SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 31, 1996
COASTAL PHYSICIAN GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-13460 56-1379244
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
2828 CROASDAILE DRIVE, DURHAM, NC 27705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (919)383-0355
N/A
(Former name or former address, if changed since last report)
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ITEM 2. - RESTRUCTURING OF CREDIT AGREEMENTS
On May 29, 1996, Coastal Physician Group, Inc. (the "Company")
entered into an amendment to its existing senior credit facility
that reduced the borrowing availability thereunder to the
outstanding balance of approximately $83 million (the
"Restructured Facility"), and also entered into an agreement
establishing a new facility (the "Overline Facility") that will
provide up to $40 million of additional borrowing availability.
These agreements became effective May 31, 1996. The Restructured
Facility and the Overline Facility (collectively, the
"Facilities"), require total principal payments of $40 million by
January 2, 1997, at which time the borrowing availability under
the Overline Facility will be reduced to $10 million. The
remaining outstanding balances under the Facilities will be due
on July 1, 1997. Interest on the Restructured Facility and the
Overline Facility will accrue at the agent bank's prime rate plus
1.5% and 2.0%, respectively, and will be paid monthly in arrears.
The Overline Facility prohibits borrowings for purposes other
than working capital requirements, requires compliance with
specific financial covenants and imposes limitations on certain
investments, dispositions of assets, additional indebtedness and
capital expenditures. Advances under the Facilities are secured
by substantially all of the Company's assets, including all of
its trade accounts receivable and contract rights, and guaranties
from, and a pledge of the common stock of, substantially all of
the Company's subsidiaries. The guaranties are further secured
by substantially all of the assets of the guarantor subsidiaries.
The Company also granted common stock purchase warrants to the
lenders entitling them to purchase at par value (over a vesting
period) up to 1,254,509 shares (subject to adjustment for certain
dilutive events) of the Company's common stock. Warrants to
purchase 125,451 shares are fully vested. The remaining warrants
do not vest and will be canceled if the Company repays specified
principal amounts by certain dates.
ITEM 7.(c) - EXHIBITS
Exhibit 2.1 Third Amendment and Limited Waiver to Credit
Agreement, dated as of May 29, 1996
Exhibit 2.2 Secured Overline Credit Agreement dated as of
May 29, 1996
Exhibit 2.3 Form of Warrant to Purchase Common Stock at
$.01 Per Share
Exhibit 2.4 Security Agreement, dated as of May 29, 1996
Exhibit 2.5 Amended and Restated Pledge Agreement, dated
as of May 29, 1996
Exhibit 2.6 Form of Amended and Restated Subsidiaries
Pledge Agreement, dated as of May 29, 1996
Exhibit 2.7 Form of Amended and Restated Guaranty
Agreement, dated as of May 29, 1996
Exhibit 2.8 Form of Subsidiaries Security Agreement,
dated as of May 29, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
COASTAL PHYSICIAN GROUP, INC.
(registrant)
Date: June 17, 1996 By: /S/ STEPHEN D. CORMAN
Stephen D. Corman
Director, Executive Vice
President and Chief
Financial Officer
Date: June 17, 1996 By: /S/ TIMOTHY W. TROST
Timothy W. Trost
Vice President, Corporate
Controller and Chief
Accounting Officer
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THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
THIS THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT,
dated as of May 29, 1996 (this "Amendment"), is made among COASTAL PHYSICIAN
GROUP, INC. (formerly known as Coastal Healthcare Group, Inc., hereinafter the
"Borrower"), each of the Subsidiaries (as defined in the Credit Agreement
referred to below) of the Borrower, the Lenders (as hereinafter defined) that
have executed this Amendment, and FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as agent for the Lenders (in such capacity, the "Agent").
R E C I T A L S
A. The Borrower, certain banks and other financial institutions (the
"Lenders") and the Agent are parties to a Credit Agreement, dated as of July 29,
1994, as amended by a First Amendment to Credit Agreement, dated as of April 12,
1995 and a Second Amendment to Credit Agreement (the "Second Amendment") dated
as of August 10, 1995 (as so amended, and as further amended, modified, restated
or supplemented from time to time, the "Credit Agreement") providing for the
availability of certain credit facilities to the Borrower upon the terms and
conditions set forth therein. Capitalized terms used herein without definition
shall have the meanings given to them in the Credit Agreement.
B. The Borrower and the Agent, on behalf of Required Lenders, have
executed waiver letters dated as of February 6, 1996, February 29, 1996, April
1, 1996, April 16, 1996, April 23, 1996, April 30, 1996, May 6, 1996, May 7,
1996 and May 8, 1996 (the "Waiver"), respectively pursuant to which (i) the
Agent, on behalf of the Required Lenders, waived until May 24, 1996 Events of
Default existing as a result of defaults under, inter alia, Sections 6.19, 6.20
and 6.26 of the Credit Agreement and (ii) the Borrower agreed that no additional
Borrowings would be permitted under the Revolving Credit Facility without the
consent of the Required Lenders, so that absent the execution and delivery of
this Amendment the Lenders have no obligation to lend under the Credit
Agreement.
C. Upon the expiration of the Waiver, the Lenders may, in accordance
with the provisions of the Credit Agreement, terminate the Commitments and
accelerate the obligations of the Borrower and exercise remedies under the
Credit Agreement and the Pledge Agreements.
D. The Borrower and its Subsidiaries have requested that Lenders waive
the existing Events of Default and amend the Credit Agreement in order to, among
other things, (i) terminate the Revolving Credit Commitments, (ii) amend and
reduce the aggregate amount of the Reducing
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Revolving Credit Commitments and permit borrowings thereunder for certain
limited purposes, (iii) modify the required Commitment reduction schedule for
the Reducing Revolving Credit Facility, (iv) amend the permitted uses for the
proceeds of the Reducing Revolving Credit Loans and (v) permit Letters of Credit
to be issued under the Reducing Revolving Credit Facility.
E. The Lenders desire to amend the Reducing Revolving Credit
Commitments to provide that each Lender shall have the applicable Reducing
Revolving Credit Commitment set forth on Annex A hereto.
F. The Borrower has, from time to time in the past, advanced funds
(including certain proceeds of the Loans) to its Subsidiaries as part of the
cash management practices of the Borrower and its Subsidiaries, and intends,
from time to time in the future, to advance to its Subsidiaries the proceeds of
any Loans and other extensions of credit made after the effective date of this
Amendment. Thus, the Subsidiaries have benefitted, and will continue to benefit,
substantially, both directly and indirectly, from loans and other extensions of
credit made and to be made under the Credit Agreement.
G. Concurrently herewith, the Borrower, the Lenders and First Union, as
agent for such Lenders are entering into that certain Secured Overline Credit
Agreement dated as of the date of this Amendment (as amended, restated,
supplemented or otherwise modified from time to time, the "Overline Credit
Agreement").
H. It is a condition precedent to the effectiveness of this Amendment
that the Borrower and its Subsidiaries (other than the HMOs) grant security
interests in all of their property, now existing and hereafter created or
acquired, in order to secure their obligations under the Credit Agreement, the
Overline Credit Agreement and the Guaranty Agreement, as the case may be.
I. Subject to the terms and conditions contained herein, Required
Lenders have agreed to grant the waivers and amend the Credit Agreement, so as
to permit certain borrowings, as provided herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
AMENDMENTS
1.1 Amendments to Article I: Definitions.
A. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following definitions in proper alphabetical order:
"`AAPB' means the aggregate consolidated liabilities required
to be reported by the Borrower and its Subsidiaries in accordance with Generally
Accepted Accounting Principles presented in a manner consistent with the amounts
reported as Total Liabilities on the Borrower's public financial statements less
any Excluded Payables, in each case determined as of the last day of each month
and reported to the Agent pursuant to subsection 5.1(o) within 30 days of the
respective month end.
"`ARTB' means the aggregate consolidated receivables of the
Borrower and its Subsidiaries presented in a manner consistent with the amounts
reported as Trade Accounts Receivable, net, on the Borrower's public financial
statements less any receivables maintained by the HMOs included in such balance.
