidiary at any time after the first day of the relevant measurement period.
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"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total cash interest expense of the Company and its
Material Subsidiaries for such period in respect of Consolidated Total
Indebtedness (including, without limitation, all such interest expense accrued
or capitalized during such period, whether or not actually paid during such
period, but excluding PIK Interest), determined on a consolidated basis and
calculated in accordance with GAAP, (ii) all net amounts payable under or in
respect of Hedge Agreements, to the extent paid or accrued by the Company and
its Material Subsidiaries during such period, and (iii) all commitment fees and
other ongoing fees in respect of Consolidated Total Indebtedness (including the
commitment fee provided for under Section 2.9(b) of the Senior Credit Agreement
and the fees provided for under the Fee Letter [as defined in the Senior Credit
Agreement] other than the underwriting and arrangement fee set forth in clause
(1) of the second paragraph of the Fee Letter) paid, accrued or capitalized by
the Company and its Material Subsidiaries during such period.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Company and its Material Subsidiaries for such period,
determined on a consolidated basis and calculated in accordance with GAAP.
Consolidated Net Income shall exclude any net income (or loss) attributable to
Non-Wholly Owned Subsidiaries to the extent (a) such net income (or loss) is
attributable to the proportionate share of the Capital Stock in such entities
owned by Persons other than the Company or a Wholly Owned Subsidiary, or (b)
such net income has not been distributed to the Company or a Wholly Owned
Subsidiary of the Company; provided that actual transaction expenses in
connection with the Transactions of up to $5,500,000 shall be added back to
Consolidated Net Income to the extent actually expensed and not capitalized.
"Consolidated Senior Indebtedness" shall mean, at any date,
Consolidated Total Indebtedness as of such date less Subordinated Indebtedness
of the Company and its Material Subsidiaries as of such date, determined on a
consolidated basis.
"Consolidated Total Indebtedness" shall mean, at any date, all
Indebtedness of the Company and its Material Subsidiaries as of such date,
determined on a consolidated basis.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability 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 obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase 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; provided, however, that, with respect to the Company and its
Subsidiaries, the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business.
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"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"Debenture" means, the Senior Subordinated Debenture dated the date of
this Agreement in the aggregate principal amount of $15,000,000 from the Company
made payable to Allied, which evidences the Company's repayment obligation for
the investment by Allied in the Company.
"Default" means any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Maturity Date; provided,
however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock; provided, further, that the shares of convertible
participating preferred stock and redeemable preferred stock issued to TA
Associates, the other shareholders of the Company and the Holders in connection
with the Transactions shall not constitute Disqualified Capital Stock as long as
the terms and conditions of such shares remain unchanged as such terms and
conditions exist on the Closing Date.
"Dollars" or "$" means lawful money of the United States of America.
"EBITDA" shall mean, for any Person during any period, the aggregate of
(i) net income (or loss) of such Person for such period, plus (ii) the sum of
interest expense, federal, state, local and other income taxes, depreciation,
amortization of intangible assets of such Person, all to the extent taken into
account in the calculation of such Person's net income for such period and all
calculated on a consolidated basis in accordance with GAAP, minus (iii) the sum
of extraordinary or nonrecurring gains (including in connection with the sale or
write-up of assets), all to the extent taken into account in the calculation of
such Person's net income for such period and calculated on a consolidated basis
in accordance with GAAP, plus (iv) the sum of reasonable extraordinary or
nonrecurring losses, taken into account in the calculation of Consolidated Net
Income for such period and calculated on a consolidated basis in accordance with
GAAP.
"Environmental Claim" shall mean any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, allegations,
notices of noncompliance or violation, investigations (other than internal
reports prepared by any Person in the ordinary
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course of its business and not in response to any third party action or request
of any kind) or proceedings relating in any way to any actual or alleged
violation of or liability under any Environmental Law or relating to any permit
issued, or any approval given, under any such Environmental Law (collectively,
"Claims"), including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
and orders of courts or Governmental Authorities, relating primarily to the
protection of human health or occupational safety or the environment, now or
hereafter in effect and in each case as amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, and any successor statute, and all
rules and regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Company or any
Subsidiary, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Company or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Company or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Company or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Company or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Company or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
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<PAGE> 8
Plan for which the Company or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Company or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Events of Default" has the meaning assigned to such term in Article
VII.
"Financial Covenants" See Section 5.11.
"Fair Market Value" shall mean, with respect to any Capital Stock of
the Company given in connection with an Acquisition or Minority Investment, the
value given to such Capital Stock for purposes of such Acquisition or Minority
Investment by the parties thereto, as determined in good faith pursuant to the
relevant acquisition agreement or otherwise in connection with such Acquisition
or Minority Investment.
"Financial Officer" shall mean, with respect to the Company, the chief
financial officer, vice president - finance, principal accounting officer or
treasurer of the Company.
"Financials" means, collectively, the Audited Financials and the
Interim Financials, as defined in Section 4.5.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority(ies)" means any Federal, state, local,
quasi-governmental instrumentality or foreign court, or governmental agency,
authority, instrumentality, agency, bureau, commission, department or regulatory
body.
"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined or regulated as hazardous wastes, hazardous substances,
pollutants, contaminants or toxic substances under any Environmental Law, (ii)
that are defined or regulated by any Environmental Law as toxic, explosive,
corrosive, ignitable, infectious, radioactive, mutagenic or otherwise hazardous,
or (iii) that contain greater than 1% asbestos, in excess of 50 parts per
million polychlorinated biphenyls, urea formaldehyde foam insulation or
petroleum hydrocarbons.
"HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety
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<PAGE> 9
bonds, letters of credit and bankers' acceptances (in each case, whether or not
drawn or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services (including
earnouts, seller notes and other contingent obligations, to the extent required
to be recorded on the Company's balance sheet in accordance with GAAP), (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any (for purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors or other
governing body of the issuer of such Disqualified Capital Stock), (viii) the net
termination obligations of such Person under any Hedge Agreements, calculated as
of any date as if such agreement or arrangement were terminated as of such date,
(ix) all Contingent Obligations of such Person, to the extent required to be
recorded on the Company's balance sheet in accordance with GAAP, and (x) all
indebtedness referred to in clauses (i) through (ix) above secured by any Lien
on any property or asset owned or held by such Person regardless of whether the
indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person, to the extent required to be recorded
on the Company's balance sheet in accordance with GAAP.
"Indemnitee" See Section 8.5.
"Intellectual Property" shall mean (i) all inventions (whether or not
patentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, divisions, revisions,
extensions, and reexaminations thereof; (ii) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith; (iii) all copyrightable works and all copyrights
(registered and unregistered); (iv) all trade secrets and confidential
information (including, without limitation, financial, business and marketing
plans and customer and supplier lists and related information); (v) all computer
software and software systems (including, without limitation, data, databases
and related documentation); (vi) all Internet web sites and domain names; (vii)
all other proprietary rights, and (viii) all licenses or other agreements to or
from third parties regarding the foregoing.
"Interest Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Annualized Consolidated EBITDA to (ii) Annualized
Consolidated Interest Expense.
"Interim Financials" See Section 4.5.
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<PAGE> 10
"Investment Documents" means, collectively, this Agreement, the
Debenture, the Subsidiary Guaranty, the Assignment of Life Insurance Policies,
the Warrants, the Shareholder Agreement (Allied), and all other instruments and
documents executed and delivered in connection with the Allied Investment.
"Investments" means, collectively, (a) the purchase, ownership,
investment in or other acquisition of any Capital Stock, evidence of
indebtedness or other obligation or security or any interest whatsoever in any
other Person; or (b) the making or permitting to exist any loans, advances or
extensions of credit to, or any investment in cash or by delivery of property
in, any other Person; or (c) the purchase or other acquisition (whether in one
or a series of related transactions) of any portion of the assets, business or
properties of another Person (including pursuant to an Acquisition); or (d) the
creation or acquisition of any Material Subsidiary; or (e) entry into any
partnership or joint venture.
"IPO" means an initial public offering and sale of equity securities by
the Company which are registered under the Securities Act of 1933, as amended.
"Licenses" shall mean, collectively, all rights, licenses, permits and
authorizations now or hereafter issued by any Governmental Authority reasonably
necessary in connection with the operation or conduct of the Company's Business.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, and (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset.
"Limitation" shall mean a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement, and the loss of any other material rights.
"Managed Practice" shall mean any professional association,
professional corporation, partnership or similar Person that provides ear, nose,
throat, head, neck or related services (including, without limitation, services
in the fields of allergy, audiology, oral surgery, pulmonology, plastic surgery
or sleep medicine) which has entered into a Service Agreement with the Company
or any of its Subsidiaries.
"Material Adverse Change" means a material adverse change in the
condition (financial or otherwise), operations, properties, or business of the
Company and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means (a) a materially adverse effect on the
business, operations, or condition, financial or otherwise, of the Company and
its Subsidiaries, taken as a whole, (b) material impairment of the ability of
the Company and its Subsidiaries, taken as a whole, to perform any of their
obligations under any Investment Document or (c) material
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<PAGE> 11
adverse effect upon the legality, validity or enforceability of this Agreement
or any of the other Investment Documents or the rights and remedies of the
Holders hereunder and thereunder.
"Material Contract" shall mean any contract or other arrangement (other
than any Investment Document), whether written or oral, to which the Company or
any other Subsidiary is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto would reasonably likely be
expected to have a Material Adverse Effect.
"Material Subsidiary" means, as of the date of any determination
thereof, any Subsidiary that (a) directly or indirectly owns any Capital Stock
of any other Material Subsidiary or (b) either (i) has total assets greater than
or equal to 3.0% of total assets (based on book value or fair market value) of
the Company and its Subsidiaries, determined on a consolidated basis and
calculated as of the fiscal quarter most recently ended or (ii) has EBITDA for
any fiscal quarter greater than or equal to 3.0% of the Consolidated EBITDA of
the Company and its Subsidiaries, determined on a consolidated basis and
calculated as of the fiscal quarter most recently ended. In any event, the term
"Material Subsidiaries" shall mean all Subsidiaries of the Company, that
together with the Company have assets equal to not less than 97% of the total
assets (calculated as described above) and EBITDA of not less than 97% of
Consolidated EBITDA (calculated as described above) and if more than one
combination of Subsidiaries satisfies such threshold, then those Subsidiaries so
determined to be "Material Subsidiaries" shall be specified by the Company;
provided that once a Subsidiary is deemed a Material Subsidiary, it shall remain
a Material Subsidiary hereunder.
"Maturity Date" means November 1, 2006.
"Maximum Rate" See Section 8.9.
"Medicaid Certification" shall mean, with respect to any facility,
certification by HCFA or another Governmental Authority, or any Person under
contract with HCFA, that such facility is in compliance with all conditions of
participation set forth in the Medicaid Regulations, except where the failure to
so comply would not have a Material Adverse Effect.
"Medicaid Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicaid program and a facility under which
the facility agrees to provide services for Medicaid patients in accordance with
the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC ss.
1395 et seq., or elsewhere) affecting the medical assistance program established
by Title XIX of the Social Security Act, and any statutes succeeding thereto;
(ii) all applicable provisions of all federal rules, regulations, manuals and
orders of all Governmental Authorities promulgated pursuant to or in connection
with the statutes described in clause (i) above and all federal administrative,
reimbursement and other guidelines of all Governmental Authorities affecting any
Managed Practice having the force of law promulgated pursuant to or in
connection with the statutes described in clause (i) above; (iii) all state
statutes and plans for medical assistance enacted in connection with the
statutes and
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<PAGE> 12
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations and orders of all Governmental Authorities
promulgated pursuant to or in connection with the statutes described in clause
(iii) above and all state administrative, reimbursement and other guidelines of
all Governmental Authorities having the force of law promulgated pursuant to or
in connection with the statutes described in clause (iii) above, in each case as
may be amended, supplemented or otherwise modified from time to time.
"Medicare Certification" shall mean, with respect to any facility,
certification by HCFA or any other Governmental Authority, or any Person under
contract with HCFA, that such facility is in compliance with all the conditions
of participation set forth in the Medicare Regulations, except where the failure
to so comply would not have a Material Adverse Effect.
"Medicare Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicare program and a facility under which
the facility agrees to provide services for Medicare patients in accordance with
the terms of the agreement and Medicare Regulations.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC ss. 1395 et
seq., or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, and orders and administrative, reimbursement and other guidelines
having the force of law of all Governmental Authorities (including without
limitation, Health and Human Services ("HHS"), HCFA, the Office of the Inspector
General for HHS, or any Person succeeding to the functions of any of the
foregoing) promulgated pursuant to or in connection with any of the foregoing
having the force of law, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Merger" shall have the meaning given to such term in the Merger
Agreement, as in effect as of the Closing Date.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
June 14, 1999, by and among Merger Sub, the Company, and certain guarantors
party thereto, including all schedules and exhibits thereto and other related
documentation.
"Merger Sub" shall mean TA Mergerco, Inc., a Delaware corporation, and
its successors.
"Merger Transaction Documents" means, collectively, the Merger
Agreement, the Voting Agreement, the Roll-Over Agreement, the Stock Purchase
Agreement, and the other documents executed pursuant to the Merger Agreement to
effect the transactions described therein.
"Minority Investment" shall mean an Investment by the Company or a
Subsidiary of the Company in an unrelated Person where the Company and its
Subsidiaries own less than fifty percent (50%) (or fifty percent (50%) without
direct or indirect management control) of the combined voting power of the
Capital Stock of such Person on a fully diluted basis.
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"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"New Lending Office" See Section 2.12.
"Net Cash Proceeds" shall mean, in the case of any IPO, the aggregate
cash payments received by the Company and its Material Subsidiaries less actual
and reasonable fees and expenses (including underwriting discounts and
commissions) incurred by the Company and its Subsidiaries in connection
therewith.
"Non-Wholly Owned Subsidiary" shall mean any Subsidiary of which less
than one-hundred percent (100%) of the outstanding Capital Stock is, directly or
indirectly, owned by the Company or its Wholly Owned Subsidiaries.
"Non-U.S. Lender" See Section 2.12.
"Obligations" means all indebtedness, advances pursuant to this
Agreement, debts, liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or such amounts are liquidated or
determinable) owing by the Company and the Subsidiary Guarantors to the Holders,
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, debenture, agreement or
other instrument, arising under this Agreement, the Debenture, or the Subsidiary
Guaranty. The term includes all principal, interest (including all interest that
accrues after the commencement of any case or proceeding in bankruptcy after the
insolvency of, or for the reorganization of the Company or any Subsidiary
Guarantor, whether or not allowed in such proceeding), prepayment premiums,
fees, charges, expenses, attorneys' fees, and any other sum chargeable to the
Company or Subsidiary Guarantors under this Agreement, the Debenture, or the
Subsidiary Guaranty.
"Other Taxes" See Section 2.12.
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
or investment made shall be within the scope of business described in Section
6.8; (ii) no Default or Event of Default has occurred or is continuing
hereunder; (iii) the Company provides pro forma financial statements to the
Holders showing the 12-month period ended with the month preceding the month in
which the Acquisition is to be closed and assuming the Acquisition was closed on
the first day of such 12-month period; (iv) such pro forma financial statements
demonstrate that, giving effect to the proposed Acquisition and the incurrence
of all indebtedness related thereto, the Company would have been in compliance
with the Financial Covenants as of the end of the 12-month period depicted in
such pro forma financial statements; (v) on a cumulative basis, no more than 75%
of the aggregate Purchase Amount for all Acquisitions completed during a rolling
12-month period is made in cash; and (vi) the consummation of such Acquisition
will not cause a Default or an Event of Default hereunder.
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"Permitted Joint Venture" shall mean (a) each of the Non-Wholly Owned
Subsidiaries identified on Schedule 4.12 and (b) a Non-Wholly Owned Subsidiary
identified as a Permitted Joint Venture by the Company to the Holders at the
time of the Acquisition or creation thereof: (i) of which at least fifty percent
(50%) of the Capital Stock is owned by the Company and/or a Subsidiary
Guarantor, (ii) over which the Company or a Subsidiary Guarantor has direct or
indirect management control, either as general partner, managing partner, by
contract or as holder of the controlling interest and over which the Company
and/or its Wholly Owned Subsidiaries has control over major decisions, including
without limitation, the decision to sell substantially all of the assets of such
joint venture or to merge such joint venture with another entity, (iii) the
activity of which is within the scope of business described in Section 6.8, (iv)
which is subject to no provision in its organizational documents or any contract
to which it is a party (A) that restricts the payment of dividends and
distributions from such entity to the Company or any Subsidiary thereof that
owns the Capital Stock of such Permitted Joint Venture, (B) that restricts the
pledge of such Capital Stock held by the Company and/or its Wholly Owned
Subsidiaries to the Senior Lender Agent for the benefit of the Senior Lenders or
(C) that restricts the exercise of remedies by the Senior Lender Agent with
respect to such Capital Stock under the Senior Loan Documents, (v) which does
not own any Capital Stock of any other Subsidiary, (vi) for which any Capital
Stock of such Permitted Joint Venture acquired from the Company or any
Subsidiary by Persons other than the Company or a Wholly Owned Subsidiary of the
Company are acquired for Fair Market Value (reasonable evidence of which shall
be provided to the Holders upon their request), and (vii) with respect to which,
after giving effect to the designation of a Subsidiary as a Permitted Joint
Venture, no Default or Event of Default would exist.
"Permitted Junior Debt" means (a) existing seller notes of the Company
or any of its Subsidiaries listed on Schedule 4.7 and (b) future seller notes
that are executed in connection with a Permitted Acquisition and that are fully
subordinated to the Obligations pursuant to one or more subordination agreements
between the Holders and each holder of such seller notes.
"Permitted Lien" is defined in Section 6.3.
"Permitted Minority Investment" shall mean (a) each of the Minority
Investments set forth on Schedule 4.12, (b) any Minority Investment with respect
to which all of the following conditions are satisfied: (i) the Minority
Investment shall be within the scope of business described in Section 6.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Company, (iii) the investors shall be the Company, a Wholly
Owned Subsidiary or a Permitted Joint Venture, (iv) the amount of any Physician
Minority Investment Loan issued in connection with such Minority Investment
shall not constitute more than forty percent (40%) of the Purchase Amount for
such Minority Investment; and (v) all of the conditions and requirements of
Section 5.15 applicable to such Minority Investment are satisfied; or (c) any
other Minority Investment to which the Holders shall have given their prior
written consent (which consent shall not be unreasonably withheld and may be
given subject to such additional terms and conditions as the Holders shall
reasonably establish) and with respect to which all of the conditions and
requirements set forth in this definition and in Section 5.15 and in or pursuant
to any such consent have been satisfied or waived in writing by the Holders;
provided that the Purchase Amount of a Minority Investment approved pursuant to
this clause (c)
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shall count toward the $25,000,000 basket set forth in Section 5.15(a)(iii)
unless the exclusion of such Purchase Amount from such basket is expressly
consented to by the Holders.
"Permitted Senior Debt" See Section 6.2(a).
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Physician Minority Investment Loan" shall mean a loan to a physician
or a physician-controlled entity in connection with a Minority Investment, which
loan (a) is used by such physician to acquire Capital Stock in the Target of
such Minority Investment, (b) is secured by Capital Stock owned by such
physician or physician-controlled entity in a Permitted Joint Venture and (c) is
evidenced by a promissory note.
"PIK Dividends" shall mean dividends paid in kind (but not in cash) by
the Company pursuant to its redeemable preferred stock or any like instrument or
security issued by the Company in the future.
"PIK Interest" means the difference between the interest accrued at the
Accrual Rate and the interest paid at the Pay Rate under the Debenture and as
those terms are defined in the Debenture, which difference is capitalized into
the outstanding principal balance under the Debenture quarterly.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which the Company or any ERISA
Affiliate may have any liability.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Purchase" shall mean an Acquisition or a Minority Investment.
"Purchase Amount" shall mean, with respect to any Purchase, the sum
(without duplication) of (i) the amount of cash paid by the Company and its
Subsidiaries in connection with such Purchase, (ii) the Fair Market Value of all
Capital Stock of the Company issued or given in connection with such Purchase,
(iii) the amount (determined by using the face amount or the amount payable at
maturity, whichever is greater) of all Indebtedness incurred, assumed or
acquired by the Company and its Subsidiaries in connection with such Purchase,
(iv) all additional purchase price amounts in connection with such Purchase in
the form of earnouts and other contingent obligations that should be recorded as
a liability on the balance sheet of the Company and its Subsidiaries or
expensed, in either event in accordance with GAAP, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Purchase, (vi) the aggregate fair market value
of all other consideration given by the Company and its Subsidiaries in
connection with such Purchase; and
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(vii) with respect to Minority Investments, the amount (determined by using the
face amount or the amount payable at maturity, whichever is greater) of any
Physician Minority Investment Loans issued by the Company and its Subsidiaries
in connection with such Minority Investment.
"Purchased Shares" means 850.00 shares of redeemable preferred stock
and 97,411 shares of convertible preferred stock in the Company purchased by
Allied pursuant to Section 2.2.
"Real Property" shall mean, collectively, all real property owned by
the Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries has a leasehold interest and all real property hereafter acquired
by the Company in fee or by means of a leasehold interest, including all real
property on which the Company's Business is now or hereafter conducted, together
with all goods located on any such real property that are or may become
"fixtures" under the law of the jurisdiction in which such real property is
located.
"Reimbursement Approvals" shall mean, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations and any other similar
agreements with or approvals by Governmental Authorities or other Persons.
"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section 4043(c) of ERISA for which the 30-day notice under Section
4043(a) of ERISA has not been waived by the PBGC (including any failure to meet
the minimum funding standard of, or timely make any required installment under,
Section 412 of the Internal Revenue Code or Section 302 of ERISA, regardless of
the issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such "reportable event" subject to advance notice to the
PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code, and (iv) a cessation of operations described in Section
4062(e) of ERISA.
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Investment
Documents.
"Responsible Officer" shall mean, with respect to the Company, the
president, the chief executive officer, the chief operating officer, any
Financial Officer, and any other officer or similar official thereof responsible
for the administration of the obligations of the Company in respect of this
Agreement.
"Roll-Over Agreement" shall mean the Roll-Over Agreement, dated as of
June 14 and October 22, 1999 among Merger Sub and the stockholders and
optionholders of the Company party thereto.
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"Roll-Over Agreement Shares" shall mean 2,058,607 shares of Capital
Stock of the Company subject to the Roll-Over Agreement.
"Senior Credit Agreement" means the Credit Agreement dated as of the
date of this Agreement by and among the Company, the Senior Lender Agent, and
the Senior Lenders in connection with the Senior Loan, as amended, supplemented,
restated, otherwise modified, extended, renewed, refunded, restructured, or
replaced from time to time in accordance with Section 6.2(a).
"Senior Lender Agent" means First Union National Bank, as agent for the
Senior Lenders, and any agent for the lenders with respect to future Permitted
Senior Debt, and their respective successors and assigns.
"Senior Lenders" means collectively the lenders who are or become
parties as lender to the Senior Credit Agreement and, with respect to future
Permitted Senior Debt, the holders of such Permitted Senior Debt. In the phrase
"approval of the Senior Lenders" or similar phases, the term "Senior Lenders"
means those Senior Lenders holding the percentage interest in the Permitted
Senior Debt required for approval under the terms of the Senior Credit
Agreement.
"Senior Leverage Ratio" means, as of the last day of any fiscal
quarter, the ratio of Consolidated Senior Indebtedness as of such date to
Annualized Consolidated EBITDA calculated with respect to the fiscal quarter
ending on such date.
"Senior Loan" means all of the following: (a) the aggregate principal
indebtedness advanced from time to time under the Senior Credit Agreement
(including reimbursement obligations in respect of letters of credit issued
thereunder) up to a maximum aggregate principal indebtedness of $60,000,000,
subject to increases that are permitted in the definition of Permitted Senior
Debt; (b) all interest accrued and accruing on the aggregate principal
outstanding under the Senior Loan Documents from time to time (including any
interest accruing after the filing of a petition for bankruptcy or for
reorganization relating to the Company [whether or not a claim for post-filing
interest is allowed in such proceedings to the extent such interest constitutes
an allowed claim]); (c) all other fees, indemnities, or monetary obligations
owed to the Senior Lenders under the Senior Loan Documents, including
indebtedness under Hedge Agreements; (d) all costs incurred by the Senior
Lenders in commencing or pursuing any enforcement action(s) with respect to the
amounts described in clauses (a) through (c), including, without limitation,
attorneys' fees and disbursements; and (e) any advances made by the Senior
Lenders to protect any collateral securing the Senior Loan.
"Senior Loan Documents" means the Senior Credit Agreement, and all
notes, collateral and security documents, guaranties, and other documents
delivered at any time in connection with Permitted Senior Debt all as amended,
supplemented, restated, otherwise modified, extended, renewed, refunded,
restructured or replaced from time to time in accordance with their respective
terms and as permitted in Section 6.2(a) and any credit or loan agreements
entered into between the Company and any bank or other lender at any time
subsequent to the Closing Date that evidences any replacement, supplemental or
new financing (other than financing that by its terms refers explicitly to this
Agreement or the Debenture and states that the indebtedness
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evidenced by such financing shall not be senior to this Agreement or the
Debenture), whether secured or unsecured, whether incurred in connection with a
refinancing of the obligations under the Senior Credit Agreement to which the
Company is a party on the Closing Date and the replacement of such financing
with a new credit facility or facilities, or any supplemental financing or any
new financing (whether or not a refinancing of existing indebtedness) to the
extent permitted under Section 6.2(a).
"Service Agreement" shall mean any agreement or arrangement between the
Company or any of its Subsidiaries and one or more Managed Practices pursuant to
which the Company or any such Subsidiary agrees to provide or arrange for
comprehensive management, administrative and other non-medical, non-dental
support services to such Managed Practice or Practices in exchange for payment
to the Company or such Subsidiary of a service, management or similar fee.
"Shareholder Agreement (Allied)" means the Shareholder Agreement
(Allied), dated of even date herewith, by and between the Company and Allied.
"Stockholders Agreement" shall mean the Stockholders Agreement, dated
as of June 14, 1999, among the stockholders of the Company and the stockholders
of Merger Sub party thereto and Merger Sub.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated as of June 14, 1999, among the TA Funds, the Company, and the Voting
Agreement Stockholders.
"Subordinated Indebtedness" means (a) subordinated indebtedness
existing on the Closing Date and described in Schedule 4.6, (b) the Indebtedness
evidenced by the Debenture, and (c) other unsecured Indebtedness of the Company
that is expressly subordinated and made junior in right and time of payment to
the Permitted Senior Debt and that is evidenced by one or more written
agreements or instruments having terms, conditions and provisions (including,
without limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form and
substance to the Senior Lenders.
"Subordination Agreement" means that certain Subordination Agreement,
dated as of the date hereof, by and among the Company, the Subsidiary Guarantors
and any of the Company's additional Subsidiaries that become Subsidiary
Guarantors from time to time after the Closing Date, Allied, and the Senior
Lender Agent, as amended, modified or supplemented from time to time.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and/or one or
more of its other Subsidiaries or a combination thereof (irrespective of
whether, at the time, securities of any other class or classes of any such
corporation or other Person shall or might have voting power by reason of the
happening of any contingency); provided that for purposes of Articles IV, V
(excluding Section 5.11), VI, and VII, a Permitted Joint Venture of which
greater
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than fifty percent (50%), or fifty percent (50%) with direct or indirect
management control, of the Capital Stock is owned by the Company and/or its
Subsidiaries shall be deemed a "Subsidiary". When used without reference to a
parent entity, the term "Subsidiary" shall be deemed to refer to a Subsidiary of
the Company.
"Subsidiary Guarantor" means any Material Subsidiary that is a
guarantor under the Subsidiary Guaranty.
"Subsidiary Guaranty" means the guaranty agreement made by the
Subsidiary Guarantors in favor of the Holders, as amended, modified or
supplemented from time to time.
"TA Associates" means TA Associates Inc., a Delaware corporation.
"TA Funds" means collectively, TA/Advent VIII, L.P., TA/Atlantic and
Pacific IV L.P., TA Executive Fund LLC, TA Investors LLC, Allied Capital
Corporation, 1998 GP&H Fund LLC, and GP&H PSC Partners.
"Target" shall have the meaning given to such term in Section
5.15(b)(i).
"Taxes" See Section 2.12.
"Third Party Payor Arrangements" shall mean any and all arrangements
with Medicare, Medicaid, CHAMPUS and any other Governmental Authority or
quasi-public agency, Blue Cross, Blue Shield, any managed care plans, and
organizations including, without limitation, health maintenance organizations
and preferred provider organizations, private commercial insurance companies and
any similar third party arrangements, plans or programs for payment or
reimbursement in connection with health care services, products or supplies.
"Total Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Consolidated Total Indebtedness as of such date to
(ii) Annualized Consolidated EBITDA calculated with respect to the fiscal
quarter ending on such date.
"Transactions" shall mean a series of transactions involving the
Company in which (i) certain TA Funds will purchase approximately 1,874,000
shares of common stock of the Company from certain stockholders of the Company
for an aggregate purchase price of approximately $19,675,000; (ii) Merger Sub
will receive approximately $13,125,000 in cash, together with the shares of
common stock of the Company purchased pursuant to the preceding clause (i) from
the TA Funds in exchange for convertible participating preferred stock and
redeemable preferred stock of Merger Sub; (iii) Merger Sub will be merged with
and into the Company with the Company as the survivor; (iv) in the Merger, the
Company's shareholders will receive approximately $10.50 per share in cash for
their common stock in the Company (other than those shares directly purchased by
certain TA Funds pursuant to clause (I) of this definition and the Roll-Over
Agreement Shares); (v) in connection with the Merger, the Roll-Over Agreement
Shares shall remain outstanding as shares of common stock of the Company (as the
surviving corporation in the Merger) and each outstanding share of common stock,
convertible participating preferred stock and 6% redeemable preferred stock,
respectively, of Merger Sub will be converted to one share of common stock,
convertible participating preferred
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stock and 6% redeemable preferred stock, respectively, of the Company, having
such terms as set forth in the Certificate of Incorporation of the surviving
corporation; (vi) the Company will issue the Debenture to the Holders for
aggregate cash proceeds of $15,000,000; (vii) the Certificate of Incorporation
of the surviving corporation shall be amended and restated as set forth in
Exhibit 1.1 to the Merger Agreement; (viii) the Company will issue Warrants to
the Holders, and the Holders will purchase redeemable preferred stock and
convertible preferred stock for an aggregate purchase price of $999,998.00;
(ix) the Company will make the initial borrowing under the Senior Loan to
finance, in part, the Transactions; (x) all outstanding borrowings and letters
of credit under the Company's existing credit facility will be refinanced or
replaced and such credit facility will be terminated; (xi) approximately
$11,100,000 of existing Subordinated Indebtedness of the Company and its
Subsidiaries shall remain outstanding; and (xii) after giving effect to the
Merger and the other transactions described above, no less than approximately
57% of the common stock of the Company on a fully diluted (and as converted)
basis will be owned by the TA Funds and their assigns.
"Transfer" means the sale, assignment, lease, transfer, mortgaging,
encumbering or other disposition, whether voluntary or involuntary, and whether
or not consideration is received therefor.
"Transfer Affecting the Company's Business" means (a) one or a series
of transactions undertaken by the Company resulting in (i) the Transfer of all
or substantially all of the assets of the Company; or (ii) a merger or
consolidation of the Company with another Person in which the Company is not the
surviving or successor entity or (b) a Change of Control.
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Voting Agreement" shall mean the Voting Agreement, dated as of June
14, 1999, among Merger Sub and the Voting Agreement Stockholders.
"Voting Agreement Stockholders" shall mean the stockholders of the
Company party to the Voting Agreement.
"Warrant Shares" means all shares of common stock of the Company
issuable upon the exercise of the Warrants.
"Warrants" means the warrant issued to Allied to purchase 101,658
shares of the common stock of the Company.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
SECTION 1.2 Terms Generally. The definitions in Section 1.1 apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun includes the corresponding masculine, feminine
and neuter forms. The words
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"include," "includes" and "including" are deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections, Exhibits and
Schedules are deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Except
as otherwise expressly provided herein, (a) any reference in this Agreement to
any Investment Document means such document as amended, restated, supplemented
or otherwise modified from time to time and (b) all terms of an accounting or
financial nature are construed in accordance with GAAP, as in effect from time
to time. Notwithstanding anything to the contrary in this Agreement, for
purposes of calculation of the Financial Covenants, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the application used in preparing the most recent financial statements of the
Company referred to in Section 4.5. In the event that any changes in GAAP after
the Closing Date are applied to the Company, the Company, the Holders and the
Senior Lender Agent will meet to determine whether such change would materially
affect the computation of the Financial Covenants. If such changes would
materially affect the computation of the Financial Covenants, the Company and
the Senior Lenders will undertake to promptly amend the Senior Credit Agreement
and the Company and the Holders will undertake to comparably amend this
Agreement to take into account such changes such that neither the Company, the
Senior Lenders, nor the Holders are advantaged or disadvantaged by such changes.
ARTICLE II
THE INVESTMENT
SECTION 2.1 Debenture. The Company will borrow, and the Holder will
invest the sum of FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000.00) in the
Company. At the closing under this Agreement (the "CLOSING"), the Holder will
advance FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000.00), such indebtedness
to be evidenced by, and to be repaid according to the terms of, the Debenture.
In the event of any inconsistency between this Article II and the Debenture, the
Debenture shall control.
SECTION 2.2 Purchased Shares. Subject to the terms and conditions
hereof, and relying on the representations and warranties set forth in this
Agreement, Allied will purchase at Closing the Purchased Shares for an aggregate
purchase price of One million Dollars ($1,000,000.00) pursuant to the
Stockholders Agreement, as amended.
SECTION 2.3 Senior Debt. The rights of the Holders under the Debenture
and this Agreement as to right of payment are subordinate only to the Permitted
Senior Debt. The Subordination Agreement governs the relative rights and
obligations of the Holders and the Senior Lenders with respect to payments by
the Company and/or Subsidiary Guarantors, the exercise of remedies by the
Holders under the Debentures and hereunder and by the Senior Lenders under the
Senior Loan Documents, and other related intercreditor matters. To the extent
there are any inconsistencies between the terms of this Agreement and the
Subordination Agreement, the Subordination Agreement shall control.
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SECTION 2.4 Repayment of Debenture. The Company shall pay interest only
on the Debenture throughout the term of the Debenture. Subject to the terms of
Section 2.8 and if not sooner paid, all unpaid principal amounts, accrued and
unpaid interest, and other obligations of the Company to the Holder due and
owing under the Debenture shall be paid upon the earliest of (i) the date of
acceleration of the Debenture pursuant to Article VII, and (ii) the Maturity
Date.
SECTION 2.5 Interest on the Debenture. Subject to the provisions of
Section 2.6, the Debenture shall bear interest (computed on the basis of a
360-day year assuming twelve equal 30-day months) at the interest rate stated in
the Debenture and be payable in accordance with the Debenture.
SECTION 2.6 Default Interest. During the continuation of an Event of
Default, the Company shall on demand from time to time pay interest, to the
extent permitted by law, on the outstanding principal balance of the Debenture
at the default rate of interest stated in the Debenture. Such default rate of
interest shall be in effect after as well as before judgment.
SECTION 2.7 Prepayment. The Company may at any time and from time to
time prepay the principal indebtedness evidenced by the Debenture, in whole or
in part, upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to Allied
before 12:00 (noon), Washington, DC time, subject to the Company's obligation to
pay a prepayment premium of 4% of any principal prepaid prior to the first
anniversary of the Closing Date and a prepayment premium of 2% of any principal
prepaid prior to the second anniversary of the Closing Date. There shall be no
prepayment premium on any prepayment made from and after the second anniversary
of the Closing Date. Any partial prepayments shall be made in increments of
$500,000. Notwithstanding the foregoing, from and after the completion of a IPO
by the Company, the prepayment premiums applicable during the first and second
years after the Closing Date shall be reduced to 2% and 1% respectively.
SECTION 2.8 Mandatory Prepayment of the Debenture at Option of Holder.
(a) The obligations of the Company under the Debenture and
this Agreement are not assumable; upon the occurrence of any of the following
triggering events, the Holder shall have the right (but not the obligation) to
require the Company to prepay the then outstanding principal balance, all
accrued but unpaid interest thereon, and all prepayment premiums then due and
owing under the Debenture, and to pay all of the other Obligations, if any, in
full. The occurrence of any of the following is a triggering event: (i) a
Transfer Affecting the Company's Business; (ii) a loss of Control by TA
Associates on behalf of the TA Funds to designate the two TA Directors (as
defined in the Stockholders Agreement) of the Company and, upon a default by the
Company under the Stockholders Agreement to unilaterally designate the
Independent Directors (as defined in the Stockholders Agreement); (iii) a
Transfer or series of Transfers of stock in the Company that results in either
TA Associates or Ramie A. Tritt owning less than 67% of its or his equity
holdings in the Company as of the Closing Date after giving effect to the Merger
Transaction (provided that any Transfer upon the death of Ramie A. Tritt
pursuant to a will or the laws of descent and distribution or pursuant to a
trust established by Ramie A. Tritt whose beneficiaries consist of family
members shall not be a triggering event); or (iv) the completion of an IPO by
the Company. Failure of the Holders to
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demand prepayment following the occurrence of any of the foregoing triggering
events shall not be deemed a waiver of the Holders' right to demand prepayment
following any future occurrence of any triggering event.
(b) If (i) the Holders elect to demand prepayment after the
completion of an IPO in accordance with this Section 2.8 and the Debenture, (ii)
the Net Cash Proceeds of the IPO are insufficient to prepay the Obligations
under the Debenture in full and to pay the Permitted Senior Debt in full, and
(iii) the Senior Lenders agree to accept a prepayment less than the amount
needed to repay the Permitted Senior Debt in full, the Holders will agree to
accept a principal prepayment under the Debenture equal to the same percentage
prepayment accepted by the Senior Lenders (i.e., if the Senior Lenders accept
the amount required to reduce the outstanding balance of the Permitted Senior
Debt by 50%, the Holders will accept a prepayment sufficient to reduce the
Obligations by 50%) on condition that upon application of the prepayment (x) the
maximum Permitted Senior Debt that may be outstanding is permanently reduced by
the amount of such principal prepayment to the Senior Lenders and (y) the Total
Leverage Ratio is not greater than 3.00:1.
SECTION 2.9 Payments.
(a) The Company shall make each payment (including principal
of or interest on the Debenture or other amounts) hereunder and under any other
Investment Document to which the Company or any Subsidiary Guarantor is a party
not later than 12:00 (noon), Washington, D.C. time, on the date when due in
immediately available dollars, without setoff, defense or counterclaim. Each
such payment shall be made to Allied at its offices at 1919 Pennsylvania Avenue,
N.W., Washington, D.C. 20006-3434, attention of J. Benjamin Nye, or by wire
transfer to the account designated by Allied.
(b) Whenever any payment (including principal of or interest
on the Debenture) hereunder or under any other Investment Document shall become
due, or otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest.
SECTION 2.10 Use of Proceeds. The proceeds of the investment by Allied
shall be used to consummate the transactions contemplated by the Merger
Transaction Documents. At Allied's sole discretion, Allied shall be permitted to
conduct a review of the Company's financial records to determine the disposition
of the proceeds of the investment, and, upon request by Allied, the Financial
Officer of the Company shall certify in writing to Allied that the proceeds of
the investment were used in accordance with this Section 2.10.
SECTION 2.11 Warrants. At Closing, the Company will issue and sell to
the Holders the Warrants. The Warrants will entitle the Holders to purchase
shares of Common Stock of the Company, subject to adjustment as provided in the
Warrants. The aggregate purchase price for the Warrants and the aggregate
exercise price for the Warrants are set forth in the Warrants.
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SECTION 2.12 Taxes.
(a) Any and all payments by or on behalf of the Company
hereunder and under the Debenture shall be made, in accordance with Section 2.9,
free and clear of and without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the net income of a Holder and (ii)
franchise taxes imposed on the net income, gross revenues, or capital of a
Holder, in each case by the jurisdiction under the laws of which such Holder is
organized or in which the principal or relevant lending office of a Holder is
located, or in which such Holder is managed or controlled, or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, being
called "TAXES"). If any Holder is a foreign Person, it shall be qualified to
transact business in the United States as a foreign person. If the Company must
deduct any Taxes from or in respect of any sum payable hereunder or under the
Debenture to a Holder, (i) the sum payable shall be increased by the amount (an
"ADDITIONAL AMOUNT") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Holder shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law.
(b) In addition, the Company will pay to the relevant
Governmental Authority in accordance with Applicable Law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Debenture
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Debenture ("OTHER TAXES").
(c) The Company will indemnify each Holder for the full amount
of Taxes and Other Taxes paid by such Holder and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability and the
method of calculating thereof prepared by such Holder absent demonstrable error,
shall be final conclusive and binding for all purposes. Such indemnification
shall be made within 45 days after the date such Holder makes written demand
therefor.
(d) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Company to the relevant Governmental Authority, the
Company will deliver to each Holder the original or a certified copy of a
receipt issued by such Governmental Authority evidencing payment thereof. If
there is a refund of any additional amount paid by the Company, the Company
shall be entitled to receive such refund.
(e) Any transferee of Allied, with respect to the investment,
if organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "NON-U.S. LENDER") shall deliver to
the Company two copies of either United States Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender
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claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-8
or W-9, as applicable, or any subsequent versions thereof or successors thereto
(and, if such Non-U.S. Lender delivers a Form W-8 or W-9, as applicable, a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10% shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Company and is not a controlled foreign
corporation related to the Company (within the meaning of Section 864(d)(4) of
the Code)), properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or reduced rate of U.S. Federal withholding
tax on payments by the Company under this Agreement and the other Investment
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement and on or before the date, if any,
such Non-U.S. Lender changes its applicable lending office by designating a
different lending office (a "NEW LENDING OFFICE"). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender.
(f) The Company shall not be required to indemnify any Holder
or to pay any additional amounts to any Holder, in respect of United States
Federal withholding tax pursuant to paragraph (a) or (c) above to the extent
that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Holder became a party to this
Agreement or, with respect to payments to a New Lending Office, the date such
Holder designated such New Lending Office with respect to the Debenture;
provided, however, that this paragraph (f) shall not apply to the extent the
indemnity payment or additional amounts any Holder would be entitled to receive
pursuant to this Section 2.12 (without regard to this paragraph (f)) do not
exceed the indemnity payment or additional amounts that the Person making the
assignment, participation or transfer to such Holder would have been entitled to
receive in the absence of such assignment, participation, or transfer or (ii)
the obligation to pay such additional amounts would not have arisen but for a
failure by such Holder to comply with the provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.12 shall require a
Holder to make available any of its tax returns (or any other information that
it reasonably deems to be confidential or proprietary).
(h) If any Holder requests compensation pursuant to paragraph
(a) or (c) above, then such Holder shall use reasonable efforts to designate a
New Lending Office for funding or booking the investment made hereunder that
would not result in such Taxes or Other Taxes being claimed. The Company may
also, upon notice to such Holder, require such Holder to assign all of its
interests, rights and obligations under this Agreement and the Debenture to any
assignee selected by the Company provided that such Holder shall have received
payment of an amount equal to the outstanding principal amount owing to it under
the Debenture, accrued interest thereon, and accrued fees required to be paid to
it hereunder or under the Debenture.
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ARTICLE III
CONDITIONS
SECTION 3.1 Conditions to Closing. The obligation of Allied to enter
into this Agreement and to perform its obligations hereunder is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) The representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects on and as of the
Closing Date.
(b) The Company and each Subsidiary Guarantor shall be in
compliance with all the terms and provisions set forth herein and in each other
Investment Document on its part to be observed or performed, and at the time of
and immediately after the Allied Investment, no Event of Default or Default
shall have occurred and be continuing.
(c) Allied shall have received the following items:
(i) a favorable written opinion of counsel for
the Company and the Subsidiary Guarantors (A) dated the Closing Date, (B)
addressed to Allied, and (C) covering such matters relating to the Investment
Documents and the Allied Investment as Allied shall reasonably request, and the
Company hereby requests such counsel to deliver such opinion;
(ii) the Debenture, duly executed by the Company,
and each of the other Investment Documents, executed by each of the parties
thereto (other than Allied);
(iii) the Warrants;
(iv) the Purchased Shares;
(v) the Shareholder Agreement (Allied), in form
and substance acceptable to the parties;
(vi) the Assignment of Life Insurance Policies
and accompanying questionnaires, duly executed by the Company, the insurer, and,
if applicable, any other beneficiaries of the Assigned Life Insurance Policies;
(vii) the Subordination Agreement relating to the
Senior Loan, duly executed by the Senior Lender Agent on behalf of the Senior
Lenders;
(viii) (A) a copy of the certificate or articles of
incorporation, including all amendments thereto, of the Company and each
Subsidiary Guarantor, certified as of a recent date by the Secretary of State of
the state of its organization, and a certificate as to the good standing of the
Company and each Subsidiary Guarantor as of a recent date, from such Secretary
of State; (B) a certificate of the Secretary or Assistant Secretary of the
Company and each Subsidiary Guarantor dated the Closing Date and certifying (1)
that attached thereto is a true and complete copy of the by-laws of the Company
or Subsidiary Guarantor, as applicable, as in effect on the Closing Date and at
all times since a date prior to the date of the resolutions
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described in clause (2) below, (2) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the Company and
each Subsidiary Guarantor authorizing the execution, delivery and performance of
the Investment Documents to which such Person is a party and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (3) that the certificate or articles of incorporation of the Company
and each Subsidiary Guarantor have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished pursuant
to clause (A) above other than pursuant to the Merger and the Merger Agreement,
and (4) as to the incumbency and specimen signature of each officer executing
any Investment Document or any other document delivered in connection herewith
on behalf of the Company each Subsidiary Guarantor; (C) a certificate of another
officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificates pursuant to (B) above; and (D)
such other documents as Allied may reasonably request; and
(ix) all amounts due and payable on or prior to
the Closing Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Company
hereunder or under any other Investment Document.
(d) After giving effect to the transactions contemplated
hereby, the Company shall have outstanding no Indebtedness other than (A) the
Permitted Senior Debt, (B) the extension of credit under this Agreement, (C)
Permitted Junior Debt listed on Schedule 4.7, and (D) the Indebtedness listed on
Schedule 4.6.
(e) Allied shall have received fully executed conformed copies
of the Merger Transaction Documents. The Merger shall have been consummated in
accordance with the terms of the Merger Transaction Documents, as evidenced by a
copy of the certificate of Merger, certified by the Secretary of State of the
State of Delaware. Without limiting the generality of the foregoing, the closing
of the Senior Loan shall have occurred and the Senior Lenders shall have
advanced at least $38,000,000 of the Senior Loan to consummate the Merger, and
the TA Funds shall have contributed at least $27,800,000 in redeemable preferred
stock and $5,000,000 in convertible preferred stock to consummate the Merger.
(f) As of immediately prior to the effective time of the
Merger, the holders of no more than five percent (5%) of the outstanding shares
of common stock of the Company shall have taken all required actions to assert
appraisal rights under Section 262 of the Delaware General Corporation Law and
not withdrawn or otherwise permitted to lapse such appraisal rights or demands
therefor.
(g) All material legal requirements to this Agreement, the
Debenture and the other Investment Documents and the Merger Transaction
Documents shall have been completed to Allied's satisfaction.
(h) The existing Permitted Junior Debt listed on Schedule 4.7
shall have been subordinated to the Debenture except to the extent Allied shall
have expressly waived such subordination requirement.
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(i) No event that has a Material Adverse Effect shall have
occurred.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Allied to enter into the Allied Investment, the
Company represents and warrants to the Holders that, after giving effect to the
Merger:
SECTION 4.1 Organization; Powers. The Company and each Material
Subsidiary (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted, (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify would not reasonably be expected to result in a
Material Adverse Effect, and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each of the Investment
Documents and each other agreement or instrument contemplated hereby, and to
borrow hereunder.
SECTION 4.2 Authorization; Enforceability. The Company and each of its
Material Subsidiaries has taken, or on the Closing Date will have taken, all
necessary action to execute, deliver and perform each of the Investment
Documents to which it is or will be a party, and has, or on the Closing Date (or
any later date of execution and delivery) will have, validly executed and
delivered each of the Investment Documents to which it is or will be a party.
This Agreement constitutes, and each of the other Investment Documents upon
execution and delivery will constitute, the legal, valid and binding obligation
of each of the Company and each of its Material Subsidiaries that is a party
hereto or thereto, enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, by
general equitable principles or by principles of good faith and fair dealing.