The ARTB shall include all appropriate reclassifications and allowances for
contractual adjustments and uncollectibles recorded in accordance with the
Borrower's written accounts receivable reserve policy referred to in paragraph S
of Article V of the Third Amendment. The Borrower's consolidated ARTB shall be
determined in accordance with Generally Accepted Accounting Principles and
consistent with Borrower's current accounting practices subject to Borrower's
account receivable reserve policy and based on the balance on the last day of
each calendar month and reported to the Agent within 30 days of each month end
for purposes of measuring compliance with the provisions of Section 6.20 in the
following month; provided that if during any month an ARTB is established for
the month just ended and delivered to the Agent pursuant to paragraph 5.1(r) of
the reporting covenants, then the Borrower shall utilize the more recent ARTB
for purposes of measuring compliance with the provisions of Section 6.20;
provided further that if during any month, the Borrower shall become aware of
any facts or circumstances, including those arising out of the Borrower's
compliance with the requirements of Section 3.4B of the Third Amendment, which
in the exercise of Borrower's good faith business judgment make the previously
reported ARTB inappropriate, then Borrower shall promptly revise the ARTB in a
manner appropriate to such facts or circumstances, report the same to the Agent
and utilize the revised ARTB in lieu of the previously reported ARTB.
"`Borrower Security Agreement' shall mean that certain
Security Agreement dated as of the date of the Third Amendment by and between
the Agent and the Borrower, together with any amendments, modifications and
supplements thereto and restatements thereof, in whole or in part."
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"`Collateral Documents' means the Pledge Agreements, the
Security Agreements, and all other instruments or documents now or hereafter
granting Liens on property of the Borrower or any of its Subsidiaries to the
Agent, for the benefit of the Agent and the Lenders."
"`Consolidated Cash Flow' shall mean the excess or shortfall
of consolidated cash receipts less consolidated cash disbursements of the
Borrower and its Subsidiaries presented in a manner consistent with the PW
Report, but before payment/receipt of:
(i) interest expense (including without limitation LIBOR
Loan contract breakage fees);
(ii) principal payments under the Credit Agreement and
the Overline Credit Agreement;
(iii) proceeds from asset sales (whether such proceeds are
retained by the Borrower or applied to prepay Loans
or Overline Loans);
(iv) income tax refunds;
(v) if the New York City contract with Better Health
Plan, Inc. commences before October 30, 1996,
capital expenditures not in excess of $750,000
required to meet the planned growth of such HMO;
(vi) disbursements for medical malpractice liabilities
subject to future reimbursements not in excess of
$2,000,000 from March 1, 1996 through February 28,
1997 and $1,500,000 from March 1, 1997 through the
Reducing Revolving Credit Facility Termination Date;
provided that all amounts excluded pursuant to this
clause shall be evidenced by appropriate
documentation reasonably satisfactory to the Agent
and the Lenders' financial advisors; and
(vii) cash disbursements to meet changes required by state
law or regulation with respect to cash or net worth
requirements applicable to all health maintenance
organizations in the applicable regulatory
jurisdiction, in excess of amounts forecasted in the
PW Report but in no event more than $3,000,000;
provided that consolidated cash receipts and consolidated cash disbursements
shall exclude the receipts and disbursements of the HMOs but shall include as
receipts monies legally transmitted in any form or manner from such entities to
the Borrower or any of its Subsidiaries and include as disbursements monies
transmitted in any form or manner by the Borrower or any of its Subsidiaries to
such entities, except as provided in clause (vii) above.
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"`CPS' means Coastal Physician Services, Inc., a North
Carolina corporation."
"`CPS Cash Flow' means the excess or shortfall of CPS cash
receipts less CPS cash disbursements from operations of CPS, presented in a
manner consistent with the PW Report, and before payment/receipt of:
(i) interest expense;
(ii) proceeds from asset sales;
(iii) income tax refunds; and
(iv) disbursements for medical malpractice liabilities
subject to future reimbursements not in excess of
$2,000,000 for the period from March 1, 1996 through
February 28, 1997 and $1,500,000 from March 1, 1997
through the Reducing Revolving Credit Facility
Termination Date; provided that all amounts excluded
pursuant to this clause shall be evidenced by
appropriate documentation reasonably satisfactory to
the Agent and the Lenders' financial advisors.
"`Excluded Payables' means the sum of
(i) payables of the HMO's;
(ii) Debt to Affiliates (as defined in the Credit
Agreement);
(iii) obligations and liabilities to Morgan Stanley or
other investment bankers and brokers directly related
to sales of assets and to be paid out of such
proceeds (net of any retainers paid to Morgan Stanley
or other investment bankers);
(iv) deferred income taxes;
(v) outstanding stock incentives;
(vi) deferred compensation;
(vii) any liabilities or claims (up to a maximum of
$1,500,000) created as a result of medical
malpractice or other insurance claims wherein the
appropriate insurer or reinsurer is financially
unable to reimburse the Borrower;
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(viii) any obligations incurred subsequent to the Third
Amendment Effective Date which are offset by a
directly proportionate related asset that will be
amortized for a period longer than one year
(including purchase money debts secured by liens as
permitted in this Agreement to the extent of the
amount of the related asset);
(ix) any liability of the Borrower related to
disbursements for medical malpractice liabilities
that are subject to future reimbursements; and
(x) Overline Obligations under and as defined in the
Overline Credit Agreement and all Credit
Obligations."
"`HMOs' means collectively Better Health Plan, Inc., Health
Plan Southeast, Inc., and Doctors Health Plan, Inc.
"`Officer's Certificate' means, with respect to any
corporation, a certificate executed by the President, Chief Executive Officer,
Chief Financial Officer or Treasurer of such corporation."
"`Overline Credit Agreement' shall mean that certain Secured
Overline Credit Agreement dated as of the date of the Third Amendment among the
Borrower, the lenders party thereto and First Union, as agent, as such agreement
may be amended, restated, supplemented or otherwise modified from time to time."
"`Overline Lenders' means the lenders which are party from
time to time to the Overline Credit Agreement."
"`Overline Loans' has the meaning assigned to that term in
the Overline Credit Agreement."
"`Overline Maturity Date' has the meaning assigned to that
term in the Overline Credit Agreement."
"`Plan Manager' has the meaning set forth in the PW
Engagement Letter.
"`PW Engagement Letter' means that certain engagement letter
agreement dated as of April 4, 1996 between Borrower and Price Waterhouse LLP."
"`PW Report' means the report delivered to the Lenders by
Price Waterhouse & Co. at the bank meeting on March 18, 1996, as amended on
March 25, 1996 and supplemented on April 15, 1996."
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"`Security Agreements' shall mean the Subsidiaries Security
Agreement and the Borrower Security Agreement."
"`Separate Indebtedness' has the meaning assigned to that
term in Section 2.1(b)(i)."
"`Subsidiaries Security Agreement' shall mean that certain
Subsidiaries Security Agreement dated as of the date of the Third Amendment by
and among the Agent and the Subsidiaries of the Borrower party thereto, together
with any amendments, modifications and supplements thereto and restatements
thereof, in whole or in part."
"`Third Amendment' shall mean that certain Third Amendment to
the Credit Agreement dated as of May 29, 1996 by and among the Borrower, the
Agent and Lenders."
"`Third Amendment Effective Date' shall mean the date Articles
I, II, III and IV of the Third Amendment became effective in accordance with the
terms of the Third Amendment."
B. The respective definitions of "Applicable Margin," "Borrower Pledge
Agreement," "Capital Expenditures," "Collateral," "Guaranty Agreement,"
"Reducing Revolving Credit Facility Termination Date," "Subsidiaries Pledge
Agreement" and "Unutilized Reducing Revolving Credit Commitment" contained in
Section 1.1 of the Credit Agreement are hereby amended and restated in their
entirety as follows:
"`Applicable Margin' shall mean, at any time with respect to
any Loan 1.5% per annum.
"`Borrower Pledge Agreement' shall mean the Amended and
Restated Pledge Agreement dated as of the date of the Third Amendment
made by the Borrower in favor of the Agent, together with any
amendments, modifications and supplements thereto and restatements
thereof, in whole or in part."
"`Capital Expenditures' shall mean, with respect to the
Borrower and its Subsidiaries (other than the HMOs) for any fiscal
year, any expenditures of the Borrower and such Subsidiaries during
such fiscal year, that are, in accordance with Generally Accepted
Accounting Principles, required to be included on the consolidated
balance sheet of the Borrower and its Restricted Subsidiaries,
excluding:
(i) expenditures consisting of the purchase price
relating to the two existing deferred purchase and sale
agreements (namely that certain Agreement dated January 14,
1994 as amended by amendment dated April 25, 1994 relating to
the Southland property located at 3104 Croasdaile Drive,
Durham, North Carolina and also that certain Agreement dated
March 1, 1989 as amended by
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Agreement dated September 28, 1990 relating to the Medbill
property located at 3114 Croasdaile Drive, Durham, North
Carolina) where the Borrower or a Subsidiary is or will become
obligated to purchase the applicable real estate and
improvements;
(ii) any and all operating cash flow expenditures
which have been included in the Borrower's adjusted cash flow
projections provided to the Lenders on April 15, 1996 as a
supplement to part of the PW Report which items were not
characterized as capital expenditures but which later will be
required to be capitalized in accordance with GAAP; provided
that all amounts excluded pursuant to this clause shall be
evidenced by appropriate documentation reasonably satisfactory
to the Agent and the Lenders' financial advisors.