SECTION 4.3 No Violation. The execution, delivery and performance by
the Company and each of its Material Subsidiaries of this Agreement and each of
the other Investment Documents to which it is or will be a party, and compliance
by it with the terms hereof and thereof, do not and will not (i) violate any
provision of its articles or certificate of incorporation, certificate of
formation, bylaws, operating agreement, partnership agreement or other organic
documents of the Company or any of its Subsidiaries or contravene any other
Requirement of Law applicable to it, (ii) conflict with, result in a breach of
or constitute (with notice, lapse of time or both) a default under any material
indenture, agreement or other instrument to which it is a party (including any
Service Agreement), by which it or any of its properties is bound or to which it
is subject, (iii) result in a Limitation on any Licenses applicable to the
business, operations or properties of the Company or any Subsidiary or adversely
affect the ability of the Company or any Subsidiary to participate in any Third
Party Payor Arrangement, or (iv) except for the Liens granted in favor of the
Senior Lender Agent for the benefit of the Senior Lenders pursuant to the Senior
Loan Documents, result in or require the creation or imposition of any Lien upon
any of its properties or assets. No Subsidiary is a party to any agreement or
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instrument or otherwise subject to any restriction or encumbrance that restricts
or limits its ability to make dividend payments or other distributions in
respect of its Capital Stock, to repay Indebtedness owed to the Company or any
Subsidiary, to make loans or advances to the Company or any Subsidiary, or to
transfer any of its assets or properties to the Company or any Subsidiary, in
each case other than such restrictions or encumbrances existing under or by
reason of the Investment Documents or applicable Requirements of Law.
SECTION 4.4 Governmental Approvals.
(a) No consent, approval, authorization or other action by,
notice to, or registration or filing with, any Governmental Authority or other
Person is or will be required as a condition to or otherwise in connection with
the due execution, delivery and performance by each of the Company and its
Material Subsidiaries of this Agreement or any of the other Investment Documents
to which it is or will be a party or the legality, validity or enforceability
hereof or thereof, other than (i) consents, authorizations and filings that have
been (or on or prior to the Closing Date will have been) made or obtained and
that are (or on the Closing Date will be) in full force and effect, (ii)
consents and filings the failure to obtain or make which would not, individually
or in the aggregate, have a Material Adverse Effect, and (iii) consents,
authorizations and filings listed on Schedule 4.4.
(b) The Company, each Subsidiary and, to the knowledge of the
Company as of the Closing Date, each Managed Practice (i) has, and is in good
standing with respect to, all approvals, permits and other Licenses and (to the
extent applicable) all Reimbursement Approvals necessary to conduct its business
as presently conducted and to own or lease and operate its properties, (ii) to
the extent applicable, has obtained and maintains accreditation from all
generally recognized accrediting agencies for the Company and its Subsidiaries
to the extent prudent and customary in the industry in which the Company, any of
its Subsidiaries or any Managed Practice is engaged or to the extent required
for facilities owned, operated or managed by the Company, any of its
Subsidiaries or any Managed Practice and (iii) if required, has obtained and
maintains Medicaid Certification and Medicare Certification; (iv) if required,
has entered into and maintains in good standing its Medicare Provider Agreement
and its Medicaid Provider Agreement, except, in each case referred to in clauses
(i) through (iv), for those instances the failure to obtain or enter into would
not be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. There is no pending or, to the knowledge of the Company,
threatened Limitation of any such approval, permit or other License or
Reimbursement Approval of the Company, any Subsidiary or any Managed Practice
(as of the Closing Date), except for such Limitations as would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
(c) Each professional employee, officer and director of the
Company, its Subsidiaries, and, to the knowledge of the Company as of the
Closing Date, any Managed Practices providing professional services to patients
of the Company or any such Subsidiary is duly Licensed (where License is
required) by each state or state agency or commission, or any other Governmental
Authority having jurisdiction over the provisions of such services by such
employee, officer or director, in which the Company or Subsidiary is located,
required to enable such employee, officer or director to provide the
professional services necessary to enable the
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Company or Subsidiary to operate as currently operated and as presently
contemplated to be operated, except for those Licenses the failure of which to
obtain would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. All such required Licenses are in full force and
effect on the date hereof and have not been revoked or suspended or otherwise
limited, except for those instances that would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. Each
physician retained or otherwise engaged as an independent contractor by the
Company or its Subsidiaries possesses a valid narcotics number issued by the
United States Drug Enforcement Administration and a valid state narcotics
registration, except for those instances that would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 4.5 Financial Condition.
(a) The Company has previously provided to Allied a true and
complete copy of the audited financial statements summarizing the financial
results of operations of the Company and its Subsidiaries for its fiscal year
ended December 31, 1998 (the "AUDITED FINANCIALS"). The Audited Financials were
prepared in accordance with GAAP, are true and correct in all material respects,
and fairly present the Company's consolidated operating income and financial
condition at such date and for the period then ended; and
(b) The Company has previously provided to Allied a true and
complete copy of preliminary unaudited financial statements summarizing the
financial results of operation of the Company and its Subsidiaries for the nine
month period ended September 30, 1999 (collectively, the "INTERIM FINANCIALS").
The Interim Financials were prepared in accordance with GAAP (except that
footnotes are omitted), are true and correct in all material respects, and
fairly present the Company's consolidated operating income and financial
condition at such date and for the period then ended, subject to normal year-end
adjustments; and
(c) The financial projections of the Company and its
Subsidiaries previously provided to Allied have been prepared in good faith by
the Company, are complete and are based on assumptions believed to be reasonable
estimates of the future performance and financial condition of the Company and
its Subsidiaries, subject to the uncertainties and approximations inherent in
any projections and that such projections are estimates and not a guarantee of
actual results.
SECTION 4.6 Indebtedness. Except as disclosed in the Financials or
listed on Schedule 4.6 attached hereto, or listed on Schedule 4.7 with respect
to existing Permitted Junior Debt, on a consolidated basis, there are no
material liabilities or obligations with respect to the Company or any Material
Subsidiary of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due)
SECTION 4.7 Existing Permitted Junior Debt. All existing Permitted
Junior Debt is described on Schedule 4.7 attached hereto and made a part hereof.
True and complete copies of each of the notes or other instruments of
indebtedness evidencing such Permitted Junior Debt have been made available to
Allied.
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SECTION 4.8 Merger.
(a) The copy of the Merger Transaction Documents (including
all schedules, exhibits, amendments, supplements, modifications, assignments and
all other documents delivered pursuant thereto or in connection therewith)
delivered or made available to Allied as of the Closing Date is complete and
correct in all material respects. Neither the Company nor, to the Company's
knowledge, any other party thereto is in default in the performance or
compliance with any material provisions thereof. The Merger Agreement complies
with, and prior to the Closing the Merger has been consummated in accordance
with, all Applicable Laws that apply to the Company. All requisite approvals by
Governmental Authorities having jurisdiction over the Company, Merger Sub, and
any other Persons referenced therein, with respect to the transactions
contemplated by the Merger Agreement, have been obtained on or before the
Closing Date, and no such approvals impose or will impose any material adverse
conditions to the consummation of the transactions contemplated by the Merger
Agreement or to the conduct by the Company and its Material Subsidiaries of
their business thereafter.
(b) As of the Closing Date, the Merger Certificate has been
duly filed with the Secretary of State of Delaware and the Merger has become
effective.
SECTION 4.9 Ownership and Control. Attached hereto as Schedule 4.9 is
an accurate and complete list of the following information for the Company: (a)
the authorized capitalization of the Company as of the date hereof; (b) the
number of shares of each class of the Company's issued capital stock and the
number of outstanding shares thereof; (c) a description of all convertible
securities and all options, warrants and similar rights held with respect to the
Company's capital stock; (d) the names of the record owners of all such shares
of capital stock and all such convertible securities, options, warrants and
similar rights; and (e) the number of shares held by each such record owner. All
shares of capital stock of the Company and all convertible securities, options,
warrants and similar rights held with respect to the Company's capital stock
have been duly authorized and validly issued, are fully paid and nonassessable
(in the case of capital stock), and are owned of record as set forth on Schedule
4.9 attached hereto. Except as listed in Schedule 4.9 attached hereto, there are
no outstanding options, warrants, convertible securities or other stock purchase
rights issued by the Company as of the date hereof, and there are no sale
agreements, pledges, proxies, voting trusts, powers of attorney or other
agreements or instruments binding upon the Company's shareholders with respect
to beneficial and record ownership of, or voting rights with respect to, the
Company's capital stock as of the date hereof.
SECTION 4.10 No Material Adverse Change. There has been no Material
Adverse Change since December 31, 1998, and there exists no event, condition or
state of facts that would reasonably be expected to result in a Material Adverse
Change.
SECTION 4.11 Title to Properties; Possession Under Leases. Except as
set forth in Schedule 4.11, the Company and each Subsidiary (i) holds interests
as lessee under valid leases in full force and effect with respect to all
material leased real and personal property used in connection with its business,
(ii) possesses or has rights to use licenses, patents, copyrights, trademarks,
service marks, trade names and other assets sufficient to enable it to continue
to
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conduct its business substantially as heretofore conducted and without any
material conflict with the rights of others, and (iii) has good title to all of
its other properties and assets reflected in the most recent financial
statements referred to in Section 4.5) (except as sold or otherwise disposed of
since the date thereof in the ordinary course of business and except those
properties which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect), in each case under (i), (ii) and
(iii) above free and clear of all Liens other than Permitted Liens. The Company
and its Material Subsidiaries own no fee interests in the Real Property.
SECTION 4.12 Subsidiaries; Minority Investments. Schedule 4.12 sets
forth a list, as of the Closing Date, of all of the Material Subsidiaries and
other Subsidiaries of the Company and all Minority Investments and, as to each
such Subsidiary and Minority Investment, the percentage ownership (direct and
indirect) of the Company in each class of its Capital Stock and each direct
owner thereof. Except for the shares of Capital Stock expressly indicated on
Schedule 4.12, there are no shares of Capital Stock of any Subsidiary of the
Company outstanding or reserved for any purpose. All outstanding shares of
Capital Stock of each Subsidiary of the Company are duly and validly issued,
fully paid and nonassessable. The Company is the sole legal, record and
beneficial owner of, and has good and valid title to, all such Capital Stock,
free and clear of all Liens other than the Liens created pursuant to the Senior
Loan Documents.
SECTION 4.13 Litigation; Compliance with Laws
(a) Except as set forth on Schedule 4.13, there are no
actions, investigations, suits or proceedings pending or, to the knowledge of
the Company, threatened, at law, in equity or in arbitration, before any court,
other Governmental Authority or other Person, (i) against or affecting the
Company, any Subsidiary, to the knowledge of the Company as of the Closing Date,
any Managed Practice, or any of their respective properties that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect, or
(ii) with respect to this Agreement or any of the other Investment Documents.
(b) The Company, each Subsidiary and, to the knowledge of the
Company as of the Closing Date, each Managed Practice, has timely filed all
material reports, documents and other materials required to be filed by it under
all Applicable Laws with any Governmental Authority, has retained all material
records and documents required to be retained by it under all Applicable Laws,
and is otherwise in compliance with all Applicable Laws in respect of the
conduct of its business and the ownership and operation of its properties
(including, without limitation, all applicable Medicare Regulations and Medicaid
Regulations), except for such Applicable Laws the failure to comply with which,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.
SECTION 4.14 Material Contracts. Schedule 4.14 lists, as of the Closing
Date, each Material Contract to which the Company or any Subsidiary is a party,
by which any of them or their respective properties is bound or to which any of
them is subject. As of the Closing Date, (i) to the knowledge of the Company
with respect to third parties, each Material Contract is in full force and
effect and is enforceable by the Company or the Subsidiary that is a party
thereto in accordance with its terms, and (ii) neither the Company nor any
Subsidiary (nor, to the
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knowledge of the Company, any other party thereto) is in breach of or default
under any Material Contract in any material respect or has given notice of
termination or cancellation of any Material Contract. No Subsidiary other than a
Material Subsidiary is party to a Material Contract.
SECTION 4.15 Investment Company Act; Public Utility Holding Company
Act. Neither the Company nor any Material Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 4.16 Use of Proceeds. The Company will use the proceeds of the
investment only for the purposes specified in Article II.
SECTION 4.17 Taxes. The Company and each of its Material Subsidiaries
has timely filed all federal, state and local tax returns and reports required
to be filed by it and has paid all taxes, assessments, fees and other charges
levied upon it or upon its properties that are shown thereon as due and payable,
other than those that are being contested in good faith and by proper
proceedings and for which adequate reserves have been established in accordance
with GAAP. Such returns accurately reflect in all material respects all
liability for taxes of the Company and its Subsidiaries for the periods covered
thereby. There is no ongoing audit or examination or, to the knowledge of the
Company, other investigation by any Governmental Authority of the tax liability
of the Company or any Material Subsidiary, and there is no unresolved claim by
any Governmental Authority concerning the tax liability of the Company or any
Material Subsidiary for any period for which tax returns have been or were
required to have been filed, other than claims for which adequate reserves have
been established in accordance with GAAP. Neither the Company nor any Material
Subsidiary has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
SECTION 4.18 Full Disclosure. All factual information heretofore or
contemporaneously furnished to Allied in writing by or on behalf of the Company
or any Subsidiary for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all other such factual information
hereafter furnished to Allied in writing by or on behalf of the Company or any
Subsidiary will be, true and accurate in all material respects on the date as of
which such information is dated or certified (or, if such information has been
amended or supplemented, on the date as of which any such amendment or
supplement is dated or certified) and not made incomplete by omitting to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which such information was provided, not misleading.
This Section 4.18 does not apply to the financial projections of the Company,
which are separately covered by Section 4.5 hereof.
SECTION 4.19 Employee Benefit Matters.
(a) Each of the Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA, and
each Plan is and has been administered in compliance in all material respects
with all applicable Requirements of Law, including, without limitation, the
applicable provisions of ERISA and the Internal Revenue
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Code. No ERISA Event (i) has occurred within the five-year period prior to the
Closing Date, (ii) has occurred and is continuing, or (iii) to the knowledge of
the Company, is reasonably expected to occur with respect to any Plan. No Plan
has any Unfunded Pension Liability as of the most recent annual valuation date
applicable thereto, and neither the Company nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
(b) Neither the Company nor any ERISA Affiliate has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Company nor any ERISA Affiliate would become subject to any liability under
ERISA if the Company or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date. No Multiemployer Plan
is in "reorganization" or is "insolvent" within the meaning of such terms under
ERISA.
SECTION 4.20 Environmental Matters.
(a) No Hazardous Substances are or have been generated, used,
released, treated, disposed of or stored by the Company or any Subsidiary or, to
the knowledge of the Company, by any other Person (including any Managed
Practice or predecessor in interest) or otherwise, in, on or under any portion
of any real property, leased or owned, of the Company or any Subsidiary, except
in material compliance with all applicable Environmental Laws, and, to the
knowledge of the Company, no portion of any such real property or any other real
property at any time leased, owned or operated by the Company or any Subsidiary,
has been contaminated by any Hazardous Substance; and no portion of any real
property, leased or owned, of the Company or any Subsidiary has been or is
presently the subject of a non-routine environmental audit, assessment or
remedial action.
(b) No portion of any real property, leased or owned, of the
Company or any Subsidiary has been used by the Company or any Subsidiary or, to
the knowledge of the Company, by any other Person, as or for a mine, a landfill,
a dump or other disposal facility, a gasoline service station, or (other than
for petroleum substances stored in the ordinary course of business) a petroleum
products storage facility; no portion of such real property or any other real
property at any time leased, owned or operated by the Company or any Subsidiary
has, pursuant to any Environmental Law, been placed on the "National Priorities
List" or "CERCLIS List" (or any similar state or local list) of sites subject to
possible environmental problems; and to the knowledge of the Company, there are
not and have never been any underground storage tanks situated on any real
property, leased or owned, of the Company or any Subsidiary.
(c) All activities and operations of the Company and each
Subsidiary are in compliance with the requirements of all applicable
Environmental Laws, except to the extent the failure so to comply, individually
or in the aggregate, would not be reasonably likely to have a Material Adverse
Effect. Each of the Company and each Subsidiary has obtained all licenses and
permits under Environmental Laws necessary to its respective operations; all
such licenses and permits are being maintained in good standing; and each of the
Company and each Subsidiary is in compliance with all terms and conditions of
such licenses and permits, except for such licenses and permits the failure to
obtain, maintain or comply with which would not be
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reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. Neither the Company nor any Subsidiary is involved in any suit, action
or proceeding, or has received any notice, complaint or other request for
information from any Governmental Authority or other Person, with respect to any
actual or alleged Environmental Claims that, if adversely determined, would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect; and, to the knowledge of the Company, there are no threatened actions,
suits, proceedings or investigations with respect to any such Environmental
Claims, nor does the Company have reason to believe any such actions, suits or
proceedings will be forthcoming.
SECTION 4.21 Insurance. Schedule 4.21 sets forth a true and complete
summary of all insurance policies or arrangements carried or maintained by the
Company and each Subsidiary as of the Closing Date, indicating in each case the
insurer, policy number, expiration, amount and type of coverage and deductibles.
The assets, properties and business of the Company and each Subsidiary are
insured against such hazards and liabilities, under such coverages and in such
amounts, as are customarily maintained by prudent companies similarly situated
and under policies issued by insurers of recognized responsibility.
SECTION 4.22 Labor Matters. Neither the Company nor any Subsidiary is
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended. There is (i) no unfair labor practice
complaint before the National Labor Relations Board, or grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, pending
or, to the knowledge of the Company, threatened, against the Company or any
Subsidiary, (ii) no strike, lock-out, slowdown, stoppage, walkout or other labor
dispute pending or, to the knowledge of the Company, threatened, against the
Company or any Subsidiary, and (iii) to the knowledge of the Company, no
petition for certification or union election or union organizing activities
taking place with respect to the Company or any Subsidiary.
SECTION 4.23 Management History. To the knowledge of the Company,
during the past ten years, neither Ramie A. Tritt nor Gerald R. Benjamin has
been arrested for, or convicted of, any criminal offense, or been the subject of
an Act of Bankruptcy. Further, neither Dr. Tritt nor Mr. Benjamin has served as
an officer, director, general partner, member, or manager of any Person that has
been or is the subject of an Act of Bankruptcy during Dr. Tritt's or Mr.
Benjamin's service in such capacity with such Person.
SECTION 4.24 Solvency. Each of the Company and its Subsidiaries, after
giving effect to the consummation of the Transactions contemplated hereby, (i)
has capital sufficient to carry on its businesses as conducted and as proposed
to be conducted, (ii) has assets with a fair saleable value, determined on a
going concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
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SECTION 4.25 Licenses. The Company and each Subsidiary has good title
to all of the Licenses needed to properly operate the Company's Business except
where the failure to obtain such Licenses would not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.26 Warrant Shares. All of the Warrant Shares have been duly
authorized and reserved for issuance, and upon issuance subsequent to the
payment of the exercise price in accordance with the terms of the Warrants, the
Warrant Shares will be validly issued, fully paid and non-assessable.
SECTION 4.27 Purchased Shares. All of the Purchased Shares have been
duly and validly issued and are fully paid and non-assessable.
SECTION 4.28 Brokers. The Company has not engaged the services of a
broker in connection with the Allied Investment.
SECTION 4.29 Year 2000 Representation. Any reprogramming required to
permit the proper functioning, before, on and after January 1, 2000, of (i) the
Company's and its Subsidiaries' computer-based systems and (ii) equipment
containing embedded microchips (including, to the Company's knowledge, systems
and equipment supplied by others or with which the Company's or any of its
Subsidiaries' systems interface), and the testing of all such systems and
equipment, as so reprogrammed, will be completed by the Closing Date. The cost
to the Company and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of the year 2000 to the Company and its
Subsidiaries (including, without limitation, to the knowledge of the Company,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and its Subsidiaries
(and, to the knowledge of the Company, the computer and management information
systems of suppliers and vendors material to the business of the Company and its
Subsidiaries) are sufficient to permit the Company and its Subsidiaries to
conduct their respective businesses without a Material Adverse Effect.
SECTION 4.30 Service Agreements. No Service Agreement to which the
Company or any Subsidiary is a party, nor any of the transactions contemplated
thereunder, violates any Applicable Law (i) relating to the eligibility of a
Managed Practice to enter into or participate in any Third Party Payor
Arrangement or otherwise applicable to such Managed Practice as a result of such
participation, (ii) relating to any License or Reimbursement Approval of a
Managed Practice required in connection with any Third Party Payor Arrangement
in which it participates, or (iii) relating to the practice of medicine or the
sharing of fees in connection therewith, except in each case under (i), (ii) and
(iii) above for such violations as would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect.
SECTION 4.31 Reimbursements. All billings by the Company, each
Subsidiary and, to the knowledge of the Company as of the Closing Date, each
Managed Practice, pursuant to Third Party Payor Arrangements have been made in
compliance with all Applicable Laws, except where the failure to comply would
not, individually or in the aggregate, be reasonably likely to
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have a Material Adverse Effect; and to the knowledge of the Company, there has
been no intentional or material overbilling or overcollection pursuant to any
Third Party Payor Arrangements, other than as created by routine adjustments and
disallowances made in the ordinary course of business by the payors with respect
to such billings.
SECTION 4.32 Fraud and Abuse. None of the Company, any Subsidiary, to
the knowledge of the Company, any Managed Practice as of the Closing Date, or,
to the knowledge of the Company as of the Closing Date, any physician
shareholder or employee of any Managed Practice, has engaged in any activities
that are prohibited under 42 U.S.C. ss. 1320a-7b, or the regulations promulgated
thereunder, or related Requirements of Law, or that are prohibited by rules of
professional conduct, including, without limitation, the following: (i)
knowingly and willfully making or causing to be made a false statement or
misrepresentation of a material fact in any application for any benefit or
payment; (ii) knowingly and willfully making or causing to be made any false
statement or misrepresentation of a material fact for use in determining rights
to any benefit or payment; (iii) failure to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with intent to
secure such benefit or payment fraudulently; and (iv) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (y) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare,
Medicaid or any other government or private third party payor, or (z) in return
for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare, Medicaid or any other
government or private third party payor.
ARTICLE V
AFFIRMATIVE COVENANTS
Subject to Section 5.17, the Company covenants and agrees with the
Holders to do all of the following:
SECTION 5.1 Existence; Businesses and Properties.
(a) The Company will, and will cause each Material Subsidiary
to, (i) maintain and preserve in full force and effect its corporate existence,
except as expressly permitted otherwise by Section 6.5, (ii) obtain, maintain
and preserve in full force and effect all other rights, franchises, licenses,
permits, certifications, approvals and authorizations and other Licenses, and
all Reimbursement Approvals, required by Governmental Authorities and necessary
to the ownership, occupation or use of its properties or the conduct of its
business, except to the extent the failure to do so would not be reasonably
likely to have a Material Adverse Effect, and (iii) keep all material properties
in good working order and condition (normal wear and tear excepted) and from
time to time make all necessary repairs to and renewals and replacements of such
properties, except to the extent that any of such properties are obsolete or are
being replaced.
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(b) The Company will exercise commercially reasonable efforts
to cause each Managed Practice to obtain, maintain and preserve in full force
and effect all other rights, franchises, permits, certifications, approvals,
authorizations and other Licenses (including with respect to physician and
dentist employees), and all Reimbursement Approvals, required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business, except to the extent the failure to do so would
not be reasonably likely to have a Material Adverse Effect.
SECTION 5.2 Insurance. The Company will, and will cause each Material
Subsidiary to, will keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
commercial general liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law. The Company will, and will cause each
Material Subsidiary to, shall maintain business interruption insurance in such
amount as Company management determines in good faith is reasonable and adequate
for the Company's Business. This Section 5.2 shall be deemed satisfied so long
as the Company is in compliance with the insurance covenants of the Senior Loan
Documents.
SECTION 5.3 Obligations and Taxes. The Company will, and will cause
each Subsidiary to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
the Company or any Subsidiary; provided, however, that neither the Company nor
any Subsidiary shall be required to pay any such tax, assessment, charge, levy
or claim that is being contested in good faith and by proper proceedings and as
to which the Company or such Subsidiary is maintaining adequate reserves with
respect thereto in accordance with GAAP.
SECTION 5.4 Financial Statements, Reports, etc. The Company will
furnish to the Holders
(a) within 90 days after the end of each fiscal year,
beginning with the fiscal year ending December 31, 1999, its consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows showing the financial condition of the Company, as of the close of
such fiscal year and the results of its operations during such year, all audited
by the independent certified public accounting firm regularly retained by the
Company or another independent certified public accounting firm of recognized
national standing and accompanied by an opinion of such accountant (which shall
not be qualified as to going concern or scope of audit) to the effect that such
financial statements fairly present the financial condition and results of
operations of the Company on a consolidated basis in accordance with GAAP;
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(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, beginning with the fiscal quarter ending
September 30, 1999, its unaudited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows showing the
financial condition of the Company, as of the close of such fiscal quarter and
the results of its operations during such fiscal quarter and the then elapsed
portion of the fiscal year, including comparisons to the previous year's results
for such period and comparisons to budget, all certified by its Financial
Officer as fairly presenting the financial condition and results of operations
of the Company on a consolidated basis in accordance with GAAP, subject to the
absence of notes required by GAAP and subject to normal year-end audit
adjustments;
(c) within 45 days after the end of each fiscal quarter,
monthly operating statements for each Managed Practice for the three months in
the fiscal quarter then ended, all in reasonable detail; provided that such
statements need not be submitted to the Holders if such submission is no longer
required under the Senior Loan Documents;
(d) within 45 days after the end of each fiscal quarter, a
covenant compliance certificate in the form attached hereto as Exhibit A;
(e) at least 30 days prior to fiscal year end, a copy of the
Company's consolidated operating budget and cash flow projections for the next
fiscal year, all certified by the Financial Officer;
(f) promptly upon receipt thereof, copies of any "management
letter" submitted to the Company or any Material Subsidiary by its certified
public accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from the Company or any
such Material Subsidiary in respect thereof;
(g) promptly upon the sending, filing or receipt thereof,
copies of (i) all financial statements, reports, notices and proxy statements
that the Company or any Subsidiary shall send or make available generally to its
shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that the Company or any
Subsidiary shall render to or file with the Securities and Exchange Commission,
the National Association of Securities Dealers, Inc. or any national securities
exchange, (iii) all press releases and other statements made available generally
by the Company or any Material Subsidiary to the public concerning material
developments in the business of the Company or any Subsidiary; and (iv) all
material regulatory reports and notices of Governmental Authorities;
(h) within thirty (30) days after filing, copies of all
material documents filed with the Internal Revenue Service, the Environmental
Protection Agency, the Occupational Safety and Health Administration, and
comparable state agencies;
(i) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Company, or compliance with the terms of any Investment Document, as the Holders
may reasonably request, including any information reasonably requested by the
Holders to enable the Holders to file any form required by any Governmental
Authority.
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<PAGE> 40
SECTION 5.5 Litigation and Other Notices. The Company will furnish to
the Holders prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the institution or threatened in writing institution of
any action, suit, investigation or proceeding against or affecting the Company
or any Subsidiary or any Managed Practice, including any such investigation or
proceeding by any Governmental Authority (other than routine periodic inquiries,
investigations or reviews), that would, if adversely determined, be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect, and
any material development in any litigation or other proceeding previously
reported pursuant to Section 4.13(a) or this subsection;
(c) the receipt by the Company or any Material Subsidiary from
any Governmental Authority of (y) any notice asserting any failure by the
Company or any Material Subsidiary or any Managed Practice to be in compliance
with Applicable Law or that threatens the taking of any action against such
Person or sets forth circumstances that, if taken or adversely determined, would
be reasonably likely to have a Material Adverse Effect, or (z) any notice of any
actual or threatened suspension, or Limitation with respect to any License or
Reimbursement Approval of the Company or any Material Subsidiary or any Managed
Practice, where such action would be reasonably likely to have a Material
Adverse Effect;
(d) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Company obtaining knowledge thereof,
the occurrence of any material default under, or any proposed or threatened
termination or cancellation of, any Material Contract;
(e) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Company obtaining knowledge thereof,
the occurrence of any ERISA Event, together with (x) a written statement of a
Responsible Officer of the Company specifying the details of such ERISA Event
and the action that the Company has taken and proposes to take with respect
thereto, (y) a copy of any notice with respect to such ERISA Event that may be
required to be filed with the PBGC and (z) a copy of any notice delivered by the
PBGC to the Company or such ERISA Affiliate with respect to such ERISA Event;
and
(f) any event that has resulted in, or would reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.6 Maintaining Records; Access to Properties and Inspections.
The Company will, and will cause each Material Subsidiary to, keep proper books
of record and account in which full, true and correct entries in conformity with
GAAP and all requirements of law are made of all dealings and transactions in
relation to its business and activities. The Company will, and will cause each
Material Subsidiary to, permit any representatives designated by the Holders to
visit and inspect the financial records and the properties of the Company and
its Subsidiaries at reasonable times during normal business hours and as often
as reasonably
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requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Holders to discuss the affairs,
finances and condition of the Company with the officers thereof and independent
accountants therefor.
SECTION 5.7 Compliance with Laws. The Company will, and will cause each
Subsidiary to, comply in all respects with all Requirements of Law applicable in
respect of the conduct of its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.
SECTION 5.8 Year 2000 Compatibility. The Company will, and will cause
each Material Subsidiary to, take all action necessary to ensure that its
computer-based systems are able to operate and effectively process data
including dates on and after January 1, 2000, except where failure to so comply
would not be expected to result in a Material Adverse Effect. At the request of
the Holders, the Company will provide reasonable assurance of its Year 2000
compatibility.
SECTION 5.9 Further Assurances. The Company and each Material
Subsidiary will execute any and all further documents, agreements and
instruments, and take all further action that may be required under Applicable
Law, or that the Holders may reasonably request, in order to effectuate the
transactions contemplated by the Investment Documents.
SECTION 5.10 Maintenance of Office or Agency. The Company shall
maintain an office or agency (i) where the Debenture may be presented for
payment, or for registration and transfer and for exchange as provided in this
Agreement; and (ii) where notices and demands to or upon the Company in respect
of the Debenture may be served. The location of such office or agency initially
shall be Physicians' Specialty Corp., 1150 Lake Hearn Drive, Atlanta, GA 30342.
The Company shall give the Holders written notice of any change of location
thereof.
SECTION 5.11 Financial Ratios and Covenants. Beginning with the fiscal
quarter ended September 30, 1999, the Company and its Subsidiaries, on a
consolidated basis, shall, with respect to such fiscal quarter and each fiscal
quarter thereafter, have complied or comply with and maintain each of the
following financial ratios and financial covenants (collectively, the "FINANCIAL
COVENANTS"), measured in accordance with GAAP, based upon results for the
immediately preceding fiscal quarter, and using the information set forth in the
financial statements provided by the Company in accordance with Section 5.4
above:
(a) Senior Leverage Ratio. The Company will not permit the
Senior Leverage Ratio as of the last day of any fiscal quarter during the
periods set forth below to be greater than the ratio set forth below such
period:
<TABLE>
<CAPTION>
--------------------------------------------
CLOSING - 9/30/2000 THEREAFTER
--------------------------------------------
<S> <C>
3.50:1 3.21:1
--------------------------------------------
</TABLE>
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<PAGE> 42
(b) Total Leverage Ratio. The Company will not permit the
Total Leverage Ratio as of the last day of any fiscal quarter during the periods
set forth below to be greater than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
-----------------------------------------------------------
CLOSING - 9/30/2000 10/1/2000 - THEREAFTER
12/31/2001
-----------------------------------------------------------
<S> <C> <C>
4.80:1 4.52:1 4.24:1
-----------------------------------------------------------
</TABLE>
(c) Minimum Interest Coverage Ratio. Commencing with the
fiscal quarter ending September 30, 1999 and prior to the Maturity Date, the
Company will not permit the Interest Coverage Ratio as of the last day of any
fiscal quarter to be less than 2.1 to 1.0.
SECTION 5.12 Right of First Negotiation.
(a) For purposes of this Section 5.12, the term "COVERED
FINANCINGS" means the issuance of any subordinated debt in the Company; provided
that Covered Financings expressly excludes (i) debt securities issued or sold in
connection with the Transactions; (ii) any public offering and sale of any debt
securities by the Company which are registered under the Securities Act; and
(iii) debt securities issued or sold in connection with any Permitted
Acquisition or Permitted Minority Investment and constituting all or a portion
of the Purchase Amount for any such Permitted Acquisition or Permitted Minority
Investment.
(b) Commencing upon the date hereof and continuing until such
time as the Debenture has been paid in full and the Obligations have been fully
discharged, Allied shall have the rights described in this Section 5.12 with
respect to any Covered Financings proposed to be undertaken by the Company. If
the Company desires to undertake any Covered Financing, then, prior to doing so,
the Company shall be obligated to first comply with the following requirements:
(i) Prior to investigating any alternatives for
a Covered Financing with any third-parties, Company shall provide written notice
to Holders of its intent to enter into a Covered Financing (such notice, the
"FINANCING NOTICE").
(ii) The Holders shall have the exclusive right
during the period commencing on Holders' receipt of the Financing Notice and
expiring 14 calendar days thereafter (the "HOLDERS' EXCLUSIVE PERIOD") to
furnish to Company a written term sheet that provides the basic business terms
under which Holders would be willing to enter into the Covered Financing (any
such, a "HOLDERS' OFFER").
(iii) If Holders shall submit a Holders' Offer
during the Holders' Exclusive Period, then Company shall have a period of ten
calendar days commencing upon receipt of Holders' Offer to determine whether or
not to accept it and to notify Holders in writing of Company's decision. If the
Company accepts the Holders' Offer, the Company and Holders shall proceed in
good faith to consummate the Covered Financing transaction upon the terms and
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conditions contained in the Holders' Offer and such additional terms and
conditions as may be required, customary, and consistent with the terms and
conditions contained in Holders' Offer.
(iv) If the Holders shall fail to submit a Holders'
Offer during the Holders' Exclusive Period or if Company shall notify Holders in
writing of Company's decision not to accept Holders' Offer, then the Company
shall be entitled to pursue and obtain the Covered Financing from sources other
than the Holders, subject to the satisfaction of each of the requirements
specified in the following subsection (v) below.
(v) If, in accordance with subsection (iv), the
Company obtains a written commitment or written expression of interest (any
such, a "THIRD PARTY OFFER") from a third party or third parties (all such
parties are collectively referred to as the "THIRD PARTY OFFEROR") to provide
the Covered Financing, then the Company shall promptly furnish to Holders a true
and complete copy of the Third Party Offer. The Company shall be entitled to
proceed to obtain the Covered Financing from the Third Party Offeror only if
each of the following requirements is satisfied: (i) the Covered Financing is
being made upon the terms and conditions contained in the Third Party Offer and
such additional terms and conditions as may be required, customary, and
consistent with the terms and conditions contained in the Third-Party Offer;
(ii) the Third Party Offer contains pricing and material terms which are not
collectively more restrictive or higher in cost to the Company than those
contained in the most recent Holders' Offer; and (iii) the Covered Financing
will be fully funded prior to the expiration of 180 calendar days from the date
of the Third Party Offer; and
(vi) If, for any reason whatsoever, the Company
fails to obtain the Covered Financing from the Third-Party Offeror within the
time limit specified in subsection (v) of this Section 5.12 and in conformity
with each of the other requirements specified in clause (v) of this Section
5.12, then the Company shall promptly notify Allied to that effect in writing,
and the Company shall comply anew with the requirements of this Section 5.12
prior to obtaining any Covered Financing.
SECTION 5.13 Observation Rights. The Company shall permit one
authorized representative of Allied to attend all meetings of the Board and
shall provide such representative with such notice and other information with
respect to such meetings as are delivered to the directors of the Company. The
Company shall pay such representative's reasonable travel expenses (including,
without limitation, the cost of airfare, meals and lodging) in connection with
the attendance of such meetings.
SECTION 5.14 Assignment of Life Insurance. Until the Debenture is paid
in full, the Company shall pay, or cause to be paid, when due all premiums on
the Assigned Life Insurance Policies and otherwise cause the Assigned Life
Insurance Policies to be maintained in full force and effect at all times. Upon
the Holders' request from time to time, the Company shall cause the insurer on
each Assigned Life Insurance Policy to acknowledge the assignment of the
Assigned Life Insurance Policies to the Holders, and will execute and deliver to
the Holders, or cause such insurer to execute and deliver to the Holders, any
documents or questionnaires necessary or useful to further evidence such
assignment and to provide or confirm information about the Assigned Life
Insurance Policies. Any payments received by the Holders under the
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Assigned Life Insurance Policies may be applied by the Holders to any part of
the Obligations then outstanding, and such payment shall not postpone or reduce
the amount of any payment due thereafter; provided that the Holders shall have
no interest in any portion of the insurance proceeds exceeding $2,000,000.00.
Any payments received by the Company shall be immediately delivered by the
Company to the Holders in the form received with any endorsement necessary for
the negotiation of any such item of payment and until so paid to the Holders
such payments shall be deemed held in trust for the Holders. If Gerald R.
Benjamin ceases to be an employee of the Company before the Debenture is paid in
full, the Holders will release their security interest in the Assigned Life
Insurance Policy on Gerald R. Benjamin on condition that the Company assign its
rights under a $2,000,000 life insurance policy on another "key man," whose
identity will be subject to the reasonable approval of Allied. If the substitute
assignment will involve a life insurance policy on the individual who replaces
Gerald R. Benjamin, the Company must designate such person within 180 days after
Mr. Benjamin's departure. In any event, the Company must deliver to the Holders
a substitute Assignment of Life Insurance Policy fully executed by the Company
and the insurer within 60 days after Allied's approval of the designated
individual.
SECTION 5.15 Permitted Acquisitions and Permitted Minority Investments.
(a) Subject to the provisions of subsection (b) below and the
requirements contained in the definition of Permitted Acquisition and Permitted
Minority Investment, and subject to the other terms and conditions of this
Agreement, the Company may from time to time on or after the Closing Date effect
Permitted Acquisitions and Permitted Minority Investment; provided that, with
respect to each Permitted Acquisition and Permitted Minority Investment (unless
otherwise consented to in writing by the Holders pursuant to the definition of
Permitted Acquisition or Permitted Minority Investment, as the case may be):
(i) no Default or Event of Default shall have
occurred and be continuing at the time of the consummation of such Permitted
Acquisition or Permitted Minority Investment, as the case may be, or would exist
immediately after giving effect thereto;
(ii) the Purchase Amount with respect to a
Permitted Minority Investment shall not exceed $3,000,000; and
(iii) the Purchase Amounts for all Permitted
Minority Investments during the term of this Agreement shall not exceed
$25,000,000.
(b) Not less than ten (10) Business Days prior to the proposed
consummation of any Permitted Minority Investment with respect to which the
Purchase Amount exceeds $1,000,000, the Company shall have delivered to the
Holders the following:
(i) a reasonably detailed description of the
material terms of such Permitted Minority Investment (including, without
limitation, the Purchase Amount and method and structure of payment) and of each
Person or business that is the subject of such Permitted Minority Investment
(each, a "TARGET"); and
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(ii) a certificate, in form and substance
required by the Senior Lenders, executed by a Financial Officer setting forth
the Purchase Amount and further to the effect that, to the best of such
individual's knowledge, (x) the consummation of such Permitted Minority
Investment will not result in a violation of any provision of this Section, and
after giving effect to such Permitted Minority Investment the Company will be in
compliance with the Financial Covenants at the most recent calculation period,
such compliance determined with regard to good faith calculations made on a pro
forma basis in accordance with GAAP, (y) after giving effect to such Permitted
Minority Investment the Company believes in good faith that it will have
sufficient availability under the Permitted Senior Debt commitment to meet its
ongoing working capital requirements, and (z) no Event of Default exists before
or after giving effect to such Permitted Minority Investment and giving effect
to the annual delivery of operating budget cash flow projections prepared on a
quarterly basis for the fiscal year following the date of such Permitted
Minority Investment.
(c) If a Minority Investment requires the prior approval of
the Holders, the Holders shall use commercially reasonable efforts to respond to
the request of the Company for the consent of the Holders with respect to a
Minority Investment promptly (and in any event within five (5) Business Days)
after receipt of all information required in connection with such Minority
Investment, including without limitation all information required under this
Section 5.15; provided that the failure of the Holders to respond within such
five (5) Business day period shall not be deemed a consent of the Holders to
such Minority Investment.
(d) Concurrently with each delivery of the financial
statements described in Section 5.4, the Company shall deliver to the Holders
the following information (to the extent such information is delivered to the
Senior Lender Agent) with respect to any Permitted Acquisition or Permitted
Minority Investment occurring during the period covered by the financial
statements then being delivered (and for purposes of the financial statements
described in Section 5.4(b), any Permitted Acquisition or Permitted Minority
Investment not previously disclosed under this subsection (f)) and not requiring
the Holders' consent under Section 5.15(a)(ii) or the definition of Permitted
Acquisition:
(i) a reasonably detailed description of the
material terms of such Permitted Acquisition or Permitted Minority Investment
(including, without limitation the Purchase Amount and the method and structure
of payment) and of the Target; and
(ii) solely with respect to a Permitted
Acquisition, projected income statements of the Target for the two-year period
following the consummation of the Permitted Acquisition for such Target, in
reasonable detail, together with any appropriate statement of assumptions and
pro forma adjustments.
SECTION 5.16 Creation or Acquisition of Subsidiaries. Subject to the
provisions of Section 6.5, the Company may from time to time create or acquire
new Subsidiaries in connection with Permitted Acquisitions or otherwise, and the
Subsidiaries of the Company may create or acquire new Subsidiaries, provided
that concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or direct or indirect acquisition by the Company
thereof, each such new Subsidiary that would be deemed a Material Subsidiary
(excluding
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<PAGE> 46
Permitted Joint Ventures), will execute and deliver to the Holders (a) a joinder
to the Subsidiary Guaranty, pursuant to which such new Material Subsidiary shall
become a party thereto and shall guarantee the payment in full of the
Obligations of the Company under this Agreement and the Debenture and (b) a
joinder to the Subordination Agreement, pursuant to which such new Material
Subsidiary shall become a party thereto and agree to be bound thereby.
Calculations for determining whether the new Subsidiary qualifies as a Material
Subsidiary shall be based upon the financial statements of the new Subsidiary or
group of purchased assets, as applicable, for the most recently ended fiscal
quarter. Such calculations shall be made in accordance with GAAP as if such
Subsidiary or group of assets had been consolidated with the Company as of such
fiscal quarter.
SECTION 5.17 Duration of Affirmative Covenants. At such time as the
Debentures have been paid in full, all of the covenants set forth in this
Article V shall terminate except the covenants in the following Sections: the
portion of Section 5.1(a) regarding maintenance of the Company's existence and
Sections 5.4(a), 5.4(b), 5.4(d) (as long as the Permitted Senior Debt is
outstanding) and 5.4(e). Thereafter, at such time as the Company has completed
an IPO and its common stock is listed for trading on a national securities
exchange or the National Association of Securities Dealers, Inc. National Market
System, all of the covenants in this Article V shall terminate.
ARTICLE VI
NEGATIVE COVENANTS
Subject to Section 6.11, the Company covenants and agrees NOT to do any
of the following without the prior written consent of the Holders:
SECTION 6.1 Mergers, Consolidations. The Company shall not, and shall
not permit any Material Subsidiary to, liquidate, wind up or dissolve, and the
Company will not, and will not permit or cause any Subsidiary to, enter into any
consolidation, merger or other combination, or agree to do any of the foregoing;
provided, however, that:
(a) the Company may merge or consolidate with another Person
so long as (x) the Company is the surviving entity, (y) such merger or
consolidation shall constitute a Permitted Acquisition and the applicable
conditions and requirements of Sections 5.15 and 5.16 shall be satisfied, and
(z) immediately after giving effect thereto, no Default or Event of Default
would exist;
(b) any Subsidiary may merge or consolidate with another
Person so long as (x) the surviving entity is the Company or a Subsidiary
Guarantor (or in the case of an immaterial Subsidiary, the surviving entity is
another immaterial Subsidiary or a Subsidiary Guarantor), (y) such merger or
consolidation shall constitute a Permitted Acquisition and the applicable
conditions and requirements of Section 5.15 and 5.16 shall be satisfied, and (z)
immediately after giving effect thereto, no Default or Event of Default would
exist;
(c) the Company and its Subsidiaries may consummate the
Transactions.
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SECTION 6.2 Indebtedness. The Company will not, and will not permit or
cause any Subsidiary to, incur, create, assume or permit to exist any
Indebtedness other than:
(a) the Senior Loan and any amendments, modifications,
extensions, restatements, renewals, additions, or replacements of the Senior
Loan; provided that as amended, modified, extended, restated, renewed, or
replaced, the Senior Loan may not, without the consent of the Holders, (i)
permit maximum principal indebtedness, including reimbursement obligations for
letters of credit, outstanding at any one time to exceed $70,000,000 (exclusive
of interest, fees, indemnities and expense reimbursements); (ii) cause a pro
forma breach of the Financial Covenants; (iii) extend the maturity date longer
than one (1) year nor shorten the maturity or weighted average life to maturity;
(iv) place any new restrictions on the Obligations hereunder or under any other
the other Investment Documents; (v) increase the interest rate on the Senior
Loan by more than 200 basis points (exclusive of default rate), as more
specifically set forth in the Subordination Agreement; (vi) require any
amendment to or modification of the Subordination Agreement; (the Senior Loan
and any amendment, modification, extension or replacement meeting the terms of
this Section 6.2(a) being referred to as "PERMITTED SENIOR DEBT");
(b) Permitted Junior Debt; provided that (i) any debt
securities issued in connection with a Permitted Acquisition occurring after the
Closing Date shall (A) have a term of not less than five (5) years, (B) amortize
principal in no greater than equal annual installments over the term thereof,
and (C) be fully subordinated to the Obligations on terms acceptable to the
Holders or (ii) the terms of such debt securities shall be expressly consented
to by the Holders;
(c) Indebtedness existing on the date hereof and set forth in
the Financials or Schedule 4.6;
(d) Indebtedness created hereunder and under the Debenture;
(e) unsecured intercompany Indebtedness (x) of any Subsidiary
to the Company, (y) of any Subsidiary Guarantor to any other Subsidiary, and (z)
of the Company to any Subsidiary; provided that any such Indebtedness under this
clause (e) is incurred in the ordinary course of business and is payable on
demand and is fully subordinated in right of payment to the Obligations;
(f) accrued expenses (including salaries, accrued vacation and
other compensation), current trade or other accounts payable and other current
liabilities arising in the ordinary course of business and not incurred through
the borrowing of money, provided that the same shall be paid when due except to
the extent being contested in good faith and by appropriate proceedings;
(g) Indebtedness of the Company under Hedge Agreements
permitted under the Senior Credit Agreement;
(h) purchase money Indebtedness of the Company and its
Subsidiaries incurred solely to finance the payment of all or part of the
purchase price of any equipment, real
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property or other fixed assets acquired in the ordinary course of business,
including Indebtedness in respect of capital lease obligations, and any
renewals, refinancings or replacements thereof (subject to the limitations on
the principal amount thereof set forth in this clause (h)), which Indebtedness
shall not exceed $8,750,000 in aggregate principal amount during the term of
this Agreement; provided that purchase money Indebtedness expressly approved by
the Senior Lenders in connection with a Permitted Acquisition (as that term is
defined in the Senior Credit Agreement) shall not count toward the $8,750,000
basket included in this clause (h);
(i) Contingent Obligations incurred by the Company or any
Subsidiary in connection with (i) endorsements by the Company or any such
Subsidiary of negotiable instruments in the ordinary course of business, (ii)
obligations of the Subsidiary Guarantors under the Subsidiary Guaranty, and
(iii) guaranties of any of the Indebtedness permitted under this Section 6.2;
and
(j) other unsecured Indebtedness not exceeding $1,250,000 in
aggregate principal amount outstanding at any time.
SECTION 6.3 Liens. The Company will not, and will not permit or cause
any Material Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist, any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or file or permit the filing
of, or permit to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset, income or profits
under the Uniform Commercial Code of any state or under any similar recording or
notice statute, or agree to do any of the foregoing, other than the following
(collectively, "PERMITTED LIENS"):
(a) Liens securing the Permitted Senior Debt;
(b) Liens in existence on the Closing Date and set forth on
Schedule 6.3;
(c) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar Liens
incurred in the ordinary course of business for sums not constituting borrowed
money that are not overdue for a period of more than forty five (45) days or
that are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP (if so
required);
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure the performance of letters of
credit, bids, tenders, statutory obligations, surety and appeal bonds, leases,
government contracts and other similar obligations (other than obligations for
borrowed money) entered into in the ordinary course of business;
(e) Liens for taxes, assessments or other governmental charges
or statutory obligations that are not delinquent or remain payable without any
penalty or that are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with GAAP (if so
required);
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(f) Liens securing the purchase money Indebtedness permitted
under clause (h) of Section 6.2; provided that any such Lien (i) shall attach to
such property concurrently with or within ten (10) days after the acquisition
thereof by the Company or such Subsidiary, (ii) shall not exceed the lesser of
(y) the fair market value of such property or (z) the cost thereof to the
Company or such Subsidiary and (iii) shall not encumber any other property of
the Company or any Subsidiary;
(g) any attachment or judgment Lien under $275,000 that is
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required);
(h) Liens arising from the filing, for notice purposes only,
of financing statements in respect of true leases;
(i) with respect to any real property occupied by the Company
or any Subsidiary, all easements, rights of way, licenses and similar
encumbrances on title that do not materially impair the use of such property for
its intended purposes; and
(j) Liens securing the Permitted Junior Debt permitted under
clause (b) of Section 6.2; provided that such Liens (i) shall apply solely to
furniture, fixtures and equipment acquired from a Target in a Permitted
Acquisition, (ii) shall attach to such property concurrently with or within ten
(10) days after the acquisition thereof by the Company or such Subsidiary, (iii)
shall not encumber any other property of the Company or any Subsidiary.
SECTION 6.4 Disposition of Assets. The Company will not, and will not
permit or cause any Subsidiary to, sell, assign, lease, convey, transfer or
otherwise dispose (whether in one or a series of transactions throughout the
term of this Agreement) of an equitable, beneficial or legal interest in assets
having an aggregate value in excess of twenty percent (20%) of the value of the
consolidated assets of the Company at any one time outstanding, determined in
accordance with GAAP, unless the Company applies the proceeds to replace or
upgrade the transferred assets or to make related capital expenditures, to repay
Permitted Senior Debt in accordance with the Senior Credit Agreement, or, after
repayment of the Permitted Senior Debt, to repay the Debenture. This limitation
on disposition of assets shall not apply to inventory sold and equipment
disposed of in the ordinary course of business.
SECTION 6.5 Investments, Notes, and Advances. The Company will not, and
will not permit or cause any Subsidiary to make any Investments, or make a
commitment or otherwise agree to do any of the foregoing, other than:
(a) Cash Equivalents;
(b) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
Intellectual Property, real property and other assets, in each case in the
ordinary course of business;
(c) Investments consisting of loans and advances to employees
for reasonable travel, relocation and business expenses in the ordinary course
of business, extensions of trade
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credit in the ordinary course of business, and receivables created and prepaid
expenses incurred in the ordinary course of business;
(d) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (e) of Section 6.2;
(e) Investments existing on the Closing Date and described in
Schedule 6.5;
(f) Investments of the Company under Hedge Agreements with any
Senior Lender as permitted under the Senior Loan Documents;
(g) Investments consisting of the making of capital
contributions or the purchase of Capital Stock (i) by the Company or any
Subsidiary in any other Person that is (or immediately after giving effect to
such Investment will be) a Subsidiary Guarantor and (ii) by any Subsidiary in
the Company; and
(h) Permitted Acquisitions and Permitted Minority Investments;
(i) Physician Minority Investment Loans permitted under the
Senior Loan Documents incurred in connection with a Permitted Minority
Investment, excluding the investments set forth in Schedule 6.5;
(j) loans to physicians in Managed Practices of up to $625,000
in the aggregate during any consecutive twelve month period, but excluding the
loans set forth on Schedule 6.5; provided that Physician Minority Investment
Loans and other loans to physicians expressly approved by the Senior Lenders
under the Senior Credit Agreement in connection with a Permitted Minority
Investment shall not count toward the $625,000 basket included in this clause
(j); and
(k) other Investments in an aggregate amount, as valued at the
time each such Investment is made, not exceeding $125,000 for all such
Investments from and after the Closing Date.
SECTION 6.6 Restricted Payments.
(a) The Company will not, and will not permit or cause any
Subsidiary to, directly or indirectly, declare or make any dividend payment, or
make any other distribution of cash, property or assets, in respect of any of
its Capital Stock or any warrants, rights or options to acquire its Capital
Stock, or purchase, redeem, retire or otherwise acquire for value any shares of
its Capital Stock or any warrants, rights or options (it being understood that
the Company may issue options) to acquire its Capital Stock, or set aside funds
for any of the foregoing, except that:
(i) the Company may declare and make dividend
payments or other distributions payable solely in its common stock and preferred
stock (as long as such preferred stock does not constitute Disqualified Capital
Stock); and
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(ii) each Subsidiary may declare and make
dividend payments or other distributions to the Company or another Subsidiary
Guarantor, to the extent not prohibited under applicable Requirements of Law;
provided, that Permitted Joint Ventures may make distributions in accordance
with distribution provisions of organizational documents reasonably approved by
the Senior Lenders so long as no Default or Event of Default then exists or
would result immediately after giving effect thereto.
(b) The Company will not, and will not permit or cause any of
its Subsidiaries to, make (or give any notice in respect of) any voluntary.
optional, or required payment or prepayment of principal on any Subordinated
Indebtedness, except as permitted herein subject to the Subordination Agreement,
or directly or indirectly make any redemption (including pursuant to any change
of control provision), retirement, defeasance or other acquisition for value of
any Subordinated Indebtedness, or make any deposit or otherwise set aside funds
for any of the foregoing purposes; provided that, subject to the terms of any
subordination agreement applicable to the seller debt securities evidencing
Permitted Junior Debt, the Company and its Subsidiaries may make scheduled
payments (but not prepayments) of principal and interest under such seller debt
securities. Notwithstanding the foregoing, the Company will not, and will not
permit or cause any of its Subsidiaries to, make any payment of principal,
interest, or any other sum due under Permitted Junior Debt during the
continuation of an Event of Default.
(c) The Company will not, and will not permit or cause any of
its Subsidiaries to, make any payment (whether voluntary, optional or required)
or prepayment of principal on the existing Permitted Junior Debt set forth on
Schedule 6.6(c) other than in common stock of the Company in accordance with the
terms of such notes.
SECTION 6.7 Transactions with Affiliates. The Company will not, and
will not permit or cause any Subsidiary to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service) with any officer, director,
stockholder or other Affiliate of the Company or any Subsidiary, except in the
ordinary course of its business and upon fair and reasonable terms that are no
less favorable to it than would obtain in a comparable arm's length transaction
with a Person other than an Affiliate of the Company or such Subsidiary;
provided, however, that nothing contained in this Section shall prohibit:
(a) transactions described on Schedule 6.7 or otherwise
expressly permitted under this Agreement; and
(b) the payment by the Company of reasonable and customary
fees to members of its board of directors.
SECTION 6.8 Business of Company, Change of Location, and Subsidiaries.
The Company will not, and will not permit or cause any Material Subsidiary to,
engage in any business other than the business of providing management services
to providers of ear, nose, throat, head and neck healthcare services (and
related fields of allergy, audiology, pulmonology, oral surgery, plastic surgery
and sleep medicine), within the United States of America and services,
businesses and activities ancillary thereto, including, but not limited to,
investments in
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and management of ambulatory surgery centers, diagnostic imaging centers and
managed care and similar plans.
SECTION 6.9 Stay, Extension and Usury Laws. The Company and each
Subsidiary Guarantor covenants and agrees (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, and will use its best efforts to
resist any attempts to claim or take the benefit of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of its obligations under this Agreement
or the Debenture. The Company and each Subsidiary Guarantor (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holders, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
SECTION 6.10 Limitation on Certain Restrictions. The Company will not,
and will not permit or cause any Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any restriction or
encumbrance on (i) the ability of the Company and its Subsidiaries to perform
and comply with their respective obligations under the Senior Loan Documents or
the Investment Documents, including the Subordination Agreement, or (ii) the
ability of any Subsidiary to make any dividend payments or other distributions
in respect of its Capital Stock, to repay Indebtedness owed to the Company or
any Subsidiary Guarantor, to make loans or advances to the Company or any
Subsidiary Guarantor, or to transfer any of its assets or properties to the
Company or any Subsidiary Guarantor, in each case other than such restrictions
or encumbrances existing under or by reason of the Senior Loan Documents, the
Investment Documents, the Subordination Agreement, or applicable Requirements of
Law.
SECTION 6.11 Duration of Negative Covenants. Upon repayment of the
Debenture in full, all of the covenants set forth in this Article VI shall
terminate.
ARTICLE VII
EVENTS OF DEFAULT
AND REMEDIES
SECTION 7.1 Events of Default. If any of the following events occurs
and is continuing, it shall be an "EVENT OF DEFAULT":
(a) any representation or warranty made or deemed made in or
in connection with this Agreement or the Debenture, or any representation,
warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished in connection with or pursuant
to this Agreement or the Debenture, proves to have been materially false or
misleading when so made, deemed made or furnished;
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(b) default is made in the payment of any principal of the
Debenture within ten (10) Business Days after the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;
(c) default is made in the payment of any interest on the
Debenture or any other amount (other than an amount referred to in (b) above)
due under any Investment Document, within ten (10) Business Days after the same
becomes due and payable;
(d) failure of the Company to perform or comply with any
Financial Covenant;
(e) with respect to the Permitted Senior Debt or any other
Indebtedness in a principal amount in excess of $1,000,000, the Company or any
Material Subsidiary (i) fails to pay any principal or interest, regardless of
amount due, within any applicable notice and cure periods after the same becomes
due and payable and the holder of the Permitted Senior Debt or such Indebtedness
has accelerated its maturity date, or (ii) fails to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness and such failure is not cured
within any applicable notice and cure periods and the holder of the Permitted
Senior Debt or such Indebtedness has accelerated its maturity date;
(f) a default is declared against the Company or any Material
Subsidiary under any Material Contract (after giving effect to any applicable
notice and cure periods provided for therein) and the failure to cure such
default would reasonably be expected to result in a Material Adverse Effect;
(g) an Act of Bankruptcy or Act of Dissolution shall have
occurred with respect to the Company;
(h) Any one or more money judgments, writs or warrants of
attachment, executions or similar processes involving an aggregate amount
(exclusive of amounts fully bonded or covered by insurance as to which the
surety or insurer, as the case may be, has acknowledged its liability in
writing) in excess of $275,000 shall be entered or filed against the Company or
any Material Subsidiary or any of their respective properties and the same shall
not be dismissed, stayed, bonded pending appeal, or discharged within a period
of thirty (30) days or in any event later than five days prior to the date of
any proposed sale thereunder;
(i) as a result of a Transfer or series of Transfer, either
Ramie A. Tritt or Gerald R. Benjamin ceases to own at least 67% of the shares of
stock or other equity interest he controls in the Company on the Closing Date
following completion of the Merger Transaction; provided that any Transfer to
trusts established for estate planning purposes by Ramie A. Tritt or General R.
Benjamin and controlled by either of them and any Transfer pursuant to a will or
the laws of descent and distribution upon the death of either Ramie A. Tritt or
Gerald Benjamin shall not be an Event of Default;
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(j) Ramie A. Tritt ceases to devote his full time and
attention to the management of the Company and/or the affiliated practice,
Atlanta Ear Nose & Throat Associates and a suitable replacement reasonably
satisfactory to the Holders is not found within 180 days;
(k) default is made in the due observance or performance by
the Company of any material covenant, condition or agreement or any
representation or warranty contained in any Investment Document (other than
those specified in (a) through (j) above) and such default continues unremedied
for a period of 30 days after notice thereof from the Holders to the Company.
Upon the occurrence of an Event of Default, (other than an event with respect to
the Company or any Subsidiary Guarantors described in paragraph (g) above) and
at any time thereafter during the continuance of such event, the Holders may by
notice to the Company and the Subsidiary Guarantors, take either or both of the
following actions, at the same or different times: declare the principal amount
then outstanding under the Debenture to be forthwith due and payable in whole or
in part, whereupon the principal amount so declared to be due and payable,
together with accrued interest thereon, prepayment premium (if acceleration
occurs during the first two years after the Closing Date), and all other
liabilities of the Company and the Subsidiary Guarantors accrued hereunder and
under the Subsidiary Guaranty, shall become forthwith due and payable, without
presentment demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company and the Subsidiary Guarantors, anything
contained herein or in any other Investment Document to the contrary
notwithstanding; and in any event with respect to the Company and the Subsidiary
Guarantors described in paragraph (g) above, the principal of the Debenture then
outstanding, together with accrued interest thereon, prepayment premium (if
acceleration occurs during the first two years after the Closing Date), and all
other liabilities of the Company and the Subsidiary Guarantors accrued hereunder
and under the Subsidiary Guaranty, shall automatically become due and payable,
without presentment demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Company and the Subsidiary Guarantors,
anything contained herein or in any other Investment Document to the contrary
notwithstanding.
SECTION 7.2 Waivers. The Company and the Subsidiary Guarantors waive
presentment, demand, notice of dishonor, and protest, and all demands and
notices of any action taken by the Holders under this Agreement, except as
otherwise provided herein.
SECTION 7.3 Enforcement Actions. The Holders may, at their option,
collect all or any portion of the Obligations or enforce against the Company and
the Subsidiary Guarantors any of their respective rights and remedies including,
but not limited to: (i) commencing or pursuing legal proceedings to collect any
amounts owed with respect to the Obligations; or (ii) executing upon, or
otherwise enforcing, any judgment obtained with respect to amounts owed with
respect to the Obligations.
SECTION 7.4 Costs. The Company shall pay all expenses of any nature,
whether incurred in or out of court, and whether incurred before or after the
Debenture shall become due at its maturity date or otherwise (including, but not
limited to, reasonable and actual attorneys'
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fees and costs) which the Holders may reasonably incur in connection with the
collection of any of the Obligations. The Holders are authorized to pay at any
time and from time to time any or all of such expenses, to add the amount of
such payment to the amount of principal outstanding under the Debenture, and to
charge interest thereon at the rate of 12% per annum.
SECTION 7.5 Remedies Non-Exclusive. None of the rights, remedies,
privileges or powers of the Holders expressly provided for herein are exclusive,
but each of them is cumulative with, and in addition to, every other right,
remedy, privilege and power now or hereafter existing in favor of each of the
Holders, whether pursuant to the other Investment Documents, at law or in
equity, by statute or otherwise.
SECTION 7.6 Subordination Agreement. Without limiting the application
of the Subordination Agreement generally to this Agreement and the other
Investment Documents, the exercise of remedies by the Holders shall be subject
to the operation and effect of the Subordination Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Company, to Physicians' Specialty Corp., 1150
Lake Hearn Drive, Suite 640, Atlanta, Georgia 30342, Telecopy No. (404)
250-0162, with a copy to Goodwin, Procter & Hoar LLP, Exchange Place, Boston,
Massachusetts 02109-2881, Attention: Steven M. Ellis, Telecopy No. (617)
523-1231;
(b) if to Allied, to Allied Capital Corporation, at its
offices at 1919 Pennsylvania Avenue NW, Washington, DC 20006-3434, Attention of
J. Benjamin Nye (Telecopy No. 202-659-2053), with a copy to Piper & Marbury
L.L.P., 1200 Nineteenth Street, N.W., Washington, D.C. 20036 Attention of
Anthony Rickert (Telecopy No. 202-223-2085).
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy (provided a copy is contemporaneously sent by first class mail) or on
the date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 8.1 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 8.1.
SECTION 8.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company and Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by Allied and shall survive the making by Allied of the investment,
regardless of any investigation made by Allied or on its behalf and shall
continue in
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full force and effect as long as the principal of or any accrued interest
on the Debenture or any other amount payable under this Agreement or the
Subsidiary Guaranty is outstanding and unpaid. The provisions of
Section 8.6 shall remain operative and in full force and effect regardless
of the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of the Debenture, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Investment Document, or any investigation made by or on behalf of
Allied.
SECTION 8.3 Binding Effect. This Agreement shall become effective when
it shall have been executed by each of the Company, Subsidiary Guarantors and
Allied, and when Allied shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
SECTION 8.4 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Company, the Subsidiary Guarantors or Allied that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Neither the Company nor any Subsidiary Guarantor shall
assign or delegate any of its rights or duties hereunder without the prior
written consent of the Holders, and any attempted assignment or delegation
without such consent shall be null and void. Each Holder may assign all or a
portion of its rights and obligations under this Agreement; provided that any
such assignment shall not be made without the Company's prior written consent,
which consent shall not be unreasonably withheld or delayed; provided further
that the Company's consent shall not be required in the event a Default or Event
of Default shall have occurred and be continuing.
SECTION 8.5 Expenses; Indemnity.
(a) The Company will pay a loan origination fee of $150,000
and all out-of-pocket expenses incurred by Allied in connection with the
preparation and administration of this Agreement and the other Investment
Documents, or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by Allied in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Investment Documents, including any suit, action, claim or other
activity of Allied to collect the Obligations or any portion thereof, or in
connection with the Allied Investment hereunder, including the reasonable fees,
charges and disbursements of Piper & Marbury L.L.P., counsel for Allied, and, in
connection with any such enforcement or protection, the reasonable fees, charges
and disbursements of any other counsel for Allied.
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(b) The Company and each Subsidiary Guarantor will indemnify
each Holder, and its directors, officers, employees and agents (each such Person
being called an "INDEMNITEE") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable and actual counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Investment Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the Allied Investment and the
other transactions contemplated thereby, (ii) the use of the proceeds of the
Debenture, (iii) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv)
any actual or alleged presence or release of Hazardous Substances on any
property owned or operated by the Company or any Subsidiary, or any
Environmental Claim related in any way to the Company or any Subsidiary;
provided that such indemnity shall not as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) The provisions of this Section 8.5 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement the consummation of the transactions contemplated hereby, the
repayment of the Debenture, the invalidity or unenforceability of any term or
provision of this Agreement or any other Investment Document, or any
investigation made by or on behalf of Allied. All amounts due under this Section
8.5 shall be payable on written demand therefor.
SECTION 8.6 Waiver of Consequential and Punitive Damages. The Company,
each Subsidiary Guarantor and each Holder hereby waive to the fullest extent
permitted by law all claims to consequential and punitive damages in any lawsuit
or other legal action brought by any of them against any other of them in
respect of any claim among or between any of them arising under this Agreement,
the other Investment Documents, or any other agreement or agreements between or
among any of them at any time, including any such agreements, whether written or
oral, made or alleged to have been made at any time prior to the Closing Date,
and all agreements made hereafter or otherwise, and any and all claims arising
under common law or under any statute of any state or the United States of
America, including any thereof in contract, tort, strict liability or otherwise,
whether any such claims be now existing or hereafter arising, now known or
unknown. In making this waiver, each Holder, the Company and each Subsidiary
Guarantor acknowledge and agree that there shall be no claims for consequential
or punitive damages made by any Holder against the Company and the Subsidiary
Guarantors and there shall be no claims for consequential or punitive damages
made against the Holders by the Company or any Subsidiary Guarantor. The
Holders, the Company and the Subsidiary Guarantors acknowledge and agree that
this waiver of claims for consequential damages and punitive damages is a
material element of the consideration for this Agreement.
SECTION 8.7 Applicable Law. THIS AGREEMENT AND THE OTHER INVESTMENT
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN THE OTHER INVESTMENT DOCUMENTS)
SHALL BE CONSTRUED IN ACCORDANCE
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WITH AND GOVERNED BY THE LAWS OF THE STATE OF MARYLAND (EXCLUDING MARYLAND
CONFLICTS OF LAWS PROVISIONS).
SECTION 8.8 Waivers; Amendment.
(a) No failure or delay of the Holders in exercising any power
or right hereunder or under any other Investment Document shall operate as a
waiver thereof nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Holders hereunder and under
the other Investment Documents are cumulative and are not exclusive of any
rights or remedies that it would otherwise have. No waiver of any provision of
this Agreement or any other Investment Document or consent to any departure by
the Company or any Subsidiary Guarantor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Company and the
Subsidiary Guarantors in any case shall entitle any of them to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Company and the Holders.
SECTION 8.9 Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to the investment,
together with all fees, charges, warrants and other amounts which are treated as
interest on the investment under Applicable Law (collectively the "CHARGES"),
shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be
contracted for, charged, taken, received or reserved by the Holders holding the
investment in accordance with applicable law, the rate of interest payable in
respect of the investment hereunder, together with all Charges payable in
respect thereof shall be limited to the Maximum Rate.
SECTION 8.10 Entire Agreement. This Agreement and the other Investment
Documents constitute the entire contract between the parties relative to the
subject matter hereof; provided that this Agreement and the other Investment
Documents are subject to the Subordination Agreement. Any other previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the other Investment Documents. Nothing in this
Agreement or in the other Investment Documents, expressed or implied, is
intended to confer upon any party other than the parties hereto and thereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Investment Documents. In the event of any conflict
between this Agreement and the Subordination Agreement, the provisions of the
Subordination Agreement shall control.
SECTION 8.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
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OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER INVESTMENT DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
INVESTMENT DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.11.
SECTION 8.12 Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Investment Document
should be held invalid, illegal or unenforceable in any way the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction).
SECTION 8.13 Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract and shall become effective as provided in Section
8.3. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 8.14 Heading. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or to be taken into consideration in interpreting,
this Agreement.
SECTION 8.15 Jurisdiction; Consent to Service of Process.
(a) Each of the Company and each Subsidiary Guarantor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any Maryland State court or Federal court of the
United States of America sitting in the State of Maryland, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Investment Documents, or for recognition or
enforcement of any judgment and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in the State of Maryland or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Holders may otherwise have to bring any action or proceeding
relating to this Agreement or the other Investment Documents against the Company
or its properties in the courts of any jurisdiction.
(b) Each of the Company and each Subsidiary Guarantor hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit action or
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proceeding arising out of or relating to this Agreement or the other Investment
Documents in any Maryland State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.1. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 8.16 Relationship of the Parties; Advice of Counsel. This
Agreement provides for the making of an investment by Allied, in its capacity as
an investor, in the Company, in its capacity as a borrower, and for the payment
of interest and repayment of principal by the Company to Allied. The provisions
herein for compliance with Financial Covenants and delivery of financial
statements are intended solely for the benefit of the Holders to protect their
interests as lenders in assuring payments of interest and repayment of
principal, and nothing contained in this Agreement shall be construed as
permitting or obligating Allied to act as a financial or business advisor or
consultant to the Company, as permitting or obligating Allied to control the
Company or to conduct the Company's operations, as creating any fiduciary
obligation on the part of Allied to the Company, or as creating any joint
venture, agency or other relationship between the parties other than as
explicitly and specifically stated in this Agreement. Allied is not (and shall
not be construed as) partner, joint venturer, alter-ego, manager, controlling
person, operator or other business participant of any kind of the Company or any
Subsidiary Guarantor; neither Allied nor the Company nor any Subsidiary
Guarantor intends that Allied assume such status, and, accordingly, Allied shall
not be deemed responsible for (or a participant in) any acts or omissions of the
Company or any Subsidiary Guarantor. Each of Allied, the Company and each
Subsidiary Guarantor represents and warrants to the other that it has had the
advice of experienced counsel of its own choosing in connection with the
negotiation and execution of this Agreement and with respect to all matters
contained herein.
SECTION 8.17 Representations of Allied Regarding Investment.
(a) Purchase for Investment. Each Holder represents that it is
purchasing the Debenture for its own account or for one or more separate
accounts maintained by it or for the account of one or more pension or trust
funds and not with a view to the distribution thereof; provided that the
disposition of its property shall at all times be within its control. Each
Holder understands that its Debenture has not been registered under the
Securities Act or applicable state securities laws and may be resold only if
registered pursuant to the provisions of the Securities Act and applicable state
securities laws or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Debenture.
(b) Source of Funds. Each Holder represents that at least one
of the following statements is an accurate representation as to each source of
funds (a "SOURCE") to be used by it to pay the purchase price of the Debenture
to be purchased by it hereunder:
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(i) the Source is an "insurance company general account"
as defined in United States Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (60 FR 35925, July 12, 1995) and in respect
thereof each Holder represents that there is no "employee benefit plan"
(as defined in section 3(3) of ERISA and section 4975(e)(1) of the
Code, treating as a single plan all plans maintained by the same
employer or employee organization or affiliate thereof) with respect to
which the amount of the general account reserves and liabilities of all
contracts held by or on behalf of such plan exceeds 10% of the total
reserves and liabilities of such general account (exclusive of separate
account liabilities plus surplus, as set forth in the National
Association of Insurance Commissioners' Annual Statement filed with
each Holder's state of domicile and that such acquisition is eligible
for and satisfies the other requirements of such exemption; or
(ii) if the Holder is an insurance company, the source
does not include assets allocated to any separate account maintained by
it in which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with such Holder's fixed contractual obligations under which
the amounts payable, or credited, to such plan and to any participant
or beneficiary of such plan (including any annuitant) are not affected
in any manner by the investment performance of the separate account; or
(iii) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as either Holder has
disclosed to the Company in writing pursuant to this paragraph (c), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(iv) the Source constitutes assets of an "investment fund"
(within the meaning of part V of PTE 84-14 (the "QPAM EXEMPTION"))
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of part V of the QPAM Exemption), no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition
of "control" in section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant
to this paragraph (d); or
(v) the Source is a governmental plan; or
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<PAGE> 62
(vi) the Source is one or more employee benefit plans, or
a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (vi); or
(vii) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 8.17, the terms "EMPLOYEE BENEFIT PLAN," "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
(c) Investment Representation. Each Holder acknowledges that
it has been provided access to all information requested by it in order to
evaluate the merits and risks of the transactions contemplated by this
Agreement. Without limiting the effect of the Company's representations and
warranties elsewhere in this Agreement, each Holder has relied solely upon the
advise of its own counsel, accountant and other advisors, with regard to the
legal, investment, tax and other considerations regarding the Allied Investment.
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THIS PAGE INTENTIONALLY BLANK.
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<PAGE> 64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers under seal as of the day
and year first above written.
ATTEST: COMPANY:
PHYSICIANS' SPECIALTY CORP.
a Delaware corporation
By: (SEAL)
- --------------------------------- ------------------------------
Name: Name:
Title: Title:
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<PAGE> 65
ATTEST: ALLIED:
ALLIED CAPITAL CORPORATION
a Maryland corporation
By: (SEAL)
- --------------------------------- ------------------------------
Name: Name:
Title: Title:
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<PAGE> 66
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Schedule 4.4 Consents and Approvals
Schedule 4.6 Exceptions to Financial Statements
Schedule 4.7 Permitted Junior Debt
Schedule 4.9 Ownership and Control of Company
Schedule 4.11 Ownership of Properties
Schedule 4.12 Subsidiaries
Schedule 4.13 Litigation
Schedule 4.14 Material Contracts
Schedule 4.21 Insurance
Schedule 6.3 Liens
Schedule 6.5 Investments
Schedule 6.6(c) Permitted Junior Debt to be paid in common stock
Schedule 6.7 Transactions with Affiliates
</TABLE>
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EXHIBIT (a)(4)
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE OFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER HEREOF IS
SATISFIED THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
THIS DEBENTURE IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT (AS FROM
TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED), DATED AS OF
THE DATE HEREOF, BY AND BETWEEN FIRST UNION NATIONAL BANK, AS AGENT FOR THE
HOLDERS, AND THE OTHER PARTIES NAMED THEREIN.
SENIOR SUBORDINATED DEBENTURE
$15,000,000.00 November 1, 1999
FOR VALUE RECEIVED, the undersigned, PHYSICIANS' SPECIALTY CORP., a
Delaware corporation (the "COMPANY"), promises to pay to the order of ALLIED
CAPITAL CORPORATION, a Maryland corporation (the "HOLDER"), the principal sum of
Fifteen Million and no/100 Dollars ($15,000,000.00), together with interest
thereon as set forth below, at its offices or such other place as the Holder may
designate in writing.
1. INVESTMENT AGREEMENT. This Senior Subordinated Debenture (the
"DEBENTURE") is executed and delivered by the Company at Closing in connection
with an investment (the "INVESTMENT") being made by the Holder in the Company in
the aggregate original principal amount of $16,000,000, pursuant to the terms
and conditions of an Investment Agreement between the Company and the Holder,
dated of even date herewith (the "INVESTMENT AGREEMENT"). A copy of the
Investment Agreement may be examined during normal business hours at the
Company's offices. Any capitalized term used herein and not otherwise defined
herein shall have the meaning ascribed to it in the Investment Agreement.
2. INTEREST RATE PROVISIONS.
2.1 Accrual and Pay Rates. Except as provided in Section 2.3,
from the date hereof and thereafter until the third anniversary of the date
hereof, interest shall accrue on the principal balance of this Debenture
outstanding from time to time at the fixed rate of 15.5% per annum (the "ACCRUAL
RATE") and shall be paid currently in cash on a quarterly basis at the fixed
rate of 12% percent per annum (the "PAY RATE"). Interest shall be calculated on
the basis of a 360-day year assuming twelve equal 30 day months and shall be
computed for each payment period on the principal balance for the actual number
of days outstanding.
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<PAGE> 2
2.2 PIK Amounts. At the beginning of each calendar quarter,
the then outstanding principal balance of this Debenture shall be increased by
an amount (the "PIK AMOUNT") equal to the difference between: (i) interest
accruing at the Accrual Rate on the principal balance of this Debenture
outstanding from time to time during the immediately preceding calendar quarter;
and (ii) interest payable at the Pay Rate on the principal balance of this
Debenture outstanding from time to time during the preceding calendar quarter.
At the end of each quarter, interest accrued and interest payable shall be
calculated on the then outstanding principal balance of this Debenture, as
increased by all PIK Amounts and decreased by all principal repayments and
prepayments (hereinafter, the "ADJUSTED PRINCIPAL BALANCE"), with the end result
that interest under this Debenture shall be compounded quarterly.
2.3 Default Interest. Upon the occurrence of a Non-Payment
Event, as defined below, the Pay Rate shall increase to thirteen and one-half
percent (13.5%) per annum and the Accrual Rate shall increase to seventeen
percent (17.0%), until the payment in full of all overdue payments hereunder, or
other cure of such Non-Payment Event. A Non-Payment Event shall be deemed to
have occurred under this Debenture if any interest payment due under the terms
of this Debenture is not received by the Holder on the due date thereof or
within ten Business Days of the due date thereof, or any principal payment or
other payment due under the terms of this Debenture or the Investment Agreement
is not received by the Holder on or before ten Business Days following the due
date thereof.
3. PAYMENT PROVISIONS.
3.1 Interest Payments. Commencing on January 15, 2000 and
continuing on the fifteenth day of each calendar quarter thereafter until this
Debenture is repaid in full, the Company shall pay to Holder quarterly
installments of interest only (in arrears) at the Pay Rate on the Adjusted
Principal Balance then outstanding under this Debenture.
3.2 Principal Payments and Payment at Maturity. On November 1,
2006 (the "MATURITY DATE"), the entire then outstanding principal balance of
this Debenture, together with all accrued but unpaid interest, and all other
sums owed hereunder shall be due and payable in full in cash without further
notice or demand.
3.3 Prepayments; Application of Payments.
(a) The Company may prepay any PIK Amounts in whole
or in part at any time without penalty.
(b) The Company may prepay the then outstanding
principal amount of this Debenture in whole or in part at any time; provided
that if such prepayment occurs prior to the date of the second anniversary
hereof, the Company shall pay to the Holder a prepayment premium (the
"PREPAYMENT PREMIUM") as defined in and as calculated in accordance with Section
3.4 hereof.
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<PAGE> 3
(c) Each prepayment with respect to this Debenture
shall be applied in the following order of priority: (i) first, to accrued, but
unpaid, interest at the applicable rate; (ii) second, to the aggregate of all
PIK Amounts; (iii) third, to any Prepayment Premium due pursuant to Section 3.4
hereof; and (iv) finally, to the then outstanding principal balance of this
Debenture.
3.4 Prepayment Premium.
(a) Payment Prior to the First Anniversary. If the
Company shall make a prepayment of any outstanding principal balance prior to
the date of the first anniversary hereof, the Prepayment Premium shall be equal
to 4% of the principal amount of the prepayment.
(b) Prepayment Between the First Anniversary and the
Second Anniversary. If the Company shall make a prepayment of any outstanding
principal balance between the first anniversary of the date hereof and the
second anniversary of the date hereof, the Prepayment Premium shall be equal to
2% of the principal amount of the prepayment.
(c) Prepayment After an IPO. Notwithstanding the
foregoing, from and after the completion of an IPO by the Company, the
prepayment premiums applicable during the first and second years after the
Closing Date shall be reduced to 2% and 1% respectively.
4. MANDATORY PREPAYMENT OF THE DEBENTURE AT OPTION OF HOLDER.
(a) The obligations of the Company under the Investment
Agreement and hereunder are not assumable; upon the occurrence of any of the
following triggering events identified in Section 2.8 of the Investment
Agreement (the "TRIGGERING EVENTS"), the Holder shall have the right (but not
the obligation) to require the Company to prepay the then outstanding principal
balance, all accrued but unpaid interest thereon, and all prepayment premiums
then due and owing hereunder, and to pay all of the other Obligations, if any,
in full. Failure of the Holder to demand prepayment following the occurrence of
any of the foregoing Triggering Events shall not be deemed a waiver of the
Holder's right to demand prepayment following any future occurrence of any
triggering event.
(b) If (i) the Holder elects to demand prepayment after the
completion of an IPO, (ii) the Net Cash Proceeds of the IPO are insufficient to
prepay the Obligations hereunder in full and to pay the Permitted Senior Debt in
full, and (iii) the Senior Lenders agree to accept a prepayment less than the
amount needed to repay the Permitted Senior Debt in full, the Holder will accept
a principal prepayment hereunder equal to the same percentage prepayment
accepted by the Senior Lenders (i.e., if the Senior Lenders accept the amount
required to reduce the outstanding balance of the Permitted Senior Debt by 50%,
the Holder will accept a prepayment sufficient to reduce the Obligations by 50%)
on condition that upon application of the prepayment, (x) the maximum Permitted
Senior Debt that may be outstanding is permanently reduced by the amount of such
principal prepayment to the Senior Lenders and (y) the Total Leverage Ratio is
not greater than 3.00:1.
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<PAGE> 4
5. SUBORDINATION. The indebtedness represented by this Debenture
is subordinate to the Permitted Senior Debt of the Company in accordance with
the terms of the Subordination Agreement and as specified in the Investment
Agreement.
6. ASSIGNMENT. This Debenture and the obligations hereunder may
not be assigned by the Company without the prior written consent of the Holder.
Assignment of the Holder's interest in this Debenture shall be subject to the
Company's consent in accordance with Section 8.4(b) of the Investment Agreement.
7. DEFAULT AND REMEDIES. The occurrence of an Event of Default
under the Investment Agreement shall constitute a default hereunder and shall
entitle the Holder to exercise the rights and remedies specified in the
Investment Agreement, as well as those available at law or in equity.
8. WAIVERS. The Company hereby waives presentment, demand,
protest, or further notice of any kind (except such notices as may be
specifically required by the express terms of the Investment Agreement).
9. CONTROLLING LAW. This Debenture and all matters related hereto
shall be governed, construed and interpreted strictly in accordance with the
laws of the State of Maryland, without regard to its principles of conflicts of
law.
10. NO USURY. This Debenture is subject to the express condition
that at no time shall the Company be obligated or required to pay interest
hereunder at a rate that could subject the Holder to either civil or criminal
liability as a result of being in excess of the maximum rate that the Company is
permitted by law to contract or agree to pay. If, by the terms of this
Debenture, the Company is at any time required or obligated to pay interest at a
rate in excess of such maximum rate, the rate of interest under this Debenture
shall be deemed to be immediately reduced to such maximum rate and interest
payable hereunder shall be computed at such maximum rate and the portion of all
prior interest payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of the principal balance of
this Debenture.
[Signatures on next page.]
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<PAGE> 5
IN WITNESS WHEREOF, the undersigned has caused this Debenture to be
executed and its seal affixed on the day and year first above written.
"COMPANY":
ATTEST: PHYSICIANS' SPECIALTY CORP.
a Delaware corporation
/s/ Gerald R. Benjamin By: /s/ Ramie A. Tritt (SEAL)
- --------------------------------- -------------------------------
Name: Gerald R. Benjamin Name: Ramie A. Tritt
Title: Executive Vice President Title: Chairman and President
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<PAGE> 1
EXHIBIT (a)(5)
THIS SUBSIDIARY GUARANTY IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT
(AS FROM TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED),
DATED AS OF THE DATE HEREOF, BY AND AMONG FIRST UNION NATIONAL BANK, AS AGENT
FOR THE SENIOR LENDERS, AND THE OTHER PARTIES NAMED THEREIN.
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (the "GUARANTY") is made as of the 1st day of
November, 1999, by the undersigned (collectively, the "GUARANTORS") in favor of
ALLIED CAPITAL CORPORATION ("ALLIED"), a Maryland corporation having an address
at 1919 Pennsylvania Avenue, N.W., Washington, D.C. 20006-3434.
RECITALS
A. Allied has agreed to make an investment (the "INVESTMENT") in
Physicians' Specialty Corp., a Delaware corporation (the "COMPANY") in the
original principal amount of SIXTEEN MILLION and 00/100 Dollars
($16,000,000.00), pursuant to the terms of a certain Investment Agreement of
even date herewith by and among the Company, the Guarantors, and Allied (the
"INVESTMENT AGREEMENT"). Allied has agreed to make FIFTEEN MILLION and 00/100
Dollars ($15,000,000.00) of the Investment in exchange for a certain Senior
Subordinated Debenture (the "DEBENTURE") of even date herewith in the same
amount.
B. Allied requires, as a condition of making the Investment, that the
Guarantors enter into this Guaranty to guarantee the obligations of the Company
under the Debenture and Investment Agreement.
C. The Guarantors desire to induce Allied to make the Investment, and
the Guarantors acknowledge that they will receive substantial direct and
indirect benefits by reason of the making of the Investment by Allied.
NOW, THEREFORE, in consideration of the foregoing Recitals, the making
of the Investment by Allied in the Company, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors hereby jointly and severally agree with Allied and the permitted
successors and assigns thereof (collectively, the "HOLDER") as follows:
1. Guaranty. The Guarantors hereby jointly and severally
undertake and guarantee all obligations and liabilities of the Company to the
Holder arising pursuant to the Debenture and the Investment Agreement, whether
now due or hereafter falling due, including at maturity or upon acceleration
(including, without limitation, the payment of principal, interest and late
charges under the Debenture), together with all costs of collection, compromise
or enforcement, including without limitation, reasonable attorneys' fees and
disbursements incurred with respect to any such obligations or liabilities or
with respect to this or any other guaranty of any of them,
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<PAGE> 2
or with respect to a proceeding under the federal bankruptcy laws or any
moratorium, insolvency, receivership arrangement or reorganization law, or an
assignment for the benefit of creditors concerning the Company or the
Guarantors, together with interest on all such costs of collection, compromise
or enforcement from the date arising (all of the foregoing, collectively, the
"GUARANTEED OBLIGATIONS"). Each Guarantor agrees that this Guaranty is a present
and continuing guaranty of payment and not of collectability.
2. Covenants. The Guarantors hereby jointly and severally
covenant and agree with the Holder as follows:
(a) This Guaranty shall not be impaired by any modification,
supplement, extension or amendment of the Debenture, Investment Agreement, or
any of the other Investment Documents, nor by any modification, release or other
alteration of any of the Guaranteed Obligations, nor by any agreements or
arrangements whatsoever made by the Holder with the Company, or anyone else.
(b) The Guarantors shall have no right of subrogation,
reimbursement or indemnity whatsoever from the Company, unless and until all of
the Guaranteed Obligations have been fully paid and performed.
(c) If any payment or transfer to any Holder that has been
credited against any of the Guaranteed Obligations under the Debenture or
Investment Agreement, is voided or rescinded or required to be returned by such
Holder, this Guaranty shall continue in effect and shall be reinstated with
respect to all such voided, rescinded or returned payments, transfers or
recoveries as though such payment, transfer or recovery had not been made.
(d) Any Holder's books and records showing the account between
such Holder and the Company shall be admissible in any action or proceeding,
shall, absent demonstrable error, be binding upon each of the Guarantors for the
purpose of establishing the items therein set forth and shall constitute prima
facie proof thereof; provided, however, that the Holder will furnish, from time
to time, copies of such books and records to the Guarantors upon the Guarantors'
written request.
(e) This Guaranty shall be construed as a continuing
obligation of each of the Guarantors without regard to the regularity, validity
or enforceability of any of the Guaranteed Obligations, and without regard to
whether any of the Guaranteed Obligations are limited, modified, voided,
released or discharged in any proceeding under the federal bankruptcy laws or in
any moratorium, insolvency, receivership, arrangement or reorganization
proceeding.
(f) This Guaranty shall be irrevocable and shall not be
discharged and the Guarantors shall not be released from liability until all
Guaranteed Obligations have been satisfied in full, and if all or any portion of
the Guaranteed Obligations are satisfied and any Holder is required for any
reason to pay to any Person all or any part of the sums used to satisfy
-2-
<PAGE> 3
the Guaranteed Obligations, the Guaranteed Obligations shall remain in effect
and enforceable to the extent thereof.
(g) This Guaranty shall remain in full force and effect
notwithstanding any failure, omission or delay on the part of the Company, any
Guarantor or any Holder to conform or comply with any term of any of the
Investment Documents or any failure of any Holder to give notice of any Default
or Event of Default.
(h) This Guaranty shall remain in full force and effect
notwithstanding any action or inaction by any Holder under or in respect of any
of the Investment Documents, any failure, lack of diligence, omission or delay
on the part of any Holder to enforce, assert or exercise any right, power or
remedy conferred on it any of the Investment Documents, or any other action or
inaction on the part of any Holder.
(i) Any and all present and future debts and obligations of
the Company to any of the Guarantors are subordinated to the full payment and
performance of the Guaranteed Obligations.
3. Representations and Warranties. Each Guarantor represents and
warrants that it has read the representations and warranties of the Company in
the Investment Agreement and each such representation and warranty that pertains
to such Guarantor is true and correct.
4. Waivers. The Guarantors hereby jointly and severally expressly
waive: (a) notice of acceptance of this Guaranty by the Holder; (b) presentment,
demand, notice of dishonor, protest, and any and all notices and demands of
every kind that may be required to be given by any statute or rule or law,
except as required by the express terms of the Debenture, Investment Agreement
or other Investment Documents; (c) any defense arising by reason of any
disability or other defense of the Company; (d) except as provided herein, any
right to participate in any security now or later held by any Holder; (e) any
right to enforce any remedies any Holder now has, or later may have, against the
Company; and (f) diligence in collection or protection of, or realization upon,
any of the Guaranteed Obligations or any other obligation hereunder, or any
security for or guaranty of any of the foregoing, and any and all formalities
that otherwise might be legally required to charge any of the Guarantors with
liability to the extent provided hereunder.
5. Successive Actions. Each Guarantor agrees that one or more
successive actions may be brought against any Guarantor, as often as the Holder
deems advisable, until all of the Guaranteed Obligations are paid and performed
in full.
6. No Waiver of Rights. No delay or failure on the part of the
Holder to exercise any right, power or privilege under this Guaranty or any of
the other Investment Documents shall operate as a waiver thereof, and no single
or partial exercise of any right, power or privilege shall preclude any other or
further exercise thereof or the exercise of any other power or right, or be
deemed to establish a custom or course of dealing or performance between the
parties hereto.
-3-
<PAGE> 4
7. No Modification Without Writing. This Guaranty may not be
modified, amended, revised, revoked, terminated, changed or varied in any way
whatsoever, except by the express terms of a writing signed by the party or
parties sought to be bound thereby.
8. Severability. Whenever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be held invalid or
ineffective, such ineffectiveness or invalidity shall not affect any other
provisions of this Guaranty, and this Guaranty shall be construed as if such
ineffective or invalid provision had never been contained therein.
9. Capitalized Terms. Any capitalized term that is not defined in
this Guaranty has the meaning given to it in the Investment Agreement.
10. Successors and Assigns. This Guaranty shall inure to the
benefit of the Holder, and shall bind each of the Guarantors and their
respective heirs, legal representatives, successors and assigns.
11. Costs and Expenses. Each Guarantor agrees to pay on demand all
costs and expenses incurred by or on behalf of the Holder (including, without
limitation attorneys' fees and expenses) in enforcing the obligations of such
Guarantor under this Guaranty.
12. Joinder. Each Guarantor agrees that any action to enforce this
Guaranty may be brought against Guarantor without any reimbursement or joinder
of Company or any other guarantor of the Guaranteed Obligations in such action.
13. Notice. Notice shall be given under this Guaranty in
accordance with Section 8.1 of the Investment Agreement. The address of the
Company shall be deemed the address of each of the Guarantors for purposes of
delivering notice under this Guaranty and under any of the Investment Documents.
14. GOVERNING LAW. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF MARYLAND. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER
RESPECTS BY THE LAWS, STATUTES AND DECISIONS OF THE STATE OF MARYLAND (EXCLUDING
CONFLICTS OF LAWS PROVISIONS). THE UNDERSIGNED, IN ORDER TO INDUCE THE HOLDER TO
ACCEPT THIS GUARANTY, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH HEREBY IS ACKNOWLEDGED, AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH OR
RELATED TO THIS GUARANTY SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND
ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE STATE OF MARYLAND. THE
GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN MARYLAND. THE UNDERSIGNED HEREBY AGREE THAT SERVICE
OF PROCESS HEREUNDER MAY BE ACCOMPLISHED AND SHALL CONSTITUTE PERSONAL SERVICE
OF SUCH PROCESS UPON THE UNDERSIGNED IF NOTICE IS MAILED BY CERTIFIED MAIL TO
THE UNDERSIGNED AT THE ADDRESS SET
-4-
<PAGE> 5
FORTH BELOW AFTER THE SIGNATURE OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY WAIVE
ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST THEM BY THE HOLDER ON THIS GUARANTY IN ACCORDANCE WITH THIS
PARAGRAPH. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE THE RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER TO ENTER INTO THE CONTEMPLATED
TRANSACTIONS. THE HOLDER HEREBY WAIVES THE RIGHT TO JURY TRIAL TO THE SAME
EXTENT AS SUCH RIGHT IS WAIVED BY THE UNDERSIGNED.
15. Waiver of Rights Against Company. Notwithstanding anything to
the contrary that may be contained herein, each Guarantor hereby unconditionally
and irrevocably agrees that such Guarantor (i) will not assert against the
Company any right or claim, at law or in equity, to indemnification,
reimbursement, contribution, restitution or payment for or with respect to any
and all amounts such Guarantor may pay or be obligated to pay to any Holder,
including, without limitation, the Guaranteed Obligations, and any and all other
obligations that such Guarantor may perform, satisfy or discharge, under or with
respect to this Guaranty, (ii) waives and releases all such rights and claims,
at law or in equity, to indemnification, reimbursement, contribution,
restitution or payment that such Guarantor may have now or at any time against
Company and (iii) will not assign or otherwise transfer any such right or claims
to any other person. Each Guarantor further unconditionally and irrevocably
agrees that such Guarantor shall have no right of subrogation, and waives any
right to enforce any remedy that any Holder now has or hereafter may have
against the Company and waives any defense based upon an election of remedies by
any Holder which destroys or otherwise impairs any subrogation rights of such
Guarantor and/or the right of such Guarantor to proceed against the Company for
reimbursement.
16. Subordination. The indebtedness guaranteed by this Subsidiary
Guaranty is subordinate to the Permitted Senior Debt of the Company in
accordance with the terms of the Subordination Agreement and as specified in the
Investment Agreement.
17. Incorporation of Recitals. The Recitals are incorporated
herein by reference.
-5-
<PAGE> 6
IN WITNESS WHEREOF, this Guaranty has been executed and delivered under
seal by the undersigned as of the date first above written.
ATTEST: ALABAMA ENT CENTER, INC.
/s/ Gerald R. Benjamin By: /s/ Richard D. Ballard (SEAL)
- --------------------------------- ------------------------------
Name: Richard D. Ballard
Title: President
ATLANTA ENT CENTER FOR
PHYSICIANS, INC.
/s/ Gerald R. Benjamin By: /s/ Ramie A. Tritt (SEAL)
- --------------------------------- ------------------------------
Name: Ramie A. Tritt
Title:
ENT CENTER OF ATLANTA, INC.
/s/ Gerald R. Benjamin By: /s/ Ramie A. Tritt (SEAL)
- --------------------------------- ------------------------------
Name: Ramie A. Tritt
Title: President
PSC ACQUISITION CORP.
/s/ Gerald R. Benjamin By: /s/ Ramie A. Tritt (SEAL)
- --------------------------------- ------------------------------
Name: Ramie A. Tritt
Title: President
PSC GEORGIA CORP.
/s/ Gerald R. Benjamin By: /s/ Richard D. Ballard (SEAL)
- --------------------------------- ------------------------------
Name: Richard D. Ballard
Title: President
-6-
<PAGE> 7
PSC MANAGEMENT CORP.
/s/ Gerald R. Benjamin By: /s/ Ramie A. Tritt (SEAL)
- --------------------------------- ------------------------------
Name: Ramie A. Tritt
Title: President
PSC SLEEP CENTERS, INC.