"`Collateral' means all of the property made subject to a Lien
in favor of the Agent pursuant to the Collateral Documents."
"`Guaranty Agreement' shall mean the Amended and Restated
Guaranty Agreement dated as of the date of the Third Amendment made by
the Subsidiaries of the Borrower party thereto, together with any
amendments, modifications and supplements thereto and restatements
thereof, in whole or in part."
"`Reducing Revolving Credit Facility Termination Date' shall
mean, subject to the provisions of Section 3.3 of the Third Amendment,
July 1, 1997; provided that if the Overline Lenders vote to extend the
Overline Maturity Date beyond July 1, 1997, the Reducing Revolving
Credit Facility Termination Date shall be extended to such later date,
whether or not the Overline Commitments under and as defined in the
Overline Credit Agreement have been terminated and the loans thereunder
prepaid."
"`Subsidiaries Pledge Agreement' shall mean the Amended and
Restated Subsidiaries Pledge Agreement dated as of the date of the
Third Amendment made by certain Subsidiaries of the Borrower in favor
of the Agent, together with any amendments, modifications and
supplements thereto and restatements thereof, in whole or in part."
"`Unutilized Reducing Revolving Credit Commitment' shall mean,
with respect to any Lender at any time, such Lender's Reducing
Revolving Credit Commitment at such time less the sum of (i) the
aggregate principal amount of all Reducing Revolving Loans made by such
Lender that are outstanding at such time and (ii) such Lender's Pro
Rata Share of all Letter of Credit Outstandings at such time."
C. The definition of "Cash Flow" contained in Section 1.1 of the
Credit Agreement is hereby amended by (i) inserting the word "Consolidated"
immediately before the phrase
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"Cash Flow" in such definition and (ii) inserting the amended definition in
proper alphabetical order in such Section.
D. The definition of "Credit Documents" contained in Section 1.1 of the
Credit Agreement is hereby amended by inserting the phrase ", the other
Collateral Documents, the Overline Credit Agreement" immediately after the
phrase "the Pledge Agreements" contained in such definition.
1.2 Amendments to Article II: Amount and Terms of the Loans; Letters of
Credit
A. Section 2.1(b) of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"(b)(i) Each Lender having a Reducing Revolving Credit
Commitment hereby severally agrees to maintain as loans under its
Reducing Revolving Credit Commitment ("Reducing Revolving Loans") its
Pro Rata Share of all loans outstanding under this Agreement on the
Third Amendment Effective Date; provided that for purposes of this
Agreement, loans owed by Borrower to First Union in an aggregate
outstanding principal amount of $6,957,117 (collectively, the "Separate
Indebtedness") and evidenced by (y) that certain promissory note dated
as of March 31, 1995 in the original principal amount of $6,600,000
executed by the Borrower in favor of First Union and (z) that certain
promissory note dated as of February 14, 1995 in the original principal
amount of $1,299,974 executed by the Borrower in favor of First Union
shall, concurrently with the effectiveness of the Third Amendment, be
deemed to be Reducing Revolving Loans outstanding under this Agreement.
Each Lender's Pro Rata Share and Reducing Revolving Credit Commitment
as of the Third Amendment Effective Date is set forth on Annex A to the
Third Amendment.
(ii) In addition to maintaining loans outstanding on the Third
Amendment Effective Date, on January 2, 1997 each Lender shall make a
Reducing Revolving Loan in an aggregate amount equal to the aggregate
amount of prepayments received from Net Proceeds in respect of such
Lender's Reducing Revolving Credit Commitment during the period from
the Third Amendment Effective Date to and including January 2, 1997;
provided that the proceeds of such Reducing Revolving Loans shall be
used only to make the payments of Overline Loans required to be made on
January 2, 1997 pursuant to the Overline Credit Agreement."
B. Section 2.1(c) of the Credit Agreement is hereby amended by
adding the following at the end thereof:
"; provided further that on and after the Third Amendment
Effective Date, all Loans shall be Base Rate Loans."
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C. Section 2.4(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"(b) Subject to the provisions of Section 2.1(b)(ii), on the
date of any payment of a Reducing Revolving Loan, or the cancellation,
expiration, other termination or reduction in amount of any Letter of
Credit, the Total Reducing Revolving Credit Commitment shall
automatically be permanently reduced by the aggregate amount of such
payment, or the amount of the Letter of Credit so cancelled, expired or
terminated, or the amount of the reduction of any such Letter of
Credit, as the case may be; provided that any outstanding Letter of
Credit may be renewed in favor of the existing beneficiary in an amount
not to exceed the amount of such Letter of Credit on the Third
Amendment Effective Date."
D. Section 2.4 of the Credit Agreement is hereby amended by
adding the following subsection at the end of such Section:
"(g) The Borrower shall make prepayments from net cash
proceeds of Asset Sales (as defined in the Overline Agreement) received
by the Borrower or any of its Subsidiaries and from the issuance of
debt or equity securities by the Borrower or any of its Subsidiaries,
and the Reducing Revolving Credit Commitments shall be automatically
reduced, on the dates and to the extent provided in subsections
2.6B(iii) and (iv) of the Overline Credit Agreement."
E. Section 2.5(b) of the Credit Agreement is hereby amended by (i)
inserting the phrase "the sum of (i)" immediately after the phrase "In the event
that" in such Section and (ii) inserting the phrase "plus (ii) the aggregate
Letter of Credit Outstandings as of such date" immediately after the phrase
"Section 2.4(b)," in such Section.
F. Section 2.5(d) of the Credit Agreement is hereby amended by
deleting the date "September 30, 2001" and substituting therefor the "Reducing
Revolving Credit Facility Termination Date."
G. Section 2.5 of the Credit Agreement is hereby amended by
adding the following subsection at the end thereof:
"(f) The Borrower shall make all prepayments of the Reducing
Revolving Loans required to be made pursuant to subsection 2.6(B) of
the Overline Credit Agreement (as in effect on the date hereof or as
may be amended, restated, supplemented or otherwise modified from time
to time with the consent of Required Lenders) and such provisions shall
be incorporated herein as if set forth herein in their entirety."
H. Section 2.6(a) of the Credit Agreement is hereby amended by
(i) inserting the phrase "the earlier of the Third Amendment Effective Date
and the date on which" immediately
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before the phrase "such principal amount" in such subsection and adding the
following at the end of such subsection:
"From and after the Third Amendment Effective Date, the Borrower will
pay interest in respect of the unpaid principal amount of each Loan,
until such principal amount shall be paid in full, at the Adjusted Base
Rate, as in effect from time to time during such period."
I. Section 2.7 of the Credit Agreement is hereby amended by:
(i) deleting the phrase "Revolving Credit Commitment"
from paragraph (d) of such Section and substituting therefor the
phrase "Reducing Revolving Credit Commitment;"
(ii) deleting the phrase "Revolving Credit Facility
Termination Date" from paragraph (d) of such Section and substituting
therefor the phrase "Reducing Revolving Credit Facility Termination
Date"; and
(iii) deleting the phrase "Revolving Credit Facility
Termination Date" from paragraph (e) of such Section and substituting
therefor the phrase "Reducing Revolving Credit Facility Termination
Date."
J. Section 2.14(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"(b) The proceeds of the Reducing Revolving Loans shall be
used solely for working capital and general corporate purposes and in
accordance with the terms and provisions of this Agreement, including
without limitation the payment of outstanding Revolving Loans."
K. Section 2.17 of the Credit Agreement is hereby amended by:
(i) deleting the phrase "Revolving Credit Facility Termination
Date" from each place such phrase occurs in such Section and
substituting therefor the phrase "Reducing Revolving Credit Facility
Termination Date;"
(ii) deleting the phrase "Revolving Loans" from each place
such phrase occurs in such Section and substituting therefor the phrase
"Reducing Revolving Loans;"
(iii) deleting the phrase "Total Revolving Credit Commitment"
from each place such phrase occurs in such Section and substituting
therefor the phrase "Total Reducing Revolving Credit Commitment;"
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(iv) deleting the phrase "Revolving Credit Facility Expiry
Date" from each place such phrase occurs in such Section and
substituting therefor the phrase "Reducing Revolving Credit Facility
Termination Date;"
(v) deleting the phrase "Revolving Credit Percentage" from
each place such phrase occurs in such Section and substituting therefor
the phrase "Reducing Revolving Credit Percentage;" and
(vi) deleting the phrase "Revolving Credit Commitments" from
each place such phrase occurs in such Section and substituting therefor
the phrase "Reducing Revolving Credit Commitments."