/s/ Gerald R. Benjamin By: /s/ Richard D. Ballard (SEAL)
- --------------------------------- ------------------------------
Name: Richard D. Ballard
Title: President
-7-
<PAGE> 1
EXHIBIT (a)(6)
================================================================================
CREDIT AGREEMENT
among
PHYSICIANS' SPECIALTY CORP.,
as Borrower,
THE LENDERS NAMED HEREIN,
as Lenders,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
and
CIBC WORLD MARKETS CORP.,
as Syndication Agent
$60,000,000 Senior Credit Facility
FIRST UNION SECURITIES, INC.,
as Sole Book-Runner and Lead Arranger
Dated as of November 1, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
1.1 Defined Terms...................................................... 1
1.2 Accounting Terms................................................... 25
1.3 Other Terms; Construction.......................................... 26
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments........................................................ 26
2.2 Borrowings......................................................... 27
2.3 Disbursements; Funding Reliance; Domicile of Loan.................. 29
2.4 Notes.............................................................. 30
2.5 Termination and Reduction of Commitments........................... 31
2.6 Mandatory Payments and Prepayments................................. 32
2.7 Voluntary Prepayments.............................................. 34
2.8 Interest........................................................... 35
2.9 Fees............................................................... 36
2.10 Interest Periods................................................... 37
2.11 Conversions and Continuations...................................... 38
2.12 Method of Payments; Computations................................... 39
2.13 Recovery of Payments............................................... 40
2.14 Use of Proceeds.................................................... 40
2.15 Pro Rata Treatment................................................. 40
2.16 Increased Costs; Change in Circumstances; Illegality; etc.......... 41
2.17 Taxes.............................................................. 43
2.18 Compensation....................................................... 45
2.19 Replacement of Lenders............................................. 46
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance........................................................... 46
3.2 Notices............................................................ 47
3.3 Participations..................................................... 48
3.4 Reimbursement...................................................... 48
3.5 Payment by Revolving Loans......................................... 48
3.6 Payment to Lenders................................................. 49
3.7 Obligations Absolute............................................... 49
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
3.8 Cash Collateral Account............................................ 51
3.9 Effectiveness...................................................... 52
ARTICLE IV
CONDITIONS OF BORROWING
4.1 Conditions of Initial Borrowing.................................... 52
4.2 Conditions of All Borrowings....................................... 57
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Organization and Power............................................. 58
5.2 Authorization; Enforceability...................................... 58
5.3 No Violation....................................................... 58
5.4 Governmental and Third-Party Authorization; Permits................ 59
5.5 Litigation......................................................... 60
5.6 Taxes.............................................................. 60
5.7 Subsidiaries/Minority Investments.................................. 60
5.8 Full Disclosure.................................................... 60
5.9 Margin Regulations................................................. 61
5.10 No Material Adverse Change......................................... 61
5.11 Financial Matters.................................................. 61
5.12 Ownership of Properties............................................ 62
5.13 ERISA.............................................................. 62
5.14 Environmental Matters.............................................. 63
5.15 Compliance With Laws............................................... 64
5.16 Regulated Industries............................................... 64
5.17 Insurance.......................................................... 64
5.18 Material Contracts................................................. 64
5.19 Security Documents................................................. 64
5.20 Labor Relations.................................................... 65
5.21 Year 2000 Compatibility............................................ 65
5.22 Service Agreements................................................. 65
5.23 Reimbursement...................................................... 66
5.24 Fraud and Abuse.................................................... 66
5.25 Certain Transactions............................................... 66
5.26 Ownership.......................................................... 67
5.27 Management History................................................. 67
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Financial Statements............................................... 68
6.2 Other Business and Financial Information........................... 69
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
6.3 Existence; Franchises; Maintenance of Properties................... 71
6.4 Compliance with Laws............................................... 71
6.5 Payment of Obligations............................................. 71
6.6 Insurance.......................................................... 71
6.7 Maintenance of Books and Records; Inspection....................... 71
6.8 Managed Practices.................................................. 72
6.9 Permitted Acquisitions and Permitted Minority Investments.......... 72
6.10 Creation or Acquisition of Subsidiaries............................ 74
6.11 Additional Security................................................ 75
6.12 Year 2000 Compatibility............................................ 76
6.13 Further Assurances................................................. 76
6.14 Compliance with Transaction Documents.............................. 76
ARTICLE VII
FINANCIAL COVENANTS
7.1 Total Leverage Ratio............................................... 76
7.2 Senior Leverage Ratio.............................................. 77
7.3 Minimum Interest Coverage Ratio.................................... 77
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Merger; Consolidation.............................................. 77
8.2 Indebtedness....................................................... 78
8.3 Liens.............................................................. 80
8.4 Disposition of Assets.............................................. 81
8.5 Investments........................................................ 82
8.6 Restricted Payments................................................ 84
8.7 Transactions with Affiliates....................................... 84
8.8 Lines of Business.................................................. 85
8.9 Certain Amendments................................................. 85
8.10 Limitation on Certain Restrictions................................. 85
8.11 No Other Negative Pledges.......................................... 86
8.12 Fiscal Year........................................................ 86
8.13 Accounting Changes................................................. 86
8.14 Hazardous Wastes................................................... 86
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default.................................................. 87
9.2 Remedies: Termination of Commitments, Acceleration, etc............ 90
9.3 Remedies: Set-Off.................................................. 91
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE X
THE AGENT
<S> <C> <C>
10.1 Appointment........................................................ 91
10.2 Nature of Duties................................................... 91
10.3 Exculpatory Provisions............................................. 92
10.4 Reliance by Agent.................................................. 92
10.5 Non-Reliance on Agent and Other Lenders............................ 92
10.6 Notice of Default.................................................. 93
10.7 Indemnification.................................................... 93
10.8 The Agent in its Individual Capacity............................... 94
10.9 Successor Agent.................................................... 94
10.10 Collateral Matters................................................. 94
10.11 Issuing Lender and Swingline Lender................................ 95
10.12 Syndication Agent.................................................. 95
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses.................................................. 95
11.2 Indemnification.................................................... 96
11.3 Governing Law; Consent to Jurisdiction............................. 96
11.4 Arbitration; Preservation and Limitation of Remedies............... 97
11.5 Notices............................................................ 98
11.6 Amendments, Waivers, etc........................................... 99
11.7 Assignments, Participations........................................ 100
11.8 No Waiver.......................................................... 102
11.9 Successors and Assigns............................................. 102
11.10 Survival........................................................... 102
11.11 Severability....................................................... 103
11.12 Construction....................................................... 103
11.13 Confidentiality.................................................... 103
11.14 Counterparts; Effectiveness........................................ 103
11.15 Disclosure of Information.......................................... 103
11.16 Entire Agreement................................................... 104
</TABLE>
iv
<PAGE> 6
EXHIBITS
Exhibit A-1 Form of Revolving Note
Exhibit A-2 Form of Swingline Note
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Swingline Borrowing
Exhibit B-3 Form of Notice of Conversion/Continuation
Exhibit B-4 Form of Letter of Credit Notice
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Pledge and Security Agreement
Exhibit F Form of Subsidiary Guaranty
Exhibit G-1 Form of Opinion of Goodwin, Procter & Hoar LLP
Exhibit G-2 Form of Opinion of Local Counsel
Exhibit H Form of Financial Condition Certificate
Exhibit I Form of Intercompany Note
Exhibit J Form of Agency Account Agreement
Exhibit K Form of Perfection Certificate
Exhibit L Form of Subordination Terms
SCHEDULES
Schedule 1.1(a) Permitted Minority Investments
Schedule 1.1(b) Permitted Joint Ventures
Schedule 4.1(a) Deposit Accounts
Schedule 5.4 Consents and Approvals
Schedule 5.5 Litigation
Schedule 5.7 Subsidiaries and Minority Investments
Schedule 5.11 Exceptions to Financial Statements
Schedule 5.12 Ownership of Properties
Schedule 5.17 Insurance
Schedule 5.18 Material Contracts
Schedule 5.26 Ownership
Schedule 8.2 Indebtedness
Schedule 8.3 Liens
Schedule 8.4 Sale Leaseback Transactions
Schedule 8.5 Investments
Schedule 8.6 Seller Notes
Schedule 8.7 Transactions with Affiliates
Schedule 8.11 Negative Pledges
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 1st day of November, 1999 (this
"Agreement"), is made among PHYSICIANS' SPECIALTY CORP., a Delaware corporation
with its principal offices in Atlanta, Georgia (the "Borrower"), the banks and
financial institutions listed on the signature pages hereto or that become
parties hereto after the date hereof (collectively, the "Lenders"), and FIRST
UNION NATIONAL BANK ("First Union"), as administrative agent for the Lenders (in
such capacity, the "Agent").
RECITALS
A. The Borrower has requested that the Lenders make available to the
Borrower a revolving credit facility in the aggregate principal amount of
$60,000,000. The Borrower will use the proceeds of this facility to refinance
certain existing indebtedness, to finance, in part, the leveraged buyout by
certain executive officers of the Borrower and TA Associates of certain existing
stockholders of the Borrower, to finance, in part, certain permitted
acquisitions as described herein, to pay or reimburse certain fees and expenses
in connection herewith and therewith, and for working capital and general
corporate purposes, all as more fully described herein.
B. The Lenders are willing to make available to the Borrower the credit
facility described herein subject to and on the terms and conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual provisions, covenants
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):
"AAA" shall have the meaning given to such term in SECTION 11.4(A).
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer and in form and
substance satisfactory to the Agent, listing any one or more accounts to which
the Borrower may from time to time request the Agent to forward the proceeds of
any Loans made hereunder.
<PAGE> 8
"Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the date hereof, by which the Borrower
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, or all or substantially all of the assets, of any Person, whether
through purchase of assets, merger or otherwise, or (ii) acquires securities or
other ownership interests of any Person having at least a majority of (or fifty
percent (50%), combined with direct or indirect management control of) the
combined voting power of the then outstanding securities or other ownership
interests of such Person. Acquisitions of less than a majority of (or fifty
percent (50%), combined with direct or indirect management control of) the
combined voting power of the then outstanding securities or other ownership
interests of a Person shall constitute a Minority Investment and not an
Acquisition.
"Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate per annum equal to the Base Rate as in effect at such time
plus the Applicable Margin Percentage for Base Rate Loans as in effect at such
time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.
"Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person. For purposes of this
definition, with respect to any Person "control" shall mean (i) the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise, or (ii) the beneficial ownership of
securities or other ownership interests of such Person having 15% or more of the
combined voting power of the then outstanding securities or other ownership
interests of such Person ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors or
other governing body of such Person.
"Agent" shall mean First Union, in its capacity as Administrative Agent
appointed under ARTICLE X, and its successors and permitted assigns in such
capacity.
"Agency Account Agreements" shall mean the Agency Account Agreements,
substantially in the form of EXHIBIT J, executed and delivered by the Borrower
and its Subsidiaries in connection with this Agreement and the other Credit
Documents.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.
"Annualized Consolidated EBITDA" shall mean, as of the last day of any
fiscal quarter, Consolidated EBITDA for the fiscal quarter ending on such date,
multiplied by four (4).
"Annualized Consolidated Interest Expense" shall mean, as of the last
day of any fiscal quarter, Consolidated Interest Expense for the fiscal quarter
ending on such date, multiplied by four (4).
2
<PAGE> 9
"Applicable Margin Percentage" shall mean, at any time from and after
the Closing Date, the applicable percentage (a) to be added to the Base Rate
pursuant to SECTION 2.8 for purposes of determining the Adjusted Base Rate, (b)
to be added to the LIBOR Rate pursuant to SECTION 2.8 for purposes of
determining the Adjusted LIBOR Rate and (c) to be used in calculating the
commitment fee payable pursuant to SECTION 2.9(B), in each case as determined
under the following matrix with reference to the Total Leverage Ratio:
<TABLE>
<CAPTION>
Applicable Applicable Base Applicable
Tier Total Leverage Ratio LIBOR Margin Rate Margin Commitment Fee
---- -------------------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
I Greater than or equal to 4.00 to 3.500% 2.250% 0.500%
1.0
II Less than 4.00 to 1.0 but 3.250% 2.000% 0.500%
greater than or equal to 3.50 to
1.0
III Less than 3.50 to 1.0 but 3.000% 1.750% 0.500%
greater than or equal to 3.00 to
1.0
IV Less than 3.00 to 1.0 but 2.750% 1.500% 0.500%
greater than or equal to 2.50 to
1.0
V Less than 2.50 to 1.0 but 2.500% 1.250% 0.500%
greater than or equal to 2.00 to
1.0
VI Less than 2.00 to 1.0 2.250% 1.000% 0.500%
</TABLE>
On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Loans and the commitment fee payable pursuant to SECTION
2.9(B) shall be adjusted effective as of such date (based upon the calculation
of the Total Leverage Ratio as of the last day of the fiscal period to which
such Adjustment Date relates) in accordance with the above matrix; provided,
however, that, notwithstanding the foregoing or anything else herein to the
contrary, if at any time the Borrower shall have failed to deliver the financial
statements and a Compliance Certificate as required by SECTION 6.1(A) or SECTION
6.1(B), as the case may be, and SECTION 6.2(A), then at the election of the
Required Lenders, at all times from and including the date on which such
statements and Compliance Certificate are required to have been delivered to the
date on which the same shall have been delivered, each Applicable Margin
Percentage shall be determined in accordance with the above matrix as if the
Total Leverage Ratio were greater than or equal to 4.00 : 1.0 (notwithstanding
the actual Total Leverage Ratio). Upon delivery of the outstanding financial
statements and Compliance Certificate, the Applicable Margin Percentage shall be
adjusted, effective as of such date of delivery (or, if such day is not a
Business Day, on the next succeeding Business Day), based upon the calculation
of the Total Leverage Ratio in accordance with the above matrix. For purposes of
this definition, "Adjustment Date" shall mean, with respect to any fiscal period
of the Borrower beginning with the fiscal quarter ending December 31, 1999, the
tenth (10th) day (or, if such day is not a Business Day, on the next succeeding
Business Day) after delivery by the Borrower in accordance with SECTION 6.1(A)
or SECTION 6.1(B), as the case may be, of (i) financial statements as of the end
of and for such fiscal period and (ii) a duly completed Compliance Certificate
with respect to such fiscal period. Until the first Adjustment Date, each
Applicable Margin
3
<PAGE> 10
Percentage shall be determined in accordance with the above matrix based upon
the Total Leverage Ratio as set forth in the pro forma Covenant Compliance
Worksheet required to be delivered pursuant to SECTION 4.1(L).
"Arbitration Rules" shall have the meaning given to such term in
SECTION 11.4.
"Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary), whether in one
transaction or a series of related transactions, of any of its assets, business
units or other properties (including any interests in property, whether tangible
or intangible, and including Capital Stock of the Subsidiaries), but excluding
the sale or other disposition of assets permitted under clauses (i), (ii) or
(iv) of SECTION 8.4.
"Assignee" shall have the meaning given to such term in SECTION
11.7(A).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
entered into between a Lender and an Assignee and accepted by the Agent and the
Borrower, in substantially the form of EXHIBIT D.
"Authorized Officer" shall mean, with respect to any action specified
herein, any officer of the Borrower duly authorized by resolution of the board
of directors of the Borrower to take such action on its behalf, and whose
signature and incumbency shall have been certified to the Agent by the secretary
or an assistant secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. ss.ss. 101 et seq., as amended
from time to time, and any successor statute.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime rate (which may not necessarily be its best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds Rate plus
0.5% per annum, as adjusted to conform to changes as of the opening of business
on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the Adjusted Base Rate.
"Borrower" shall mean Physicians' Specialty Corp, a Delaware
corporation, and its successors.
"Borrowing" shall mean the incurrence by the Borrower (including as a
result of conversions and continuations of outstanding Loans pursuant to SECTION
2.11) on a single date of a group of Loans of a single Class, Type (or a
Swingline Loan made by the Swingline Lender) and, in the case of LIBOR Loans, as
to which a single Interest Period is in effect.
"Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.
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"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.
"Cash Collateral Account" shall have the meaning given to such term in
SECTION 3.8.
"Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., (iii) time deposits and certificates of deposit
maturing within 90 days from the date of issuance and issued by a bank or trust
company organized under the laws of the United States of America or any state
thereof that has combined capital and surplus of at least $500,000,000 and that
has (or is a subsidiary of a bank holding company that has) a long-term
unsecured debt rating of at least A or the equivalent thereof by Standard &
Poor's Ratings Services or at least A2 or the equivalent thereof by Moody's
Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above, and (v) money market funds at
least 95% of the assets of which are continuously invested in securities of the
type described in clause (i) above.
"Casualty Event" shall mean, with respect to any property (including
any interest in property) of the Borrower or any of its Subsidiaries, any loss
of, damage to, or condemnation or other taking of, such property for which the
Borrower or such Subsidiary receives insurance proceeds, proceeds of a
condemnation award or other compensation in an amount for any Casualty Event
exceeding $100,000 or in the aggregate for all Casualty Events exceeding
$250,000 and to the extent such proceeds are not used to repair damaged property
or reinvested in similar assets within one hundred eighty (180) days after
receipt thereof and in compliance with the other terms and conditions of this
Agreement.
"Class" shall have the meaning given to such term in SECTION 2.2(A).
"Closing Date" shall mean the date upon which the initial extensions of
credit are made pursuant to this Agreement.
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"Collateral" shall mean all the assets, property and interests in
property that shall from time to time be pledged or be purported to be pledged
as direct or indirect security for the Obligations pursuant to any one or more
of the Security Documents.
"Commitments" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Swingline Commitment (if any).
"Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C, together with a Covenant Compliance
Worksheet.
"Consolidated EBITDA" shall mean, for any period, without duplication,
the aggregate of (i) Consolidated Net Income for such period, plus (ii) the sum
of Consolidated Interest Expense, federal, state, local and other income taxes,
depreciation, amortization of intangible assets, PIK Dividends, PIK Interest and
compensation charges related to the non-cash exercise of stock options to the
extent not capitalized, all to the extent taken into account in the calculation
of Consolidated Net Income for such period and all calculated on a consolidated
basis in accordance with GAAP, minus (iii) the sum of extraordinary or
nonrecurring gains (including in connection with the sale or write-up of
assets), all to the extent taken into account in the calculation of Consolidated
Net Income for such period and calculated on a consolidated basis in accordance
with GAAP, plus (iv) the sum of extraordinary or nonrecurring losses, all solely
to the extent reasonably approved by the Required Lenders, taken into account in
the calculation of Consolidated Net Income for such period and calculated on a
consolidated basis in accordance with GAAP. Consolidated EBITDA shall be deemed
to include, without duplication, historical Consolidated EBITDA of any business
acquired and operated by the Borrower or any Material Subsidiary after the
commencement of the relevant measurement period, as if such business had been
acquired by the Borrower or such Material Subsidiary as of the first day of such
measurement period; provided that such Consolidated EBITDA is supported by
financial statements, tax returns or other financial data acceptable to the
Agent in its reasonable discretion. Calculations of Consolidated EBITDA shall
exclude the results of operations of any entity disposed of by the Borrower or
any Material Subsidiary at any time after the first day of the relevant
measurement period.
"Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total cash interest expense of the Borrower and its
Material Subsidiaries for such period in respect of Consolidated Total
Indebtedness (including, without limitation, all such interest expense accrued
or capitalized during such period, whether or not actually paid during such
period, but excluding PIK Interest), determined on a consolidated basis and
calculated in accordance with GAAP, (ii) all net amounts payable under or in
respect of Hedge Agreements, to the extent paid or accrued by the Borrower and
its Material Subsidiaries during such period, and (iii) all commitment fees and
other ongoing fees in respect of Consolidated Total Indebtedness (including the
commitment fee provided for under SECTION 2.9(B) and the fees provided for under
the Fee Letter (other than the underwriting and arrangement fee set forth in
clause (1) of the second paragraph of the Fee Letter)) paid, accrued or
capitalized by the Borrower and its Material Subsidiaries during such period.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Borrower and its Material Subsidiaries for such period,
determined on a consolidated basis and
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<PAGE> 13
calculated in accordance with GAAP. Consolidated Net Income shall exclude any
net income (or loss) attributable to Non-Wholly Owned Subsidiaries to the extent
(a) such net income (or loss) is attributable to the proportionate share of the
Capital Stock in such entities owned by Persons other than the Borrower or a
Wholly Owned Subsidiary, or (b) such net income has not been distributed to the
Borrower or a Wholly Owned Subsidiary of the Borrower; provided that actual
transaction expenses in connection with the Transactions of up to $5,500,000
shall be added back to Consolidated Net Income to the extent actually expensed
and not capitalized.
"Consolidated Senior Indebtedness" shall mean, at any date,
Consolidated Total Indebtedness as of such date less Subordinated Indebtedness
of the Borrower and its Material Subsidiaries as of such date, determined on a
consolidated basis.
"Consolidated Total Indebtedness" shall mean, at any date, all
Indebtedness of the Borrower and its Material Subsidiaries as of such date,
determined on a consolidated basis.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability 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 obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase 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; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business.
"Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C.
"Credit Documents" shall mean this Agreement, the Notes, the Letters of
Credit, the Fee Letter, the Security Agreement, the Subsidiary Guaranty, any
other Security Documents, the Intercompany Notes, and all other agreements,
instruments, documents and certificates now or hereafter executed and delivered
to the Agent or any Lender by or on behalf of the Borrower or any of its
Subsidiaries with respect to this Agreement and the transactions contemplated
hereby, in each case as amended, modified, supplemented or restated from time to
time.
"Debt Issuance" shall mean the issuance or sale by the Borrower or any
of its Material Subsidiaries of any debt securities, whether in a public
offering of such securities or otherwise; provided, however, that the term Debt
Issuance shall not include the issue or sale of (i) debt securities issued or
sold in connection with the Transactions or (ii) debt securities issued or sold
in connection with any Permitted Acquisition and constituting all or a portion
of the Purchase Amount for any such Permitted Acquisition.
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<PAGE> 14
"Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.
"Disputes" shall have the meaning given to such term in SECTION 11.4.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Maturity Date; provided,
however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock; provided, further, that the shares of convertible
participating preferred stock and redeemable preferred stock issued to TA
Associates, the other shareholders of the Borrower and the Subordinated
Investors in connection with the Transactions shall not constitute Disqualified
Capital Stock as long as the terms and conditions of such shares remain
unchanged as such terms and conditions exist on the Closing Date.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDA" shall mean, for any Person during any period, the aggregate of
(i) net income (or loss) of such Person for such period, plus (ii) the sum of
interest expense, federal, state, local and other income taxes, depreciation,
amortization of intangible assets of such Person, all to the extent taken into
account in the calculation of such Person's net income for such period and all
calculated on a consolidated basis in accordance with GAAP, minus (iii) the sum
of extraordinary or nonrecurring gains (including in connection with the sale or
write-up of assets), all to the extent taken into account in the calculation of
such Person's net income for such period and calculated on a consolidated basis
in accordance with GAAP, plus (iv) the sum of extraordinary or nonrecurring
losses, all solely to the extent reasonably approved by the Required Lenders,
taken into account in the calculation of Consolidated Net Income for such period
and calculated on a consolidated basis in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower or
any Subsidiary, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a
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<PAGE> 15
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan that results in liability under Section 4201 or 4204 of
ERISA, or the receipt by the Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA, (iii) the distribution by the Borrower or any
ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent to
terminate any Plan or the taking of any action to terminate any Plan, (iv) the
commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Borrower or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Borrower or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Borrower or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Internal Revenue Code by any fiduciary of any
Plan for which the Borrower or any of its ERISA Affiliates may be directly or
indirectly liable or (ix) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $3,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic Cooperation and
Development or any successor thereto (the "OECD") or a political subdivision of
any such country and having total assets in excess of $3,000,000,000; provided,
that such bank or other financial institution is acting through a branch or
agency located in the United States, in the country under the laws of which it
is organized or in another country that is also a member of the OECD, (iii) the
central bank of any country that is a member of the OECD, (iv) a finance
company, insurance company or other financial institution or fund that is
engaged in making, purchasing or otherwise investing in loans in the ordinary
course of its business and having total assets in excess of $500,000,000, (v)
any Affiliate of an existing Lender or (vi) any other Person approved by the
Required Lenders, which approval shall not be unreasonably withheld.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
allegations, notices of noncompliance or violation, investigations (other than
internal reports prepared by any Person in the ordinary course of its business
and not in response to any third party action or request of any kind) or
proceedings relating in any way to any actual or alleged violation of or
liability under any Environmental Law or relating to any permit issued, or any
approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims
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<PAGE> 16
by Governmental Authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law and (ii) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Substances or arising from alleged injury or threat of
injury to human health or the environment.
"Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
and orders of courts or Governmental Authorities, relating primarily to the
protection of human health or occupational safety or the environment, now or
hereafter in effect and in each case as amended from time to time.
"Equity Issuance" shall mean the issuance, sale or other disposition by
the Borrower or any of its Material Subsidiaries of its Capital Stock
(including, without limitation, pursuant to an initial registered public
offering of Capital Stock of the Borrower), any rights, warrants or options to
purchase or acquire any shares of its Capital Stock or any other security or
instrument representing, convertible into or exchangeable for an equity interest
in the Borrower or any of its Material Subsidiaries; provided, however, that the
term Equity Issuance shall not include (i) the issuance or sale of Capital Stock
by any Subsidiary to the Borrower so long as such Capital Stock is pledged to
the Agent pursuant to the Security Agreement, (ii) Capital Stock of the Borrower
issued in connection with the Transactions, (iii) any Capital Stock of the
Borrower issued or sold in connection with any Permitted Acquisition and
constituting all or a portion of the Purchase Amount for any such Permitted
Acquisition, (iv) any Capital Stock of the Borrower issued in connection with
the Borrower's stock incentive plan(s), or (v) the issuance of Capital Stock by
the Borrower to TA Associates or other shareholders of the Borrower for the
purpose of consummating a Permitted Acquisition or otherwise acceptable to the
Required Lenders.
"Event of Default" shall have the meaning given to such term in SECTION
9.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Fair Market Value" shall mean, with respect to any Capital Stock of
the Borrower given in connection with an Acquisition or Minority Investment, the
value given to such Capital Stock for purposes of such Acquisition or Minority
Investment by the parties thereto, as determined in good faith pursuant to the
relevant acquisition agreement or otherwise in connection with such Acquisition
or Minority Investment.
"Federal Funds Rate" shall mean, for any period, a fluctuating per
annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one
percentage point) equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
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"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" shall mean the letter from First Union to the Borrower,
dated June 10, 1999, relating to certain fees payable by the Borrower in respect
of the transactions contemplated by this Agreement, as amended, modified or
supplemented from time to time.
"Financial Condition Certificate" shall mean a fully completed and duly
executed certificate, substantially in the form of EXHIBIT H, together with the
attachments thereto.
"Financial Officer" shall mean, with respect to the Borrower, the chief
financial officer, vice president finance, principal accounting officer or
treasurer of the Borrower.
"GAAP" shall mean generally accepted accounting principles, as set
forth in the statements, opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained, as in
effect from time to time (subject to the provisions of SECTION 1.2).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.
"Hazardous Substances" shall mean any substances or materials (i) that
are or become defined or regulated as hazardous wastes, hazardous substances,
pollutants, contaminants or toxic substances under any Environmental Law, (ii)
that are defined or regulated by any Environmental Law as toxic, explosive,
corrosive, ignitable, infectious, radioactive, mutagenic or otherwise hazardous,
or (iii) that contain greater than 1% asbestos, in excess of 50 parts per
million polychlorinated biphenyls, urea formaldehyde foam insulation or
petroleum hydrocarbons.
"Hedge Agreement" shall mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Indebtedness" shall mean, with respect to any Person (without
duplication), (i) all indebtedness and obligations of such Person for borrowed
money or in respect of loans or advances of any kind, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (iii)
all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not drawn
or matured and in the stated amount thereof), (iv) all obligations of such
Person to pay the deferred purchase price of property or services (including
earnouts, seller notes and other contingent obligations, to the extent required
to be recorded on the Borrower's balance sheet in accordance with GAAP),
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<PAGE> 18
(v) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person, (vi)
all obligations of such Person as lessee under leases that are or are required
to be, in accordance with GAAP, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any (for purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors or other
governing body of the issuer of such Disqualified Capital Stock), (viii) the net
termination obligations of such Person under any Hedge Agreements, calculated as
of any date as if such agreement or arrangement were terminated as of such date,
(ix) all Contingent Obligations of such Person, to the extent required to be
recorded on the Borrower's balance sheet in accordance with GAAP, and (x) all
indebtedness referred to in clauses (i) through (ix) above secured by any Lien
on any property or asset owned or held by such Person regardless of whether the
indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person, to the extent required to be recorded
on the Borrower's balance sheet in accordance with GAAP.
"Intellectual Property" shall mean (i) all inventions (whether or not
patentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, divisions, revisions,
extensions, and reexaminations thereof; (ii) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith; (iii) all copyrightable works and all copyrights
(registered and unregistered); (iv) all trade secrets and confidential
information (including, without limitation, financial, business and marketing
plans and customer and supplier lists and related information); (v) all computer
software and software systems (including, without limitation, data, databases
and related documentation); (vi) all Internet web sites and domain names; (vii)
all other proprietary rights, and (viii) all licenses or other agreements to or
from third parties regarding the foregoing.
"Indemnified Costs" shall have the meaning given to such term in
SECTION 11.2.
"Indemnified Person" shall have the meaning given to such term in
SECTION 11.2.
"Intercompany Notes" shall mean, collectively, any intercompany notes
made by the Subsidiaries, in substantially the form of EXHIBIT I, as amended,
modified or supplemented from time to time.
"Interest Coverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Annualized Consolidated EBITDA to (ii) Annualized
Consolidated Interest Expense.
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"Interest Period" shall have the meaning given to such term in SECTION
2.10.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"Investment Agreement" shall mean the Investment Agreement, dated as of
November 1, 1999, by and among the Borrower and the Subordinated Investors, and
all amendments, modifications and supplements thereto to the extent permitted
under this Agreement.
"Investments" shall have the meaning given to such term in SECTION 8.5.
"Issuing Lender" shall mean First Union in its capacity as issuer of
the Letters of Credit, and its successors in such capacity.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising
part of the same Borrowing for any Interest Period, an interest rate per annum
obtained by dividing (i) (y) the rate of interest (rounded upward, if necessary,
to the nearest 1/100 of one percentage point) appearing on Page 3750 of the Dow
Jones Market Screen (or any successor page) or (z) if no such rate is available,
the rate of interest determined by the Agent to be the rate or the arithmetic
mean of rates (rounded upward, if necessary, to the nearest 1/100 of one
percentage point) at which Dollar deposits in immediately available funds are
offered by First Union to first-tier banks in the London interbank Eurodollar
market, in each case under (y) and (z) above at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest Period for a
period substantially equal to such Interest Period and in an amount
substantially equal to the amount of First Union's LIBOR Loan comprising part of
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve Requirement
(expressed as a decimal) for such Interest Period.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereunder pursuant to
SECTION 11.7, and their respective successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on its signature page hereto or
in an Assignment and Acceptance, or such other office as may be otherwise
designated in writing from time to time by such Lender to the Borrower and the
Agent. A Lender may designate separate Lending Offices as provided in the
foregoing sentence for the purposes of making or maintaining different Types of
Loans, and, with respect to LIBOR Loans, such office may be a domestic or
foreign branch or Affiliate of such Lender.
"Letter of Credit Exposure" shall mean, with respect to any Lender at
any time, such Lender's ratable share (based on the proportion that its
Revolving Credit Commitment bears to the aggregate Revolving Credit Commitments
of all Lenders at such time) of the sum of (i) the aggregate Stated Amount of
all Letters of Credit outstanding at such time and (ii) the aggregate amount of
all Reimbursement Obligations outstanding at such time.
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"Letter of Credit Notice" shall have the meaning given to such term in
SECTION 3.2.
"Letters of Credit" shall have the meaning given to such term in
SECTION 3.1.
"Licenses" shall mean any and all licenses (including provisional
licenses), certificates of need, accreditations, permits, franchises, rights to
conduct business, approvals (by a Governmental Authority or otherwise),
consents, qualifications, operating authority and any other authorizations.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.
"Limitation" shall mean a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement, and the loss of any other material rights.
"Loans" shall mean the Revolving Loans and the Swingline Loans.
"Managed Practice" shall mean any professional association,
professional corporation, partnership or similar Person that provides ear, nose,
throat, head, neck or related services (including, without limitation, services
in the fields of allergy, audiology, oral surgery, pulmonology, plastic surgery
or sleep medicine) which has entered into a Service Agreement with the Borrower
or any of its Subsidiaries.
"Margin Stock" shall have the meaning given to such term in Regulation
U.
"Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, properties or business of the
Borrower and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, properties or business of
the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the
Borrower or any Subsidiary to perform its obligations under this Agreement or
any of the other Credit Documents to which it is a party or (iii) the legality,
validity or enforceability of this Agreement or any of the other Credit
Documents or the rights and remedies of the Agent and the Lenders hereunder and
thereunder.
"Material Contract" shall mean any contract or other arrangement (other
than any Loan Document), whether written or oral, to which the Borrower or any
other Subsidiary is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto would reasonably likely be expected to
have a Material Adverse Effect.
"Material Subsidiary" means, as of the date of any determination
thereof, any Subsidiary which (a) directly or indirectly owns any Capital Stock
of any other Material Subsidiary or (b) either (i) has total assets greater than
or equal to 3.0% of total assets (based on book value or fair
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<PAGE> 21
market value) of the Borrower and its Subsidiaries, determined on a consolidated
basis and calculated as of the fiscal quarter most recently ended or (ii) has
EBITDA for any fiscal quarter greater than or equal to 3.0% of the Consolidated
EBITDA of the Borrower and its Subsidiaries, determined on a consolidated basis
and calculated as of the fiscal quarter most recently ended. In any event, the
term "Material Subsidiaries" shall mean all Subsidiaries of the Borrower, that
together with the Borrower have assets equal to not less than 97% of the total
assets (calculated as described above) and EBITDA of not less than 97% of
Consolidated EBITDA (calculated as described above) and if more than one
combination of Subsidiaries satisfies such threshold, then those Subsidiaries so
determined to be "Material Subsidiaries" shall be specified by the Borrower;
provided, that once a Subsidiary is deemed a Material Subsidiary, it shall
remain a Material Subsidiary hereunder.
"Medicaid Certification" shall mean, with respect to any facility,
certification by HCFA or another Governmental Authority, or any Person under
contract with HCFA, that such facility is in compliance with all conditions of
participation set forth in the Medicaid Regulations, except where the failure to
so comply would not have a Material Adverse Effect.
"Medicaid Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicaid program and a facility under which
the facility agrees to provide services for Medicaid patients in accordance with
the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC
ss.ss. 1395 et seq., or elsewhere) affecting the medical assistance program
established by Title XIX of the Social Security Act, and any statutes succeeding
thereto; (ii) all applicable provisions of all federal rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities affecting any Managed Practice having the force of law promulgated
pursuant to or in connection with the statutes described in clause (i) above;
(iii) all state statutes and plans for medical assistance enacted in connection
with the statutes and provisions described in clauses (i) and (ii) above; and
(iv) all applicable provisions of all rules, regulations and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (iii) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (iii) above, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Medicare Certification" shall mean, with respect to any facility,
certification by HCFA or any other Governmental Authority, or any Person under
contract with HCFA, that such facility is in compliance with all the conditions
of participation set forth in the Medicare Regulations, except where the failure
to so comply would not have a Material Adverse Effect.
"Medicare Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicare program and a facility under which
the facility agrees to provide services for Medicare patients in accordance with
the terms of the agreement and Medicare Regulations.
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"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC ss.ss. 1395
et seq., or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, and orders and administrative, reimbursement and other guidelines
having the force of law of all Governmental Authorities (including without
limitation, Health and Human Services ("HHS"), HCFA, the Office of the Inspector
General for HHS, or any Person succeeding to the functions of any of the
foregoing) promulgated pursuant to or in connection with any of the foregoing
having the force of law, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Merger" shall have the meaning given to such term in the Merger
Agreement, as in effect as of the Closing Date.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of June 14, 1999, among the Borrower, the Merger Sub and certain guarantors
party thereto, including all schedules and exhibits thereto and other related
documentation.
"Merger Sub" shall mean TA Mergerco., Inc., a Delaware corporation, and
its successors.
"Merger Transaction Documents" means, collectively, the Merger
Agreement, the Voting Agreement, the Roll-Over Agreement, the Stock Purchase
Agreement, and the other documents executed pursuant to the Merger Agreement to
effect the transactions described therein.
"Minority Investment" shall mean an Investment by the Borrower or a
Subsidiary of the Borrower in an unrelated Person where the Borrower and its
Subsidiaries own less than fifty percent (50%) (or fifty percent (50%) without
direct or indirect management control) of the combined voting power of the
Capital Stock of such Person on a fully diluted basis.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"Net Cash Proceeds" shall mean, in the case of any Equity Issuance,
Debt Issuance or Asset Disposition, the aggregate cash payments received by the
Borrower and its Material Subsidiaries less actual and reasonable fees and
expenses (including underwriting discounts and commissions) incurred by the
Borrower and its Subsidiaries in connection therewith, and in the case of an
Asset Disposition, less Indebtedness that the transferee of (or holder of a Lien
on) such Property requires be paid as a condition to such Asset Disposition and
less any income or transfer taxes payable by the Borrower or any Material
Subsidiary as a result of such Asset Disposition, in each case, to the extent
paid from cash payments actually received by the Borrower as consideration for
such Asset Disposition.
"Non-U.S. Lender" shall have the meaning given to such term in SECTION
2.17(D).
"Non-Wholly Owned Subsidiary" shall mean any Subsidiary of which less
than one-hundred percent (100%) of the outstanding Capital Stock is, directly or
indirectly, owned by the Borrower or its Wholly Owned Subsidiaries.
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"Notes" shall mean any or all of the Revolving Notes and the Swingline
Note.
"Notice of Borrowing" shall have the meaning given to such term in
SECTION 2.2(B).
"Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 2.11(B).
"Notice of Swingline Borrowing" shall have the meaning given to such
term in SECTION 2.2(D).
"Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans, all
Reimbursement Obligations and all fees, expenses, indemnities and other
obligations owing, due or payable at any time by the Borrower to the Agent, any
Lender, the Issuing Lender or any other Person entitled thereto, under this
Agreement or any of the other Credit Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"PIK Dividends" shall mean dividends paid in kind (but not in cash) by
the Borrower pursuant to its redeemable preferred stock or any like instrument
or security issued by the Borrower in the future.
"PIK Interest" shall mean the difference between the interest accrued
at the Accrual Rate and the interest paid at the Pay Rate under the Permitted
Senior Subordinated Debentures and as those terms are defined in the Permitted
Senior Subordinated Debentures, which difference is capitalized into the
outstanding principal balance under the Permitted Senior Subordinated Debentures
quarterly.
"Parent Subsidiary" shall have the meaning given to such term in
SECTION 6.10(B).
"Participant" shall have the meaning given to such term in SECTION
11.7(D).
"Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
or investment made shall be within the scope of business described in SECTION
8.8, (ii) any Capital Stock given as consideration in connection therewith shall
be Capital Stock of the Borrower, (iii) in the case of an Acquisition involving
the acquisition of control of Capital Stock of any Person, immediately after
giving effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be the
Borrower, a Wholly Owned Subsidiary that is a Subsidiary Guarantor or a
Permitted Joint Venture that is a Subsidiary Guarantor, (iv) all of the
conditions and requirements of SECTIONS 6.9 and 6.10 applicable to such
Acquisition are satisfied, and (v) the Borrower has provided to the Agent all
deliverables and complied with all conditions set forth in the definition of
"Permitted Acquisition" in the Investment Agreement (except to the extent waived
by the Subordinated Investors under the Investment Agreement); or (b) any other
Acquisition to which the Required Lenders (or the Agent on their behalf) shall
have given their prior written consent (which consent shall not be unreasonably
withheld and may be given subject to such additional terms and conditions as the
Required Lenders shall reasonably establish) and with respect to which all of
the conditions and requirements set forth in this
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definition and in SECTION 6.9 and 6.10, and in or pursuant to any such consent,
have been satisfied or waived in writing by the Required Lenders (or the Agent
on their behalf); provided, that the Purchase Amount of an Acquisition approved
pursuant to this clause (b) shall count toward the $20,000,000 basket set forth
in SECTION 6.9(A)(II) and the $10,000,000 basket set forth in SECTION
6.9(A)(III) unless the exclusion of such Purchase Amount from such baskets is
expressly consented to by the Required Lenders.
"Permitted Joint Venture" shall mean (a) each of the Non-Wholly Owned
Subsidiaries identified on SCHEDULE 1.1(B) and (b) a Non-Wholly Owned Subsidiary
identified as a Permitted Joint Venture by the Borrower to the Agent at the time
of the Acquisition or creation thereof: (i) of which at least fifty percent
(50%) of the Capital Stock is owned by the Borrower and/or a Subsidiary
Guarantor, (ii) over which the Borrower or a Subsidiary Guarantor has direct or
indirect management control, either as general partner, managing partner, by
contract or as holder of the controlling interest and over which the Borrower
and/or its Wholly Owned Subsidiaries has control over major decisions, including
without limitation, the decision to sell substantially all of the assets of such
joint venture or to merger such joint venture with another entity, (iii) the
activity of which is within the scope of business described in SECTION 8.8, (iv)
which is subject to no provision in its organizational documents or any contract
to which it is a party (A) that restricts the payment of dividends and
distributions from such entity to the Borrower or any Subsidiary thereof that
owns the Capital Stock of such Permitted Joint Venture, (B) that restricts the
pledge of such Capital Stock held by the Borrower and/or its Wholly Owned
Subsidiaries to the Agent pursuant to the Security Agreement or (C) that
restricts the exercise of remedies by the Agent with respect to such Capital
Stock under the Security Agreement, (v) which does not own any Capital Stock of
any other Subsidiary, (vi) for which any Capital Stock of such Permitted Joint
Venture acquired from the Borrower or any Subsidiary by Persons other than the
Borrower or a Wholly Owned Subsidiary of the Borrower are acquired for Fair
Market Value (reasonable evidence of which shall be provided to the Agent upon
its request), and (vii) with respect to which, after giving effect to the
designation of a Subsidiary as a Permitted Joint Venture, no Default or Event of
Default would exist.
"Permitted Liens" shall have the meaning given to such term in SECTION
8.3.
"Permitted Minority Investment" shall mean (a) each of the Minority
Investments set forth on SCHEDULE 1.1(A), (b) any Minority Investment with
respect to which all of the following conditions are satisfied: (i) the Minority
Investment shall be within the scope of business described in SECTION 8.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Borrower, (iii) the investors shall be the Borrower, a
Wholly Owned Subsidiary or a Permitted Joint Venture, (iv) the amount of any
Physician Minority Investment Loan issued in connection with such Minority
Investment shall not constitute more than forty percent (40%) of the Purchase
Amount for such Minority Investment; and (v) all of the conditions and
requirements of SECTION 6.9 applicable to such Minority Investment are
satisfied; or (c) any other Minority Investment to which the Required Lenders
(or the Agent on their behalf) shall have given their prior written consent
(which consent shall not be unreasonably withheld and may be given subject to
such additional terms and conditions as the Required Lenders shall reasonably
establish) and with respect to which all of the conditions and requirements set
forth in this definition and in SECTION 6.9 and in or pursuant to any such
consent have been satisfied or waived in writing by the Required Lenders (or the
Agent on their behalf);
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provided, that the Purchase Amount of a Minority Investment approved pursuant to
this clause (c) shall count toward the $20,000,000 baskets set forth in SECTION
6.9(A)(II) and SECTION 6.9(A)(IV) and the $10,000,000 basket set forth in
SECTION 6.9(A)(III) unless the exclusion of such Purchase Amount from such
baskets is expressly consented to by the Required Lenders.
"Permitted Senior Subordinated Debentures" shall mean the unsecured
Debentures, due November 1, 2006, of the Borrower, in form and substance
satisfactory to the Agent, issued on the Closing Date pursuant to the Investment
Agreement in the aggregate principal amount of $15,000,000, as amended, modified
and supplemented from time to time, all as permitted hereby.
"Person" shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"Physician Minority Investment Loan" shall mean a loan to a physician
or a physician-controlled entity in connection with a Minority Investment, which
loan (a) is used by such physician to acquire Capital Stock in the Target of
such Minority Investment, (b) is secured by Capital Stock owned by such
physician or physician-controlled entity in a Permitted Joint Venture (which
Capital Stock is then pledged to the Agent for the benefit of the Lenders) and
(c) is evidenced by a promissory note that is pledged to the Agent for the
benefit of the Lenders.
"Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is subject to the provisions of Title IV
of ERISA (other than a Multiemployer Plan) and to which the Borrower or any
ERISA Affiliate may have any liability.
"Prepayment Account" shall have the meaning given to such term in
SECTION 2.6(G).
"Pro Forma Balance Sheet" shall have the meaning given to such term in
SECTION 5.11(B).
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"Projections" shall have the meaning given to such term in SECTION
5.11(C).
"Purchase" shall mean an Acquisition or a Minority Investment.
"Purchase Amount" shall mean, with respect to any Purchase, the sum
(without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Purchase, (ii) the Fair Market Value of all
Capital Stock of the Borrower issued or given in connection with such Purchase,
(iii) the amount (determined by using the face amount or the amount payable at
maturity, whichever is greater) of all Indebtedness incurred, assumed or
acquired by the Borrower and its Subsidiaries in connection with such Purchase,
(iv) all additional purchase price amounts in connection with such Purchase in
the form of earnouts and other contingent obligations that should be recorded as
a liability on the balance sheet of the
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Borrower and its Subsidiaries or expensed, in either event in accordance with
GAAP, (v) all amounts paid in respect of covenants not to compete, consulting
agreements and other affiliated contracts in connection with such Purchase, (vi)
the aggregate fair market value of all other consideration given by the Borrower
and its Subsidiaries in connection with such Purchase; and (vii) with respect to
Minority Investments, the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of any Physician Minority
Investment Loans issued by the Borrower and its Subsidiaries in connection with
such Minority Investment.
"Realty" shall mean all realty and interest in realty now or hereafter
acquired or leased by the Borrower or any Subsidiary.
"Refunded Swingline Loans" shall have the meaning given to such term in
SECTION 2.2(E).
"Register" shall have the meaning given to such term in SECTION
11.7(B).
"Reimbursement Approvals" shall mean, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations and any other similar
agreements with or approvals by Governmental Authorities or other Persons.
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.
"Reimbursement Obligation" shall have the meaning given to such term in
SECTION 3.4.
"Replaced Lender" shall have the meaning given to such term in SECTION
2.19.
"Replacement Effective Date" shall have the meaning given to such term
in SECTION 2.19.
"Replacement Lender" shall have the meaning given to such term in
SECTION 2.19.
"Reportable Event" shall mean (i) any "reportable event" within the
meaning of Section 4043(c) of ERISA for which the 30-day notice under Section
4043(a) of ERISA has not been waived by the PBGC (including any failure to meet
the minimum funding standard of, or timely make any required installment under,
Section 412 of the Internal Revenue Code or Section 302 of ERISA, regardless of
the issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such "reportable event" subject to advance notice to the
PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code, and (iv) a cessation of operations described in Section
4062(e) of ERISA.
"Required Lenders" shall mean the Lenders holding outstanding Loans
(excluding Swingline Loans) and Unutilized Commitments (or, after the
termination of the Revolving Credit Commitments, outstanding Loans (excluding
Swingline Loans) and Letter of Credit Exposure and participations in outstanding
Swingline Loans) representing more than sixty percent (60%) of the aggregate at
such time of all outstanding Loans (excluding Swingline Loans) and Unutilized
Commitments (or, after the termination of the Revolving Credit Commitments, the
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<PAGE> 27
aggregate at such time of all outstanding Loans (excluding Swingline Loans) and
Letter of Credit Exposure and participations in outstanding Swingline Loans).
"Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to First Union
under Regulation D with respect to "Eurocurrency liabilities" within the meaning
of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
"Responsible Officer" shall mean, with respect to the Borrower, the
president, the chief executive officer, the chief operating officer, any
Financial Officer, and any other officer or similar official thereof responsible
for the administration of the obligations of the Borrower in respect of this
Agreement.
"Revolving Credit Commitment" shall mean, with respect to any Lender at
any time, the amount set forth opposite such Lender's name on its signature page
hereto under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, the amount set forth for
such Lender at such time in the Register maintained by the Agent pursuant to
SECTION 11.7(B) as such Lender's "Revolving Credit Commitment," as such amount
may be reduced at or prior to such time pursuant to the terms hereof.
"Revolving Credit Maturity Date" shall mean the fifth anniversary of
the Closing Date.
"Revolving Credit Termination Date" shall mean the Revolving Credit
Maturity Date or such earlier date of termination of the Revolving Credit
Commitments pursuant to SECTION 2.5 or SECTION 9.2.
"Revolving Loans" shall have the meaning given to such term in SECTION
2.1(A).
"Revolving Notes" shall mean the promissory notes of the Borrower, in
substantially the form of EXHIBIT A-1, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Roll-Over Agreement" shall mean the Roll-Over Agreement, dated as of
June 14, 1999 and October 22, 1999 among Merger Sub and the stockholders and
optionholders of the Borrower party thereto.
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"Roll-Over Agreement Shares" shall mean 2,058,607 shares of Capital
Stock of the Borrower subject to the Roll-Over Agreement.
"Security Agreement" shall mean the Pledge and Security Agreement made
by the Borrower and the Subsidiary Guarantors in favor of the Agent, in
substantially the form of EXHIBIT E, as amended, modified or supplemented from
time to time.
"Security Documents" shall mean the Security Agreement and all other
pledge or security agreements, mortgages (if any), deeds of trust (if any),
assignments or other similar agreements or instruments executed and delivered by
the Borrower or any of its Subsidiaries pursuant to SECTION 6.10 or SECTION 6.11
or otherwise in connection with the transactions contemplated hereby, in each
case as amended, modified or supplemented from time to time.
"Senior Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of Consolidated Senior Indebtedness as of such date to
Annualized Consolidated EBITDA calculated with respect to the fiscal quarter
ending on such date.
"Service Agreement" shall mean any agreement or arrangement between the
Borrower or any of its Subsidiaries and one or more Managed Practices pursuant
to which the Borrower or any such Subsidiary agrees to provide or arrange for
comprehensive management, administrative and other non-medical, non-dental
support services to such Managed Practice or Practices in exchange for payment
to the Borrower or such Subsidiary of a service, management or similar fee.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the aggregate amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stockholders Agreement" shall mean the Stockholders Agreement, dated
as of June 14, 1999, among the stockholders of the Borrower and the stockholders
of Merger Sub party thereto and Merger Sub.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated as of June 14, 1999, among the TA Funds, the Borrower and the Voting
Agreement Stockholders.
"Subordinated Indebtedness" shall have the meaning given to such term
in SECTION 8.2(VI).
"Subordinated Investors" shall mean the financial institutions party to
the Investment Agreement.
"Subordination Agreement" shall mean the Subordination Agreement, dated
as of the Closing Date, among the Subordinated Investors, the Agent, on behalf
of the Lenders, the Borrower, the Subsidiary Guarantors and any of the
Borrower's additional Subsidiaries who become Subsidiary Guarantors from time to
time after the Closing Date, as amended, modified or supplemented from time to
time.
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"Subordination Terms" shall mean the terms and conditions substantially
in the form of EXHIBIT L.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and/or one or
more of its other Subsidiaries or a combination thereof (irrespective of
whether, at the time, securities of any other class or classes of any such
corporation or other Person shall or might have voting power by reason of the
happening of any contingency); provided that for purposes of ARTICLES IV, V, VI,
VIII and IX, a Permitted Joint Venture of which greater than fifty percent
(50%), or fifty percent (50%) with direct or indirect management control, of the
Capital Stock is owned by the Borrower and/or its Subsidiaries shall be deemed a
"Subsidiary". When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean any Material Subsidiary that is a
guarantor under the Subsidiary Guaranty and has granted to the Agent a Lien upon
and security interest in its personal property assets pursuant to the Security
Agreement.
"Subsidiary Guaranty" shall mean a guaranty agreement made by the
Subsidiary Guarantors in favor of the Agent and the Lenders, in substantially
the form of EXHIBIT F, as amended, modified or supplemented from time to time.
"Swingline Commitment" shall mean $3,000,000 or, if less, the aggregate
Revolving Credit Commitments at the time of determination, as such amount may be
reduced at or prior to such time pursuant to the terms hereof.
"Swingline Lender" shall mean First Union in its capacity as maker of
Swingline Loans, and its successors in such capacity.
"Swingline Loans" shall have the meaning given to such term in SECTION
2.1(B).
"Swingline Maturity Date" shall mean the date that is five (5) Business
Days prior to the Revolving Credit Maturity Date.
"Swingline Note" shall mean the promissory note of the Borrower in
substantially the form of EXHIBIT A-2, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Syndication Agent" shall mean CIBC World Markets Corp., in its
capacity under ARTICLE X, and its successors and permitted assigns.
"TA Associates" shall mean TA Associates Inc., a Delaware Corp.
"TA Funds" shall mean TA/Advent VIII, L.P., TA/Atlantic and Pacific IV,
L.P., TA Investors, LLC, TA Executives Fund LLC, Allied Capital Corporation,
1998 GP&H Fund LLC and GP&H PSC Partners.
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"Target" shall have the meaning given to such term in SECTION
6.9(B)(I).
"Taxes" shall have the meaning given to such term in SECTION 2.17(A).
"Terminating Indebtedness" shall have the meaning given to such term in
SECTION 4.1(M).
"Third Party Payor Arrangements" shall mean any and all arrangements
with Medicare, Medicaid, CHAMPUS and any other Governmental Authority or
quasi-public agency, Blue Cross, Blue Shield, any managed care plans, and
organizations including, without limitation, health maintenance organizations
and preferred provider organizations, private commercial insurance companies and
any similar third party arrangements, plans or programs for payment or
reimbursement in connection with health care services, products or supplies.
"Total Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Consolidated Total Indebtedness as of such date to
(ii) Annualized Consolidated EBITDA calculated with respect to the fiscal
quarter ending on such date.
"Transactions" shall mean a series of transactions involving the
Borrower in which (i) certain TA Funds will purchase approximately 1,874,000
shares of common stock of the Borrower from certain stockholders of the Borrower
for an aggregate purchase price of approximately $19,675,000, (ii) Merger Sub
will receive approximately $13,125,000 in cash, together with the shares of
common stock of the Borrower purchased pursuant to the preceding clause (i) from
the TA Funds in exchange for convertible participating preferred stock and
redeemable preferred stock of Merger Sub, (iii) Merger Sub will be merged with
and into the Borrower with the Borrower as the survivor, (iv) in the Merger, the
Borrower's shareholders will receive approximately $10.50 per share in cash for
their common stock in the Borrower (other than those shares directly purchased
by certain TA Funds pursuant to clause (I) of this definition and the Roll-Over
Agreement Shares); (v) in connection with the Merger, the Roll-Over Agreement
Shares shall remain outstanding as shares of common stock of the Borrower (as
the surviving corporation in the Merger) and each outstanding share of common
stock, convertible participating preferred stock and redeemable preferred stock,
respectively, of Merger Sub will be converted to one share of common stock,
convertible participating preferred stock and redeemable preferred stock,
respectively, of the Borrower having such terms as set forth in the Certificate
of Incorporation of the surviving corporation, (vi) the Borrower will issue
Permitted Senior Subordinated Debentures to the Subordinated Investors for
aggregate cash proceeds of $15,000,000, (vii) the Certificate of Incorporation
of the surviving corporation to the Merger shall be amended and restated as set
forth in Exhibit 1.1 to the Merger Agreement, (viii) the Borrower will issue
Warrants, redeemable preferred stock and convertible preferred stock to the
Subordinated Investors for aggregate cash proceeds of approximately $999,998.00,
(ix) the Borrower will make the initial Borrowing to finance, in part, the
Transactions, (x) all outstanding borrowings and letters of credit under the
Borrower's existing credit facility will be refinanced or replaced and such
credit facility will be terminated, (xi) approximately $11,100,000 of existing
Subordinated Indebtedness of the Borrower and its Subsidiaries shall remain
outstanding and (xii) after giving effect to the Merger and the other
transactions described above, no less than approximately 57% of the common stock
of the Borrower on a fully diluted basis (and as converted) will be owned by the
TA Funds and their assigns.
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"Transaction Documents" shall mean (i) the Merger Agreement, the
Roll-Over Agreement, the Stock Purchase Agreement, the Voting Agreement, the
Stockholders Agreement and the other agreements executed and delivered in
connection with the Merger, (ii) the Investment Agreement, the Warrants and the
other agreements executed and delivered in connection with the Investment
Agreement, (iii) this Agreement and the other Credit Documents, and (iv) all
other documents executed and delivered in connection with the Transactions.
"Type" shall have the meaning given to such term in SECTION 2.2(A).
"Unfunded Pension Liability" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.
"Uniform Customs" shall have the meaning given to such term in SECTION
11.3.
"Unutilized Revolving Credit Commitment" shall mean, with respect to
any Lender at any time, such Lender's Revolving Credit Commitment at such time
less the sum of (i) the aggregate principal amount of all Revolving Loans made
by such Lender that are outstanding at such time and (ii) such Lender's Letter
of Credit Exposure at such time.
"Unutilized Swingline Commitment" shall mean, with respect to the
Swingline Lender at any time, the Swingline Commitment at such time less the
aggregate principal amount of all Swingline Loans that are outstanding at such
time.
"Voting Agreement" shall mean the Voting Agreement, dated as of June
14, 1999, among Merger Sub and the Voting Agreement Stockholders.
"Voting Agreement Stockholders" shall mean the stockholders of the
Borrower party to the Voting Agreement.
"Warrants" shall mean the warrants issued under the Investment
Agreement, in form and substance satisfactory to the Agent, to purchase shares
of Common Stock of the Borrower.
"Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.
1.2 Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them in accordance with GAAP.
Notwithstanding anything to the contrary in this Agreement, for purposes of
calculation of the financial covenants set forth in ARTICLE VII, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the application used in preparing the most recent financial statements of the
Borrower referred to in SECTION 5.11(A). In the event that any changes in GAAP
after the Closing Date are applied to the Borrower, the Borrower and the Agent
will meet to determine whether such change would materially affect the
computation of the financial covenants contained in ARTICLE VII. If such changes
would materially affect the computation of such financial covenants, the
Borrower and
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the Lenders will undertake to promptly amend this Agreement to take into account
such changes such that neither the Agent nor the Lenders are advantaged or
disadvantaged by such changes; provided that similar changes shall be made to
the Permitted Senior Subordinated Debentures and the Investment Agreement.
1.3 Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto. All references
herein to the Lenders or any of them shall be deemed to include the Issuing
Lender unless specifically provided otherwise or unless the context otherwise
requires.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments.
(a) Each Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Revolving Loan," and
collectively, the "Revolving Loans") to the Borrower, from time to time on any
Business Day during the period from and including the Closing Date to but not
including the Revolving Credit Termination Date, in an aggregate principal
amount at any time outstanding not greater than the excess, if any, of its
Revolving Credit Commitment at such time over its Letter of Credit Exposure at
such time, provided that no Borrowing of Revolving Loans shall be made if,
immediately after giving effect thereto, the sum of (x) the aggregate principal
amount of Revolving Loans outstanding at such time, (y) the aggregate Letter of
Credit Exposure of all Lenders at such time and (z) the aggregate principal
amount of Swingline Loans outstanding at such time (excluding the principal
amount of any Swingline Loans to be repaid with the proceeds of Revolving Loans
made pursuant to such Borrowing) would exceed the aggregate Revolving Credit
Commitments of all Lenders at such time. Subject to and on the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow
Revolving Loans.
(b) The Swingline Lender agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Swingline Loan," and
collectively, the "Swingline Loans") to the Borrower, from time to time on any
Business Day during the period from the Closing Date to but not including the
Swingline Maturity Date (or, if earlier, the Revolving Credit Termination Date),
in an aggregate principal amount at any time outstanding not exceeding the
Swingline Commitment, notwithstanding that the aggregate principal amount of
Swingline Loans outstanding at any time, when added to the aggregate principal
amount of the Revolving Loans made by the Swingline Lender in its capacity as a
Lender outstanding at such time and its Letter of Credit Exposure at such time,
may exceed its Revolving Credit Commitment at such time, but provided that no
Borrowing of Swingline Loans shall be made if, immediately after giving effect
thereto, the sum of (x) the aggregate principal amount of Revolving Loans
outstanding at such time, (y) the aggregate Letter of Credit Exposure of all
Lenders at such time and (z) the
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aggregate principal amount of Swingline Loans outstanding at such time would
exceed the aggregate Revolving Credit Commitments at such time. Subject to and
on the terms and conditions of this Agreement, the Borrower may borrow, repay
(including by means of a Borrowing of Revolving Loans pursuant to SECTION
2.2(e)) and reborrow Swingline Loans.
2.2 Borrowings.
(a) The Revolving Loans (together with the Swingline Loans, each a
"Class" of Loan) shall, at the option of the Borrower and subject to the terms
and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each, a "Type" of Loan), provided that (i) all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type, and (ii) no Borrowing of LIBOR Loans may be made at any time prior to the
third (3rd) Business Day after the Closing Date unless otherwise agreed by the
Lenders. The Swingline Loans shall be made and maintained as Base Rate Loans at
all times.
(b) In order to make a Borrowing (other than (x) Borrowings of
Swingline Loans, which shall be made pursuant to SECTION 2.2(D), (y) Borrowings
for the purpose of repaying Refunded Swingline Loans, which shall be made
pursuant to SECTION 2.2(E), and (z) Borrowings involving continuations or
conversions of outstanding Loans, which shall be made pursuant to SECTION 2.11),
the Borrower will give the Agent written notice not later than 11:00 a.m.,
Charlotte time, three (3) Business Days prior to each Borrowing to be comprised
of LIBOR Loans and one (1) Business Day prior to each Borrowing to be comprised
of Base Rate Loans; provided, however, that requests for the Borrowing of any
Revolving Loans to be made on the Closing Date may, at the discretion of the
Agent, be given later than the times specified hereinabove. Each such notice
(each, a "Notice of Borrowing") shall be irrevocable, shall be given in the form
of EXHIBIT B-1 and shall specify (1) the aggregate principal amount and initial
Type of the Loans to be made pursuant to such Borrowing, (2) in the case of a
Borrowing of LIBOR Loans, the initial Interest Period to be applicable thereto,
and (3) the requested Borrowing Date, which shall be a Business Day. Upon its
receipt of a Notice of Borrowing, the Agent will promptly notify each Lender of
the proposed Borrowing. Notwithstanding anything to the contrary contained
herein:
(i) the aggregate principal amount of each Borrowing comprised
of Base Rate Loans shall not be less than $3,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof (or, if less, in the
amount of the aggregate Unutilized Commitments), and the aggregate
principal amount of each Borrowing comprised of LIBOR Loans shall not
be less than $3,000,000 or, if greater, an integral multiple of
$1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type
of Revolving Loans comprising a Borrowing, the Borrower shall be deemed
to have requested a Borrowing comprised of Base Rate Loans; and
(iii) if the Borrower shall have failed to select the duration
of the Interest Period to be applicable to any Borrowing of LIBOR
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month.
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(c) Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Lender will make available to the Agent at its office
referred to in SECTION 11.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the Revolving Loan to be made by such Lender. To the extent the
Lenders have made such amounts available to the Agent as provided hereinabove,
the Agent will make the aggregate of such amounts available to the Borrower in
accordance with SECTION 2.3(A) and in like funds as received by the Agent.
(d) In order to make a Borrowing of a Swingline Loan, the Borrower will
give the Agent and the Swingline Lender written notice not later than 11:00
a.m., Charlotte time, on the proposed Borrowing Date of such Borrowing. Each
such notice (each, a "Notice of Swingline Borrowing") shall be irrevocable,
shall be given in the form of EXHIBIT B-2 and shall specify the principal amount
of the Swingline Loan to be made pursuant to such Borrowing (which shall not be
less than $250,000 and, if greater, shall be in an integral multiple of $100,000
in excess thereof (or, if less, in the amount of the Unutilized Swingline
Commitment)). Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, the Swingline Lender will make available to the Agent at its
office referred to in SECTION 11.5 (or at such other location as the Agent may
designate) an amount, in Dollars and in immediately available funds, equal to
the amount of the requested Swingline Loan. To the extent the Swingline Lender
has made such amount available to the Agent as provided hereinabove, the Agent
will make such amount available to the Borrower in accordance with SECTION
2.3(A) and in like funds as received by the Agent.
(e) With respect to any outstanding Swingline Loans, the Swingline
Lender may at any time (whether or not an Event of Default has occurred and is
continuing) in its sole and absolute discretion, and is hereby authorized and
empowered by the Borrower to, cause a Borrowing of Revolving Loans to be made
for the purpose of repaying such Swingline Loans by delivering to the Agent (if
the Agent is different from the Swingline Lender) and each other Lender (on
behalf of, and with a copy to, the Borrower), not later than 11:00 a.m.,
Charlotte time, one (1) Business Day prior to the proposed Borrowing Date
therefor, a notice (which shall be deemed to be a Notice of Borrowing given by
the Borrower) requesting the Lenders to make Revolving Loans (which shall be
made initially as Base Rate Loans unless otherwise agreed by the Lenders) on
such Borrowing Date in an aggregate amount equal to the amount of such Swingline
Loans (the "Refunded Swingline Loans") outstanding on the date such notice is
given that the Swingline Lender requests to be repaid. Not later than 1:00 p.m.,
Charlotte time, on the requested Borrowing Date, each Lender (other than the
Swingline Lender) will make available to the Agent at its office referred to in
SECTION 11.5 (or at such other location as the Agent may designate) an amount,
in Dollars and in immediately available funds, equal to the amount of the
Revolving Loan to be made by such Lender. To the extent the Lenders have made
such amounts available to the Agent as provided hereinabove, the Agent will make
the aggregate of such amounts available to the Swingline Lender in like funds as
received by the Agent, which shall apply such amounts in repayment of the
Refunded Swingline Loans. Notwithstanding any provision of this Agreement to the
contrary, on the relevant Borrowing Date, the Refunded Swingline Loans
(including the Swingline Lender's ratable share thereof, in its capacity as a
Lender) shall be deemed to be repaid with the proceeds of the Revolving Loans
made as provided above (including a Revolving Loan deemed to have been made by
the Swingline Lender), and such Refunded Swingline Loans deemed to be so repaid
shall no longer be outstanding as Swingline Loans but shall be outstanding as
Revolving Loans. If any portion of
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any such amount repaid (or deemed to be repaid) to the Swingline Lender shall be
recovered by or on behalf of the Borrower from the Swingline Lender in any
bankruptcy, insolvency or similar proceeding or otherwise, the loss of the
amount so recovered shall be shared ratably among all the Lenders in the manner
contemplated by SECTION 2.15(B).
(f) If, as a result of any bankruptcy, insolvency or similar proceeding
with respect to the Borrower, Revolving Loans are not made pursuant to
SUBSECTION (E) above in an amount sufficient to repay any amounts owed to the
Swingline Lender in respect of any outstanding Swingline Loans, or if the
Swingline Lender is otherwise precluded for any reason from giving a notice on
behalf of the Borrower as provided for hereinabove, the Swingline Lender shall
be deemed to have sold without recourse, representation or warranty, and each
Lender shall be deemed to have purchased and hereby agrees to purchase, a
participation in such outstanding Swingline Loans in an amount equal to its
ratable share (based on the proportion that its Revolving Credit Commitment
bears to the aggregate Revolving Credit Commitments at such time) of the unpaid
amount thereof together with accrued interest thereon. Upon one (1) Business
Day's prior notice from the Swingline Lender, each Lender (other than the
Swingline Lender) will make available to the Agent at its office referred to in
SECTION 11.5 (or at such other location as the Agent may designate) an amount,
in Dollars and in immediately available funds, equal to its respective
participation. To the extent the Lenders have made such amounts available to the
Agent as provided hereinabove, the Agent will make the aggregate of such amounts
available to the Swingline Lender in like funds as received by the Agent. In the
event any such Lender fails to make available to the Agent the amount of such
Lender's participation as provided in this SUBSECTION (F), the Swingline Lender
shall be entitled to recover such amount on demand from such Lender, together
with interest thereon for each day from the date such amount is required to be
made available for the account of the Swingline Lender until the date such
amount is made available to the Swingline Lender at the Federal Funds Rate for
the first three (3) Business Days and thereafter at the Adjusted Base Rate
applicable to Revolving Loans. Promptly following its receipt of any payment by
or on behalf of the Borrower in respect of a Swingline Loan, the Swingline
Lender will pay to each Lender that has acquired a participation therein such
Lender's ratable share of such payment.
(g) Notwithstanding any provision of this Agreement to the contrary,
the obligation of each Lender (other than the Swingline Lender) to make
Revolving Loans for the purpose of repaying any Refunded Swingline Loans
pursuant to SUBSECTION (E) above and each such Lender's obligation to purchase a
participation in any unpaid Swingline Loans pursuant to SUBSECTION (F) above
shall be absolute and unconditional and shall not be affected by any
circumstance or event whatsoever, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right that such Lender may
have against the Swingline Lender, the Agent, the Borrower or any other Person
for any reason whatsoever, (ii) the occurrence or continuance of any Default or
Event of Default, (iii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries, or (iv) any breach of this Agreement by any
party hereto.
2.3 Disbursements; Funding Reliance; Domicile of Loan.
(a) The Borrower hereby authorizes the Agent to disburse the proceeds
of each Borrowing in accordance with the terms of any written instructions from
any of the Authorized
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Officers, provided that the Agent shall not be obligated under any circumstances
to forward amounts to any account not listed in an Account Designation Letter.
The Borrower may at any time deliver to the Agent an Account Designation Letter
listing any additional accounts or deleting any accounts listed in a previous
Account Designation Letter.
(b) Unless the Agent has received, prior to 1:00 p.m., Charlotte time,
on the relevant Borrowing Date, written notice from a Lender that such Lender
will not make available to the Agent such Lender's ratable portion of the
relevant Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent in immediately available funds on such Borrowing Date in
accordance with the applicable provisions of SECTION 2.2, and the Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date. If and to
the extent that such Lender shall not have made such portion available to the
Agent, and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and (ii) in
the case of the Borrower, at the rate of interest applicable at such time to the
Type of Loans comprising such Borrowing, as determined under the provisions of
SECTION 2.8. If such Lender shall repay to the Agent such corresponding amount,
such amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement. The failure of any Lender to make any Loan required
to be made by it as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Loan as part of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender as part of any Borrowing.
(c) Subject to SECTION 2.16(F), each Lender may, at its option, make
and maintain any Loan at, to or for the account of any of its Lending Offices,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan to or for the account of such Lender in accordance
with the terms of this Agreement.
2.4 Notes.
(a) The Loans made by each Lender shall be evidenced (i) in the case of
Revolving Loans, by a Revolving Note appropriately completed in substantially
the form of EXHIBIT A-1 and (ii) in the case of Swingline Loans, by a Swingline
Note appropriately completed in substantially the form of EXHIBIT A-2.
(b) Each Revolving Note issued to a Lender shall (i) be executed by the
Borrower, (ii) be payable to the order of such Lender, (iii) be dated as of the
Closing Date (or, in the case of a Revolving Note issued after the Closing Date,
dated the effective date of the applicable Assignment and Acceptance), (iv) be
in a stated principal amount equal to such Lender's Revolving Credit Commitment,
(v) bear interest in accordance with the provisions of SECTION 2.8, as the same
may be applicable from time to time to the Revolving Loans made by such Lender,
and (vi) be entitled to all of the benefits of this Agreement and the other
Credit Documents and subject to the provisions hereof and thereof.
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(c) The Swingline Note shall (i) be executed by the Borrower, (ii) be
payable to the order of the Swingline Lender, (iii) be dated as of the Closing
Date, (iv) be in a stated principal amount equal to the Swingline Commitment,
(v) bear interest in accordance with the provisions of SECTION 2.8, as the same
may be applicable from time to time to the Swingline Loans, and (vi) be entitled
to all of the benefits of this Agreement and the other Credit Documents and
subject to the provisions hereof and thereof.
(d) Each Lender will record on its internal records the amount and Type
of each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Acceptance relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.
2.5 Termination and Reduction of Commitments.
(a) The Revolving Credit Commitments shall be automatically and
permanently terminated on the Revolving Credit Termination Date (or on November
30, 1999, but only if the Closing Date shall not have occurred on or prior to
such date).
(b) The Swingline Commitment shall be automatically and permanently
terminated on the Swingline Maturity Date, unless sooner terminated pursuant to
any other provision of this SECTION or SECTION 9.2.
(c) The Revolving Credit Commitments shall, on each date upon which a
prepayment of the Loans is required under any provision of paragraph (c), (d) or
(e) of SECTION 2.6, be automatically and permanently reduced by the amount of
such required prepayment, as more particularly set forth in SECTION 2.6(F).
(d) At any time and from time to time after the date hereof, upon not
less than five (5) Business Days' prior written notice to the Agent (and, in the
case of a termination or reduction of the Unutilized Swingline Commitment, the
Swingline Lender), the Borrower may terminate in whole or reduce in part the
aggregate Unutilized Revolving Credit Commitments or the Unutilized Swingline
Commitment, provided that any such partial reduction shall be in an aggregate
amount of not less than $2,000,000 ($1,000,000 in the case of Unutilized
Swingline Commitment) or, if greater, an integral multiple thereof. The amount
of any termination or reduction made under this subsection (d) may not
thereafter be reinstated.
(e) Each reduction of the Revolving Credit Commitments pursuant to
this Section shall be applied ratably among the Lenders according to their
respective Revolving Credit Commitments. Notwithstanding any provision of this
Agreement to the contrary, any reduction of the Revolving Credit Commitments
pursuant to this Section that has the effect of reducing the aggregate
Revolving Credit Commitments to an amount less than the amount of the Swingline
Commitment at such time shall result in an automatic corresponding reduction of
the Swingline
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Commitment to the amount of the aggregate Revolving Credit Commitments (as so
reduced), without any further action on the part of the Borrower or the
Swingline Lender.
2.6 Mandatory Payments and Prepayments.
(a) Except to the extent due or paid sooner pursuant to the provisions
of this Agreement, (i) the aggregate outstanding principal of the Revolving
Loans shall be due and payable in full on the Revolving Credit Maturity Date,
and (ii) the aggregate outstanding principal of the Swingline Loans shall be due
and payable in full on the Swingline Maturity Date.
(b) In the event that, at any time, the sum of (x) the aggregate
principal amount of Revolving Loans outstanding at such time, (y) the aggregate
Letter of Credit Exposure of all Lenders at such time and (z) the aggregate
principal amount of Swingline Loans outstanding at such time (excluding the
aggregate amount of any Swingline Loans to be repaid with proceeds of Revolving
Loans made on the date of determination) shall exceed the aggregate Revolving
Credit Commitments at such time (after giving effect to any concurrent
termination or reduction thereof), the Borrower will immediately prepay the
outstanding principal amount of the Swingline Loans and, to the extent of any
excess remaining after prepayment in full of outstanding Swingline Loans, the
Borrower will immediately prepay the outstanding principal amount of the
Revolving Loans in the amount of such excess; provided that, to the extent such
excess amount is greater than the aggregate principal amount of Swingline Loans
and Revolving Loans outstanding immediately prior to the application of such
prepayment, the amount so prepaid shall be retained by the Agent and held in the
Cash Collateral Account as cover for Letter of Credit Exposure, as more
particularly described in SECTION 3.8, and thereupon such cash shall be deemed
to reduce the aggregate Letter of Credit Exposure by an equivalent amount.
(c) Promptly upon (and in any event not later than two (2) Business
Days after) its receipt thereof, the Borrower will prepay the outstanding
principal amount of the Loans in an amount equal to 100% of the Net Cash
Proceeds from any Equity Issuance and 100% of the Net Cash Proceeds from any
Debt Issuance, and will deliver to the Agent, concurrently with such prepayment,
a certificate signed by a Financial Officer in form and substance satisfactory
to the Agent and setting forth the calculation of such Net Cash Proceeds.
(d) Promptly upon (and in any event not later than two (2) Business
Days after) its receipt thereof, the Borrower will prepay the outstanding
principal amount of the Loans in an amount equal to 100% of the Net Cash
Proceeds from any Asset Disposition (including insurance proceeds, to the extent
such proceeds are not applied within 180 days after receipt thereof toward the
repair of damaged equipment or the replacement of the assets disposed with
similar assets) and will deliver to the Agent, concurrently with such
prepayment, a certificate signed by a Financial Officer in form and substance
satisfactory to the Agent and setting forth the calculation of such Net Cash
Proceeds. Notwithstanding the foregoing, nothing in this subsection shall be
deemed to permit any Asset Disposition not expressly permitted under SECTION
8.4.
(e) Not later than one hundred eighty (180) days after its receipt of
any proceeds of insurance, condemnation award or other compensation in respect
of any Casualty Event (and in
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any event upon its determination not to repair or replace any property subject
to such Casualty Event), the Borrower will prepay the outstanding principal
amount of the Loans in an amount equal to 100% of the Net Cash Proceeds from
such Casualty Event (less any amounts theretofore applied to the repair or
replacement of property subject to such Casualty Event) and will deliver to the
Agent, concurrently with such prepayment, a certificate signed by a Financial
Officer, in form and substance satisfactory to the Agent, setting forth the
calculation of such Net Cash Proceeds; provided, however, (i) nothing in this
paragraph shall be deemed to limit or otherwise affect any right of the Agent
herein or in any of the other Credit Documents to receive and hold such proceeds
as loss payee and to disburse the same to the Borrower upon the terms hereof or
thereof, or any obligation of the Borrower and each of the Subsidiaries herein
or in any of the other Credit Documents to remit any such proceeds to the Agent
upon its receipt thereof, and (ii) any and all such proceeds received or held by
the Agent or the Borrower or any of the Subsidiaries during the continuance of
an Event of Default (regardless of any proposed or actual use thereof for repair
or replacement) shall be applied to prepay the outstanding principal amount of
the Loans.
(f) Each prepayment of the Loans made pursuant to subsections (c), (d)
or (e) above shall be applied (i) first, to reduce the outstanding principal
amount of the Swingline Loans, with a corresponding reduction to the Revolving
Credit Commitments as provided in SECTION 2.5(C), (ii) second, to the extent of
any excess remaining after application as provided in clause (i) above, to
reduce the outstanding principal amount of the Revolving Loans, with a
corresponding reduction to the Revolving Credit Commitments as provided in
SECTION 2.5(C), and (iii) third, to the extent of any excess remaining after
application as provided in clauses (i) and (ii) above, to pay any outstanding
Reimbursement Obligations, and thereafter to cash collateralize Letter of Credit
Exposure pursuant to SECTION 3.8, and shall be applied first to prepay all Base
Rate Loans before any LIBOR Loans are prepaid. Each payment or prepayment
pursuant to the provisions of this Section shall be applied ratably among the
Lenders holding the Loans being prepaid, in proportion to the principal amount
held by each.
(g) Each payment or prepayment of a LIBOR Loan made pursuant to the
provisions of this Section on a day other than the last day of the Interest
Period applicable thereto shall be made together with all amounts required under
Section 2.18 to be paid as a consequence thereof; provided, however, at the
request of the Borrower, any amount of any such prepayment of a LIBOR Loan shall
be deposited in a separate Prepayment Account (as defined below). The Agent
shall apply any cash deposited in the Prepayment Account to prepay LIBOR Loans
on the last day of their respective Interest Periods (or, at the direction of
the Borrower, on any earlier date) until all such outstanding Loans have been
prepaid or until all the allocable cash on deposit in the Prepayment Account has
been exhausted. For purposes of this Agreement, the term "Prepayment Account"
shall mean an account established by the Borrower with the Agent and over which
the Agent shall have exclusive dominion and control, including the exclusive
right of withdrawal for application in accordance with this paragraph. The Agent
will, at the request of the Borrower, invest amounts on deposit in the
Prepayment Account in Cash Equivalents that mature prior to the last day of the
applicable Interest Periods of the LIBOR Loans to be prepaid; provided, however,
that (i) the Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Agent to be in, or would result in
any, violation of any law, statute, rule or regulation, (ii) such Cash
Equivalents
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shall be subjected to a first priority perfected security interest in favor of
the Agent and (iii) if an Event of Default shall have occurred and be
continuing, the selection of such investments shall be in the sole discretion of
the Agent. The Borrower shall indemnify the Agent for any losses relating to the
investments so that the amount available to prepay LIBOR Loans on the last day
of the applicable Interest Periods is not less than the amount that would have
been available had no investments been made pursuant thereto. Other than any
interest or profits earned on such investments, the Prepayment Account shall not
bear interest. Interest or profits, if any, earned on the investments in the
Prepayment Account shall accumulate in the Prepayment Account. The Borrower
shall be entitled to the accumulated interest and profits in the Deposit Account
if (i) all amounts deposited in the Deposit Account by the Borrower have been
applied to repay outstanding Loans and (ii) no Default or Event of Default has
occurred and is continuing at the time such deposited amounts have been
exhausted. If the maturity of the Loans has been accelerated pursuant to SECTION
9.2, the Agent may, in its sole discretion, apply all amounts on deposit in the
Prepayment Account (including, without limitation, interest and profits) to
satisfy any of the Obligations. The Borrower hereby pledges and assigns to the
Agent, for its benefit and the benefit of the Lenders, the Prepayment Account
established hereunder to secure the Obligations..
2.7 Voluntary Prepayments.
(a) At any time and from time to time, the Borrower shall have the
right to prepay the Loans, in whole or in part, without premium or penalty
(except as provided in clause (iii) below), upon written notice given to the
Agent not later than 11:00 a.m., Charlotte time, three (3) Business Days prior
to each intended prepayment of LIBOR Loans and one (1) Business Day prior to
each intended prepayment of Base Rate Loans, provided that (i) each partial
prepayment shall be in an aggregate principal amount of not less than $3,000,000
or, if greater, an integral multiple of $1,000,000 in excess thereof ($250,000
and $100,000, respectively, in the case of Swingline Loans), (ii) no partial
prepayment of LIBOR Loans made pursuant to any single Borrowing shall reduce the
aggregate outstanding principal amount of the remaining LIBOR Loans under such
Borrowing to less than $3,000,000 or to any greater amount not an integral
multiple of $1,000,000 in excess thereof, and (iii) unless made together with
all amounts required under SECTION 2.18 to be paid as a consequence of such
prepayment, a prepayment of a LIBOR Loan may be made only on the last day of the
Interest Period applicable thereto. Each such notice shall specify the proposed
date of such prepayment and the aggregate principal amount, Class and Type of
the Loans to be prepaid (and, in the case of LIBOR Loans, the Interest Period of
the Borrowing pursuant to which made), and shall be irrevocable and shall bind
the Borrower to make such prepayment on the terms specified therein. Loans
prepaid pursuant to this subsection (a) may be reborrowed, subject to the terms
and conditions of this Agreement.
(b) Each prepayment of the Loans made pursuant to subsection (a) above
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
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2.8 Interest.
(a) The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full, (i) at the Adjusted Base Rate, as in effect from
time to time during such periods as such Loan is a Base Rate Loan, and (ii) at
the Adjusted LIBOR Rate, as in effect from time to time during such periods as
such Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of any default by
the Borrower in the payment of any principal of or interest on any Loan, any
fees or other amount hereunder when due (whether at maturity, pursuant to
acceleration or otherwise), and (at the election of the Required Lenders) upon
the occurrence and during the continuance of any Event of Default, all
outstanding principal amounts of the Loans and, to the greatest extent permitted
by law, all interest accrued on the Loans and all other accrued and outstanding
fees and other amounts hereunder, shall bear interest at a rate per annum equal
to the interest rate applicable from time to time thereafter to such Loans
(whether the Adjusted Base Rate or the Adjusted LIBOR Rate) plus 2% (or, in the
case of fees and other amounts, at the Adjusted Base Rate plus 2%), and, in each
case, such default interest shall be payable on demand. To the greatest extent
permitted by law, interest shall continue to accrue after the filing by or
against the Borrower of any petition seeking any relief in bankruptcy or under
any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each Base Rate Loan (including any Base Rate
Loan or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6, except as provided hereinbelow), in arrears on the last
Business Day of each calendar quarter, beginning with the first such
day to occur after the Closing Date; provided, that in the event the
Loans are repaid or prepaid in full and the Commitments have been
terminated, then accrued interest in respect of all Base Rate Loans
shall be payable together with such repayment or prepayment on the date
thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Loan
or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.6, except as provided hereinbelow), in arrears on the last
Business Day of the Interest Period applicable thereto (subject to the
provisions of clause (iv) in SECTION 2.10); provided, that in the event
all LIBOR Loans made pursuant to a single Borrowing are repaid or
prepaid in full, then accrued interest in respect of such LIBOR Loans
shall be payable together with such repayment or prepayment on the date
thereof; and
(iii) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Credit Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on
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such interest payment date shall be automatically reduced to such maximum
permissible amount. In the event of any such reduction affecting any Lender, if
from time to time thereafter the amount of interest payable for the account of
such Lender on any interest payment date would be less than the maximum amount
permitted by applicable law to be charged by such Lender, then the amount of
interest payable for its account on such subsequent interest payment date shall
be automatically increased to such maximum permissible amount, provided that at
no time shall the aggregate amount by which interest paid for the account of any
Lender has been increased pursuant to this sentence exceed the aggregate amount
by which interest paid for its account has theretofore been reduced pursuant to
the previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination of
the Reserve Requirement) shall, absent manifest error, be conclusive and binding
on all parties hereto.
2.9 Fees. The Borrower agrees to pay:
(a) To First Union Securities, Inc., for its own account, on the date
of its execution of this Agreement, the fees described in clauses (1) and (3) of
paragraph 2 of the Fee Letter, in the amounts set forth therein as due and
payable on such date and to the extent not theretofore paid to First Union
Securities, Inc.;
(b) To the Agent, for the account of each Lender, a commitment fee for
each calendar quarter (or portion thereof) for the period from the date of this
Agreement to the Revolving Credit Termination Date, at a per annum rate equal to
the Applicable Margin Percentage in effect for such fee from time to time during
such quarter on such Lender's ratable share (based on the proportion that its
Revolving Credit Commitment bears to the aggregate Revolving Credit Commitments)
of the average daily aggregate Unutilized Revolving Credit Commitments of all
Lenders, payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the Revolving Credit Termination Date;
(c) To the Agent, for the account of each Lender, a letter of credit
fee for each calendar quarter (or portion thereof) in respect of all Letters of
Credit outstanding during such quarter, at a per annum rate equal to the
Applicable Margin Percentage in effect from time to time during such quarter for
Loans that are maintained as LIBOR Loans, on such Lender's ratable share (based
on the proportion that its Revolving Credit Commitment bears to the aggregate
Revolving Credit Commitments of all Lenders) of the daily average aggregate
Stated Amount of such Letters of Credit, payable in arrears (i) on the last
Business Day of each calendar quarter, beginning with the first such day to
occur after the Closing Date, and (ii) on the later of the Revolving Credit
Termination Date and the date of termination of the last outstanding Letter of
Credit;
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(d) To the Issuing Lender, for its own account, a facing fee for each
calendar quarter (or portion thereof) in respect of all Letters of Credit
outstanding during such quarter, at a per annum rate of 0.125% on the daily
average aggregate Stated Amount of such Letters of Credit, payable in arrears
(i) on the last Business Day of each calendar quarter, beginning with the first
such day to occur after the Closing Date, and (ii) on the later of the Revolving
Credit Termination Date and the date of termination of the last outstanding
Letter of Credit;
(e) To the Issuing Lender, for its own account, such commissions,
issuance fees, transfer fees and other fees and charges incurred in connection
with the issuance and administration of each Letter of Credit as are customarily
charged from time to time by the Issuing Lender for the performance of such
services in connection with similar letters of credit, or as may be otherwise
agreed to by the Issuing Lender, but without duplication of amounts payable
under subsection (d) above; and
(f) To the Agent, for its own account, the annual administrative fee
described in clause 2 of paragraph 2 of the Fee Letter, on the terms, in the
amount and at the times set forth therein.
2.10 Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two or three-month period; provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such LIBOR Loan (including the
date of any continuation of, or conversion into, such LIBOR Loan), and
each successive Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) LIBOR Loans may not be outstanding under more than five
(5) separate Interest Periods at any one time (for which purpose
Interest Periods shall be deemed to be separate even if they are
coterminous);
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless such next succeeding Business Day
falls in another calendar month, in which case such Interest Period
shall expire on the next preceding Business Day;
(v) the Borrower may not select any Interest Period that
begins prior to the third (3rd) Business Day after the Closing Date
(unless otherwise agreed by the Lenders) or that expires after the
Revolving Credit Maturity Date; and
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(vi) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which
such Interest Period would otherwise expire, such Interest Period shall
expire on the last Business Day of such calendar month.
2.11 Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day occurring
on or after the Closing Date, to elect (i) to convert all or a portion of the
outstanding principal amount of any Base Rate Loans into LIBOR Loans, or to
convert any LIBOR Loans the Interest Periods for which end on the same day into
Base Rate Loans, or (ii) upon the expiration of any Interest Period, to continue
all or a portion of the outstanding principal amount of any LIBOR Loans the
Interest Periods for which end on the same day for an additional Interest
Period, provided that (w) any such conversion of LIBOR Loans into Base Rate
Loans shall involve an aggregate principal amount of not less than $3,000,000
or, if greater, an integral multiple of $1,000,000 in excess thereof; any such
conversion of Base Rate Loans into, or continuation of, LIBOR Loans shall
involve an aggregate principal amount of not less than $3,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof; and no partial
conversion of LIBOR Loans made pursuant to a single Borrowing shall reduce the
outstanding principal amount of such LIBOR Loans to less than $3,000,000 or to
any greater amount not an integral multiple of $1,000,000 in excess thereof, (x)
except as otherwise provided in SECTION 2.16(D), LIBOR Loans may be converted
into Base Rate Loans only on the last day of the Interest Period applicable
thereto (and, in any event, if a LIBOR Loan is converted into a Base Rate Loan
on any day other than the last day of the Interest Period applicable thereto,
the Borrower will pay, upon such conversion, all amounts required under SECTION
2.18 to be paid as a consequence thereof), (y) no such conversion or
continuation shall be permitted with regard to any Base Rate Loans that are
Swingline Loans, and (z) no conversion of Base Rate Loans into LIBOR Loans or
continuation of LIBOR Loans shall be permitted during the continuance of a
Default or Event of Default.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 11:00 a.m., Charlotte time, three (3) Business
Days prior to the intended effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR Loans and one (1) Business Day prior to the
intended effective date of any conversion of LIBOR Loans into Base Rate Loans.
Each such notice (each, a "Notice of Conversion/Continuation") shall be
irrevocable, shall be given in the form of EXHIBIT B-3 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount, Class and Type of
the Loans being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender of the
proposed conversion or continuation. In the event that the Borrower shall fail
to deliver a Notice of Conversion/Continuation as provided herein with respect
to any outstanding LIBOR Loans, such LIBOR Loans shall automatically be
converted to Base Rate Loans upon the expiration of the then current Interest
Period applicable thereto (unless repaid pursuant to the terms hereof). In the
event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
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2.12 Method of Payments; Computations.
(a) Payments by the Borrower hereunder shall be made without setoff,
counterclaim or other defense, in Dollars and in immediately available funds to
the Agent, for the account of the Lenders entitled to such payment or the
Swingline Lender, as the case may be (except as otherwise expressly provided
herein as to payments required to be made directly to the Issuing Lender and the
Lenders) at its office referred to in SECTION 11.5, prior to 12:00 noon,
Charlotte time, on the date payment is due. Any payment made as required
hereinabove, but after 12:00 noon, Charlotte time, shall be deemed to have been
made on the next succeeding Business Day. If any payment falls due on a day that
is not a Business Day, then such due date shall be extended to the next
succeeding Business Day (except that in the case of LIBOR Loans to which the
provisions of clause (iv) in SECTION 2.10 are applicable, such due date shall be
the next preceding Business Day), and such extension of time shall then be
included in the computation of payment of interest, fees or other applicable
amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of the Lenders as follows: (i) if the
payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be disbursed by the Agent until the date
repaid to such Lender. The Agent will distribute to the Issuing Lender like
amounts relating to payments made to the Agent for the account of the Issuing
Lender in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date, and the Agent
may, in reliance on such assumption, but shall not be obligated to, cause to be
distributed to such Lender on such due date an amount equal to the amount then
due to such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, and without limiting the obligation of the
Borrower to make such payment in accordance with the terms hereof, such Lender
shall repay to the Agent forthwith on demand such amount so distributed to such
Lender, together with interest thereon for each day from the date such amount is
so distributed to such Lender until the date repaid to the Agent, at the Federal
Funds Rate.
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(d) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed; provided that the computation of interest
on Base Rate Loans shall be made on the basis of a year consisting of 365/366
days and the actual number of days (including the first day, but excluding the
last day) elapsed.
2.13 Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes a
payment or payments to or for the account of the Agent, any Lender or the
Issuing Lender, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy,
insolvency or similar state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, the Obligation intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been received.
(b) If any amounts distributed by the Agent to any Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.14 Use of Proceeds. The proceeds of the Loans shall be used (i) to
finance a portion of the consideration paid in the Transactions, (ii) to pay off
the Terminating Indebtedness in full, (iii) to pay or reimburse actual and
reasonable transaction fees and expenses in connection with the closing of the
Transactions, in amounts reasonably acceptable to the Agent, and (iv)
thereafter, for working capital and general corporate purposes and in accordance
with the terms and provisions of this Agreement (including to finance Permitted
Acquisitions and Permitted Minority Investments in accordance with the terms and
provisions of this Agreement).
2.15 Pro Rata Treatment.
(a) Except in the case of Swingline Loans, all fundings, continuations
and conversions of Loans shall be made by the Lenders pro rata on the basis of
their respective Commitments (in the case of the initial funding of Loans
pursuant to SECTION 2.2) or on the basis of their respective outstanding Loans
(in the case of continuations and conversions of Loans pursuant to SECTION 2.11,
and additionally in all cases in the event the Commitments have expired or have
been terminated), as the case may be from time to time. All payments on account
of principal of or interest on any Loans, fees or any other Obligations owing to
or for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.
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(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, or otherwise, other
than pursuant to SECTION 11.7) applicable to the payment of any of the
Obligations that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all Lenders at
such time) of payments on account of such Obligations then or therewith obtained
by all the Lenders to which such payments are required to have been made, such
Lender shall forthwith purchase from the other Lenders such participations in
such Obligations as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each such other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such other Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to the provisions of this subsection may, to the
fullest extent permitted by law, exercise any and all rights of payment
(including, without limitation, setoff, banker's lien or counterclaim) with
respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. Subject to SECTION
9.2 hereof, if under any applicable bankruptcy, insolvency or similar law, any
Lender receives a secured claim in lieu of a setoff to which this subsection
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this subsection to share in the benefits of any recovery
on such secured claim.
2.16 Increased Costs; Change in Circumstances; Illegality; etc.
(a) If, at any time after the date hereof and from time to time, the
introduction of or any change in any applicable law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law), shall (i) subject such Lender to any
tax or other charge, or change the basis of taxation of payments to such Lender,
in respect of any of its LIBOR Loans or any other amounts payable hereunder or
its obligation to make, fund or maintain any LIBOR Loans (other than any change
in the rate or basis of tax on the overall net income of such Lender or its
applicable Lending Office), (ii) impose, modify or deem applicable any reserve,
special deposit or similar requirement (but excluding any reserves to the extent
actually included within the Reserve Requirement in the calculation of the LIBOR
Rate) against assets of, deposits with or for the account of, or credit extended
by, such Lender or its applicable Lending Office, or (iii) impose on such Lender
or its applicable Lending Office any other condition, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Loans or issuing or participating in Letters of Credit or
to reduce the amount of any sum received or receivable by such Lender hereunder
(including in respect of Letters of Credit), the Borrower will, promptly upon
demand therefor by such Lender (which demand shall provide reasonable detail of
such Lender's increased costs), pay to such
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Lender such additional amounts as shall compensate such Lender for such
increase in costs or reduction in return.