1.3 Amendments to Article IV: Representations and Warranties.
A. Section 4.17 of the Credit Agreement is hereby amended by
adding the following at the end thereof:
"Upon the effectiveness of the Third Amendment, the provisions of each
Security Agreement will be effective to create in favor of the Agent a
legal, valid and enforceable security interest in all of the Collateral
described therein. The Security Agreements, together with the filing,
with regard to each Credit Party, of financing statements naming each
such Credit Party as debtor, the Agent as secured party, and describing
the Collateral, in the jurisdictions set forth beneath such Credit
Party's name on Annex A to the applicable Security Agreement, create,
and at all times shall constitute, valid and perfected security
interests in and Liens upon the Collateral owned by the Credit Parties
in favor of the Agent, superior and prior to the rights of all other
Persons therein (except for Permitted Liens), and no other or
additional filings, registrations, recordings or actions are or shall
be necessary or appropriate in order to maintain the perfection and
priority of such Lien and security interest, other than continuation
statements required under the applicable Uniform Commercial Code."
B. Article IV of the Credit Agreement is hereby amended by adding
the following Section 4.23 at the end thereof:
"4.23 Independent Business. The Borrower and each of its
Subsidiaries is a separate and distinct legal entity. Each of the
Borrower and its Subsidiaries (i) maintains or causes to be maintained
its own books and records, including without limitation records of its
intercompany accounts, (ii) operates its own business, separate from
the business of any other Person, and (iii) deals with its creditors as
an independent entity."
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1.4 Amendments to Article V: Affirmative Covenants.
A. Section 5.1 of the Credit Agreement is hereby amended by (i)
deleting the number "110" from clause (b) thereof and substituting the number
"100" therefor, (ii) amending clause "(k)" thereof to be clause "(u)" and (iii)
inserting the following clauses immediately after clause (j) contained in such
Section:
"(k) As soon as practicable and in any event within seven
business days after each Friday, an unaudited statement of consolidated
cash receipts and disbursements of the Borrower and its Subsidiaries in
a manner consistent with the PW Report as updated on April 15, 1996,
and distributed to the Agent, comparing the actual consolidated cash
flows for the week to those projected in the PW Report, as updated, and
explanations for variations in total inflows and/or total outflows in
excess of 10%. The first report shall be delivered for the week ending
May 31, 1996.
(l) As soon as practicable and in any event within seven
business days after each Friday, an unaudited statement of consolidated
cash receipts and disbursements of CPS, prepared by the Borrower in a
manner consistent with the PW Report as updated on April 15, 1996, and
distributed to the Agent, comparing the actual consolidated cash flows
for the week to those projected in the PW Report, as updated, and
explanations for variations in total inflows and/or total outflows in
excess of 10%, with the first report to be for the week ending Friday,
May 10, 1996, and delivered to the Agent on or before May 24, 1996.
(m) As soon as practicable and in any event within seven
business days after the end of the month of May, 1996 and after the end
of each month thereafter, (i) unaudited projections of consolidated
cash receipts and disbursements for the Borrower and its Subsidiaries
and (ii) unaudited projections of cash receipts and disbursements for
CPS and its Subsidiaries, in each case reflecting the latest trends, as
adjusted for actual activity as reported in (k) and (l) above, for the
13 weeks following such week with comparisons to the covenants
regarding Consolidated Cash Flow contained in Sections 6.18 and 6.19
applicable to the period.
(n) As soon as practicable, and in any event within 50 days
after the end of each calendar quarter, unaudited consolidating balance
sheets and income statements including the Borrower's separate business
units defined as CPS, Clinics, CGS, HBR HMOs and Group in the PW Report
each without subsidiary detail, consistent with the Borrower's
historical accounting practices.
(o) A Compliance Certificate signed by the Borrower's Chief
Financial Officer, Chief Accounting Officer or Treasurer with respect
to the status of compliance as to all covenants described in Sections
6.18 and 6.19 below within seven business days of the end of each
month, for covenants described in Section 6.17 within thirty days after
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the end of each quarter, and for covenants described in Sections 6.20
and 6.21, within 30 days after the end of each month.
(p) By September 30, 1996, a full and complete confidential
three year business plan, setting forth the business strategies
underlying each major individual business unit, reflecting the
anticipated divestiture of any business units or portions thereof, and
including annual balance sheet projections and monthly financial
statement projections of income and cash flow during the forecast
period commencing October 1, 1996 through December 31, 1997 with annual
projections thereafter.
(q) As soon as practicable but in no event later than 30 days
from the end of each month, a monthly schedule of intercompany balances
for each legal entity as of the respective month end, beginning with
the month ending May 1996.
(r) As soon as practicable but in no event later than 30 days
from the end of each month, monthly aged ARTB as of the prior month
end.
(s) As soon as practicable but no less than seven days prior
to the Borrower or any of its Subsidiaries closing a sale of
assets/business units for net proceeds above $5,000,000, Borrower will
provide pro-forma financial projections to Agent reflecting the impact
of such sale on Borrower's and the applicable Subsidiary's balance
sheet, income statement and cash flows through the remaining term of
the Credit Agreement or through February 28, 1997 if such sale occurs
prior to setting of covenants for the period including and beyond March
1, 1997.
(t) As soon as practicable but in no event later than 30 days
from the end of each month HMO monthly operating statistics including
(i) premiums per member by Commercial, Medicaid and Medicare product
line; (ii) enrollment by Commercial, Medicaid and Medicare product line
on a monthly and three-month rolling basis; (iii) medical loss ratio by
Commercial, Medicaid and Medicare product line; (iv) administrative
expense ratios; (v) cash to claims ratio (Cash plus
receivables)/(unpaid claims plus payables); and (vi) claims payable
medical expenses for the preceding 12 months.
B. Section 5.11 of the Credit Agreement is hereby amended by (i)
inserting the phrase "and the Subsidiaries Security Agreement" after the phrase
"Guaranty Agreement" in clause (i) thereof and (ii) adding the following at the
end of clause (i) thereof:
"together with all financing statements and other documents,
certificates and instruments necessary to perfect the security interest
of the Agent in the Collateral of such new Subsidiary pursuant to the
provisions of the Subsidiaries Security Agreement, all in form and
substance satisfactory to the Agent,"
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C. Section 5.12 of the Credit Agreement is hereby amended by
inserting the phrase "and the Security Agreements" after the phrase "the
Pledge Agreements" therein.
1.5 Amendments to Article VI: Negative Covenants.
A. Section 6.2(a) of the Credit Agreement is hereby amended by (i)
deleting the phrase "is evidenced by one or more promissory notes pledged to the
Agent pursuant to the Pledge Agreements," from clause (iv) thereof and
substituting therefor the phrase "shall not be evidenced by any promissory notes
unless each such promissory note is pledged and delivered to the Agent
concurrently with execution thereof pursuant to the Pledge Agreements" and (ii)
amending and restating clause (viii) thereof as the following:
"(viii) Debt other than Debt referred to in clauses (i) -
(vii) above, outstanding on the Third Amendment Effective Date in an
aggregate principal amount as set forth on Schedule 6.2 not to exceed
$16,964,991; provided that there shall be no refinancing of any such
Debt or, upon payment of any such Debt, reborrowings thereof."
B. Section 6.6 of the Credit Agreement is hereby amended by (i)
deleting clause (ix) therefrom and substituting "INTENTIONALLY OMITTED" therefor
and (ii) deleting the phrase "not to exceed $5,000,000 during any fiscal year or
$10,000,000 at any time outstanding" from clause (xi) thereof and substituting
therefor the phrase "not to exceed $2,500,000 at any time outstanding."
C. Section 6.17 of the Credit Agreement is hereby amended by deleting
the phrase "$25,000,000 during any fiscal year beginning with the fiscal year
ending December 31, 1994" and substituting therefor the following:
"(i) $3,300,000 during the period from March 1, 1996 through
and including February 28, 1997, and (ii) $2,000,000 in any three month
period ending during the period from May 31, 1996 through February 28,
1997."