(b) If, at any time after the date hereof and from time to time, any
Lender shall have reasonably determined that the introduction of or any change
in any applicable law, rule or regulation regarding capital adequacy or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by such Lender
with any guideline or request from any such Governmental Authority (whether or
not having the force of law), has or would have the effect, as a consequence of
such Lender's Commitment, Loans or issuance of or participations in Letters of
Credit hereunder, of reducing the rate of return on the capital of such Lender
or any Person controlling such Lender to a level below that which such Lender or
controlling Person could have achieved but for such introduction, change or
compliance (taking into account such Lender's or controlling Person's policies
with respect to capital adequacy), the Borrower will, promptly upon demand
therefor by such Lender (which demand will provide reasonable detail of such
Lender's reduced rate of return), pay to such Lender such additional amounts as
will compensate such Lender or controlling Person for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (y) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period or (z) the Agent
shall have received written notice from the Required Lenders of their
determination that the rate of interest referred to in the definition of "LIBOR
Rate" upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining LIBOR Loans during such Interest
Period, the Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice, (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall be deemed to be a request for Base Rate Loans, in each case until the
Agent or the Required Lenders, as the case may be, shall have determined that
the circumstances giving rise to such suspension no longer exist (and the
Required Lenders, if making such determination, shall have so notified the
Agent), and the Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Agent and the Borrower. Upon such notice, (i) each of such Lender's then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Period applicable thereto (or, to the extent any such LIBOR
Loan may not
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lawfully be maintained as a LIBOR Loan until such expiration date, upon such
notice), be converted into a Base Rate Loan, (ii) the obligation of such Lender
to make, to convert Base Rate Loans into, or to continue, LIBOR Loans shall be
suspended (including pursuant to any Borrowing for which the Agent has received
a Notice of Borrowing but for which the Borrowing Date has not arrived), and
(iii) any Notice of Borrowing or Notice of Conversion/Continuation given at any
time thereafter with respect to LIBOR Loans shall, as to such Lender, be deemed
to be a request for a Base Rate Loan, in each case until such Lender shall have
determined that the circumstances giving rise to such suspension no longer exist
and shall have so notified the Agent, and the Agent shall have so notified the
Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent demonstrable error, be conclusive,
provided that such determinations are made in good faith. No failure by the
Agent or any Lender at any time to demand payment of any amounts payable under
this Section shall constitute a waiver of its right to demand payment of any
additional amounts arising at any subsequent time; provided, however, that the
Borrower shall not be required to compensate a Lender pursuant to this Section
for any increased costs or reduction in return incurred or suffered by any
Lender for any period prior to 90 days before the date of such Lender's notice
to the Borrower of its intent to claim compensation therefor. Nothing in this
Section shall require or be construed to require the Borrower to pay any
interest, fees, costs or other amounts in excess of that permitted by applicable
law.
(f) Any Lender claiming any amounts pursuant to SECTION 2.16(A),
2.16(B) or 2.17 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to avoid any costs, reductions or Taxes in respect of
which such amounts are claimed, including the filing of any certificate or
document reasonably requested by the Borrower or the changing of the
jurisdiction of its Lending Office if such efforts would avoid the need for or
reduce the amount of any such amounts which would thereafter accrue and would
not, in the sole determination of such Lender, the Agent or Issuing Lender, as
applicable, result in any additional costs, expenses or risks to such Lender,
the Agent or Issuing Lender or would be otherwise disadvantageous to such
Lender, the Agent or Issuing Lender.
2.17 Taxes.
(a) Any and all payments by the Borrower hereunder or under any Note
shall be made, in accordance with the terms hereof and thereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, other than net income and franchise taxes imposed on the Agent or any
Lender as a result of a present or former connection between the Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Credit Document) (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to the Agent or any Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required
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deductions with respect to such Taxes (including deductions applicable to Taxes
imposed on additional sums payable under this Section), the Agent or such
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower will make such
deductions, (iii) the Borrower will pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Borrower will deliver to the Agent or such Lender, as the case may be,
evidence of such payment.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within 30
days from the date the Agent or such Lender, as the case may be, makes written
demand therefor (accompanied by reasonably supporting material).
(c) Each of the Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit with respect to, any amount of
Taxes (i) previously paid by it and as to which it has been indemnified by or on
behalf of the Borrower or (ii) previously deducted by the Borrower (including,
without limitation, any Taxes deducted from any additional sums payable under
clause (i) of SUBSECTION (A) above), the Agent or such Lender, as the case may
be, shall reimburse the Borrower to the extent of the amount of any such
recovery or permanent net tax benefit (but only to the extent of indemnity
payments made, or additional amounts paid, by or on behalf of the Borrower under
this Section with respect to the Taxes giving rise to such recovery or tax
benefit); provided, however, that the Borrower, upon the request of the Agent or
such Lender, agrees to repay to the Agent or such Lender, as the case may be,
the amount paid over to the Borrower (together with any penalties, interest or
other charges), in the event the Agent or such Lender is required to repay such
amount to the relevant taxing authority or other Governmental Authority. The
determination by the Agent or any Lender of the amount of any such recovery or
permanent net tax benefit shall, in the absence of demonstrable error, be
conclusive and binding.
(d) Any Lender who is incorporated or organized under the laws of a
jurisdiction other than the United States of America or any state thereof (a
"Non-U.S. Lender") agrees to deliver to each of the Agent and the Borrower, on
or prior to the Closing Date (or, in the case of a Non-U.S. Lender that becomes
a party to this Agreement as a result of an assignment after the Closing Date,
on the effective date of such assignment), (i) Internal Revenue Service Form
4224 or 1001, as applicable (or successor forms), certifying that such Non-U.S.
Lender is entitled to a complete exemption from withholding or deduction for or
on account of United States federal income taxes in connection with payments
under this Agreement or any of the Notes, or (ii) in the case of a Non-U.S.
Lender that is not a "bank" for purposes of Section 881(c)(3)(A) of the Internal
Revenue Code, two signed certificates in form and substance reasonably
satisfactory to the Agent and the Borrower and to the effect that (x) such
Non-U.S. Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the
Internal Revenue Code, is not subject to regulatory or other legal requirements
as a bank in any jurisdiction, and has not been treated as a bank for purposes
of any tax, securities law or other filing or submission made to any
governmental authority, any application made to a rating agency or qualification
for any exemption from any
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tax, securities law or other legal requirements, (y) is not a 10-percent
shareholder for purposes of Section 881(c)(3)(B) of the Internal Revenue Code
and (z) is not a controlled foreign corporation receiving interest from a
related person for purposes of Section 881(c)(3)(C) of the Internal Revenue
Code, together with two accurate and complete original signed counterparts of
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms).
Each such Non-U.S. Lender further agrees to deliver to each of the Agent and the
Borrower an additional copy of each such relevant form on or before the date
that such form expires or becomes obsolete or after the occurrence of any event
(including a change in its applicable Lending Office) requiring a change in the
most recent forms so delivered by it, in each case certifying that such Non-U.S.
Lender is entitled to an exemption from or a reduction of withholding or
deduction for or on account of United States federal income taxes in connection
with payments under this Agreement or any of the Notes, unless an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required, which event renders all such forms inapplicable or the exemption or
reduction to which such forms relate unavailable and such Non-U.S. Lender
notifies the Agent and the Borrower that it is not entitled to receive payments
without deduction or withholding of United States federal income taxes. Each
such Non-U.S. Lender will promptly notify the Agent and the Borrower of any
changes in circumstances that would modify or render invalid any claimed
exemption or reduction.
(e) If any of the forms or other documentation required under
SUBSECTION (D) above are not delivered by any Lender to the Agent as therein
required, then the Borrower and the Agent may withhold from any interest payment
to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax, and the Borrower shall not be
required to make any payment to or for the benefit or account of such Lender
under SUBSECTION (A) or SUBSECTION (B) with respect to the amount as withheld.
2.18 Compensation. The Borrower will compensate each Lender upon demand
for all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund or maintain LIBOR
Loans) that such Lender may incur or sustain (i) if for any reason (other than a
default by such Lender) a Borrowing or continuation of, or conversion into, a
LIBOR Loan does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any LIBOR Loan occurs on a date other than the last day of an
Interest Period applicable thereto (including as a consequence of acceleration
of the maturity of the Loans pursuant to SECTION 9.2), (iii) if any prepayment
of any LIBOR Loan is not made on any date specified in a notice of prepayment
given by the Borrower or (iv) as a consequence of any other failure by the
Borrower to make any payments with respect to any LIBOR Loan when due hereunder.
Calculation of all amounts payable to a Lender under this SECTION 2.18 shall be
made as though such Lender had actually funded its relevant LIBOR Loan through
the purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an
amount equal to the amount of such LIBOR Loan, having a maturity comparable to
the relevant Interest Period; provided, however, that each Lender may fund its
LIBOR Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this SECTION 2.18.
Determinations by any Lender for purposes of this SECTION 2.18 of any such
losses, expenses or liabilities shall,
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absent demonstrable error, be conclusive, provided that such determinations are
made in good faith.
2.19 Replacement of Lenders. The Borrower may, at any time and so long
as no Default or Event of Default has then occurred and is continuing, replace
any Lender (i) that has requested compensation from the Borrower under SECTION
2.16 or 2.17, (ii) the obligation of which to make or maintain LIBOR Loans has
been suspended under SECTION 2.16(D) or (iii) that shall default in the funding
of its ratable share of any Borrowing requested and permitted to be made
hereunder and such default has not been cured within three (3) Business Days
after the Borrower has given such Lender written notice thereof, provided, that
in any case under clauses (i) through (iii) above the Borrower has given written
notice to such Lender and the Agent not more than thirty (30) days after any
such event and identifying one or more Persons each of which shall be an
Eligible Assignee and reasonably acceptable to the Agent (each, a "Replacement
Lender," and collectively, the "Replacement Lenders") to replace such Lender
(the "Replaced Lender"); provided, further, that (i) the notice from the
Borrower to the Replaced Lender and the Agent provided for hereinabove shall
specify an effective date for such replacement (the "Replacement Effective
Date"), which shall be at least five (5) Business Days after such notice is
given, (ii) as of the relevant Replacement Effective Date, each Replacement
Lender shall enter into an Assignment and Acceptance with the Replaced Lender
pursuant to SECTION 11.7, pursuant to which such Replacement Lenders
collectively shall acquire, in such proportion among them as they may agree with
the Borrower and the Agent, all (but not less than all) of the Commitments and
outstanding Loans of the Replaced Lender, and, in connection therewith, shall
pay (x) to the Replaced Lender, as the purchase price in respect thereof, an
amount equal to the sum as of the Replacement Effective Date (without
duplication) of (1) the unpaid principal amount of, and all accrued but unpaid
interest on, all outstanding Loans of the Replaced Lender and (2) the Replaced
Lender's ratable share of all accrued but unpaid fees owing to the Replaced
Lender under SECTION 2.9, (y) to the Agent, for its own account, any amounts
owing to the Agent by the Replaced Lender under SECTION 2.3(B), and (z) to the
Agent, for the account of the Swingline Lender, any amounts owing the Swingline
Lender under SECTIONS 2.2(E) and 2.2(F), and (iii) all other obligations of the
Borrower owing to the Replaced Lender (other than those specifically described
in clause (ii) above in respect of which the assignment purchase price has been,
or is concurrently being, paid), including, without limitation, amounts payable
under SECTIONS 2.16 and 2.17 which give rise to the replacement of such Replaced
Lender and (iii) amounts payable under SECTION 2.18 as a result of the actions
required to be taken under this SECTION 2.19, shall be paid in full by the
Borrower to the Replaced Lender on or prior to the Replacement Effective Date.
ARTICLE III
LETTERS OF CREDIT
3.1 Issuance. Subject to and upon the terms and conditions herein set
forth, so long as no Default or Event of Default has occurred and is continuing,
the Issuing Lender will, at any time and from time to time on and after the
Closing Date and prior to the earlier of (i) the seventh day prior to the
Revolving Credit Maturity Date and (ii) the Revolving Credit Termination Date,
and upon request by the Borrower in accordance with the provisions of SECTION
3.2, issue for the
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account of the Borrower one or more irrevocable standby letters of credit
denominated in Dollars and in a form customarily used or otherwise approved by
the Issuing Lender (together with all amendments, modifications and supplements
thereto, substitutions therefor and renewals and restatements thereof,
collectively, the "Letters of Credit"). The Stated Amount of each Letter of
Credit shall not be less than such amount as may be acceptable to the Issuing
Lender. Notwithstanding the foregoing:
(a) No Letter of Credit shall be issued the Stated Amount upon issuance
of which (i) when added to the aggregate Letter of Credit Exposure of the
Lenders at such time, would exceed $100,000 or (ii) when added to the sum of (x)
the aggregate Letter of Credit Exposure of all Lenders at such time, (y) the
aggregate principal amount of all Revolving Loans then outstanding and (z) the
aggregate principal amount of all Swingline Loans then outstanding, would exceed
the aggregate Revolving Credit Commitments at such time;
(b) No Letter of Credit shall be issued that by its terms expires later
than the seventh day prior to the Revolving Credit Maturity Date or, in any
event, more than one (1) year after its date of issuance; provided, however,
that a Letter of Credit may, if requested by the Borrower, provide by its terms,
and on terms acceptable to the Issuing Lender, for renewal for successive
periods of one year or less (but not beyond the seventh day prior to the
Revolving Credit Maturity Date), unless and until the Issuing Lender shall have
delivered a notice of nonrenewal to the beneficiary of such Letter of Credit;
(c) The Issuing Lender shall be under no obligation to issue any Letter
of Credit if, at the time of such proposed issuance, (i) any order, judgment or
decree of any Governmental Authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing
Lender refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Issuing Lender with respect to
such Letter of Credit any restriction or reserve or capital requirement (for
which the Issuing Lender is not otherwise compensated) not in effect on the
Closing Date, or any unreimbursed loss, cost or expense that was not applicable,
in effect or known to the Issuing Lender as of the Closing Date and that the
Issuing Lender in good faith deems material to it, or (ii) the Issuing Lender
shall have actual knowledge, or shall have received notice from any Lender,
prior to the issuance of such Letter of Credit that one or more of the
conditions specified in SECTIONS 4.1 (if applicable) or 4.2 are not then
satisfied (or have not been waived in writing as required herein) or that the
issuance of such Letter of Credit would violate the provisions of subsection (a)
above; and
(d) No more than five (5) Letters of Credit shall be outstanding at any
one time.
3.2 Notices. Whenever the Borrower desires the issuance of a Letter of
Credit, the Borrower will give the Issuing Lender written notice with a copy to
the Agent not later than 11:00 a.m., Charlotte time, three (3) Business Days (or
such shorter period as is acceptable to the Issuing Lender in any given case)
prior to the requested date of issuance thereof. Each such notice (each, a
"Letter of Credit Notice") shall be irrevocable, shall be given in the form of
EXHIBIT B-4 and shall specify (i) the requested date of issuance, which shall be
a Business Day,
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(ii) the requested Stated Amount and expiry date of the Letter of Credit, and
(iii) the name and address of the requested beneficiary or beneficiaries of the
Letter of Credit. The Borrower will also complete any application procedures and
documents required by the Issuing Lender in connection with the issuance of any
Letter of Credit. Upon its issuance of any Letter of Credit, the Issuing Lender
will promptly notify the Agent of such issuance, and the Agent will give prompt
notice thereof to each Lender.
3.3 Participations. Immediately upon the issuance of any Letter of
Credit, the Issuing Lender shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Lender, without recourse or warranty, an
undivided interest and participation, pro rata (based on the percentage of the
aggregate Revolving Credit Commitments of all Lenders represented by such
Lender's Revolving Credit Commitment), in such Letter of Credit, each drawing
made thereunder and the obligations of the Borrower under this Agreement with
respect thereto and any Collateral or other security therefor or guaranty
pertaining thereto; provided, however, that the fee relating to Letters of
Credit described in SECTION 2.9(D) shall be payable directly to the Issuing
Lender as provided therein, and the Lenders shall have no right to receive any
portion thereof. Upon any change in the Revolving Credit Commitments of any of
the Lenders pursuant to SECTION 11.7(A), with respect to all outstanding Letters
of Credit and Reimbursement Obligations there shall be an automatic adjustment
to the participations pursuant to this Section to reflect the new pro rata
shares of the assigning Lender and the Assignee.
3.4 Reimbursement. The Borrower hereby agrees to reimburse the Issuing
Lender by making payment to the Agent, for the account of the Issuing Lender, in
immediately available funds, for any payment made by the Issuing Lender under
any Letter of Credit (each such amount so paid until reimbursed, together with
interest thereon payable as provided hereinbelow, a "Reimbursement Obligation")
immediately after, and in any event within one (1) Business Day after its
receipt of notice of, such payment (provided that any such Reimbursement
Obligation shall be deemed timely satisfied (but nevertheless subject to the
payment of interest thereon as provided hereinbelow) if satisfied pursuant to a
Borrowing of Revolving Loans made on or prior to the next Business Day following
the date of the Borrower's receipt of notice of such payment), together with
interest on the amount so paid by the Issuing Lender, to the extent not
reimbursed prior to 1:00 p.m., Charlotte time, on the date of such payment or
disbursement, for the period from the date of the respective payment to the date
the Reimbursement Obligation created thereby is satisfied, at the Adjusted Base
Rate applicable to Revolving Loans as in effect from time to time during such
period, such interest also to be payable on demand. The Issuing Lender will
provide the Agent and the Borrower with prompt notice of any payment or
disbursement made under any Letter of Credit, although the failure to give, or
any delay in giving, any such notice shall not release, diminish or otherwise
affect the Borrower's obligations under this Section or any other provision of
this Agreement. The Agent will promptly pay to the Issuing Lender any such
amounts received by it under this Section.
3.5 Payment by Revolving Loans. In the event that the Issuing Lender
makes any payment under any Letter of Credit and the Borrower shall not have
timely satisfied in full its Reimbursement Obligation to the Issuing Lender
pursuant to SECTION 3.4, and to the extent that any amounts then held in the
Cash Collateral Account established pursuant to SECTION 3.8 shall be
insufficient to satisfy such Reimbursement Obligation in full, the Issuing
Lender will promptly notify the Agent, and the Agent will
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promptly notify each Lender, of such failure. If the Agent gives such notice
prior to 11:00 a.m., Charlotte time, on any Business Day, each Lender will make
available to the Agent, for the account of the Issuing Lender, its pro rata
share (based on the percentage of the aggregate Revolving Credit Commitments of
all Lenders represented by such Lender's Revolving Credit Commitment) of the
amount of such payment on such Business Day in immediately available funds. If
the Agent gives such notice after 11:00 a.m., Charlotte time, on any Business
Day, each such Lender shall make its pro rata share of such amount available to
the Agent on the next succeeding Business Day. If and to the extent any Lender
shall not have so made its pro rata share of the amount of such payment
available to the Agent, such Lender agrees to pay to the Agent, for the account
of the Issuing Lender, forthwith on demand such amount, together with interest
thereon at the Federal Funds Rate for each day from such date until the date
such amount is paid to the Agent. The failure of any Lender to make available to
the Agent its pro rata share of any payment under any Letter of Credit shall not
relieve any other Lender of its obligation hereunder to make available to the
Agent its pro rata share of any payment under any Letter of Credit on the date
required, as specified above, but no Lender shall be responsible for the failure
of any other Lender to make available to the Agent such other Lender's pro rata
share of any such payment. Each such payment by a Lender under this Section of
its pro rata share of an amount paid by the Issuing Lender shall constitute a
Revolving Loan by such Lender (the Borrower being deemed to have given a timely
Notice of Borrowing therefor) and shall be treated as such for all purposes of
this Agreement; provided that for purposes of determining the aggregate
Unutilized Revolving Credit Commitments immediately prior to giving effect to
the application of the proceeds of such Revolving Loans, the Reimbursement
Obligation being satisfied thereby shall be deemed not to be outstanding at such
time.
3.6 Payment to Lenders. Whenever the Issuing Lender receives a payment
in respect of a Reimbursement Obligation as to which the Agent has received, for
the account of the Issuing Lender, any payments from the Lenders pursuant to
SECTION 3.5, the Issuing Lender will promptly pay to the Agent, and the Agent
will promptly pay to each Lender that has paid its pro rata share thereof, in
immediately available funds, an amount equal to such Lender's ratable share
(based on the proportionate amount funded by such Lender to the aggregate amount
funded by all Lenders) of such Reimbursement Obligation.
3.7 Obligations Absolute. The Reimbursement Obligations of the
Borrower, and the obligations of the Lenders under SECTION 3.5 to make payments
to the Agent, for the account of the Issuing Lender, with respect to Letters of
Credit, shall be irrevocable, shall remain in effect until the Issuing Lender
shall have no further obligations to make any payments or disbursements under
any circumstances with respect to any Letter of Credit, and, except to the
extent resulting from any gross negligence or willful misconduct on the part of
the Issuing Lender, shall be absolute and unconditional, shall not be subject to
counterclaim, setoff or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(a) Any lack of validity or enforceability of this Agreement, any of
the other Credit Documents or any documents or instruments relating to any
Letter of Credit;
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(b) Any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations in respect of any Letter of Credit
or any other amendment, modification or waiver of or any consent to departure
from any Letter of Credit or any documents or instruments relating thereto, in
each case whether or not the Borrower has notice or knowledge thereof;
(c) The existence of any claim, setoff, defense or other right that the
Borrower may have at any time against a beneficiary named in a Letter of Credit,
any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, the Issuing Lender, any Lender or other
Person, whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated hereby or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named in any
such Letter of Credit);
(d) Any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect
(provided that such draft, certificate or other document appears on its face to
comply with the terms of such Letter of Credit), any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
telecopier or otherwise, or any errors in translation or in interpretation of
technical terms;
(e) Any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit (provided that any draft,
certificate or other document presented pursuant to such Letter of Credit
appears on its face to comply with the terms thereof), any nonapplication or
misapplication by the beneficiary or any transferee of the proceeds of such
drawing or any other act or omission of such beneficiary or transferee in
connection with such Letter of Credit;
(f) The exchange, release, surrender or impairment of any Collateral or
other security for the Obligations;
(g) The occurrence of any Default or Event of Default; or
(h) Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
Any action taken or omitted to be taken by the Issuing Lender under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall be binding upon the Borrower and
each Lender and shall not create or result in any liability of the Issuing
Lender to the Borrower or any Lender. It is expressly understood and agreed
that, for purposes of determining whether a wrongful payment under a Letter of
Credit resulted from the Issuing Lender's gross negligence or willful
misconduct, (i) the Issuing Lender's acceptance of documents that appear on
their face to comply with the terms of such Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary, (ii) the Issuing Lender's exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including the amount of any draft presented
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under such Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect (so long as such document appears on its face to comply with the terms
of such Letter of Credit), and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (iii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute gross negligence or willful misconduct of
the Issuing Lender.
3.8 Cash Collateral Account. At any time and from time to time (i)
after the occurrence and during the continuance of an Event of Default, the
Agent, at the direction or with the consent of the Required Lenders, may require
the Borrower to deliver to the Agent such additional amount of cash as is equal
to the aggregate Stated Amount of all Letters of Credit at any time outstanding
(whether or not any beneficiary under any Letter of Credit shall have drawn or
be entitled at such time to draw thereunder) and (ii) in the event of a
prepayment under SECTION 2.6(B), or to the extent any amount of a required
prepayment under SECTION 2.6(C), 2.6(D) or 2.6(E) remains after prepayment of
all outstanding Loans and Reimbursement Obligations and termination of the
Commitments, as contemplated by SECTION 2.6(F), the Agent will retain such
amount as may then be required to be retained, such amounts in each case under
clauses (i) and (ii) above to be held by the Agent in a cash collateral account
(the "Cash Collateral Account"). The Borrower hereby grants to the Agent, for
the benefit of the Issuing Lender and the Lenders, a Lien upon and security
interest in the Cash Collateral Account and all amounts held therein from time
to time as security for Letter of Credit Exposure, and for application to the
Borrower's Reimbursement Obligations as and when the same shall arise. The Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest on the investment of such
amounts in Cash Equivalents, which investments shall be made at the direction of
the Borrower (unless a Default or Event of Default shall have occurred and be
continuing, in which case the determination as to investments shall be made at
the option and in the discretion of the Agent), amounts in the Cash Collateral
Account shall not bear interest. Interest and profits, if any, on such
investments shall accumulate in such account. In the event of a drawing, and
subsequent payment by the Issuing Lender, under any Letter of Credit at any time
during which any amounts are held in the Cash Collateral Account, the Agent will
deliver to the Issuing Lender an amount equal to the Reimbursement Obligation
created as a result of such payment (or, if the amounts so held are less than
such Reimbursement Obligation, all of such amounts) to reimburse the Issuing
Lender therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Lender for all of its obligations thereunder shall be held by the Agent, for the
benefit of the Borrower, to be applied against the Obligations in such order and
manner as the Agent may direct. If the Borrower is required to provide cash
collateral pursuant to SECTION 2.6(B), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower on demand, provided that after
giving effect to such return (i) the sum of (x) the aggregate principal amount
of all Revolving Loans outstanding at such time, (y) the aggregate principal
amount of all Swingline Loans outstanding at such time, and (z) the aggregate
Letter of Credit Exposure of all Lenders at such time would not exceed the
aggregate Revolving Credit Commitments of all Lenders at such time and (ii) no
Default or Event of Default shall have occurred and be continuing at such time.
If the Borrower is required
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to provide cash collateral as a result of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three (3) Business Days after all Events of Default have been cured or waived.
3.9 Effectiveness. Notwithstanding any termination of the Revolving
Credit Commitments or repayment of the Loans, or both, the obligations of the
Borrower under this Article shall remain in full force and effect until the
Issuing Lender and the Lenders shall have no further obligations to make any
payments or disbursements under any circumstances with respect to any Letter of
Credit.
ARTICLE IV
CONDITIONS OF BORROWING
4.1 Conditions of Initial Borrowing. The obligation of each Lender to
make Loans in connection with the initial Borrowing hereunder, and the
obligation of the Issuing Lender to issue Letters of Credit hereunder on the
Closing Date, is subject to the satisfaction of the following conditions
precedent:
(a) The Agent shall have received the following, each dated as of the
Closing Date (unless otherwise specified):
(i) (A) a Revolving Note for each Lender that is a party
hereto as of the Closing Date holding a Revolving Credit Commitment, in
the amount of such Lender's Revolving Credit Commitment; and (B) a
Swingline Note for the Swingline Lender, in the amount of the Swingline
Commitment, in each case duly completed in accordance with the relevant
provisions of SECTION 2.4 and executed by the Borrower;
(ii) (A) the Subsidiary Guaranty, duly completed and executed
by each Material Subsidiary; and (B) to the extent issued, an
Intercompany Note, duly completed and executed by each Material
Subsidiary;
(iii) the Security Agreement, duly completed and executed by
the Borrower and each Material Subsidiary, together with (A) any
certificates evidencing the Capital Stock of the Borrower's Material
Subsidiaries being pledged thereunder as of the Closing Date and
undated assignments separate from certificate for any such certificate,
duly executed in blank, and any promissory notes being pledged
thereunder (including the Intercompany Notes), duly endorsed in blank;
and (B) a duly completed and executed Perfection Certificate,
substantially in the form of EXHIBIT K hereto;
(iv) (A) the favorable opinions of (i) Goodwin, Procter & Hoar
LLP, special counsel to the Borrower and its Subsidiaries, in
substantially the form of EXHIBIT G-1, and (ii) local counsel to the
Borrower in such jurisdictions as shall be reasonably specified by the
Agent, in substantially the form of EXHIBIT G-2 and (B) copies of each
opinion required to be delivered, if any, by counsel pursuant to the
Merger Agreement or the Investment Agreement, accompanied in each case
by a letter, unless such opinion is addressed to the Agent and the
Lenders or expressly includes a reliance provision, from
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the counsel rendering such opinion, stating that the Agent and the
Lenders are entitled to rely on such opinion as if it were addressed to
the Agent and the Lenders;
(v) Agency Account Agreements in substantially the form of
EXHIBIT J, dated as of the Closing Date and duly executed by the
parties thereto for the Deposit Accounts (as such term is defined in
the Security Agreement) referred to on SCHEDULE 4.1(A);
(vi) Assignments of Copyrights and Assignments of Patents and
Trademarks for the federally registered Intellectual Property referred
to in Annexes D, E and F of the Security Agreement, in substantially
the form of Exhibits B and C, as applicable, to the Security Agreement,
duly completed and executed by the Borrower or the applicable
Subsidiary;
(vii) Assignment of Domain Names for each of the domain names
referred to in Annex G of the Security Agreement, in substantially the
form of Exhibit E to the Security Agreement, duly completed and
executed by the Borrower or the applicable Subsidiary;
(viii) the Subordination Agreement, in form and substance
satisfactory to the Agent, duly completed and executed by each of the
Subordinated Investors and the Borrower as of the Closing Date;
(ix) as of immediately prior to the effective time of the
Merger, the holders of no more than five percent (5%) of the
outstanding shares of common stock of the Borrower shall have taken all
required actions to assert appraisal rights under Section 262 of the
Delaware General Corporation Law and not withdrawn or otherwise
permitted to lapse such appraisal rights or demands therefore;
(b) The Agent shall have received a certificate, signed by the
president, the chief executive officer or the Financial Officer of the Borrower,
in form and substance satisfactory to the Agent, certifying that (i) all
representations and warranties of the Borrower contained in this Agreement and
the other Credit Documents are true and correct as of the Closing Date, both
immediately before and after giving effect to the consummation of the
transactions contemplated hereby and by the other Transaction Documents, the
making of the initial Loans hereunder and the application of the proceeds
thereof, (ii) no Default or Event of Default has occurred and is continuing,
both immediately before and after giving effect to the consummation of the
transactions contemplated hereby and by the other Transaction Documents, the
making of the initial Loans hereunder and the application of the proceeds
thereof, (iii) both immediately before and after giving effect to the
consummation of the transactions contemplated hereby and by the other
Transaction Documents, the making of the initial Loans hereunder and the
application of the proceeds thereof, no Material Adverse Change has occurred
since December 31, 1998, and there exists no event, condition or state of facts
that would reasonably be expected to result in a Material Adverse Change, and
(iv) all conditions to the initial extensions of credit hereunder set forth in
this Section and in SECTION 4.2 have been satisfied or waived as required
hereunder.
(c) The Agent shall have received a certificate of the secretary or an
assistant secretary of each of the Borrower and each Material Subsidiary, in
form and substance satisfactory to the Agent, certifying (i) that attached
thereto is a true and complete copy of the
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articles or certificate of incorporation or certificate of formation, as the
case may be, and all amendments thereto of the Borrower or such Subsidiary, as
the case may be, certified as of a recent date by the Secretary of State (or
comparable Governmental Authority) of its jurisdiction of organization or
formation, as the case may be, and that the same has not been amended since the
date of such certification, (ii) that attached thereto is a true and complete
copy of the bylaws, partnership agreement, operating agreement or similar
organic document, as the case may be, of the Borrower or such Subsidiary, as
then in effect and as in effect at all times from the date on which the
resolutions referred to in clause (iii) below were adopted to and including the
date of such certificate, and (iii) that attached thereto is a true and complete
copy of resolutions adopted by the board of directors, members or partners, as
the case may be, of the Borrower or such Subsidiary, authorizing the execution,
delivery and performance of this Agreement and the other Credit Documents to
which it is a party, and as to the incumbency and genuineness of the signature
of each officer of the Borrower or such Subsidiary, as the case may be,
executing this Agreement or any of such other Credit Documents, and attaching
all such copies of the documents described above.
(d) The Agent shall have received (i) a certificate as of a recent date
of the good standing of each of the Borrower and each Material Subsidiary under
the laws of its jurisdiction of organization, from the Secretary of State (or
comparable Governmental Authority) of such jurisdiction, and (ii) a certificate
as of a recent date of the qualification of each of the Borrower and each
Material Subsidiary to conduct business as a foreign corporation in each
jurisdiction where it is so qualified as of the Closing Date, from the Secretary
of State (or comparable Governmental Authority) of such jurisdiction.
(e) All legal, accounting and tax matters, documentation, and corporate
or other proceedings incident to the transactions contemplated hereby and by the
other Transaction Documents shall be satisfactory in form and substance to the
Agent; all approvals, permits and consents of any Governmental Authorities or
other Persons required in connection with the execution and delivery of this
Agreement, the other Credit Documents, the Merger Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby shall have been obtained, without the imposition of
conditions that are not acceptable to the Agent, and all related filings, if
any, shall have been made, and all such approvals, permits, consents and filings
shall be in full force and effect and the Agent shall have received such copies
thereof as it shall have requested; all applicable waiting periods shall have
expired without any adverse action being taken by any Governmental Authority
having jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or that is otherwise related to or arises out
of, this Agreement, any of the other Credit Documents, the Merger Agreement, any
of the other Transaction Documents or the consummation of the transactions
contemplated hereby or thereby, or that, in the opinion of the Agent, would
reasonably be expected to have a Material Adverse Effect.
(f) The Agent shall have received certified reports from an independent
search service satisfactory to it listing any Uniform Commercial Code financing
statement that (i) names the Borrower as debtor in any of the jurisdictions
listed beneath its name on Annex B
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to the Security Agreement or (ii) names any Material Subsidiary as debtor in any
of the jurisdictions listed beneath its name on Annex B to the Security
Agreement, and the results thereof shall be satisfactory to the Agent.
(g) The Agent shall have received evidence in form and substance
satisfactory to it that all filings, recordings, registrations and other actions
(including, without limitation, the filing of duly completed and executed UCC-1
financing statements in each jurisdiction listed on Annex B to the Security
Agreement) necessary or, in the reasonable opinion of the Agent, desirable to
perfect the Liens created by the Security Documents shall have been completed,
or arrangements satisfactory to the Agent for the completion thereof shall have
been made.
(h) Since December 31, 1998, both immediately before and after giving
effect to the consummation of the transactions contemplated by this Agreement
and the other Transaction Documents, there shall not have occurred any Material
Adverse Change or any event, condition or state of facts that could reasonably
be expected to result in a Material Adverse Change.
(i) The Borrower shall have received, directly or indirectly, (a) cash
proceeds of approximately $32,800,000 from the issuance of preferred stock to
the TA Funds on terms and conditions set forth in the Merger Agreement or
otherwise satisfactory to the Agent and (b) cash proceeds of approximately
$15,000,000 from the issuance of the Permitted Senior Subordinated Debentures on
terms and conditions satisfactory to the Agent, including, without limitation,
subordination terms and representations, warranties, covenants and defaults,
conforming to and less restrictive than the provisions in this Agreement.
(j) The Borrower shall have paid (i) to First Union Securities, Inc.,
the unpaid balance of the fees described in clauses (1) and (2) of the second
paragraph of the Fee Letter, (ii) to the Agent, the initial payment of the
annual administrative fee described in clause (2) of the second paragraph of the
Fee Letter, and (iii) all other reasonable and actual fees and expenses of the
Agent required hereunder or under any other Credit Document to be paid on or
prior to the Closing Date (including reasonable invoiced fees and expenses of
Agent's outside counsel) in connection with this Agreement and the transactions
contemplated hereby.
(k) The Agent shall have received a Financial Condition Certificate,
together with the Pro Forma Balance Sheet and the Projections as described in
SECTIONS 5.11(B) and 5.11(C), all of which shall be in form and substance
satisfactory to the Agent.
(l) The Agent shall have received a Covenant Compliance Worksheet, duly
completed and certified by the Financial Officer and in form and substance
satisfactory to the Agent, demonstrating the Borrower's compliance with the
financial covenants set forth in ARTICLE VII, determined on a pro forma basis as
of September 30, 1999 after giving effect to the making of the initial Loans
hereunder and the consummation of the Transactions.
(m) The Agent shall have received evidence satisfactory to it that (i)
concurrently with the making of the initial Loans hereunder, (x) all principal,
interest and other amounts outstanding with respect to any Indebtedness of the
Borrower or a Subsidiary not expressly permitted under SECTION 8.2 to remain
outstanding on and after the Closing Date ("Terminating Indebtedness") shall be
repaid and satisfied in full, (y) all commitments to extend credit under
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the agreements and instruments relating thereto shall be terminated, and (z) any
Liens securing any Terminating Indebtedness shall be released and any related
filings terminated of record (or arrangements satisfactory to the Agent made
therefor), and (ii) any letters of credit outstanding with respect to the
Terminating Indebtedness shall have been terminated or canceled.
(n) The Agent shall have received a report from the Borrower's
independent insurance consultant, together with any other evidence in form and
substance reasonably satisfactory to the Agent, that all of the requirements of
SECTION 6.6 and those provisions of the Security Agreement relating to the
maintenance of insurance have been satisfied, including receipt of certificates
of insurance evidencing the insurance coverages described on SCHEDULE 5.17 and
all other or additional coverages required under the Security Agreement and
naming the Agent as loss payee or additional insured, as its interests may
appear; provided that the Borrower may change its insurance after the Closing as
long as such insurance complies with the terms hereof.
(o) The Agent shall have received an Account Designation Letter,
together with written instructions from an Authorized Officer, including wire
transfer information, directing the payment of the proceeds of the initial Loans
to be made hereunder.
(p) Subject to paragraph (e) above, the Transaction Documents shall
have been duly authorized, executed and delivered by, and shall be binding upon,
the Borrower, Merger Sub, TA Associates and each stockholder of the Borrower, in
each case to the extent such Persons are parties thereto, and the Agent shall
have received a copy thereof, together with all supporting documentation
thereto.
(q) The Transactions shall be consummated concurrently with the making
of the initial Borrowing in accordance with the Transaction Documents and
without any modification thereto or waiver of any term or condition thereof
without the approval of the Agent.
(r) The consummation of the Transactions shall not violate or cause a
default under any material Requirement of Law or any Material Contract of the
Borrower or any Subsidiary.
(s) The Agent shall have received a copy of the certificate of Merger,
certified by the Secretary of State of the State of Delaware, evidencing the
Merger.
(t) The Agent and each Lender shall be satisfied with the terms and
conditions (including without limitation the terms of subordination thereof to
the Obligations) of the Subordinated Indebtedness permitted under SECTION
8.2(II), including, without limitation, the terms of the Permitted Senior
Subordinated Debentures.
(u) As of the Closing Date, there shall not have occurred and be
continuing a material disruption or a material adverse change in, or other
condition with respect to, the United States financial and capital markets that
could reasonably be expected to have a material adverse effect on the successful
completion of the syndication of the Commitments.
(v) There shall not be any material pending or threatened litigation,
proceeding, bankruptcy or insolvency, injunction, order or claim with respect to
the Borrower or any of its Subsidiaries or the transactions contemplated hereby
or by the other Transaction Documents;
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(w) The Agent shall have received a funds flow memorandum setting forth
the flow of funds for the transactions contemplated hereby and by the Asset
Purchase Agreement, and the same shall be in form and substance reasonably
satisfactory to the Agent.
(x) The Agent shall have received from the Borrower its consolidated
operating budget for the period from September 30, 1999 through December 31,
2003, and the same shall be in form and substance satisfactory to the Agent.
(y) The Agent and each Lender shall have received such other documents,
certificates, opinions and instruments in connection with the transactions
contemplated hereby as it shall have reasonably requested.
4.2 Conditions of All Borrowings. The obligation of each Lender to make
any Loans hereunder, including the initial Loans (but excluding Revolving Loans
made for the purpose of repaying Swingline Loans pursuant to SECTION 2.2(E)),
and the obligation of the Issuing Lender to issue any Letters of Credit
hereunder, is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date or date of issuance:
(a) The Agent shall have received a Notice of Borrowing in accordance
with SECTION 2.2(B), or (together with the Swingline Lender) a Notice of
Swingline Borrowing in accordance with SECTION 2.2(D), or (together with the
Issuing Lender) a Letter of Credit Notice in accordance with SECTION 3.2, as
applicable;
(b) Each of the representations and warranties contained in ARTICLE V
and in the other Credit Documents shall be true and correct in all material
respects on and as of such Borrowing Date (including the Closing Date, in the
case of the initial Loans made hereunder) or date of issuance with the same
effect as if made on and as of such date, both immediately before and after
giving effect to the Loans to be made or Letter of Credit to be issued on such
date (except to the extent any such representation or warranty is expressly
stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date);
(c) No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans to be made or Letter of Credit to be issued on such date; and
(d) Any Borrowing or issuance of a Letter of Credit for the purpose of
satisfying obligations related to the exercise of appraisal rights under Section
262 of the Delaware General Corporation Law in connection with the Merger shall
require the consent of the Agent, which consent may be given in its sole
discretion.
Each giving of a Notice of Borrowing, a Notice of Swingline Borrowing,
or a Letter of Credit Notice, and the consummation of each Borrowing or issuance
of a Letter of Credit, shall be deemed to constitute a representation by the
Borrower that the statements contained in subsections (b) and (c) above are
true, both as of the date of such notice or request and as of the relevant
Borrowing Date or date of issuance.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to extend the credit contemplated hereby, the Borrower
represents and warrants to the Agent and the Lenders as follows:
5.1 Organization and Power. The Borrower and each of its Material
Subsidiaries (i) is a corporation, partnership, professional corporation or
limited liability company duly organized or formed, as the case may be, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as applicable, (ii) has the full power and authority
to execute, deliver and perform the Credit Documents to which it is or will be a
party, to own and hold its property and to engage in its business as presently
conducted, and (iii) is duly qualified to do business as a foreign corporation,
partnership, professional corporation or limited liability company and is in
good standing in each jurisdiction where the nature of its business or the
ownership of its properties requires it to be so qualified, except where the
failure to be so qualified would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
5.2 Authorization; Enforceability. The Borrower and each of its
Material Subsidiaries has taken, or on the Closing Date will have taken, all
necessary action to execute, deliver and perform each of the Credit Documents to
which it is or will be a party, and has, or on the Closing Date (or any later
date of execution and delivery) will have, validly executed and delivered each
of the Credit Documents to which it is or will be a party. This Agreement
constitutes, and each of the other Credit Documents upon execution and delivery
will constitute, the legal, valid and binding obligation of each of the Borrower
and each of its Material Subsidiaries that is a party hereto or thereto,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, by general equitable
principles or by principles of good faith and fair dealing.
5.3 No Violation. The execution, delivery and performance by the
Borrower and each of its Material Subsidiaries of this Agreement and each of the
other Credit Documents to which it is or will be a party, and compliance by it
with the terms hereof and thereof, do not and will not (i) violate any provision
of its articles or certificate of incorporation, certificate of formation,
bylaws, operating agreement, partnership agreement or other organic documents of
the Borrower or any of its Subsidiaries or contravene any other Requirement of
Law applicable to it, (ii) conflict with, result in a breach of or constitute
(with notice, lapse of time or both) a default under any material indenture,
agreement or other instrument to which it is a party (including any Service
Agreement), by which it or any of its properties is bound or to which it is
subject, (iii) result in a Limitation on any Licenses applicable to the
business, operations or properties of the Borrower or any Subsidiary or
adversely affect the ability of the Borrower or any Subsidiary to participate in
any Third Party Payor Arrangement, or (iv) except for the Liens granted in favor
of the Agent pursuant to the Security Documents, result in or require the
creation or imposition of any Lien upon any of its properties or assets. No
Subsidiary is a party to any agreement or instrument or otherwise subject to any
restriction or encumbrance that
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restricts or limits its ability to make dividend payments or other distributions
in respect of its Capital Stock, to repay Indebtedness owed to the Borrower or
any Subsidiary, to make loans or advances to the Borrower or any Subsidiary, or
to transfer any of its assets or properties to the Borrower or any Subsidiary,
in each case other than such restrictions or encumbrances existing under or by
reason of the Credit Documents or applicable Requirements of Law.
5.4 Governmental and Third-Party Authorization; Permits.
(a) No consent, approval, authorization or other action by, notice to,
or registration or filing with, any Governmental Authority or other Person is or
will be required as a condition to or otherwise in connection with the due
execution, delivery and performance by each of the Borrower and its Material
Subsidiaries of this Agreement or any of the other Credit Documents to which it
is or will be a party or the legality, validity or enforceability hereof or
thereof, other than (i) filings of Uniform Commercial Code financing statements
and other instruments and actions necessary to perfect the Liens created by the
Security Documents, (ii) consents, authorizations and filings that have been (or
on or prior to the Closing Date will have been) made or obtained and that are
(or on the Closing Date will be) in full force and effect, (iii) consents and
filings the failure to obtain or make which would not, individually or in the
aggregate, have a Material Adverse Effect, and (iv) consents, authorizations and
filings listed on SCHEDULE 5.4.
(b) The Borrower, each Subsidiary and, to the knowledge of the Borrower
as of the Closing Date, each Managed Practice (i) has, and is in good standing
with respect to, all approvals, permits and other Licenses and (to the extent
applicable) all Reimbursement Approvals necessary to conduct its business as
presently conducted and to own or lease and operate its properties, (ii) to the
extent applicable, has obtained and maintains accreditation from all generally
recognized accrediting agencies for the Borrower and its Subsidiaries to the
extent prudent and customary in the industry in which the Borrower, any of its
Subsidiaries or any Managed Practice is engaged or to the extent required for
facilities owned, operated or managed by the Borrower, any of its Subsidiaries
or any Managed Practice and (iii) if required, has obtained and maintains
Medicaid Certification and Medicare Certification; (iv) if required, has entered
into and maintains in good standing its Medicare Provider Agreement and its
Medicaid Provider Agreement, except, in each case referred to in clauses (i)
through (iv), for those instances the failure to obtain or enter into which
would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect. There is no pending or, to the knowledge of the
Borrower, threatened Limitation of any such approval, permit or other License or
Reimbursement Approval of the Borrower, any Subsidiary or any Managed Practice
(as of the Closing Date), except for such Limitations as would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
(c) Each professional employee, officer and director of the Borrower,
its Subsidiaries, and, to the knowledge of the Borrower as of the Closing Date,
any Managed Practices providing professional services to patients of the
Borrower or any such Subsidiary is duly Licensed (where License is required) by
each state or state agency or commission, or any other Governmental Authority
having jurisdiction over the provisions of such services by such employee,
officer or director, in which the Borrower or Subsidiary is located, required to
enable such employee, officer or director to provide the professional services
necessary to enable the Borrower or Subsidiary to operate as currently operated
and as presently contemplated to be operated, except
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for those Licenses the failure of which to obtain would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect. All
such required Licenses are in full force and effect on the date hereof and have
not been revoked or suspended or otherwise limited, except for those instances
which would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. Each physician retained or otherwise engaged as an
independent contractor by the Borrower or its Subsidiaries possesses a valid
narcotics number issued by the United States Drug Enforcement Administration and
a valid state narcotics registration, except for those instances which would not
be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
5.5 Litigation. Except as set forth in SCHEDULE 5.5, there are no
actions, investigations, suits or proceedings pending or, to the knowledge of
the Borrower, threatened, at law, in equity or in arbitration, before any court,
other Governmental Authority or other Person, (i) against or affecting the
Borrower, any Subsidiary, to the knowledge of the Borrower as of the Closing
Date, any Managed Practice, or any of their respective properties that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect, or
(ii) with respect to this Agreement or any of the other Credit Documents.
5.6 Taxes. The Borrower and each of its Material Subsidiaries has
timely filed all federal, state and local tax returns and reports required to be
filed by it and has paid all taxes, assessments, fees and other charges levied
upon it or upon its properties that are shown thereon as due and payable, other
than those that are being contested in good faith and by proper proceedings and
for which adequate reserves have been established in accordance with GAAP. Such
returns accurately reflect in all material respects all liability for taxes of
the Borrower and its Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
or any Material Subsidiary, and there is no unresolved claim by any Governmental
Authority concerning the tax liability of the Borrower or any Material
Subsidiary for any period for which tax returns have been or were required to
have been filed, other than claims for which adequate reserves have been
established in accordance with GAAP. Neither the Borrower nor any Material
Subsidiary has waived or extended or has been requested to waive or extend the
statute of limitations relating to the payment of any taxes.
5.7 Subsidiaries/Minority Investments. SCHEDULE 5.7 sets forth a list,
as of the Closing Date, of all of the Material Subsidiaries and other
Subsidiaries of the Borrower and all Minority Investments and, as to each such
Subsidiary and Minority Investment, the percentage ownership (direct and
indirect) of the Borrower in each class of its Capital Stock and each direct
owner thereof. Except for the shares of Capital Stock expressly indicated on
SCHEDULE 5.7, there are no shares of Capital Stock of any Subsidiary of the
Borrower outstanding or reserved for any purpose. All outstanding shares of
Capital Stock of each Subsidiary of the Borrower are duly and validly issued,
fully paid and nonassessable. The Borrower is the sole legal, record and
beneficial owner of, and has good and valid title to, all such Capital Stock,
free and clear of all Liens other than the Liens created pursuant to the
Security Agreement.
5.8 Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Agent or any Lender in writing by or on
behalf of the Borrower or any Subsidiary for purposes of or in connection with
this Agreement and the transactions
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contemplated hereby is, and all other such factual information hereafter
furnished to the Agent or any Lender in writing by or on behalf of the Borrower
or any Subsidiary will be, true and accurate in all material respects on the
date as of which such information is dated or certified (or, if such information
has been amended or supplemented, on the date as of which any such amendment or
supplement is dated or certified) and not made incomplete by omitting to state a
material fact necessary to make the statements contained therein, in light of
the circumstances under which such information was provided, not misleading.
This SECTION 5.8 does not apply to the Projections, which are separately covered
by SECTION 5.11(C) hereof.
5.9 Margin Regulations. Neither the Borrower nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. No
proceeds of the Loans will be used, directly or indirectly, to purchase or carry
any Margin Stock, to extend credit for such purpose or for any other purpose
that would violate or be inconsistent with Regulations T or X or any provision
of the Exchange Act.
5.10 No Material Adverse Change. There has been no Material Adverse
Change since December 31, 1998, and there exists no event, condition or state of
facts that would reasonably be expected to result in a Material Adverse Change.