D. Article VI of the Credit Agreement is hereby amended by deleting
subsections 6.18, 6.19, 6.20, 6.21, 6.22, 6.23, 6.24 and 6.25 therefrom and
substituting the following therefor:
"6.18 Minimum Consolidated Cash Flow. The Borrower will not
permit Consolidated Cash Flow for any consecutive three-month period
ending on the dates set forth below to be worse than the corresponding
amount set forth below (subject to the provisions of subsection 6.22):
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Minimum Consolidated
Date Cash Flow
- ---- ---------
May 31, 1996 ($18,700,000)
June 30, 1996 ($27,300,000)
July 31, 1996 ($24,300,000)
August 31, 1996 ($13,700,000)
September 30, 1996 ($ 9,600,000)
October 30, 1996 ($ 6,800,000)
November 30, 1996 ($ 6,200,000)
December 31, 1996 ($ 3,400,000)
January 31, 1997 ($ 5,100,000)
February 28, 1997 ($ 3,900,000)
6.19 Minimum CPS Cash Flow. The Borrower will not permit CPS
Cash Flow for any consecutive three-month period ending on the dates
set forth below to be worse than the corresponding amount set forth
below (subject to the provisions of subsection 6.22):
Minimum CPS
Date Cash Flow
- ---- ---------
May 31, 1996 ($6,000,000)
June 30, 1996 ($8,800,000)
July 31, 1996 ($8,500,000)
August 31, 1996 ($5,400,000)
September 30, 1996 ($3,700,000)
October 30, 1996 ($1,900,000)
November 30, 1996 ($2,900,000)
December 31, 1996 $ 100,000
January 31, 1997 ($ 200,000)
February 28, 1997 ($1,900,000)
6.20 Minimum Accounts Receivable Balances.
(a) The Borrower will maintain at all times ARTB in
an amount equal to or greater than (i) with respect to the
period from the Third Amendment Effective Date to January 2,
1997, 110% and (ii) with respect to the period on and after
January 2, 1997, 115%, of the aggregate outstanding principal
amount of the Reducing Revolving Loans and the Overline Loans.
(b) If the Borrower fails to comply with the
requirements of paragraph (a) above in any month for any seven
consecutive day period and provided that the ARTB is not on
each such day less than 105% of the sum of the aggregate
outstanding principal amount of the Reducing Revolving Loans
plus the Total Utilization of the Overline Commitments (as
defined in the Overline Credit Agreement) a non-monetary
default shall have occurred and Borrower shall have three
consecutive days to cure the default or obtain a waiver
thereof in
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compliance with the provisions of this Agreement and the
Overline Credit Agreement; provided that if the ARTB is less
than 105% of the sum of the aggregate outstanding principal
amount of the Reducing Revolving Loans plus the Total
Utilization of the Overline Commitments on any day, then
Borrower shall have three consecutive days (excluding bank
holidays) to cure or obtain a waiver of such Default;
provided further, that notwithstanding anything to the contrary
contained in Section 9.8 of this Agreement or Section 10.8 of the
Overline Credit Agreement, waiver of this covenant shall require a vote
of Lenders holding 75% of the Reducing Revolving Credit Commitments and
Overline Lenders holding 75% of the Overline Commitments.
6.21 Maximum Operating Liabilities. The Borrower will not
permit the AAPB as of any date set forth below to be greater than the
corresponding amount set forth below (subject to the provisions of
subsection 6.22):
Date AAPB
- ---- ----
March 31,1996 $93,000,000
April 30, 1996 $92,000,000
May 31, 1996 $87,000,000
June 30, 1996 $89,000,000
July 31, 1996 $91,000,000
August 31, 1996 $84,000,000
September 30, 1996 $85,000,000
October 30, 1996 $87,000,000
November 30, 1996 $80,000,000
December 31, 1996 $81,000,000
January 31, 1997 $79,000,000
February 28, 1997 $74,000,000
6.22 Adjustment of the Covenants. Unless agreed otherwise by
the Borrower and Required Lenders, the covenants set forth in
subsections 6.18, 6.19, 6.20 and 6.21 will be automatically adjusted in
a manner reasonably satisfactory to the Borrower and the Agent upon any
Asset Sale to reflect the prospective arithmetic and accounting
implications and changes to the cash flow projections as a result of
such Asset Sale.
6.23 PW Engagement Letter. The PW Engagement Letter shall not
be amended, modified or terminated without the prior written approval
of the Required Lenders.
1.6 Amendments to Article VII: Events of Default.
A. Section 7.1(b) of the Credit Agreement is hereby amended by
adding the following at the end thereof:
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"; provided that any violations of the reporting covenants
outlined in subsections 5.1(k) - (t) above are subject to a
five business day cure period which option the Borrower may
not exercise more than twice during the period from the Third
Amendment Effective Date to the Reducing Revolving Credit
Facility Termination Date; provided further that such option
may not be exercised successively with respect to any
individual reporting requirement, and provided, further, that
the availability of such cure period shall not be utilized as
a means to delay delivery of the ARTB report to the Agent if
such report is available to the Borrower. Notwithstanding
anything to the contrary contained in this paragraph (b), no
cure period for reporting pursuant to the covenant outlined in
5.1 (r) shall be available for reports due thereunder after
July 31, 1996."
B. Section 7.1(f) of the Credit Agreement as hereby amended and
restated as follows:
"(f) Any Credit Party shall fail to pay when due, whether by
scheduled maturity, required prepayment acceleration or otherwise
(taking into account any applicable grace period), any principal of,
interest on or other amount payable in respect of any Overline
Obligation (as defined in the Overline Credit Agreement) or any Debt
(other than the Debt incurred pursuant to this Agreement or the
Overline Credit Requirement) having an aggregate principal amount of at
least $1,000,000; any other default or event of default shall occur
under the terms of the Overline Credit Agreement or any agreement or
instrument pursuant to which any Credit Party has incurred any such
Debt, the effect of which default is to accelerate, or permit
acceleration of (after any applicable grace period, notice or lapse of
time), the maturity of any Overline Obligation or at least $1,000,000
in principal amount of such Debt; or any Overline Obligation or any
such Debt of any Credit Party shall be declared to be due and payable
or required to be prepaid or redeemed (other than pursuant to a regular
schedule therefor), purchased or defeased, or an offer to prepay,
redeem, purchase or defease shall be required to be made, in each case
prior to the stated maturity thereof;"
C. Section 7.1 of the Credit Agreement is hereby amended by (i)
inserting the phrase "or either Security Agreement" immediately after the phrase
"either Pledge Agreement" in clause (o) thereof; (ii) deleting the word "or"
from the end of clause (r) thereof; (iii) deleting the punctuation "." from the
end of clause (s) thereof and substituting "; or" therefor; and (iv) adding the
following clause (t) at the end of such Section:
"(t) Any Credit Party shall (i) change its name, identity or
corporate structure, (ii) change its chief executive office or any
place of business from the location thereof listed on Annex B to the
applicable Security Agreement or (iii) remove any Collateral, or any
books, records or other information relating to the Collateral, from
the location thereof listed on Annex B to the applicable Security
Agreement to a new location, unless in each case the applicable Credit
Party has (1) given twenty (20) days' prior written notice to the Agent
of its intention to do so, together with information regarding any such
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new location and such other information in connection with such
proposed action as the Agent may reasonably request and (2) delivered
to the Agent ten (10) days prior to any such change or removal such
documents, instruments and financing statements as may be reasonably
required by the Agent, all in form and substance reasonably
satisfactory to the Agent, paid all necessary filing and recording fees
and taxes, and taken all other actions reasonably requested by the
Agent, in order to perfect and maintain the Lien upon and security
interest in the Collateral provided for in the Security Agreements."
1.7 Amendments to Article VIII: The Agent.
Section 8.11(a) of the Credit Agreement is hereby amended by deleting
the phrase "Pledge Agreements" and substituting the phrase "Credit Documents."
1.8 Amendments to Article IX: Miscellaneous.
Section 9.5(a) of the Credit Agreement is hereby amended by adding the
following at the end of the first sentence thereof:
"; provided further, that each assignment of rights and obligations
under this Agreement (including with respect to any Reducing Revolving
Credit Commitment, outstanding Reducing Revolving Loans and Reducing
Revolving Notes) shall become effective only upon a concurrent pro rata
assignment to the same Eligible Assignee of all or the applicable
portion of such Lender's rights and obligations as an Overline Lender
under the Overline Credit Agreement (including with respect to such
Overline Lender's Overline Commitment, outstanding Overline Loans and
Overline Note, as such terms are defined in the Overline Credit
Agreement)."