5.11 Financial Matters.
(a) The Borrower has heretofore furnished to the Agent copies of (i)
the audited consolidated balance sheets of the Borrower and its Subsidiaries as
of December 31, 1998 and 1997, and the related statements of income, cash flows
and stockholders' equity for the fiscal years then ended, together with the
opinion of Arthur Andersen LLP thereon, and (ii) the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as of September 30, 1999, and
the related statements of income, cash flows and stockholders' equity for the
nine-month period then ended. Such financial statements have been prepared in
accordance with GAAP (subject, with respect to the unaudited financial
statements, to the absence of notes required by GAAP and to normal year-end
adjustments), are true and correct in all material respects, and present fairly
the financial condition of the Borrower and its Subsidiaries on a consolidated
basis as of the respective dates thereof and the consolidated results of
operations of the Borrower and its Subsidiaries for the respective periods then
ended. Except as fully reflected in the most recent financial statements
referred to above and the notes thereto or on SCHEDULE 5.11, there are no
material liabilities or obligations with respect to the Borrower or any Material
Subsidiary of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due).
(b) The unaudited pro forma balance sheet of the Borrower and its
Subsidiaries as of the Closing Date, a copy of which has heretofore been
delivered to the Agent, gives pro forma effect to the Transactions, the initial
extensions of credit made under this Agreement, and the payment of transaction
fees and expenses related to the foregoing, all as if such events had occurred
on such date (the "Pro Forma Balance Sheet"). The Pro Forma Balance Sheet has
been prepared in accordance with GAAP (subject to (i) the absence of footnotes
required by GAAP and subject to normal year-end adjustments and (ii) the
consolidation of its Subsidiaries) and, subject to stated assumptions made in
good faith and having a reasonable basis set forth therein,
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presents fairly the financial condition of the Borrower and its Subsidiaries on
an unaudited pro forma basis as of the date set forth therein after giving
effect to the consummation of the Transactions.
(c) The Borrower has prepared, and has heretofore furnished to the
Agent a copy of, annual projected balance sheets and statements of income and
cash flows of the Borrower and Loan Parties for the fourth quarter of the year
ended December 31, 1999 and the four succeeding fiscal years, giving effect to
the Transactions, the initial extensions of credit made under this Agreement,
and the payment of transaction fees and expenses related to the foregoing (the
"Projections"). In the opinion of management of the Borrower, the assumptions
used in the preparation of the Projections were fair, complete and reasonable
when made and continue to be fair, complete and reasonable as of the date
hereof. The Projections have been prepared in good faith by the Borrower, are
complete and are based on assumptions believed to be reasonable estimates of the
future performance and financial condition of the Borrower and its Subsidiaries,
subject to the uncertainties and approximations inherent in any projections and
that such projections are estimates and not a guarantee of actual results.
(d) Each of the Borrower and its Subsidiaries, after giving effect to
the consummation of the Transactions contemplated hereby, (i) has capital
sufficient to carry on its businesses as conducted and as proposed to be
conducted, (ii) has assets with a fair saleable value, determined on a going
concern basis, (y) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (z)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.
5.12 Ownership of Properties. Except as set forth in SCHEDULE 5.12, the
Borrower and each Subsidiary (i) holds interests as lessee under valid leases in
full force and effect with respect to all material leased real and personal
property used in connection with its business, (ii) possesses or has rights to
use licenses, patents, copyrights, trademarks, service marks, trade names and
other assets sufficient to enable it to continue to conduct its business
substantially as heretofore conducted and without any material conflict with the
rights of others, and (iii) has good title to all of its other properties and
assets reflected in the most recent financial statements referred to in SECTION
5.11(A) (except as sold or otherwise disposed of since the date thereof in the
ordinary course of business and except those properties which would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect), in each case under (i), (ii) and (iii) above free and clear of all
Liens other than Permitted Liens. The Borrower and its Material Subsidiaries own
no fee interests in the Realty.
5.13 ERISA.
(a) Each of the Borrower and its ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA, and each Plan is
and has been administered in compliance in all material respects with all
applicable Requirements of Law, including, without limitation, the applicable
provisions of ERISA and the Internal Revenue Code. No ERISA Event (i) has
occurred within the five-year period prior to the Closing Date, (ii) has
occurred and is continuing, or (iii) to the knowledge of the Borrower, is
reasonably expected to occur with
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respect to any Plan. No Plan has any Unfunded Pension Liability as of the most
recent annual valuation date applicable thereto, and neither the Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
(b) Neither the Borrower nor any ERISA Affiliate has had a complete or
partial withdrawal from any Multiemployer Plan, and neither the Borrower nor any
ERISA Affiliate would become subject to any liability under ERISA if the
Borrower or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date. No Multiemployer Plan
is in "reorganization" or is "insolvent" within the meaning of such terms under
ERISA.
5.14 Environmental Matters.
(a) No Hazardous Substances are or have been generated, used,
released, treated, disposed of or stored by the Borrower or any Subsidiary or,
to the knowledge of the Borrower, by any other Person (including any Managed
Practice or predecessor in interest) or otherwise, in, on or under any portion
of any real property, leased or owned, of the Borrower or any Subsidiary, except
in material compliance with all applicable Environmental Laws, and, to the
knowledge of the Borrower, no portion of any such real property or any other
real property at any time leased, owned or operated by the Borrower or any
Subsidiary, has been contaminated by any Hazardous Substance; and no portion of
any real property, leased or owned, of the Borrower or any Subsidiary has been
or is presently the subject of a non-routine environmental audit, assessment or
remedial action.
(b) No portion of any real property, leased or owned, of the Borrower
or any Subsidiary has been used by the Borrower or any Subsidiary or, to the
knowledge of the Borrower, by any other Person, as or for a mine, a landfill, a
dump or other disposal facility, a gasoline service station, or (other than for
petroleum substances stored in the ordinary course of business) a petroleum
products storage facility; no portion of such real property or any other real
property at any time leased, owned or operated by the Borrower or any Subsidiary
has, pursuant to any Environmental Law, been placed on the "National Priorities
List" or "CERCLIS List" (or any similar state or local list) of sites subject to
possible environmental problems; and to the knowledge of the Borrower, there are
not and have never been any underground storage tanks situated on any real
property, leased or owned, of the Borrower or any Subsidiary.
(c) All activities and operations of the Borrower and each Subsidiary
are in compliance with the requirements of all applicable Environmental Laws,
except to the extent the failure so to comply, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect. Each of the
Borrower and each Subsidiary has obtained all licenses and permits under
Environmental Laws necessary to its respective operations; all such licenses and
permits are being maintained in good standing; and each of the Borrower and each
Subsidiary is in compliance with all terms and conditions of such licenses and
permits, except for such licenses and permits the failure to obtain, maintain or
comply with which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary is involved in any suit, action or proceeding, or has received any
notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined,
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would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect; and, to the knowledge of the Borrower, there are no threatened
actions, suits, proceedings or investigations with respect to any such
Environmental Claims, nor does the Borrower have reason to believe any such
actions, suits or proceedings will be forthcoming.
5.15 Compliance With Laws. The Borrower, each Subsidiary and, to the
knowledge of the Borrower as of the Closing Date, each Managed Practice, has
timely filed all material reports, documents and other materials required to be
filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties (including,
without limitation, all applicable Medicare Regulations and Medicaid
Regulations), except for such Requirements of Law the failure to comply with
which, individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Effect.
5.16 Regulated Industries. Neither the Borrower nor any Subsidiary is
(i) an "investment company," a company "controlled" by an "investment company,"
or an "investment advisor," within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.17 Insurance. SCHEDULE 5.17 sets forth a true and complete summary of
all insurance policies or arrangements carried or maintained by the Borrower and
each Subsidiary as of the Closing Date, indicating in each case the insurer,
policy number, expiration, amount and type of coverage and deductibles. The
assets, properties and business of the Borrower and each Subsidiary are insured
against such hazards and liabilities, under such coverages and in such amounts,
as are customarily maintained by prudent companies similarly situated and under
policies issued by insurers of recognized responsibility.
5.18 Material Contracts. SCHEDULE 5.18 lists, as of the Closing Date,
each Material Contract to which the Borrower or any Subsidiary is a party, by
which any of them or their respective properties is bound or to which any of
them is subject. As of the Closing Date, (i) to the knowledge of the Borrower
with respect to third parties, each Material Contract is in full force and
effect and is enforceable by the Borrower or the Subsidiary that is a party
thereto in accordance with its terms, and (ii) neither the Borrower nor any
Subsidiary (nor, to the knowledge of the Borrower, any other party thereto) is
in breach of or default under any Material Contract in any material respect or
has given notice of termination or cancellation of any Material Contract. No
Subsidiary other than a Material Subsidiary is party to a Material Contract.
5.19 Security Documents. The provisions of each of the Security
Documents (whether executed and delivered prior to or on the Closing Date or
thereafter) are and will be effective to create in favor of the Agent, for its
benefit and the benefit of the Lenders, a valid and enforceable security
interest in and Lien upon all right, title and interest of each of the Borrower
and each Subsidiary that is a party thereto in and to the Collateral purported
to be pledged by it thereunder
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and described therein, and upon (i) the initial extension of credit hereunder,
(ii) the filing of appropriately completed Uniform Commercial Code financing
statements and continuations thereof in the jurisdictions specified therein,
(iii) the filing of appropriately completed short-form assignments in the U.S.
Patent and Trademark Office and the U.S. Copyright Office, and (iv) the
possession by the Agent of any certificates evidencing the securities pledged
thereby, such security interest and Lien shall constitute a fully perfected and
first priority security interest in and Lien upon such right, title and interest
of the Borrower or such Subsidiary, as applicable, in and to such Collateral, to
the extent that such security interest and Lien can be perfected by such
filings, actions and possession, subject only to Permitted Liens.
5.20 Labor Relations. Neither the Borrower nor any Subsidiary is
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended. There is (i) no unfair labor practice
complaint before the National Labor Relations Board, or grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, pending
or, to the knowledge of the Borrower, threatened, against the Borrower or any
Subsidiary, (ii) no strike, lock-out, slowdown, stoppage, walkout or other labor
dispute pending or, to the knowledge of the Borrower, threatened, against the
Borrower or any Subsidiary, and (iii) to the knowledge of the Borrower, no
petition for certification or union election or union organizing activities
taking place with respect to the Borrower or any Subsidiary.
5.21 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) the Borrower's
and its Subsidiaries' computer-based systems and (ii) equipment containing
embedded microchips (including, to the Borrower's knowledge, systems and
equipment supplied by others or with which the Borrower's or any of its
Subsidiaries' systems interface), and the testing of all such systems and
equipment, as so reprogrammed, will be completed by the Closing Date. The cost
to the Borrower and its Subsidiaries of such reprogramming and testing and of
the reasonably foreseeable consequences of the year 2000 to the Borrower and its
Subsidiaries (including, without limitation, to the knowledge of the Borrower,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its Subsidiaries
(and, to the knowledge of the Borrower, the computer and management information
systems of suppliers and vendors material to the Borrower and its Subsidiaries'
business) are sufficient to permit the Borrower and its Subsidiaries to conduct
their respective businesses without a Material Adverse Effect.
5.22 Service Agreements. No Service Agreement to which the Borrower or
any Subsidiary is a party, nor any of the transactions contemplated thereunder,
violates any applicable Requirement of Law (i) relating to the eligibility of a
Managed Practice to enter into or participate in any Third Party Payor
Arrangement or otherwise applicable to such Managed Practice as a result of such
participation, (ii) relating to any License or Reimbursement Approval of a
Managed Practice required in connection with any Third Party Payor Arrangement
in which it participates, or (iii) relating to the practice of medicine or the
sharing of fees in connection therewith, except in each case under (i), (ii) and
(iii) above for such violations as would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect.
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5.23 Reimbursement. All billings by the Borrower, each Subsidiary and,
to the knowledge of the Borrower as of the Closing Date, each Managed Practice,
pursuant to Third Party Payor Arrangements have been made in compliance with all
applicable Requirements of Law, except where the failure to comply would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect; and to the knowledge of the Borrower, there has been no
intentional or material overbilling or overcollection pursuant to any Third
Party Payor Arrangements, other than as created by routine adjustments and
disallowances made in the ordinary course of business by the payors with respect
to such billings.
5.24 Fraud and Abuse. None of the Borrower, any Subsidiary, to the
knowledge of the Borrower, any Managed Practice as of the Closing Date, or, to
the knowledge of the Borrower as of the Closing Date, any physician shareholder
or employee of any Managed Practice, has engaged in any activities that are
prohibited under 42 U.S.C. ss.ss. 1320a-7b, or the regulations promulgated
thereunder, or related Requirements of Law, or that are prohibited by rules of
professional conduct, including, without limitation, the following: (i)
knowingly and willfully making or causing to be made a false statement or
misrepresentation of a material fact in any application for any benefit or
payment; (ii) knowingly and willfully making or causing to be made any false
statement or misrepresentation of a material fact for use in determining rights
to any benefit or payment; (iii) failure to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with intent to
secure such benefit or payment fraudulently; and (iv) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (y) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare,
Medicaid or any other government or private third party payor, or (z) in return
for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare, Medicaid or any other
government or private third party payor.
5.25 Certain Transactions.
(a) As of the Closing Date, (i) all conditions to the obligations of
the Borrower under the Merger Agreement and the other Transaction Documents to
consummate the Transactions shall have been satisfied unless waived or consented
to by the Agent, (ii) all funds advanced by the Lenders will be used to
consummate the Transactions and for other permitted uses under SECTION 2.14 and
(iii) the Transactions will be consummated in accordance with the Merger
Agreement, and the other Transaction Documents.
(b) As of the Closing Date, the representations and warranties made by
the Borrower under the Merger Agreement, the Investment Agreement and the
Warrants are true and correct (except to the extent that any such
representations and warranties speak only to a prior date, in which case, such
representations and warranties shall have been true and correct as of such prior
date), both immediately before and after giving effect to the consummation of
the Transactions (or, to the extent made as of the consummation of the
Transactions, will be true and correct in all material respects upon
consummation of the Transactions).
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(c) On the Closing Date, all funds advanced by the Subordinated
Investors will be used to consummate the Transactions and to pay any financial
advisory fees, accounting fees, legal fees and other similar advisory and
consulting fees and related out-of-pocket expenses and closing fees of the
Borrower incurred as a result of the Transactions and all other non-recurring
costs and expenses (including, without limitation, severance and/or termination
fees under employment contracts) occurring as a result of the Transactions.
(d) The copy of the Merger Transaction Documents (including all
schedules, exhibits, amendments, supplements, modifications, assignments and all
other documents delivered pursuant thereto or in connection therewith) delivered
or made available to the Agent as of the Closing Date is complete and correct in
all material respects. Neither the Borrower nor, to the Borrower's knowledge,
any other party thereto is in default in the performance or compliance with any
material provisions thereof. The Merger Agreement complies with, and prior to
the Closing the Merger has been consummated in accordance with, all applicable
Requirements of Law that apply to the Borrower. All requisite approvals by
Governmental Authorities having jurisdiction over the Borrower, Merger Sub, and
any other Persons referenced therein, with respect to the transactions
contemplated by the Merger Agreement, have been obtained on or before the
Closing Date, and no such approvals impose or will impose any material adverse
conditions to the consummation of the transactions contemplated by the Merger
Agreement or to the conduct by the Borrower and its Material Subsidiaries of
their business thereafter.
(e) As of the Closing Date, the Merger Certificate has been duly filed
with the Secretary of State of Delaware and the Merger has become effective.
5.26 Ownership. After giving effect to the Transactions (including the
Merger), the authorized Capital Stock of the Borrower will consist of (i)
10,000,000 shares of common stock, $.001 par value per share, of which 2,058,607
shares will be issued and outstanding and 284,597 shares will be reserved for
issuance under the Borrower's employee stock incentive plans, and (ii) 4,576,186
shares of preferred stock, par value $.001 per share, consisting of 4,546,186
shares of convertible participating preferred stock, of which 3,247,080 shares
will be issued and outstanding, 30,000 shares of 6% redeemable preferred stock,
of which 27,800 shares will be outstanding, and (iii) 500,000 shares of
undesignated preferred stock, of which no shares shall be outstanding. After
giving effect to the Transactions (including the Merger), all of the outstanding
shares of common stock and preferred stock of the Borrower will have been duly
and validly authorized and issued, will be fully paid and nonassessable, and
will not have been issued in violation of the preemptive rights of any
stockholder. Upon consummating the Transactions, TA Associates will own good,
valid and marketable title to at least 55% of the Borrower's Capital Stock,
including all of the outstanding preferred stock. Other than the common stock
and preferred stock of the Borrower and the Warrants, the Borrower has not
issued any other Capital Stock. Except as set forth on SCHEDULE 5.26, and except
for the Warrants and any options outstanding under the Borrower's stock
incentive plans, there are no existing options, warrants, calls or commitments
relating to, or any securities or rights convertible into, exercisable for or
exchangeable for, any Capital Stock of the Borrower.
5.27 Management History. To the knowledge of the Borrower, during the
past ten (10) years neither Ramie A. Tritt nor Gerald R. Benjamin has been
arrested for, or convicted of, any criminal offense, or been the subject of one
of the events described in paragraphs (f) or (g) of
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SECTION 9.1, applying such events to such persons. Further, neither Dr. Tritt
nor Mr. Benjamin has served as an officer, director, general partner, member, or
manager of any Person that has been or is the subject of one of the events
described in paragraphs (f) or (g) of SECTION 9.1, applying such events to such
Person during Dr. Tritt's or Mr. Benjamin's service in such capacity with such
Person.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
6.1 Financial Statements. The Borrower will deliver to each Lender:
(a) As soon as available and in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
beginning with the fiscal quarter ending September 30, 1999, (i) unaudited
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such fiscal quarter and unaudited consolidated statements of income, cash
flows and stockholders' equity for the Borrower and its Subsidiaries for the
fiscal quarter then ended and for that portion of the fiscal year then ended, in
each case setting forth comparative consolidated figures as of the end of and
for the corresponding period in the preceding fiscal year, together with
comparative budgeted figures for the fiscal year then ended, all in reasonable
detail and prepared in accordance with GAAP (subject to the absence of notes
required by GAAP and subject to normal year-end adjustments) applied on a basis
consistent with that of the preceding quarter or containing disclosure of the
effect on the financial condition or results of operations of any change in the
application of accounting principles and practices during such quarter and (ii)
monthly operating statements for each Managed Practice for the three months in
the fiscal quarter then ended, all in reasonable detail; and
(b) As soon as available and in any event within ninety (90) days after
the end of each fiscal year, beginning with the fiscal year ending December 31,
1999, (i) an audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income, cash flows and stockholders' equity for the Borrower and
its Subsidiaries for the fiscal year then ended, including the notes thereto, in
each case setting forth comparative figures as of the end of and for the
preceding fiscal year together with comparative budgeted figures for the fiscal
year then ended, all in reasonable detail and certified by the independent
certified public accounting firm regularly retained by the Borrower or another
independent certified public accounting firm of recognized national standing
reasonably acceptable to the Required Lenders, together with a report thereon by
such accountants that is not qualified as to going concern or scope of audit and
to the effect that such financial statements present fairly the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated in accordance with
GAAP applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the
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financial condition or results of operations of any change in the application of
accounting principles and practices during such year and (ii) monthly operating
statements for each Managed Practice for the three most recent months of the
fiscal year then ended, all in reasonable detail.
6.2 Other Business and Financial Information. The Borrower will deliver
to each Lender:
(a) Concurrently with each delivery of the financial statements
described in SECTION 6.1, a Compliance Certificate with respect to the period
covered by the financial statements then being delivered, executed by a
Financial Officer, together with a Covenant Compliance Worksheet reflecting the
computation of the financial covenants set forth in ARTICLE VII as of the last
day of the period covered by such financial statements;
(b) As soon as available and in any event within thirty (30) days prior
to the end of each fiscal year, beginning with the fiscal year ending December
31, 1999, a consolidated operating budget for the Borrower and its Subsidiaries
for the succeeding fiscal year (prepared on a quarterly basis), consisting of a
consolidated balance sheet and consolidated statements of income and cash flows,
together with cash flow projections for the succeeding fiscal year (to the
extent such cash flow projections are delivered to the Subordinated Investors),
together with a certificate of a Financial Officer to the effect that such
budgets have been prepared in good faith and are reasonable estimates of the
financial position and results of operations of the Borrower and its
Subsidiaries for the period covered thereby; and as soon as available from time
to time thereafter, any modifications or revisions to or restatements of such
budget;
(c) Promptly upon receipt thereof, copies of any "management letter"
submitted to the Borrower or any Material Subsidiary by its certified public
accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from the Borrower or any
such Material Subsidiary in respect thereof;
(d) Promptly upon the sending, filing or receipt thereof, copies of (i)
all financial statements, reports, notices and proxy statements that the
Borrower or any Subsidiary shall send or make available generally to its
shareholders, (ii) all regular, periodic and special reports, registration
statements and prospectuses (other than on Form S-8) that the Borrower or any
Subsidiary shall render to or file with the Securities and Exchange Commission,
the National Association of Securities Dealers, Inc. or any national securities
exchange, (iii) all press releases and other statements made available generally
by the Borrower or any Material Subsidiary to the public concerning material
developments in the business of the Borrower or any Subsidiary; and (iv) all
material regulatory reports and notices of Governmental Authorities.
(e) Promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of the Borrower obtaining knowledge thereof,
written notice of any of the following:
(i) the occurrence of any Default or Event of Default,
together with a written statement of a Responsible Officer of the
Borrower specifying the nature of such Default
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or Event of Default, the period of existence thereof and the action
that the Borrower has taken and proposes to take with respect thereto;
(ii) the institution or threatened in writing institution of
any action, suit, investigation or proceeding against or affecting the
Borrower or any Subsidiary or any Managed Practice, including any such
investigation or proceeding by any Governmental Authority (other than
routine periodic inquiries, investigations or reviews), that would, if
adversely determined, be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, and any material
development in any litigation or other proceeding previously reported
pursuant to SECTION 5.5 or this subsection;
(iii) the receipt by the Borrower or any Material Subsidiary
from any Governmental Authority of (y) any notice asserting any failure
by the Borrower or any Material Subsidiary or any Managed Practice to
be in compliance with applicable Requirements of Law or that threatens
the taking of any action against such Person or sets forth
circumstances that, if taken or adversely determined, would be
reasonably likely to have a Material Adverse Effect, or (z) any notice
of any actual or threatened suspension, or Limitation with respect to
any License or Reimbursement Approval of the Borrower or any Material
Subsidiary or any Managed Practice, where such action would be
reasonably likely to have a Material Adverse Effect;
(iv) the occurrence of any ERISA Event, together with (x) a
written statement of a Responsible Officer of the Borrower specifying
the details of such ERISA Event and the action that the Borrower has
taken and proposes to take with respect thereto, (y) a copy of any
notice with respect to such ERISA Event that may be required to be
filed with the PBGC and (z) a copy of any notice delivered by the PBGC
to the Borrower or such ERISA Affiliate with respect to such ERISA
Event;
(v) the occurrence of any material default under, or any
proposed or threatened termination or cancellation of, any Material
Contract;
(vi) the occurrence of any of the following: (x) the written
assertion of any Environmental Claim against or affecting the Borrower,
any Subsidiary or any of their respective real property, leased or
owned; (y) the receipt by the Borrower or any Subsidiary of written
notice of any alleged violation of or noncompliance with any
Environmental Laws; or (z) the taking of any remedial action by the
Borrower, any Subsidiary or any other Person in response to the actual
or alleged generation, storage, release, disposal or discharge of any
Hazardous Substances on, to, upon or from any real property leased or
owned by the Borrower or any Subsidiary; but in each case under clauses
(x), (y) and (z) above, only to the extent the same would be reasonably
likely to have a Material Adverse Effect; and
(vii) any other matter or event that has, or would be
reasonably likely to have, a Material Adverse Effect, including without
limitation, information about Managed Practices, together with a
written statement of a Responsible Officer of the Borrower setting
forth the nature and period of existence thereof and the action that
the Borrower has taken and proposes to take with respect thereto;
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(f) As promptly as reasonably possible, such other information about
the condition (financial or otherwise), operations, properties or business of
the Borrower or any Subsidiary (including any Plan and any information required
to be filed under ERISA) as the Agent or any Lender may from time to time
reasonably request; and
(g) Concurrently with each delivery of the financial statements
described in SECTION 6.1, the information referred to in SECTION 6.9(E).
6.3 Existence; Franchises; Maintenance of Properties. The Borrower
will, and will cause each Material Subsidiary to, (i) maintain and preserve in
full force and effect its corporate existence, except as expressly permitted
otherwise by SECTION 8.1, (ii) obtain, maintain and preserve in full force and
effect all other rights, franchises, licenses, permits, certifications,
approvals and authorizations and other Licenses, and all Reimbursement
Approvals, required by Governmental Authorities and necessary to the ownership,
occupation or use of its properties or the conduct of its business, except to
the extent the failure to do so would not be reasonably likely to have a
Material Adverse Effect, and (iii) keep all material properties in good working
order and condition (normal wear and tear excepted) and from time to time make
all necessary repairs to and renewals and replacements of such properties,
except to the extent that any of such properties are obsolete or are being
replaced.
6.4 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply in all respects with all Requirements of Law applicable in
respect of the conduct of its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.
6.5 Payment of Obligations. The Borrower will, and will cause each
Subsidiary to, (i) pay all liabilities and obligations as and when due (subject
to any applicable subordination provisions), except to the extent failure to do
so would not be reasonably likely to have a Material Adverse Effect, and (ii)
pay and discharge all taxes, assessments and governmental charges or levies
imposed upon it, upon its income or profits or upon any of its properties, prior
to the date on which penalties would attach thereto, and all lawful claims that,
if unpaid, might become a Lien upon any of the properties of the Borrower or any
Subsidiary; provided, however, that neither the Borrower nor any Subsidiary
shall be required to pay any such tax, assessment, charge, levy or claim that is
being contested in good faith and by proper proceedings and as to which the
Borrower or such Subsidiary is maintaining adequate reserves with respect
thereto in accordance with GAAP.
6.6 Insurance. The Borrower will, and will cause each Material
Subsidiary to, maintain with financially sound and reputable insurance companies
insurance with respect to its assets, properties and business, against such
hazards and liabilities, of such types and in such amounts, as is customarily
maintained by companies in the same or similar businesses similarly situated,
and maintain such other or additional insurance on such terms and subject to
such conditions as may be required under any Security Document.
6.7 Maintenance of Books and Records; Inspection. The Borrower will,
and will cause each Material Subsidiary to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business
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and properties, and prepare all financial statements required under this
Agreement, in each case in accordance with GAAP and in compliance with the
requirements of any Governmental Authority having jurisdiction over it, and (ii)
permit employees or agents of the Agent or any Lender (by arrangements through
the Agent) to inspect its properties and examine or audit its books, records,
working papers and accounts and make copies and memoranda of them, and to
discuss its affairs, finances and accounts with its officers and employees and,
upon reasonable advance notice to the Borrower, the independent public
accountants of the Borrower and its Subsidiaries (and by this provision the
Borrower authorizes such accountants to discuss the finances and affairs of the
Borrower and its Subsidiaries), all at such times and from time to time, upon
reasonable notice and during business hours, as may be reasonably requested.
6.8 Managed Practices. The Borrower will exercise commercially
reasonable efforts to cause each Managed Practice to obtain, maintain and
preserve in full force and effect all other rights, franchises, permits,
certifications, approvals, authorizations and other Licenses (including with
respect to physician and dentist employees), and all Reimbursement Approvals,
required by Governmental Authorities and necessary to the ownership, occupation
or use of its properties or the conduct of its business, except to the extent
the failure to do so would not be reasonably likely to have a Material Adverse
Effect.
6.9 Permitted Acquisitions and Permitted Minority Investments.
(a) Subject to the provisions of subsection (b) below and the
requirements contained in the definition of Permitted Acquisition and Permitted
Minority Investment, and subject to the other terms and conditions of this
Agreement, the Borrower may from time to time on or after the Closing Date
effect Permitted Acquisitions and Permitted Minority Investments; provided that,
with respect to each Permitted Acquisition and Permitted Minority Investment
(unless otherwise consented to in writing by the Required Lenders pursuant to
the definition of Permitted Acquisition or Permitted Minority Investment, as the
case may be):
(i) no Default or Event of Default shall have occurred and be
continuing at the time of the consummation of such Permitted
Acquisition or Permitted Minority Investment, as the case may be, or
would exist immediately after giving effect thereto;
(ii) the Purchase Amount with respect to a Permitted
Acquisition (y) shall not exceed $3,000,000, and (z) together with the
aggregate of the Purchase Amounts for all other Permitted Acquisitions
and Permitted Minority Investments consummated during any consecutive
twelve month period shall not exceed $20,000,000;
(iii) the Purchase Amount with respect to a Permitted
Acquisition in the form of a Permitted Joint Venture or a Permitted
Minority Investment (y) shall not exceed $3,000,000, and (z) together
with the aggregate of the Purchase Amounts for all other Permitted
Acquisitions in the form of Permitted Joint Ventures and Permitted
Minority Investments consummated during any consecutive twelve month
period shall not exceed $10,000,000;
(iv) the Purchase Amounts for all Permitted Minority
Investments during the term of this Agreement shall not exceed
$20,000,000; and
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(v) if required, the Borrower has received the consent of the
Subordinated Investors under the Permitted Senior Subordinated
Debentures.
(b) Not less than ten (10) Business Days prior to the proposed
consummation of any Permitted Acquisition or Permitted Minority Investment with
respect to which the Purchase Amount exceeds $1,000,000, the Borrower shall have
delivered to the Agent the following:
(i) a reasonably detailed description of the material terms of
such Permitted Acquisition or Permitted Minority Investment, as the
case may be (including, without limitation, the Purchase Amount and
method and structure of payment) and of each Person or business that is
the subject of such Permitted Acquisition or Permitted Minority
Investment, as the case may be (each, a "Target"); and
(ii) a certificate, in form and substance reasonably
satisfactory to the Agent, executed by a Financial Officer setting
forth the Purchase Amount and further to the effect that, to the best
of such individual's knowledge, (x) the consummation of such Permitted
Acquisition or Permitted Minority Investment, as the case may be will
not result in a violation of any provision of this Section, and after
giving effect to such Permitted Acquisition or Permitted Minority
Investment, as the case may be and any Borrowings made in connection
therewith, the Borrower will be in compliance with the financial
covenants contained in ARTICLE VII at the most recent calculation
period, such compliance determined with regard to good faith
calculations made on a pro forma basis in accordance with GAAP as if
such Target (in the case of a Permitted Acquisition) had been
consolidated with the Borrower for such periods (such calculations to
be attached to the certificate), (y) after giving effect to such
Permitted Acquisition or Permitted Minority Investment, as the case may
be, and any Borrowings in connection therewith, the Borrower believes
in good faith that it will have sufficient availability under the
Commitments to meet its ongoing working capital requirements, and (z)
no Event of Default exists before or after giving effect to such
Permitted Acquisition or Permitted Minority Investment, as the case may
be, and giving effect to the annual delivery of operating budget cash
flow projections prepared on a quarterly basis for the fiscal year
following the date of such Permitted Acquisition or Permitted Minority
Investment, as the case may be.
(c) The Agent and the Lenders shall use commercially reasonable efforts
to respond to the request of the Borrower for the consent of the Required
Lenders with respect to an Acquisition or a Minority Investment promptly (and in
any event within five (5) Business Days) after receipt of all information
required in connection with such Acquisition or Minority Investment, including
without limitation all information required under SECTIONS 6.9 and 6.10;
provided, that the failure of the Agent and the Lenders to respond within such
five (5) Business day period shall not be deemed a consent of the Required
Lenders to such Acquisition or Minority Investment.
(d) As soon as reasonably practicable after the consummation of any
Permitted Acquisition or Permitted Minority Investment, the Borrower will
deliver to the Agent a copy of the fully executed acquisition or investment
agreement (including schedules and exhibits thereto) and other material
documents and closing papers delivered in connection therewith.
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(e) The consummation of each Permitted Acquisition or Permitted
Minority Investment, as the case may be, shall be deemed to be a representation
and warranty by the Borrower that (except as shall have been approved in writing
by the Required Lenders) all conditions thereto set forth in this Section and in
the description furnished under clause (i) of subsection (b) above have been
satisfied, that the same is permitted in accordance with the terms of this
Agreement, and that the matters certified to by the Financial Officer of the
Borrower in the certificate referred to in clause (ii) of subsection (b) above
are, to the best of such individual's knowledge, true and correct in all
material respects as of the date such certificate is given, which representation
and warranty shall be deemed to be a representation and warranty as of the date
thereof for all purposes hereunder, including, without limitation, for purposes
of SECTIONS 4.2 and 9.1.
(f) Concurrently with each delivery of the financial statements
described in SECTION 6.1, the Borrower shall deliver to the Agent and each
Lender the following information with respect to any Permitted Acquisition or
Permitted Minority Investment occurring during the period covered by the
financial statements then being delivered (and for purposes of the financial
statements described in SECTION 6.1(B), any Permitted Acquisition or Permitted
Minority Investment not previously disclosed under this subsection (f)) and not
requiring the Required Lenders' consent under SECTION 6.9(A)(II) or CLAUSE (B)
of the definition of Permitted Acquisition:
(i) a reasonably detailed description of the material terms of
such Permitted Acquisition or Permitted Minority Investment (including,
without limitation the Purchase Amount and the method and structure of
payment) and of the Target; and
(ii) solely with respect to a Permitted Acquisition, projected
income statements of the Target for the two-year period following the
consummation of the Permitted Acquisition for such Target, in
reasonable detail, together with any appropriate statement of
assumptions and pro forma adjustments.
(g) The Agent shall have the right to conduct an on-site visit of the
Target before or after any Acquisition or Minority Investment is consummated,
subject to reasonable notice and reasonable times.
6.10 Creation or Acquisition of Subsidiaries. Subject to the provisions
of SECTION 8.5, the Borrower may from time to time create or acquire new
Subsidiaries in connection with Permitted Acquisitions or otherwise, and the
Subsidiaries of the Borrower may create or acquire new Subsidiaries, provided
that:
(a) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or direct or indirect acquisition by the Borrower
thereof, each such new Subsidiary that would be deemed a Material Subsidiary
(excluding Permitted Joint Ventures), will execute and deliver to the Agent (i)
a joinder to the Subsidiary Guaranty, pursuant to which such new Material
Subsidiary shall become a party thereto and shall guarantee the payment in full
of the Obligations of the Borrower under this Agreement and the other Credit
Documents, and (ii) a joinder to the Security Agreement, pursuant to which such
new Material Subsidiary shall become a party thereto and shall grant to the
Agent a first priority Lien upon and security interest in its
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accounts receivable, inventory, equipment, general intangibles and other
personal property as Collateral for its obligations under the Subsidiary
Guaranty, subject only to Permitted Liens;
(b) Concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or acquisition of any new Material Subsidiary
(including Permitted Joint Ventures) all or a portion of the Capital Stock of
which is directly owned by the Borrower, the Borrower will execute and deliver
to the Agent an amendment or supplement to the Security Agreement pursuant to
which all of the Capital Stock of such new Material Subsidiary owned by the
Borrower shall be pledged to the Agent, together with the certificates
evidencing such Capital Stock and undated stock powers duly executed in blank;
and concurrently with (and in any event within ten (10) Business Days
thereafter) the creation or acquisition of any new Material Subsidiary
(including Permitted Joint Ventures) all or a portion of the Capital Stock of
which is directly owned by another Subsidiary (the "Parent Subsidiary"), the
Parent Subsidiary will execute and deliver to the Agent an appropriate joinder,
amendment or supplement to the Security Agreement, pursuant to which all of the
Capital Stock of such new Material Subsidiary owned by such Parent Subsidiary
shall be pledged to the Agent, together with the certificates evidencing such
Capital Stock and undated stock powers duly executed in blank; and
(c) As promptly as reasonably possible, the Borrower will deliver any
such other documents, certificates and opinions (including without limitation
UCC financing statements, Intercompany Notes and opinions of local counsel in
the jurisdiction of organization of each such new Material Subsidiary), in form
and substance reasonably satisfactory to the Agent, as the Agent may reasonably
request in connection therewith and will take such other action as the Agent may
reasonably request to create in favor of the Agent a perfected security interest
in the Collateral being pledged pursuant to the documents described above;
provided, that with respect to Permitted Joint Ventures that do not become
Subsidiary Guarantors pursuant to PARAGRAPH 6.10(A) above, the Borrower shall
cause such Permitted Joint Venture to deliver documentation of the type
described in SECTIONS 4.1(C), (D) and (F) herein.
(d) Calculations for determining whether the new Subsidiary qualifies
as a Material Subsidiary shall be based upon the financial statements of the new
Subsidiary or group of purchased assets, as applicable, for the most recently
ended fiscal quarter. Such calculations shall be made in accordance with GAAP as
if such Subsidiary or group of assets had been consolidated with the Borrower as
of such fiscal quarter.
6.11 Additional Security. The Borrower will, and will cause each of its
Material Subsidiaries (excluding Permitted Joint Ventures) to, grant to the
Agent from time to time security interests, fee mortgages and other Liens in and
upon such assets and properties of the Borrower or such Material Subsidiary as
are not covered by the Security Documents executed and delivered on the Closing
Date or pursuant to SECTION 6.10 and as may be reasonably requested from time to
time by the Required Lenders (including, without limitation, Liens on assets
acquired by the Borrower or a Material Subsidiary in connection with any
Permitted Acquisition). Such security interests, fee mortgages and Liens shall
be granted pursuant to documentation in form and substance reasonably
satisfactory to the Agent and shall constitute valid and perfected security
interests and Liens, subject to no Liens other than Permitted Liens. Without
limitation of the foregoing, in connection with the grant of any fee mortgage or
fee deed of trust with respect to any fee interest in real property, the
Borrower will, and will cause each
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applicable Material Subsidiary to, at the Borrower's expense, prepare, obtain
and deliver to the Agent any environmental assessments, appraisals, surveys,
title insurance and other matters or documents as the Agent may reasonably
request or as may be required under applicable banking laws and regulations.
6.12 Year 2000 Compatibility. The Borrower will, and will cause each
Material Subsidiary to, take all action necessary to ensure that its
computer-based systems are able to operate and effectively process data
including dates on and after January 1, 2000, except where failure to so comply
would not be expected to result in a Material Adverse Effect. At the request of
the Agent or the Required Lenders, the Borrower will provide reasonable
assurance of its Year 2000 compatibility.
6.13 Further Assurances. The Borrower will, and will cause each
Subsidiary to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Agent or the Required
Lenders to perfect and maintain the validity and priority of the Liens granted
pursuant to the Security Documents and to effect, confirm or further assure or
protect and preserve the interests, rights and remedies of the Agent and the
Lenders under this Agreement and the other Credit Documents.
6.14 Compliance with Transaction Documents. The Borrower will perform
and observe, and will cause each of its Subsidiaries to perform and observe, all
of its material obligations set forth in the Transaction Documents.
ARTICLE VII
FINANCIAL COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
7.1 Total Leverage Ratio. The Borrower will not permit the Total
Leverage Ratio as of the last day of any fiscal quarter during the periods set
forth below to be greater than the ratio set forth below opposite such period:
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Maximum
Date Total Leverage Ratio
---- --------------------
September 30, 1999 through September 30,
2000 4.25 : 1.0
October 1, 2000 through December 31,
2001 4.00 : 1.0
Thereafter 3.75 : 1.0
7.2 Senior Leverage Ratio. The Borrower will not permit the Senior
Leverage Ratio as of the last day of any fiscal quarter during the periods set
forth below to be greater than the ratio set forth below opposite such period:
Maximum
Date Senior Leverage Ratio
---- ---------------------
September 30, 1999 through September 30,
2000 3.00 : 1.0
Thereafter 2.75 : 1.0
7.3 Minimum Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio as of the last day of any fiscal quarter, beginning with
the fiscal quarter ended on September 30, 1999, to be less than 2.50 to 1.0.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments, the termination or expiration of all Letters of Credit and the
payment in full of all principal and interest with respect to the Loans and all
Reimbursement Obligations together with all other amounts then due and owing
hereunder:
8.1 Merger; Consolidation. The Borrower will not, and will not permit
or cause any Material Subsidiary to, liquidate, wind up or dissolve, and the
Borrower will not, and will not permit or cause any Subsidiary to, enter into
any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another Person
so long as (x) the Borrower is the surviving entity, (y) such merger or
consolidation shall constitute a Permitted Acquisition and the
applicable conditions and requirements of SECTIONS 6.9
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and 6.10 shall be satisfied, and (z) immediately after giving effect
thereto, no Default or Event of Default would exist;
(ii) any Subsidiary may merge or consolidate with another
Person so long as (x) the surviving entity is the Borrower or a
Subsidiary Guarantor (or in the case of an immaterial Subsidiary, the
surviving entity is another immaterial Subsidiary or a Subsidiary
Guarantor), (y) such merger or consolidation shall constitute a
Permitted Acquisition and the applicable conditions and requirements of
SECTIONS 6.9 and 6.10 shall be satisfied, and (z) immediately after
giving effect thereto, no Default or Event of Default would exist;
(iii) the Borrower and its Subsidiaries may consummate the
Transactions.
8.2 Indebtedness. The Borrower will not, and will not permit or cause
any Subsidiary to, create, incur, assume or suffer to exist any Indebtedness
other than:
(i) Indebtedness incurred under this Agreement, the Notes
and the Subsidiary Guaranty;
(ii) subordinated indebtedness existing on the Closing Date
and described in SCHEDULE 8.2, as such subordinated indebtedness is in
effect as of the Closing Date, including all terms and conditions
thereto;
(iii) accrued expenses (including salaries, accrued vacation
and other compensation), current trade or other accounts payable and
other current liabilities arising in the ordinary course of business
and not incurred through the borrowing of money, provided that the same
shall be paid when due except to the extent being contested in good
faith and by appropriate proceedings;
(iv) unsecured intercompany Indebtedness (x) of any Subsidiary
Guarantor to the Borrower, (y) of any Subsidiary Guarantor to a
Subsidiary, and (z) of the Borrower to any Subsidiary, provided that
any such Indebtedness under this clause (iv) is incurred in
the ordinary course of business and, if requested by the Agent, is
evidenced by one or more promissory notes pledged to the Agent pursuant
to the Security and Pledge Agreement, is payable on demand and is fully
subordinated in right of payment to the Obligations; and provided,
further, that unsecured intercompany Indebtedness of Permitted Joint
Ventures under clauses (x) or (y) above, when aggregated with
dispositions of assets to Permitted Joint Ventures permitted under
SECTION 8.4(IV) and restricted investments permitted under SECTION
8.5(IX), shall not exceed, for any consecutive twelve month period,
$10,000,000 in the aggregate or $3,000,000 individually with respect to
Permitted Joint Ventures and, with respect to SECTION 8.5(ix),
Permitted Minority Investments (including Purchase Amounts incurred in
connection with Permitted Joint Ventures and Permitted Minority
Investments and other amounts consented to by the Required Lenders in
writing)
(v) Indebtedness of the Borrower under Hedge Agreements
permitted under SECTION 8.5(VI);
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(vi) other than seller debt issued or sold in accordance with
subsection (IX) below, unsecured Indebtedness of the Borrower that is
expressly subordinated and made junior in right and time of payment to
the Obligations and that is evidenced by one or more written agreements
or instruments having terms, conditions and provisions (including,
without limitation, provisions relating to principal amount, maturity,
covenants, defaults, interest, and subordination) satisfactory in form
and substance to the Required Lenders in their sole discretion (the
Indebtedness described hereinabove and in clauses (ii) and (ix) of this
SECTION 8.2, collectively, the "Subordinated Indebtedness"); provided
that, as further conditions to the issuance of any Subordinated
Indebtedness (other than Subordinated Indebtedness issued or sold in
accordance with clause (ix) below), (1) immediately after giving effect
to the issuance of such Subordinated Indebtedness, no Default or Event
of Default shall exist, (2) all agreements and instruments evidencing
or governing such Subordinated Indebtedness shall have been approved in
writing by the Required Lenders (or the Agent on their behalf), and (3)
prior to or concurrently with the issuance of such Subordinated
Indebtedness, the Borrower shall have delivered to the Agent a
certificate, signed by a Financial Officer of the Borrower,
satisfactory in form and substance to the Required Lenders and to the
effect that, after giving effect to the incurrence of such Subordinated
Indebtedness, the Borrower is in compliance with the financial
covenants set forth in ARTICLE VII such compliance being determined
with regard to calculations made on a pro forma basis in accordance
with GAAP as of the last day of the fiscal quarter then most recently
ended and as if such Subordinated Indebtedness had been incurred on the
first day of the period applicable to such covenants (such calculations
to be attached to such certificate); and provided further that the Net
Cash Proceeds from the issuance of such Subordinated Indebtedness shall
be applied to prepay the Loans and reduce the Commitments in accordance
with, and to the extent required under, the provisions of SECTION 2.6;
(vii) purchase money Indebtedness of the Borrower and its
Subsidiaries incurred solely to finance the payment of all or part of
the purchase price of any equipment, real property or other fixed
assets acquired in the ordinary course of business, including
Indebtedness in respect of capital lease obligations, and any renewals,
refinancings or replacements thereof (subject to the limitations on the
principal amount thereof set forth in this CLAUSE (VII)), which
Indebtedness shall not exceed $7,000,000 in aggregate principal amount
during the term of this Agreement; provided, that purchase money
Indebtedness expressly approved by the Required Lenders in connection
with a Permitted Acquisition shall not count toward the $7,000,000
basket included in this clause (VII);
(viii) Contingent Obligations incurred by the Borrower or any
Subsidiary in connection with (a) endorsements by the Borrower or any
such Subsidiary of negotiable instruments in the ordinary course of
business, (b) obligations of the Subsidiaries under the Subsidiary
Guaranty and (c) guarantees of any of the Indebtedness permitted under
this SECTION 8.2;
(ix) seller debt securities issued or sold in connection with
any Permitted Acquisition and consisting of up to fifty percent (50%)
of the Purchase Amount for any such Permitted Acquisition; provided,
that (a) such debt securities (i) have a term of not
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less than five (5) years, (ii) amortize principal in no greater than
equal annual installments over the term thereof, and (iii) are
subordinated to the Obligations pursuant to the Subordination Terms
(which provide for the subordination of any Lien permitted pursuant to
SECTION 8.3(X)(A) hereof) or (b) the terms of such debt securities are
expressly consented to by the Required Lenders; and
(x) other unsecured Indebtedness not exceeding $1,000,000 in
aggregate principal amount outstanding at any time (which Indebtedness
shall not increase the $10,000,000 aggregate and $3,000,000 individual
baskets included in clause (IV) above with respect to Permitted Joint
Ventures and Permitted Minority Investments).
8.3 Liens. The Borrower will not, and will not permit or cause any
Material Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist, any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or file or permit the filing
of, or permit to remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset, income or profits
under the Uniform Commercial Code of any state or under any similar recording or
notice statute, or agree to do any of the foregoing, other than the following
(collectively, "Permitted Liens"):
(i) Liens created under the Security Documents;
(ii) Liens in existence on the Closing Date and set forth on
SCHEDULE 8.3;
(iii) Liens imposed by law, such as Liens of carriers,
warehousemen, mechanics, materialmen and landlords, and other similar
Liens incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a period of more
than forty five (45) days or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(iv) Liens (other than any Lien imposed by ERISA, the creation
or incurrence of which would result in an Event of Default under
SECTION 9.1(J)) incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the
performance of letters of credit, bids, tenders, statutory obligations,
surety and appeal bonds, leases, government contracts and other similar
obligations (other than obligations for borrowed money) entered into in
the ordinary course of business;
(v) Liens for taxes, assessments or other governmental charges
or statutory obligations that are not delinquent or remain payable
without any penalty or that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required);
(vi) Liens securing the purchase money Indebtedness permitted
under clause (vii) of SECTION 8.2, provided that any such Lien (a)
shall attach to such property concurrently with or within ten (10) days
after the acquisition thereof by the Borrower or such Subsidiary, (b)
shall not exceed the lesser of (y) the fair market value of such
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property or (z) the cost thereof to the Borrower or such Subsidiary and
(c) shall not encumber any other property of the Borrower or any
Subsidiary;
(vii) any attachment or judgment Lien not constituting an
Event of Default under SECTION 9.1(H) that is being contested in good
faith by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP (if so required);
(viii) Liens arising from the filing, for notice purposes
only, of financing statements in respect of true leases;
(ix) with respect to any real property occupied by the
Borrower or any Subsidiary, all easements, rights of way, licenses and
similar encumbrances on title that do not materially impair the use of
such property for its intended purposes; and
(x) subordinated Liens securing the seller debt securities
permitted under clause (ix) of SECTION 8.2, provided that such Liens
(a) shall apply solely to furniture, fixtures and equipment acquired
from a Target in a Permitted Acquisition, (b) shall attach to such
property concurrently with or within ten (10) days after the
acquisition thereof by the Borrower or such Subsidiary, and (c) shall
not encumber any other property of the Borrower or any Subsidiary.