1.9 Amendments to Schedules.
The Credit Agreement is hereby amended by adding Annex B to this
Amendment as Schedule 6.2 to the Credit Agreement
ARTICLE II
LIMITED WAIVER
2.1 Waiver of Certain Defaults.
Subject to the provisions of Section 2.2 of this Amendment, Required
Lenders hereby waive any Event of Default resulting solely from (i) the
Borrower's failure to comply with the provisions of Sections 6.19, 6.20 and 6.26
for the period ended December 31, 1995 and the provisions of Sections 6.19
through 6.26 inclusive for the period ending March 31, 1996, and
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the Borrower's failure to comply with the provisions of Section 6.2(a)(iv) at
any time prior to the Third Amendment Effective Date (as hereinafter defined).
2.2 Limitation of Waiver.
Without limiting the generality of the provisions of Section 9.8 of the
Credit Agreement, the waiver set forth herein shall be limited precisely as
written and relates solely to the noncompliance by the Borrower with the
provisions of Sections 6.2(a)(iv), 6.19 through 6.26 inclusive (collectively,
the "Applicable Sections") to the extent described above and nothing in this
Article II shall be deemed to (a) constitute a waiver of compliance by the
Borrower or any of its Subsidiaries with respect to (i) any Applicable Section
in any other instance or (ii) any other term, provision or condition of the
Credit Agreement or any other instrument or agreement referred to therein or (b)
prejudice any right or remedy that the Agent or any Lender may now have (except
to the extent such right or remedy was based upon existing Events of Default
that will not exist after giving effect to this limited waiver) or may have in
the future under or in connection with the Credit Agreement or any other
instrument or agreement referred to therein. Except as expressly set forth
herein, the terms, provisions and conditions of the Credit Agreement and the
other Credit Documents shall remain in full force and effect and in all other
respects are hereby ratified and confirmed.
ARTICLE III
OTHER AGREEMENTS
3.1 Termination of Revolving Credit Commitments.
The Borrower hereby voluntarily terminates the Revolving Credit
Commitments and agrees that (i) all outstanding Revolving Loans, together with
all accrued but unpaid interest thereon, shall be deemed to be paid in full on
the Third Amendment Effective Date with the proceeds of the Reducing Revolving
Loans deemed made by the Lenders on such date and (ii) all Letters of Credit
outstanding on the Third Amendment Effective Date shall be deemed to be issued
and outstanding under the Reducing Revolving Credit Facility.
3.2 Reducing Revolving Credit Commitments.
The Borrower, each Lender and each other party hereto hereby
acknowledge and agree that:
(i) concurrently with the effectiveness of the Third
Amendment, the Separate Indebtedness shall be deemed to be, for all
purposes of this Agreement, Reducing Revolving Loans made by First
Union under this Agreement;
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(ii) upon the effectiveness of the Third Amendment, but
immediately after giving effect to the provisions of clause (i) above,
all amounts held in the Escrow Account under and as defined in that
certain Escrow Agreement dated as of May 8, 1996 (as amended, restated,
supplemented or otherwise modified from time to time, the "Escrow
Agreement") among the Borrower and First Union, individually and as
escrow agent, will be applied to prepay Reducing Revolving Loans;
(iii) upon the effectiveness of the Third Amendment but
immediately after giving effect to the provisions of clauses (i) and
(ii) above, in accordance with the provisions of Section 4.2(a) of the
Credit Agreement, the Total Reducing Revolving Credit Commitment shall
be automatically reduced to $83,708,333 and the Reducing Revolving
Commitment of each Lender shall be the applicable amount set forth on
Annex A hereto.
3.3 Extension of Financial Covenants; Automatic Termination of Commitments.
The Borrower hereby agrees that if the Credit Agreement (and, by
incorporation, the Overline Credit Agreement) is not amended by January 15, 1997
to establish financial covenants satisfactory in form and substance to (i)
Overline Lenders (as defined in the Overline Credit Agreement) holding 82% of
the Overline Commitments (as defined in the Overline Credit Agreement) and (ii)
Lenders holding 82% of the Reducing Revolving Credit Commitments for the period
subsequent to February 1997 the Overline Commitments and the Reducing Revolving
Credit Commitments shall automatically terminate and all Overline Loans (as
defined in the Overline Credit Agreement), Reducing Revolving Loans, and all
other obligations under such commitments will become automatically due and
payable on February 28, 1997.
3.4 Review of Accounts Receivables.
A. The Borrower hereby agrees to deliver to the Lenders by June 21,
1996 a written receivables reserve policy in accordance with Generally Accepted
Accounting Principles that is satisfactory in form and substance to the Lenders
and that is no less restrictive than the policy delivered to the Lenders
pursuant to paragraph S of Article V of this Amendment. Changes to this reserve
policy shall not be made without the prior consent of each of the Lenders.
B. The Borrower hereby agrees to (i) cause an analysis of its accounts
receivable to be completed within 45 days of the end of each calendar quarter
(or, if reasonably requested by the Lenders, more frequently) by the Company's
independent auditors (or other entity satisfactory to the Required Lenders) and
(ii) cause the Lender's financial advisor to have complete access to such entity
conducting the analysis and to the results of such analysis. Such analyses will
be accompanied by Borrower's valuation of the net collectibility of accounts
receivable covered by the most recent reported ARTB. Each accounts receivable
analysis will consist of a written agreed-upon procedures report with regard to
(a) compliance with the
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Borrower's written reserve policy and (b) accuracy of the Borrower's valuation
of the net collectibility of such accounts receivable.
3.5 Priority of Payments.
Except as otherwise expressly provided herein or in the Credit
Documents, all payments and other amounts received by Agent (including, without
limitation, all proceeds of Collateral) under the Credit Documents or the
Restructuring Documents (as defined in the Overline Credit Agreement) shall be
applied first to Overline Obligations then owing and thereafter to amounts owing
under or in respect of the Credit Agreement; provided that application of any
such payments or amounts to the Overline Obligations shall not constitute a
waiver of any amounts due under or in respect of the Credit Agreement. Each
Lender hereby acknowledges and agrees that each Overline Lender is a third party
beneficiary of this Section 3.5 and that this Section may not be amended,
restated, supplemented or otherwise modified without the consent of the Overline
Lenders.
3.6 Non-Cash Expenses or Charges.
Notwithstanding anything to the contrary contained in Section 1.12 of
the Second Amendment, for purposes of financial covenant calculations under the
Credit Agreement, all non-cash expenses or charges must be approved in writing
by Required Lenders.
3.7 HMO Guaranties.
Lenders hereby release the guaranties of each Subsidiary of the
Borrower that is a health maintenance organization; provided that upon the
request of the Agent or Required Lenders and to the extent not prohibited by
application of relevant health maintenance organization laws and regulations,
the Borrower shall cause each such Subsidiary (other than Doctors Health Plan,
Inc.) to deliver a guaranty substantially in the form of the Guaranty Agreement
and to secure its guaranty by granting a security interest in all of its then
existing and future assets.
3.8 Delivery of Certain Items.
A. Time Line. The Borrower hereby agrees to deliver to the
Lenders upon receipt, but in any event no later than 30 days after the Third
Amendment Effective Date, a report from Morgan Stanley (and, promptly after
engagement, from each other investment bank engaged by the Borrower for
similar purposes) that sets forth specific dates for disposition of specific
assets and business segments and projected valuation ranges therefor.
B. Tax Base Information. The Borrower hereby agrees to deliver
to the Lenders no later than 30 days after the Third Amendment Effective Date
detailed tax base information for assets of the Borrower and each of its
Subsidiaries to be sold.
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C. Other Advisors. The Borrower hereby agrees that if the Borrower
shall engage any investment banker or advisor other than Morgan Stanley in
connection with the proposed disposition of assets or equity and/or debt
infusions, the Borrower shall deliver to the Agent a copy of the engagement
agreement with such advisor, which shall be reasonably satisfactory in form and
substance to the Required Lenders and shall provide that the Lenders will have
direct access to such advisor. If Morgan Stanley or such advisor prepares a
final report for the Borrower reaching conclusions regarding proposed asset sale
or equity and/or debt infusions, the Borrower shall deliver a copy of such
report to the Agent for distribution to the Lenders on a confidential basis.
3.9 Restricted Subsidiaries.
The Borrower hereby agrees that, notwithstanding anything to the
contrary contained in the Credit Agreement or this Amendment, there shall be no
Unrestricted Subsidiaries at any time after the Third Amendment Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Borrower.
The Borrower hereby represents and warrants that:
A. The Borrower is in compliance with all terms and provisions
set forth in the Credit Agreement to be observed or performed, except where
the Borrower's failure to comply has been waived in writing by the Required
Lenders.
B. The representations and warranties of the Borrower set forth in the
Credit Agreement, except for those relating to a specific date other than the
date hereof, are (after giving effect to the waiver set forth in Article II
hereof) true and correct in all material respects on and as of the date hereof
as if made on and as of the date hereof.
C. No Event of Default (as defined in the Credit Agreement), nor any
event that upon notice, lapse of time or both would become an Event of Default
is continuing other than those, if any, waived by Required Lenders pursuant to
Article II hereof.
D. All Loans by the Lenders to the Borrower under the Credit Agreement,
as amended hereby, and the Notes will continue to be secured by the Agent's
security interest in all of the Collateral granted under the Credit Agreement or
other Credit Documents, and nothing herein will affect the validity, perfection
or enforceability of such security interests.
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4.2 Representations and Warranties of All Credit Parties.
A. Each of the Credit Parties hereby ratifies and affirms each of the
representations and warranties made by the Borrower on the Third Amendment
Effective Date, including without limitation, each representation and warranty
contained in the Notice of Borrowing delivered by the Borrower under the
Overline Credit Agreement.
B. Each Credit Party represents and warrants that:
(i) As a result of the interrelated nature of their businesses
and in order to achieve economies of scale and operate in a
cost-efficient manner, the Borrower and the other Credit Parties engage
in numerous substantive and administrative intercompany activities and
operations, which each accounts for in its own separate books and
records, but which would not be feasible without the credit extended by
the Lenders and the Overline Lenders under the Credit Agreement and the
Overline Credit Agreement.
(ii) The direct and indirect benefits which each Credit Party
receives from or as a result of the credit extended by the Lenders and
the Overline Lenders under the Credit Agreement and the Overline Credit
Agreement are substantial and material, and while such indirect
benefits are not necessarily precisely quantifiable, all of such
benefits are essential to the continuation of the operations of each of
the Credit Party.
(iii) To the best knowledge of each Credit Party, the Borrower
and each other Credit Party is Solvent.
ARTICLE V
CONDITIONS TO EFFECTIVENESS
Articles I, II, III and IV of this Amendment shall become effective
only upon the satisfaction of all of the following conditions (the date of
satisfaction of such conditions being referred to herein as the "Third Amendment
Effective Date"):
A. Executed Documents. The following documents shall have been
duly authorized, executed and delivered by the parties thereto, shall be in
form and substance satisfactory to the Agent and the Required Lenders, no
default shall exist thereunder, the Agent and each Lender shall have received
a copy thereof:
(i) this Amendment executed by the Borrower, the Agent
and each Lender;
(ii) the Borrower Security Agreement executed by the
Borrower and the Agent;
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(iii) the Guaranty Agreement executed by the Borrower, each
of its Subsidiaries (other than the HMOs) and the Agent;
(iv) the Subsidiaries Pledge Agreement executed by the
Borrower, each of its Subsidiaries (other than the HMOs) and the
Agent;
(v) the Subsidiaries Security Agreement executed by the
Borrower, each of its Subsidiaries (other than the HMOs) and the
Agent; and
(vi) the Amendment Fee Notes.
B. Security Interests. The Borrower shall have taken or caused
to be taken all such actions as are necessary or desirable in the judgment of
the Agent to create in favor of the Agent on behalf of the Lenders a valid,
enforceable and perfected first priority Lien on the Collateral (subject only
to Liens expressly permitted under the Credit Documents and the priority of the
Overline Lenders as provided in Section 3.5 of this Amendment) including
without limitation (i) the delivery to the Agent of Uniform Commercial Code
financing statements, executed by the applicable Credit Parties as to the
Collateral granted by such Credit Parties for all jurisdictions as may be
necessary or desirable in the sole opinion of the Agent to perfect the
Agent's security interest in such Collateral, (ii) to the extent not
previously delivered, the delivery pursuant to the applicable Collateral
Documents by the applicable Credit Parties of stock certificates (which
certificates shall be registered in the name of the Agent or properly endorsed
in blank for transfer or accompanied by irrevocable undated stock powers duly
endorsed in blank, all in form and substance satisfactory to the Agent)
representing all of the capital stock and other investment securities required
to be pledged pursuant to the Collateral Documents, (iii) to the extent not
previously delivered, the delivery pursuant to the applicable Collateral
Documents by the applicable Credit Parties of any existing promissory notes
(which promissory notes shall be endorsed to the order of the Agent)
representing all of the pledged debt required to be delivered pursuant to the
Collateral Documents, (iv) execution and delivery by the Agent, the applicable
Credit Parties and the applicable depository institutions of letter agreements,
satisfactory in form and substance to the Agent, with respect to the perfection
of security interests in favor of the Agent in certain of the deposit accounts
of the Credit Parties, as required pursuant to the Security Agreements, (v) the
delivery to Agent of executed mortgages satisfactory in form and substance to
the Agent pursuant to which the Borrower and its Subsidiaries grant Liens in
all of their respective real property and the recording of such mortgages with
all appropriate authorities, (vi) delivery to the Agent of all chattel paper
of the Borrower and its Subsidiaries, and (vii) the delivery to the Agent of
the insurance certificates required to be delivered pursuant to Section 6(b)
of the Subsidiaries Security Agreement and Section 6(b) of the Borrower
Security Agreement.
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C. Secretary's Certificates. The Agent shall have
received (with copies for each of the Lenders) a certificate of the
Secretary or an Assistant Secretary of each Credit Party, dated the
Third Amendment Effective Date, certifying (i) that attached thereto is
a true and complete copy of the Articles or Certificate of Incorporation
of the applicable Credit Party and all amendments thereto, certified as
of a recent date by the Secretary of State of its state of
incorporation, and there has been no amendment thereto except as set
forth therein, (ii) that attached thereto is a true and complete copy of
the Bylaws of the applicable Credit Party as in effect at all times from
the date upon which the resolutions referred to in clause (iii) below
were adopted to and including the Third Amendment Effective Date and
there has been no amendment thereto except as set forth therein, (iii)
that attached thereto is a true and complete copy of the resolutions
adopted by the board of directors of the applicable Credit Party (or an
authorized executive committee thereof), authorizing the execution,
delivery and performance of this Amendment and all other documents
executed in connection herewith or therewith and the consummation of the
transactions contemplated hereby or thereby, including, in the case of
the Borrower, the engagement of Price Waterhouse LLP, as provided in
paragraph J, and adoption of the business turnaround plan contained in
the PW Report and (iv) as to the incumbency and genuineness of the
signature of each officer of the applicable Credit Party who has
executed this Amendment or any other documents and certificates in
connection herewith.
D. Certificates of Good Standing. The Agent shall have
received certificates as of a recent date of the corporate good standing
of each Credit Party under the laws of its jurisdiction of
incorporation.
E. Officer's Certificate. The Agent shall have received
(with copies for each of the Lenders) a certificate from the Chief
Financial Officer or Treasurer of the Borrower, dated the date of this
Amendment, certifying that (i) after giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing, and (ii) the
Borrower has satisfied each of the conditions required to the satisfied
by it hereunder.
F. Opinion of Counsel. The Agent and each Lender shall have
received the favorable opinion of the law firm of Moore & Van Allen,
PLLC, counsel to the Borrower and its Subsidiaries, and Joseph G.
Piemont, Esq., general counsel to the Borrower and its Subsidiaries,
each dated as of the Third Amendment Effective Date and addressed
to the Agent and each Lender, and such other opinions as the Agent
or the Lenders may reasonably require, including an opinion of
Pennington & Haben, P.A., local counsel to the Florida Subsidiaries,
all in form and substance satisfactory to the Agent and the Required
Lenders.
G. Payment of Fees and Expenses. The Borrower shall have paid
(i) the reasonable out-of-pocket fees and expenses (including
professional fees and allocated costs of internal counsel) that are
accrued or estimated as of the Third Amendment Effective Date and
(ii) a retainer of $50,000 to Ernst & Young to secure its fees and
expenses accruing after the Third Amendment Effective Date, which
retainer shall, together with interest accrued at a rate of 4% per
annum, be applied to Ernst & Young's final invoice.
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H. Overline Credit Agreement. The Overline Credit
Agreement shall have been executed and delivered by the parties thereto
and shall have become effective in accordance with its terms.
I. Operating Strategy. The Borrower shall have delivered
to the Agent and Lenders (i) a report from Morgan Stanley including a
strategic plan for disposition of assets and a methodology for sales,
(ii) an executed engagement letter for Morgan Stanley authorizing the
sales effort for major assets and/or raising of equity, and providing
for periodic reports to the Lenders on such initiatives, (iii)
authorization for the Agent and Lenders to have direct access to Morgan
Stanley and (iv) one or more resolutions of the Board of Directors of
the Borrower adopting the business turnaround plan referred to in the PW
Report, authorizing the engagement of investment bankers (including
Morgan Stanley) and ratifying the engagement of Price Waterhouse ("PW"),
each case in form and substance satisfactory to the Agent and Required
Lenders.
J. Price Waterhouse Engagement. The Borrower shall have
delivered to the Agent and Lenders a copy of the executed PW Engagement
Letter which shall be in full force and effect.
K. Ernst & Young. The Agent shall have retained at the
Borrower's expense Ernst & Young as a financial advisor to report to
the Lenders as to the Borrower's financial projections, the progress
made by the Borrower and PW in implementing the business turnaround
plan referred to in paragraph I above, actual performance as measured
against covenants, review of the analyses of accounts receivable and
reserves contemplated by Section 3.4, and other issues determined by
the Lenders.
L. Audit Opinions. The Agent and Lenders shall have
received unqualified audit opinions of KPMG Peat Marwick for the
Borrower and its Subsidiaries on a consolidated basis and for each of
the HMO's (provided that the financial statements for the North Carolina
and Florida HMOs shall be prepared in accordance with applicable
regulatory accounting procedures).
M. Annual Report. The Borrower will deliver to the Agent
and Lenders the 1995 Annual Report (including all footnotes) and all
KPMG Peat Marwick management letters issued within the two years
preceding the Third Amendment Effective Date.
N. Debt Schedules. The Borrower shall have delivered to
the Agent and Lenders a schedule, satisfactory in form and substance to
the Agent, of all debt of the Borrower and its Subsidiaries, including
without limitation all off-balance sheet guaranties, earnouts and other
contingencies with quantification of existing and potential obligations
and such schedule shall be certified as true and correct by the Chief
Financial Officer of the Borrower and approved by the Plan Manager, to
the best of his knowledge.
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<PAGE>
O. Dr. Scott's Financial Statements. The Borrower shall
have delivered or cause to be delivered to the Agent on a confidential
basis the personal financial statements of Dr. Scott and his family
trusts as of December 31, 1995 and Ernst & Young shall have reported on
such statements to the Lenders.
P. Cash Flow Forecasts. The Borrower will deliver to the
Lenders (i) revised consolidating cash flow forecasts through February
1997 in the format contained in the PW Report, including adjustments as
of April 17, 1996, acceptable to the Lenders, and (ii) a statement
executed by PW that as of the date hereof no further adjustments are
appropriate with respect to the PW Report.
Q. Operating Statement. The Borrower shall have
delivered to the Lenders by May 1, 1996 a profit and loss statement for
the first quarter certified by the Borrower's chief financial officer
and approved by the Plan Manager to the best of his knowledge.
R. Borrower's Representation as to Material Adverse
Change. The Borrower shall deliver an Officer's Certificate
representing that no Material Adverse Change shall have occurred since
the date of the PW Report and such representation shall be true and
correct.
S. Receivables Reserve Policy. The Borrower will deliver
to the Lenders a written summary of the accounts receivables reserve
policy in effect at the time KPMG Peat Marwick audited the 1995
financial statements.
T. Termination of Contract. The Borrower will deliver to
the Lenders a certificate from the principal officer of Healthplan
Southeast, Inc. ("HSI") stating that HSI has no reason to believe that
HSI's contract with the State of Florida will not be renewed.
U. Certificate Regarding Corporate Structure. The Agent
shall have received (with copies for each of the Lenders) a certificate
from the Secretary or an Assistant Secretary of the Borrower, in form
and substance acceptable to the Agent, certifying the corporate
structure of the Borrower and its Subsidiaries and identifying the
direct and indirect Subsidiaries of each Credit Party.
V. Representations and Warranties. The representations and
warranties contained in the Credit Agreement, the Overline Credit
Agreement and this Amendment shall be true, correct and complete to
the satisfaction of the Agent in all respects as of the Third Amendment
Effective Date, except, in the case of the Credit Agreement, to the
extent such representations and warranties relate solely to or are
specifically expressed as of a particular date or period, and the
Borrower shall have delivered an Officer's Certificate certifying that
such representations and warranties are true, correct and complete to
the extent set forth above.
W. Other Documents. The Agent and each Lender shall have
received such other documents, certificates and opinions as the Agent
and the Required Lenders may reasonably
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request in connection with this Amendment, each in form and
substance satisfactory to the Agent and the Required Lenders.
ARTICLE VI
EFFECT OF AMENDMENT
6.1 Amendment of Credit Documents.
On and after the Third Amendment Effective Date, any
individual or collective reference to any of the Credit Documents in
any of the other Credit Documents to which the Borrower or any other
Credit Party is a party, and each other Credit Document, shall mean,
unless otherwise specifically provided, such Credit Document as amended
and supplemented by this Third Amendment to Credit Agreement and as
such Credit Document is further amended, restated, supplemented or
modified from time to time and any substitute or replacement
therefor or renewals thereof, including without limitation, all
references to the Credit Agreement, which shall mean the Credit
Agreement as amended hereby and as further amended from time to time.
6.2 Full Force and Effect.
As expressly amended hereby, the Credit Agreement shall
continue in full force and effect in accordance with the provisions
thereof, and no change or modification in any of the terms thereof
except as specifically set forth herein has been effected. As used
in the Credit Agreement, "hereinafter," "hereto," "hereof" and
words of similar import shall, unless the context otherwise
requires, mean the Credit Agreement as amended by this Amendment.
6.3 No Novation.
Except as expressly set forth herein, this Amendment
shall not by implication or otherwise limit, impair, constitute a
waiver of or otherwise affect the rights and remedies of any party under
the Credit Agreement, or any amendment thereto, nor alter, modify,
amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement, or any
amendment thereto, all of which are ratified and affirmed in all
respects and shall continue in full force and effect. This Amendment
shall apply and be effective only with respect to the provisions
of the Credit Agreement specifically referred to herein.
6.4 Acknowledgement by Credit Parties.
Each Credit Party hereby acknowledges and agrees that
each of the Credit Documents to which it is a party or otherwise bound
shall continue in full force and effect and that all of its obligations
thereunder shall remain valid and enforceable and shall not be
impaired or limited by the execution and effectiveness of this
Amendment.
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ARTICLE VII
PAYMENT OF AMENDMENT AND WAIVER FEE
7.1 Amendment and Waiver Fee.
In consideration of the agreement of the Lenders to enter
into this Amendment, to waive the Defaults and Events of Default
waived herein and to amend the Credit Agreement as provided herein,
the Borrower agrees to execute and deliver to the Agent for the ratable
benefit of the Lenders the Amendment Fee Notes in an aggregate
principal amount equal to $837,083.33, substantially in the form
attached as Annex C hereto.
ARTICLE VIII
RELEASE
8.1 Release.
Although the Borrower and its Subsidiaries do not believe
that they have any claims against the Agent or any of the Lenders,
each is willing to provide such parties with a general and total
release of all such claims in consideration of the extensions and
other benefits which the Borrower and its Subsidiaries will receive
pursuant to this Amendment and the Overline Credit Agreement.
Accordingly, the Borrower and each of its Subsidiaries, for itself,
each of its Subsidiaries and any successor of such Person or such
Subsidiary, hereby knowingly, voluntarily, intentionally and
irrevocably releases and discharges the Agent, each Lender and
each of their respective officers, directors, agents, affiliates and
counsel (each a "Releasee") from any and all actions, causes of action,
suits, sums of money, controversies, variances, trespasses, damages,
judgments, extents, executions, losses, liabilities, costs, expenses,
debts, dues, demands, obligations or other claims of any kind
whatsoever, in law, admiralty or equity, which such Person or
any of its Subsidiaries ever had, now have or hereafter can, shall or
may have against any Releasee for, upon or by reason of any matter,
cause or thing whatsoever from the beginning of the world to the Third
Amendment Effective Date; provided that this release shall not apply
to obligations of Lenders pursuant to existing contracts other than
the Credit Documents and the Restructuring Documents (as defined in
the Overline Credit Agreement).
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<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 Governing Law.
THIS AMENDMENT 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).
9.2 Severability.
To the extent any provision of this Amendment 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 any such jurisdiction.
9.3 Counterparts.
This Amendment 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.
9.4 Expenses.
The Borrower agrees to pay all reasonable out-of-pocket
expenses incurred by the Agent and each of the Lenders (including
allocated fees of in-house counsel) in connection with the preparation,
execution and delivery of this Amendment, including, without
limitation, all attorneys' and financial advisors' fees, as set forth
in paragraph G of Article V and other expenses immediately upon
presentation of invoices or statements with respect thereto.
9.5 Further Assurances.
The Borrower shall execute and deliver to the Agent and
each