8.4 Disposition of Assets. The Borrower will not, and will not permit
or cause any Subsidiary to, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) all or any portion of
its assets, business or properties (including, without limitation, any Capital
Stock of any Subsidiary ), or enter into any arrangement with any Person
providing for the lease by the Borrower or any Subsidiary as lessee of any asset
that has been sold or transferred by the Borrower or such Subsidiary to such
Person, or agree to do any of the foregoing, except for:
(i) sales of inventory and licenses or leases of Intellectual
Property and other property and assets and termination or disposition
of licenses or leases, in each case in the ordinary course of business;
(ii) the sale or exchange of used or obsolete equipment to the
extent (y) the proceeds of such sale are applied towards, or such
equipment is exchanged for, replacement equipment or (z) such equipment
is no longer necessary for the operations of the Borrower or its
applicable Subsidiary in the ordinary course of business;
(iii) the sale and lease back of personal property of the
Borrower or any Material Subsidiary, the Net Proceeds of which are used
to prepay the Loans and reduce the Commitments in accordance with the
terms of SECTION 2.6 hereof;
(iv) the sale, lease or other disposition of assets by a
Subsidiary to the Borrower or to a Subsidiary Guarantor if, immediately
after giving effect thereto, no Default or Event of Default would
exist; and provided, further, that sales, leases, or other dispositions
of assets to Permitted Joint Ventures, when aggregated with unsecured
intercompany Indebtedness of Permitted Joint Ventures permitted under
SECTION 8.2(IV)
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and restricted investments permitted under SECTION 8.5(IX), shall not
exceed, for any consecutive twelve month period, $10,000,000 in the
aggregate or $3,000,000 individually with respect to Permitted Joint
Ventures and, with respect to SECTION 8.5(ix), Permitted Minority
Investments (including Purchase Amounts incurred in connection with
Permitted Joint Ventures and Permitted Minority Investments and other
amounts consented to by the Required Lenders in writing);
(v) the sale or disposition of assets outside the ordinary
course of business for fair value and for cash, provided that (w) the
Net Cash Proceeds from such sales or dispositions, when aggregated with
the Net Cash Proceeds from all other sales and dispositions not
otherwise specifically permitted under this Section that are
consummated during the same fiscal quarter or the period of three
fiscal quarters immediately prior thereto do not exceed $250,000 in the
aggregate for the Borrower and its Subsidiaries, (x) such Net Cash
Proceeds are delivered to the Agent promptly after receipt thereof for
application in prepayment of the Loans and reduction of the Commitments
in accordance with the provisions of SECTION 2.6, (y) in no event shall
the Borrower or any Material Subsidiary sell or otherwise dispose of
any of the Capital Stock of any Material Subsidiary, and (z)
immediately after giving effect thereto, no Default or Event of Default
would exist;
(vi) the sale and lease back transactions described on
SCHEDULE 8.4, the Net Proceeds of which are used to reduce the Loans
and Commitments in accordance with the terms of SECTION 2.6 hereof; and
(vii) the sale or disposition of immaterial assets by an
immaterial Subsidiary in the ordinary course of business.
8.5 Investments. The Borrower will not, and will not permit or cause
any Subsidiary to, directly or indirectly, purchase, own, invest in or otherwise
acquire any Capital Stock, evidence of indebtedness or other obligation or
security or any interest whatsoever in any other Person, or make or permit to
exist any loans, advances or extensions of credit to, or any investment in cash
or by delivery of property in, any other Person, or purchase or otherwise
acquire (whether in one or a series of related transactions) any portion of the
assets, business or properties of another Person (including pursuant to an
Acquisition), or create or acquire any Material Subsidiary, or become a partner
or joint venturer in any partnership or joint venture (collectively,
"Investments"), or make a commitment or otherwise agree to do any of the
foregoing, other than:
(i) Cash Equivalents;
(ii) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
Intellectual Property, real property and other assets, in each case in
the ordinary course of business;
(iii) Investments consisting of loans and advances to
employees for reasonable travel, relocation and business expenses in
the ordinary course of business, extensions of
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trade credit in the ordinary course of business, and receivables
created and prepaid expenses incurred in the ordinary course of
business;
(iv) without duplication, Investments consisting of
intercompany Indebtedness permitted under clause (iv) of SECTION 8.2;
(v) Investments existing on the Closing Date and described in
SCHEDULE 8.5;
(vi) Investments of the Borrower under Hedge Agreements with
any Lender for purposes of limiting or fixing the rate of interest that
would be payable in connection with the Loans;
(vii) Investments consisting of the making of capital
contributions or the purchase of Capital Stock (a) by the Borrower or
any Subsidiary in any other Person that is (or immediately after giving
effect to such Investment will be) a Subsidiary Guarantor (provided,
that investments in Permitted Joint Ventures and Minority Investments
shall satisfy the limitations set forth in clause (ix) of this SECTION
8.5), provided that the Borrower complies with the provisions of
SECTION 6.10, and (b) by any Subsidiary in the Borrower;
(viii) Permitted Acquisitions (subject to the limitations set
forth in clause (ix) below);
(ix) investments in Permitted Joint Ventures and Permitted
Minority Investments that, when aggregated with unsecured intercompany
Indebtedness of Permitted Joint Ventures permitted under SECTION
8.2(IV) and dispositions of assets to Permitted Joint Ventures
permitted under SECTION 8.4(IV), shall not exceed, for any consecutive
twelve month period, $10,000,000 in the aggregate or $3,000,000
individually with respect to Permitted Joint Ventures and, with respect
to this clause 8.5(IX), Permitted Minority Investments (including
Purchase Amounts incurred in connection with Permitted Joint Ventures
and Permitted Minority Investments and other amounts consented to by
the Required Lenders in writing but excluding the investments set forth
in SCHEDULE 8.5);
(x) Physician Minority Investment Loans incurred in connection
with a Permitted Minority Investment, excluding the investments set
forth in SCHEDULE 8.5;
(xi) loans to physicians in Managed Practices of up to
$500,000 in the aggregate during any consecutive twelve month period,
but excluding the loans set forth in Schedule 8.5; provided that
Physician Minority Investment Loans and other loans to physicians
expressly approved by the Required Lenders in connection with a
Permitted Acquisition or a Permitted Minority Investment shall not
count toward the $500,000 basket included in this clause (XI); and
(xii) other Investments in an aggregate amount, as valued at
the time each such Investment is made, not exceeding $100,000 for all
such Investments from and after the Closing Date (which Investments
shall not increase the $10,000,000 aggregate and
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$3,000,000 individual baskets included in clause (IX) above with
respect to Permitted Joint Ventures and Minority Investments).
8.6 Restricted Payments.
(a) The Borrower will not, and will not permit or cause any Subsidiary
to, directly or indirectly, declare or make any dividend payment, or make any
other distribution of cash, property or assets, in respect of any of its Capital
Stock or any warrants, rights or options to acquire its Capital Stock, or
purchase, redeem, retire or otherwise acquire for value any shares of its
Capital Stock or any warrants, rights or options (it being understood that the
Borrower may issue options) to acquire its Capital Stock, or set aside funds for
any of the foregoing, except that:
(i) the Borrower may declare and make dividend payments or
other distributions payable solely in its common stock and preferred
stock (as long as such preferred stock does not constitute Disqualified
Capital Stock); and
(ii) each Subsidiary may declare and make dividend payments or
other distributions to the Borrower or another Subsidiary Guarantor, to
the extent not prohibited under applicable Requirements of Law;
provided, that Permitted Joint Ventures may make distributions in
accordance with distribution provisions of organizational documents
reasonably approved by the Required Lenders so long as no Default or
Event of Default then exists or would result immediately after giving
effect thereto.
(b) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, make (or give any notice in respect of) any voluntary, optional
or required payment or prepayment of principal on, or make any other payments of
indemnification or premium with respect to, any Permitted Senior Subordinated
Debentures or any Subordinated Indebtedness, or directly or indirectly make any
redemption (including pursuant to any change of control provision), retirement,
defeasance or other acquisition for value of any Permitted Senior Subordinated
Debentures or any Subordinated Indebtedness, or make any deposit or otherwise
set aside funds for any of the foregoing purposes; provided that, subject to the
terms of any subordination agreement applicable to the seller debt securities,
the Borrower and its Subsidiaries may make scheduled payments (but not
prepayments) of principal and interest under such seller debt securities.
Notwithstanding the foregoing, the Borrower will not, and will not permit or
cause any of its Subsidiaries to, make any payment of principal, interest, or
any other sum due under such seller debt securities during the continuation of
an Event of Default.
(c) The Borrower will not, and will not permit or cause any of its
Subsidiaries to, make any payment (whether voluntary, optional or required) or
prepayment of principal on the seller notes set forth on SCHEDULE 8.6 other than
in common stock of the Borrower in accordance with the terms of such notes.
8.7 Transactions with Affiliates. The Borrower will not, and will not
permit or cause any Subsidiary to, enter into any transaction (including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service) with any officer, director,
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stockholder or other Affiliate of the Borrower or any Subsidiary, except in the
ordinary course of its business and upon fair and reasonable terms that are no
less favorable to it than would obtain in a comparable arm's length transaction
with a Person other than an Affiliate of the Borrower or such Subsidiary;
provided, however, that nothing contained in this Section shall prohibit:
(i) transactions described on SCHEDULE 8.7 or otherwise
expressly permitted under this Agreement; and
(ii) the payment by the Borrower of reasonable and customary
fees to members of its board of directors.
8.8 Lines of Business. The Borrower will not, and will not permit or
cause any Material Subsidiary to, engage in any business other than the business
of providing management services to providers of ear, nose, throat, head and
neck healthcare services (and related fields of allergy, audiology, pulmonology,
oral surgery, plastic surgery and sleep medicine), within the United States of
America and services, businesses and activities ancillary thereto, including,
but not limited to, investments in and management of ambulatory surgery centers,
diagnostic imaging centers and managed care and similar plans.
8.9 Certain Amendments. The Borrower will not, and will not permit or
cause any Subsidiary to, (i) amend, modify or waive, or permit the amendment,
modification or waiver of, any provision of any agreement or instrument
evidencing or governing any Permitted Senior Subordinated Debentures or any
other Subordinated Indebtedness, the effect of which would be to (a) increase
the principal amount due thereunder, (b) shorten or accelerate the time of
payment of any amount due thereunder (including, without limitation, the
maturity date), (c) increase the applicable interest rate or amount of any fees
or costs due thereunder, (d) amend any of the subordination provisions
thereunder (including any of the definitions relating thereto), (e) make any
covenant or event of default therein more restrictive or add any new covenant or
event of default, (f) amend or add additional prepayment or redemption
provisions thereunder, (g) allow for the creation, incurrence or assumption of
additional Liens or (h) otherwise materially and adversely affect the Lenders,
or breach or otherwise violate any of the subordination provisions applicable
thereto, including, without limitation, restrictions against payment of
principal and interest thereon, or (ii) amend, modify or change any provision of
its articles or certificate of incorporation, certificate of formation, bylaws,
partnership agreement, operating agreement or other organic document, the
Stockholders Agreement, or the terms of any class or series of its Capital
Stock, other than in a manner that would not reasonably be expected to adversely
affect the Lenders.
8.10 Limitation on Certain Restrictions. The Borrower will not, and
will not permit or cause any Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance on (i) the ability of the Borrower and its Subsidiaries to perform
and comply with their respective obligations under the Credit Documents or (ii)
the ability of any Subsidiary to make any dividend payments or other
distributions in respect of its Capital Stock, to repay Indebtedness owed to the
Borrower or any Subsidiary Guarantor, to make loans or advances to the Borrower
or any Subsidiary Guarantor, or to transfer any of its assets or properties to
the Borrower or any Subsidiary Guarantor, in each case other
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than such restrictions or encumbrances existing under or by reason of the Credit
Documents or applicable Requirements of Law.
8.11 No Other Negative Pledges. The Borrower will not, and will not
permit or cause any Material Subsidiary to, directly or indirectly, enter into
or suffer to exist any agreement or restriction that prohibits or conditions the
creation, incurrence or assumption of any Lien upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or agree to
do any of the foregoing, other than as set forth in (i) this Agreement and the
Security Documents, (ii) any agreement or instrument creating a Permitted Lien
(but only to the extent such agreement or restriction applies to the assets
subject to such Permitted Lien), (iii) operating leases of real or personal
property entered into by the Borrower or any Subsidiary as lessee in the
ordinary course of business, (iv) pursuant to the Investment Agreement and (v)
in the agreements set forth on SCHEDULE 8.11; provided that all Liens set forth
in this Agreement and the Security Documents from time to time are permitted
under each of the above.
8.12 Fiscal Year. The Borrower will not, and will not permit or cause
any of its Subsidiaries to, change the ending date of its fiscal year to a date
other than December 31.
8.13 Accounting Changes. The Borrower will not, and will not permit or
cause any Subsidiary to, make or permit any material change in its accounting
policies or reporting practices, except as may be required by GAAP.
8.14 Hazardous Wastes. The Borrower will not, and will not permit or
cause any Subsidiary to, permit any Hazardous Substances to be unlawfully
brought on, to or located on any real property owned or leased by the Borrower
or any Subsidiary, except in material compliance with all applicable
Environmental Laws; and if any such material is brought or found located thereon
in violation of any applicable law, it shall be handled as required pursuant to
applicable Environmental Laws and to the Agent's reasonable satisfaction, and
any required environmental cleanup procedures shall be diligently undertaken
pursuant to all such Environmental Laws, and the obligations hereunder with
respect to any such materials brought or located thereon while the Borrower or
any Subsidiary owned or leased any such real property shall survive any
foreclosure of any mortgage and other deeds of trust or mortgages. THE BORROWER
HEREBY ACKNOWLEDGES THAT FOR SO LONG AS THE LENDERS HAVE NOT FORECLOSED AND
TAKEN TITLE TO, OR POSSESSION AND CONTROL OF THE REALTY, OR TAKEN OVER CONTROL
OF WASTE HANDLING PRACTICES, ALL HAZARDOUS WASTE HANDLING PRACTICES AND
ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE RESPONSIBILITY OF THE
BORROWER AND ITS SUBSIDIARIES AND THE BORROWER AND ITS SUBSIDIARIES HAVE FULL
DECISION-MAKING POWER WITH RESPECT THERETO, AS WITH RESPECT TO THE LENDERS. THE
BORROWER FURTHER ACKNOWLEDGES THAT NEITHER THE AGENT NOR ANY LENDER IS AN
ENVIRONMENTAL CONSULTANT, ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE
WHATSOEVER. NO ACT (OR DECISION NOT TO ACT) OF THE AGENT OR ANY LENDER RELATED
TO THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL GIVE RISE TO ANY OBLIGATION OR
LIABILITY ON THE PART OF THE AGENT OR ANY LENDER WITH RESPECT TO ENVIRONMENTAL
MATTERS UNLESS SUCH ACTION IS AFTER THE LENDERS HAVE FORECLOSED ON AND TAKEN
POSSESSION AND CONTROL OF THE SUBJECT
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PROPERTY AND SUCH ACTION PROXIMATELY RESULTS IN SUCH CONTAMINATION. IN NO EVENT
SHALL ANY INFORMATION OBTAINED FROM THE AGENT OR ANY LENDER OR THEIR RESPECTIVE
AGENTS PURSUANT TO THIS AGREEMENT OR ANY CREDIT DOCUMENT CONCERNING THE
ENVIRONMENTAL CONDITION OF THE REALTY BE CONSIDERED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES (OR ANY OTHER RECIPIENT OF SUCH INFORMATION) AS CONSTITUTING
LEGAL OR ENVIRONMENTAL CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING
ADVICE, AND NEITHER THE BORROWER NOR ANY OF ITS SUBSIDIARIES (NOR ANY OTHER
RECIPIENT OF SUCH INFORMATION) SHALL RELY ON SAID INFORMATION AS SUCH. THE
RESPONSIBILITY FOR COMPLIANCE WITH ENVIRONMENTAL LAWS RESTS SOLELY WITH THE
BORROWER AND ITS SUBSIDIARIES FOR SO LONG AS THE LENDERS HAVE NOT FORECLOSED AND
TAKEN TITLE TO, OR POSSESSION AND CONTROL OF THE REALTY, OR TAKEN OVER CONTROL
OF WASTE HANDLING PRACTICES.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower shall fail to pay (i) any principal of any Loan, any
Reimbursement Obligation, any fee or any other Obligation (other than interest)
when due or (ii) any interest on any Loan within three (3) Business Days of the
due date;
(b) The Borrower or any Subsidiary shall fail to observe, perform or
comply with any condition, covenant or agreement contained in any of SECTIONS
2.14, 6.1, 6.2, 6.3(I), 6.9, 6.10, 6.11 or in ARTICLE VII or ARTICLE VIII;
(c) The Borrower or any Subsidiary shall fail to observe, perform or
comply with any condition, covenant or agreement contained in this Agreement or
any of the other Credit Documents other than those enumerated in subsections (a)
and (b) above, and such failure (i) is deemed by the terms of the relevant
Credit Document to constitute an Event of Default or (ii) shall continue
unremedied for any grace period specifically applicable thereto or, if no such
grace period is applicable, for a period of thirty (30) days after the earlier
of (y) the date on which a Responsible Officer of the Borrower acquires
knowledge thereof and (z) the date on which written notice thereof is delivered
by the Agent or any Lender to the Borrower;
(d) Any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in this Agreement, any of the other Credit
Documents or in any certificate, instrument, report or other document furnished
in connection herewith or therewith or in connection with the transactions
contemplated hereby or thereby shall prove to have been false or misleading in
any material respect as of the time made, deemed made or furnished;
(e) The Borrower or any Material Subsidiary shall (i) fail to pay when
due (whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace
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period) (y) any principal of or interest on the Permitted Senior Subordinated
Debentures or any Indebtedness (other than the Indebtedness incurred pursuant to
this Agreement) having an aggregate principal amount of at least $250,000 or (z)
any termination or other payment under any Hedge Agreement covering a notional
amount of Indebtedness of at least $250,000 or (ii) fail to observe, perform or
comply with any condition, covenant or agreement contained in any agreement or
instrument evidencing or relating to the Permitted Senior Subordinated
Debentures or any such Indebtedness, or any other event shall occur or condition
exist in respect thereof, and the effect of such failure, event or condition is
to cause, or permit the holder or holders of such Indebtedness (or a trustee or
agent on its or their behalf) to cause (with the giving of notice, lapse of
time, or both), such Indebtedness to become due, or to be prepaid, redeemed,
purchased or defeased, prior to its stated maturity;
(f) The Borrower or any Material Subsidiary shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in subsection (g) below, (iii) apply for
or consent to the appointment of or taking possession by a custodian, trustee,
receiver or similar official for or of itself or all or a substantial part of
its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;
(g) Any involuntary petition or case shall be filed or commenced
against the Borrower or any Material Subsidiary seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
(h) Any one or more money judgments, writs or warrants of attachment,
executions or similar processes involving an aggregate amount (exclusive of
amounts fully bonded or covered by insurance as to which the surety or insurer,
as the case may be, has acknowledged its liability in writing) in excess of
$250,000 shall be entered or filed against the Borrower or any Material
Subsidiary or any of their respective properties and the same shall not be
dismissed, stayed, bonded pending appeal, or discharged within a period of
thirty (30) days or in any event later than five days prior to the date of any
proposed sale thereunder;
(i) Any Security Document to which the Borrower or any Material
Subsidiary is now or hereafter a party shall for any reason cease to be in full
force and effect or cease to be effective to give the Agent a valid and
perfected security interest in and Lien upon the Collateral purported to be
covered thereby, subject to no Liens other than Permitted Liens, in each case
unless any such cessation occurs in accordance with the terms thereof or is due
to any act or failure to act on the part of the Agent or any Lender; or the
Borrower or any such Material Subsidiary shall assert any of the foregoing; or
any Subsidiary or any Person acting on behalf of
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any such Material Subsidiary shall deny or disaffirm such Subsidiary's
obligations under the Subsidiary Guaranty;
(j) Any ERISA Event or any other event or condition shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events and other events or conditions then
existing, the Borrower and its ERISA Affiliates have incurred or would incur
liability to any one or more Plans or Multiemployer Plans or to the PBGC (or to
any combination thereof) in excess of $250,000;
(k) There shall occur a Limitation with respect to any one or more
Licenses or Reimbursement Approvals of the Borrower, any Subsidiary or any
Managed Practice, or any other action shall be taken by any Governmental
Authority or other Person in response to any alleged failure by the Borrower,
any Subsidiary or any Managed Practice to be in compliance with applicable
Requirements of Law, and such Limitation or other action, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse Effect;
(l) The following three conditions shall occur: (i) any one or more
Environmental Claims shall have been asserted against the Borrower or any
Subsidiary; (ii) the Borrower and its Subsidiaries shall incur or would be
reasonably likely to incur liability as a result thereof; and (iii) such
liability, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect;
(m) The Borrower and its Subsidiaries shall be in breach of or default
under the terms of ten percent (10%) or more of the number of agreements for the
lease of real property (for example, on the Closing Date the Borrower and its
Subsidiaries have 67 leases so 7 leases would be 10% of such number), and the
effect of such breach or default is to terminate, or permit the other party or
parties thereto to terminate, such lease or leases; or a default is declared
against the Borrower or any Material Subsidiary under any Material Contract
(after giving effect to any applicable notice and cure periods provided for
therein) and the failure to cure such default would reasonably be expected to
result in a Material Adverse Effect;
(n) There shall occur (i) any uninsured damage to, or loss, theft or
destruction of, any Collateral or other properties of the Borrower and its
Material Subsidiaries having an aggregate fair market value in excess of
$250,000 or (ii) any labor dispute, act of God or other casualty that has or
would be reasonably likely to have a Material Adverse Effect;
(o) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group, other than the
existing stockholders of the Borrower as of the date hereof or a group comprised
solely of such Persons, shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, have become,
after the date hereof, the "beneficial owner" (within the meaning of such term
under Rule 13d-3 under the Exchange Act) of securities of the Borrower
representing 25% or more of the combined voting power of the then outstanding
securities of the Borrower ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors; or
(ii) the Board of Directors of the Borrower shall cease to consist of a majority
of the individuals who constituted the Board of Directors as of the date hereof
or who shall have become a member thereof subsequent to the date hereof after
having been nominated, or
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otherwise approved in writing, by at least a majority of individuals who
constituted the Board of Directors of the Borrower as of the date hereof (or
their replacements approved as herein required); or (iii) the TA Funds shall
cease to own at least fifty percent (50%) of their collective equity interests
in the Borrower as of the date hereof; or (iv) either Ramie A. Tritt or Gerald
R. Benjamin ceases to own at least 67% (for so long as the Permitted Senior
Subordinated Debentures are outstanding, and thereafter 50%) of the shares of
stock or other equity interest he controls in the Borrower on the Closing Date
following completion of the Transactions; provided that, any transfer to trusts
established for estate planning purposes by Ramie A. Tritt or Gerald R. Benjamin
and controlled by either of them and any transfer pursuant to a will or the laws
of descent and distribution upon the death of either Ramie A. Tritt or Gerald R.
Benjamin shall not be an Event of Default; or
(p) The Subordination Agreement shall for any reason cease to be in
full force and effect or cease to be effective to give the Agent any of its
rights thereunder, in each case unless any such cessation occurs in accordance
with the terms thereof or is due to any act or failure to act on the part of the
Agent or any Lender; or the Borrower or any of its Subsidiaries shall assert any
of the foregoing.
9.2 Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments and the Issuing Lender's obligation to
issue Letters of Credit, to be terminated, whereupon the same shall terminate
(provided that, upon the occurrence of an Event of Default pursuant to SECTION
9.1(F) or SECTION 9.1(G), the Commitments and the Issuing Lender's obligation to
issue Letters of Credit shall automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement, the Notes and the
other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower (provided that, upon the occurrence of an Event of
Default pursuant to SECTION 9.1(F) or SECTION 9.1(G), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower);
(c) Direct the Borrower to deposit (and the Borrower hereby agrees,
forthwith upon receipt of notice of such direction from the Agent, to deposit)
with the Agent from time to time such additional amount of cash as is equal to
the aggregate Stated Amount of all Letters of Credit then outstanding (whether
or not any beneficiary under any Letter of Credit shall have drawn or be
entitled at such time to draw thereunder), such amount to be held by the Agent
in the Cash Collateral Account as security for the Letter of Credit Exposure as
described in SECTION 3.8; and
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(d) Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
9.3 Remedies: Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, each Lender may, and each is hereby authorized by the Borrower, at any
such time and from time to time, to the fullest extent permitted by applicable
law, without presentment, demand, protest or other notice of any kind, all of
which are hereby knowingly and expressly waived by the Borrower, to set off and
to apply any and all deposits (general or special, time or demand, provisional
or final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
such Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to such Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, the Borrower hereby granting to
each Lender a continuing security interest in and Lien upon all such deposits
and other property as security for such Obligations. Each Lender agrees promptly
to notify the Borrower and the Agent after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
ARTICLE X
THE AGENT
10.1 Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Agent hereunder and under the other Credit
Documents and to take such actions as agent on its behalf hereunder and under
the other Credit Documents, and to exercise such powers and to perform such
duties, as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers and duties as are reasonably incidental
thereto.
10.2 Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Credit Documents. The Agent shall not have, by reason of this Agreement or
any other Credit Document, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Credit Document, express or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein. The Agent may execute
any of its duties under this Agreement or any other Credit Document by or
through agents or attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact that it selects with
reasonable care. The Agent shall be entitled to consult with legal counsel,
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Credit Documents and its
duties hereunder and thereunder 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 or experts. The Lenders hereby acknowledge that the Agent
shall not be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any other Credit
Document unless it shall be requested in
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writing to do so by the Required Lenders (or, where a higher percentage of the
Lenders is expressly required hereunder, such Lenders).
10.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Credit Documents, except for its or such Person's own
gross negligence or willful misconduct, (ii) responsible in any manner to any
Lender for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or in any document, instrument,
certificate, report or other writing delivered in connection herewith or
therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Credit Document, or
for the financial condition of the Borrower, its Subsidiaries or any other
Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document or the existence or possible existence of
any Default or Event of Default, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Credit Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Credit Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than liability and expense arising from its own gross negligence or willful
misconduct) that may be incurred by it by reason of taking, continuing to take
or omitting to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such instructions and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders (including all subsequent
Lenders).
10.5 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereinafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate,
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made its own appraisal of and investigation into the business, prospects,
operations, properties, financial and other condition and creditworthiness of
the Borrower and its Subsidiaries and made its own decision to enter into this
Agreement and extend credit to the Borrower hereunder, and (ii) it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action hereunder and under the other Credit Documents and to make
such investigation as it deems necessary to inform itself as to the business,
prospects, operations, properties, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries. Except as expressly
provided in this Agreement and the other Credit Documents, the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information concerning the business,
prospects, operations, properties, financial or other condition or
creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
10.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 10.4 and
11.6) take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all of the Lenders.
10.7 Indemnification. To the extent the Agent is not reimbursed by or
on behalf of the Borrower, and without limiting the obligation of the Borrower
to do so, the Lenders agree (i) to indemnify the Agent and its officers,
directors, employees, agents, attorneys-in-fact and Affiliates, ratably in
proportion to their respective percentages as used in determining the Required
Lenders as of the date of determination, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including,
without limitation, at any time following the repayment in full of the Loans and
the termination of the Commitments) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other Credit Document or any documents contemplated by or referred to herein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing, and (ii) to
reimburse the Agent upon demand, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, for any expenses incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, administration, amendment,
modification, waiver
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or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement or any of the other Credit Documents (including, without limitation,
reasonable attorneys' fees and expenses and compensation of agents and employees
paid for services rendered on behalf of the Lenders); provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the gross negligence or willful misconduct of the
party to be indemnified.
10.8 The Agent in its Individual Capacity. With respect to its
Commitment, the Loans made by it, the Letters of Credit issued or participated
in by it and the Note or Notes issued to it, the Agent in its individual
capacity and not as Agent shall have the same rights and powers under the Credit
Documents as any other Lender and may exercise the same as though it were not
performing the agency duties specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Notes" and any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to,
make investments in, and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower, any of its Subsidiaries
or any of their respective Affiliates as if the Agent were not performing the
agency duties specified herein, and may accept fees and other consideration from
any of them for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
10.9 Successor Agent. The Agent may resign at any time by giving ten
(10) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such ten-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and the Borrower, appoint a
successor Agent from among the Lenders. Upon the acceptance of any appointment
as Agent by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Credit Documents. After any retiring
Agent's resignation as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.
If no successor to the Agent has accepted appointment as Agent by the thirtieth
(30th) day following a retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall thereafter perform all of the duties of the Agent hereunder and
under the other Credit Documents until such time, if any, as the Required
Lenders appoint a successor Agent as provided for hereinabove.
10.10 Collateral Matters.
(a) The Agent is hereby authorized on behalf of the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be
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necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to the Security Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments, termination or expiration of
all outstanding Letters of Credit and payment in full of all of the Obligations,
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition expressly permitted hereunder or under any other
Credit Document or to which the Required Lenders have consented or (iii)
otherwise pursuant to and in accordance with the provisions of any applicable
Credit Document. Upon request by the Agent at any time, the Lenders will confirm
in writing the Agent's authority to release Collateral pursuant to this
subsection (b).
10.11 Issuing Lender and Swingline Lender. The provisions of this
Article (other than SECTION 10.9) shall apply to the Issuing Lender and the
Swingline Lender mutatis mutandis to the same extent as such provisions apply to
the Agent.
10.12 Syndication Agent. Notwithstanding any other provision of this
Agreement or any of the other Credit Documents, the Syndication Agent is named
as such for recognition purposes only, and in its capacities as such shall have
no powers, rights, duties, responsibilities or liabilities with respect to this
Agreement and the other Credit Documents and the transactions contemplated
hereby and thereby.
ARTICLE XI
MISCELLANEOUS
11.1 Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and expenses of counsel to the Agent
actually invoiced) in connection with (w) the Agent's due diligence
investigation in connection with, and the preparation, negotiation, execution,
delivery and syndication of, this Agreement and the other Credit Documents, and
any amendment, modification or waiver hereof or thereof or consent with respect
hereto or thereto, (x) the administration, monitoring and review of the Loans
and the Collateral (including, without limitation, out-of-pocket expenses for
travel, meals, long-distance telephone calls, wire transfers, facsimile
transmissions and copying and with respect to the engagement of appraisers,
consultants, auditors or similar Persons by the Agent at any time, whether
before or after the Closing, to render opinions concerning the financial
condition of the Borrower or any Subsidiary and the value of the Collateral),
(y) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral and (z) the creation, perfection and
maintenance of the perfection of the Agent's Liens upon the Collateral,
including, without limitation, Lien search, filing and recording fees, (ii) to
pay upon demand all reasonable out-of-pocket costs and expenses of the Agent and
each Lender (including, without limitation, reasonable attorneys' fees and
expenses actually invoiced) in connection with (x) restructuring of the credit
arrangement provided under this Agreement, whether in the nature of a
"work-out," in any insolvency or
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bankruptcy proceeding or otherwise and whether or not consummated, and (y) the
enforcement, attempted enforcement or preservation of any rights or remedies
under this Agreement or any of the other Credit Documents, whether in any
action, suit or proceeding (including any bankruptcy or insolvency proceeding)
or otherwise, and (iii) to pay and hold the Agent and each Lender harmless from
and against all liability for any intangibles, documentary, stamp or other
similar taxes, fees and excises, if any, including any interest and penalties,
and any finder's or brokerage fees, commissions and expenses (other than any
fees, commissions or expenses of finders or brokers engaged by the Agent or any
Lender), that may be payable in connection with the transactions contemplated by
this Agreement and the other Credit Documents.
11.2 Indemnification. The Borrower agrees, whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold the Agent and each Lender and each of their respective directors,
officers, employees, agents and Affiliates (each, an "Indemnified Person")
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses actually invoiced) of any kind or nature
whatsoever, whether direct, indirect or consequential (collectively,
"Indemnified Costs"), that may at any time be imposed on, incurred by or
asserted against any such Indemnified Person as a result of, arising from or in
connection with the preparation, execution, performance or enforcement of this
Agreement or any of the other Credit Documents, any of the transactions
contemplated herein or therein or any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of any Loans or
Letters of Credit (including, without limitation, in connection with the actual
or alleged generation, presence, discharge or release of any Hazardous
Substances on, into or from, or the transportation of Hazardous Substances to or
from, any real property at any time owned or leased by the Borrower or any of
its Subsidiaries, any other Environmental Claims or any violation of or
liability under any Environmental Law), or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; provided, however, that no
Indemnified Person shall have the right to be indemnified hereunder for any
Indemnified Costs to the extent determined by a final and nonappealable judgment
of a court of competent jurisdiction or pursuant to arbitration as set forth
herein to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. All of the foregoing Indemnified Costs of any Indemnified
Person shall be paid or reimbursed by the Borrower, as and when incurred and
upon demand.
11.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE
OTHER CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL
BE DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED
THAT EACH LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO
SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS, INTERNATIONAL CHAMBER OF COMMERCE, AS IN EFFECT FROM TIME
TO TIME
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(THE "UNIFORM CUSTOMS"), AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,
THE LAWS OF THE STATE OF NORTH CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF). THE BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY
FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA
FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT
DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR
THE BORROWER IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN
CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER. THE
BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF
APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES
ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE
OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL
DIRECTED TO IT AT ITS ADDRESS SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE
(3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND
PROPERLY ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
11.4 Arbitration; Preservation and Limitation of Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Credit
Document ("Disputes") between or among the Borrower, its Subsidiaries, the Agent
and the Lenders, or any of them, shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions,
claims arising from documents executed in the future, disputes as to whether a
matter is subject to arbitration, or claims arising out of or connected with the
transactions contemplated by this Agreement and the other Credit Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA"), as in effect from time to time, and the Federal
Arbitration Act, Title 9 of the U.S. Code, as amended. All arbitration hearings
shall be conducted in the city in which the principal office of the Agent is
located. A hearing shall begin within ninety (90) days of demand for arbitration
and all hearings shall be concluded within 120 days of demand for arbitration.
These time limitations may not be extended unless a party shows cause for
extension and then for no
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more than a total of sixty (60) days. The expedited procedures set forth in Rule
51 et seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. Notwithstanding the foregoing,
this arbitration provision does not apply to Disputes under or related to any
Hedge Agreement that is a Credit Document. The parties do not waive applicable
federal or state substantive law except as provided herein.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Credit Documents or
under applicable law or by judicial foreclosure and sale, including a proceeding
to confirm the sale; (ii) all rights of self-help, including peaceful occupation
of real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies, including
injunctive relief, sequestration, garnishment, attachment, appointment of a
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Any claim or controversy with
regard to any party's entitlement to such remedies is a Dispute. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute. The parties hereto agree
that no party shall have a remedy of punitive or exemplary damages against any
other party in any Dispute, and each party hereby waives any right or claim to
punitive or exemplary damages that it has now or that may arise in the future in
connection with any Dispute, whether such Dispute is resolved by arbitration or
judicially. The parties acknowledge that by agreeing to binding arbitration they
have irrevocably waived any right they may have to a jury trial with regard to a
Dispute. The Borrower agrees to pay the reasonable fees and expenses of counsel
to the Agent and the Lenders in connection with any Dispute subject to
arbitration as provided herein.
11.5 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
(a) if to the Borrower, to Physicians' Specialty Corp., 1150 Lake Hearn
Drive, Suite 640, Atlanta, Georgia 30342, Telecopy No. (404) 250-0162, with a
copy to Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts
02109-2881, Attention: Steven M. Ellis, Telecopy No. (617) 523-1231;
(b) if to the Agent, to First Union National Bank, One First Union
Center, DC-5, 301 South College Street, Charlotte, North Carolina 28288-0735,
Attention: Syndication Agency Services, Telecopy No. (704) 383-0288;
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(c) if to any Lender, to it at the address set forth on its signature
page hereto (or if to any Lender not a party hereto as of the date hereof, at
the address set forth in its Assignment and Acceptance);
or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answerback, transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Agent shall not be effective until received by the Agent.
11.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge or termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Required Lenders (or by the Agent at the
direction or with the consent of the Required Lenders), and then the same shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, modification, waiver,
discharge, termination or consent shall:
(a) unless agreed to by each Lender directly affected thereby, (i)
reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon, or reduce or forgive any fees or other Obligations
(other than fees payable to the Agent for its own account), or (ii) extend the
Revolving Credit Maturity Date, the Swingline Maturity Date or any other date
(including any scheduled date for the mandatory reduction or termination of any
Commitments) fixed for the payment of any principal of or interest on any Loan
(other than additional interest payable under SECTION 2.8(B) at the election of
the Required Lenders, as provided therein), any fees referred to in SECTION 2.9
(other than fees payable to the Agent for its own account) or any other
Obligations or extend the expiry date of any Letter of Credit beyond the seventh
day prior to the Revolving Credit Maturity Date;
(b) unless agreed to by all of the Lenders, (i) increase or extend any
Commitment of any Lender (it being understood that a waiver of any Event of
Default, if agreed to by the requisite Lenders hereunder, shall not constitute
such an increase), (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Agent to take, any action hereunder (including as set
forth in the definition of "Required Lenders"), (iii) except as may be otherwise
specifically provided in this Agreement or in any other Credit Document, release
all or substantially all of the Collateral or release any Subsidiary Guarantor
from its obligations under the Subsidiary Guaranty, or (iv) change any provision
of SECTION 2.15 or this Section; and
(c) unless agreed to by the Issuing Lender, the Swingline Lender or the
Agent in addition to the Lenders required as provided hereinabove to take such
action, affect the respective rights or obligations of the Issuing Lender, the
Swingline Lender or the Agent, as applicable, hereunder or under any of the
other Credit Documents;
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and provided further that the Fee Letter and any Hedge Agreement to which any
Lender is a party may be amended or modified, and any rights thereunder waived,
in a writing signed by the parties thereto.
11.7 Assignments, Participations.
(a) Each Lender may assign to one or more other Eligible Assignees
(each, an "Assignee") all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Revolving
Credit Commitment, all of its Swingline Commitment, the outstanding Loans made
by it, the Note or Notes held by it and its participations in Letters of
Credit); provided, however, that (i) any such assignment (other than an
assignment to a Lender or an Affiliate of a Lender) shall not be made without
the prior written consent of the Agent and the Borrower (to be evidenced by its
counterexecution of the relevant Assignment and Acceptance), which consent shall
not be unreasonably withheld (provided that the Borrower's consent shall not be
required in the event a Default or Event of Default shall have occurred and be
continuing), (ii) each such assignment shall be of a uniform, and not varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement, (iii) except in the case of an assignment to a Lender or an Affiliate
of a Lender, no such assignment shall be in an aggregate principal amount
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) less than (y) in the case of Revolving Credit Commitments,
$5,000,000, determined by combining the amount of the assigning Lender's
outstanding Revolving Loans, Letter of Credit Exposure and Unutilized Revolving
Credit Commitment being assigned pursuant to such assignment (or, if less, the
entire Revolving Credit Commitment of the assigning Lender), or (z) in the case
of Swingline Loans, the entire Swingline Commitment and the full amount of the
outstanding Swingline Loans, and (iv) the parties to each such assignment will
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment, and will pay a nonrefundable processing fee of $3,000 to the
Agent for its own account. Upon such execution, delivery, acceptance and
recording of the Assignment and Acceptance, from and after the effective date
specified therein, which effective date shall be at least five (5) Business Days
after the execution thereof (unless the Agent shall otherwise agree), (A) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of the assigning Lender
hereunder with respect thereto and (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than rights under the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Agent and the other parties hereto as if set forth at length
herein.
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(b) The Agent will maintain at its address for notices referred to
herein a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Agent, in exchange for the surrendered Note or Notes, a new
Note or Notes to the order of the Assignee (and, if the assigning Lender has
retained any portion of its rights and obligations hereunder, to the order of
the assigning Lender), prepared in accordance with the provisions of SECTION 2.4
as necessary to reflect, after giving effect to the assignment, the Commitments
of the Assignee and (to the extent of any retained interests) the assigning
Lender, dated the date of the replaced Note or Notes and otherwise in
substantially the form of EXHIBIT A. The Agent will return canceled Notes to the
Borrower.
(d) Each Lender may, without the consent of the Borrower, the Agent or
any other Lender, sell to one or more other Persons (each, a "Participant")
participations in any portion comprising less than all of its rights and
obligations under this Agreement (including, without limitation, a portion of
its Commitments, the outstanding Loans made by it, the Note or Notes held by it
and its participations in Letters of Credit); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged and such Lender
shall remain solely responsible for the performance of such obligations, (ii) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement, (iii) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
no Lender shall permit any Participant to have any voting rights or any right to
control the vote of such Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other Credit Document
(except as to actions that would (x) reduce or forgive the principal amount of
any Loan, reduce the rate of or forgive any interest thereon, or reduce or
forgive any fees or other Obligations, (y) extend the Revolving Credit Maturity
Date, the Swingline Maturity Date, or any other date fixed for the payment of
any principal of or interest on any Loan, any fees or any other Obligations, or
(z) increase or extend any Commitment of any Lender), and (iv) no Participant
shall have any rights under this Agreement or any of the other Credit Documents,
each Participant's rights against the granting Lender in respect of any
participation to be those set forth in the participation agreement, and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not granted such participation. Notwithstanding the foregoing,
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each Participant shall have the rights of a Lender for purposes of SECTIONS
2.16(A), 2.16(B), 2.17, 2.18 and 9.3, and shall be entitled to the benefits
thereto, to the extent that the Lender granting such participation would be
entitled to such benefits if the participation had not been made, provided that
no Participant shall be entitled to receive any greater amount pursuant to any
of such Sections than the Lender granting such participation would have been
entitled to receive in respect of the amount of the participation made by such
Lender to such Participant had such participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any
Lender from pledging or assigning all or any portion of its rights and interest
hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release a Lender from any of its obligations hereunder.
(f) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section, disclose to the Assignee or Participant or proposed Assignee or
Participant any information relating to the Borrower and its Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
Assignee or Participant or proposed Assignee or Participant agrees in writing to
keep such information confidential to the same extent required of the Lenders
under SECTION 11.13.
11.8 No Waiver. The rights and remedies of the Agent and the Lenders
expressly set forth in this Agreement and the other Credit Documents are
cumulative and in addition to, and not exclusive of, all other rights and
remedies available at law, in equity or otherwise. No failure or delay on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or be construed to be a
waiver of any Default or Event of Default. No course of dealing between any of
the Borrower and the Agent or the Lenders or their agents or employees shall be
effective to amend, modify or discharge any provision of this Agreement or any
other Credit Document or to constitute a waiver of any Default or Event of
Default. No notice to or demand upon the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent or any Lender to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.
11.9 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, and all references herein to any party shall be
deemed to include its successors and assigns; provided, however, that (i) the
Borrower shall not sell, assign or transfer any of its rights, interests, duties
or obligations under this Agreement without the prior written consent of all of
the Lenders and (ii) any Assignees and Participants shall have such rights and
obligations with respect to this Agreement and the other Credit Documents as are
provided for under and pursuant to the provisions of SECTION 11.7.
11.10 Survival. All representations, warranties and agreements made by
or on behalf of the Borrower and its Subsidiaries in this Agreement and in the
other Credit Documents shall survive the execution and delivery hereof or
thereof, the making and repayment of the Loans and
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the issuance and repayment of the Letters of Credit. In addition,
notwithstanding anything herein or under applicable law to the contrary, the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, including, without
limitation, the provisions of SECTIONS 2.16(A), 2.16(B), 2.17, 2.18, 10.7, 11.1
and 11.2, shall survive the payment in full of all Loans and Letters of Credit,
the termination of the Commitments and all Letters of Credit, and any
termination of this Agreement or any of the other Credit Documents.
11.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
11.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
11.13 Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound banking practices, all
nonpublic information provided to it by or on behalf of the Borrower or any
Subsidiary in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting
jurisdiction over such Lender, as may be required pursuant to subpoena or other
legal process, or otherwise in order to comply with any applicable Requirement
of Law, (iii) in connection with any proceeding to enforce its rights hereunder
or under any other Credit Document or any other litigation or proceeding related
hereto or to which it is a party, (iv) to the Agent or any other Lender, (v) to
the extent the same has become publicly available other than as a result of a
breach of this Agreement and (vi) pursuant to and in accordance with the
provisions of SECTION 11.7(F).
11.14 Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by the Agent and the Borrower of written
or telephonic notification of such execution and authorization of delivery
thereof.
11.15 Disclosure of Information. The Borrower agrees and consents to
the Agent's disclosure of information relating to this transaction to Gold
Sheets and other similar bank trade publications. Such information will consist
of deal terms and other information customarily found in such publications.
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11.16 Entire Agreement. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL
PRIOR AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE
COMMITMENT LETTER FROM FIRST UNION TO THE BORROWER DATED JUNE 10, 1999, BUT
SPECIFICALLY EXCLUDING THE FEE LETTER, AND (C) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
PHYSICIANS' SPECIALTY CORP.
By: /s/ Gerald R. Benjamin
--------------------------------------
Title: Executive Vice President
-----------------------------------
(signatures continued)
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FIRST UNION NATIONAL BANK, as
Administrative Agent and as a Lender
By: /s/ Joyce L. Barry
-----------------------------------------
Commitment:
$20,000,000 Title: Senior Vice President
--------------------------------------
Instructions for wire
transfers to the Agent:
First Union National Bank
ABA Routing No. 053000219
Charlotte, North Carolina
Account Number: 0145916 8110012, RC 0001802
Account Name: Physicians' Specialty Corp.
Attention: Tonya Rhyne
Address for notices as a Lender:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Joyce Barry
Telephone: (704) 374-4151
Telecopy: (704) 715-1997
Lending Office:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Joyce Barry
Telephone: (704) 374-4151
Telecopy: (704) 715-1997
(signatures continued)
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CIBC INC., as a Lender
By: /s/ Gerald Girardi
------------------------------------------
Commitment:
$15,000,000 Title: Executive Director, CIBC World Markets
----------------------------------------
Corp., as agent
----------------------------------------
Instructions for wire transfers:
The Bank of New York
ABA Routing No.: 021-000-018
Account Number: 890-0331-046
Account Name: CIBC New York
Attention: Atlanta
Re: Physicians' Specialty Corporation with
payment details
Address for notices:
CIBC Inc.
425 Lexington Avenue, 8th Floor
New York, New York 10017
Attention: Gerald Girardi, Executive Director
Telephone: (212) 856-3649
Telecopy: (212) 856-3761
Lending Office:
CIBC Inc.
2727 Paces Ferry Road, Suite 1200
Paces West, Building 2
Atlanta, Georgia 30339
Attention: Tonya Hunter
Telecopy: (770) 319-4950
(signatures continued)
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BANK OF AMERICA, N.A.
By: /s/ Walter Bland
--------------------------------------------
Commitment:
$15,000,000 Title: Senior Vice President
-----------------------------------------
Instructions for wire transfers:
Bank of America, N.A.
ABA Routing No. 061000052
Atlanta, Georgia
Account Number: 003251640613
Account Name: Bank of America
Attention: Janet Perez; (404) 607-5859
Re: Physicians' Specialty Corp.
Address for notices:
Bank of America, N.A.
600 Peachtree Street, 19th Floor
Atlanta, Georgia 30308
Attention: Walter Bland
Telephone: (404) 607-5861
Telecopy: (404) 607-6343
E-Mail: [email protected]
Lending Office:
Bank of America, N.A.
600 Peachtree Street, 19th Floor
Atlanta, Georgia 30308
Attention: Janet Perez
Telephone: (404) 607-5859
Telecopy: (404) 607-6338
E-Mail: [email protected]
(signatures continued)
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U.S. BANK NATIONAL ASSOCIATION
By: /s/ Forrest F. Vollrath
---------------------------------------
Commitment:
$10,000,000 Title: Vice President
------------------------------------
Instructions for wire transfers:
U.S. Bank National Association
ABA Routing No. 091000022
Minneapolis, Minnesota
Account Number: 300-0130-1540830
Account Name: U.S. Bank--Asset Based Lending
Division
Attention: Jean Matlock
Re: Physicians' Specialty settlement, interest, fees
Address for notices:
U.S. Bank National Association
Mailstation: MPFP0512
601 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Forrest Vollrath
Telephone: (612) 973-0630
Telecopy: (612) 973-0829
E-Mail: [email protected]
Lending Office:
U.S. Bank National Association
Mailstation: MPFP0512
601 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Jean Matlock
Telephone: (612) 973-0601
Telecopy: (612) 973-0829
E-Mail: [email protected]
S-5
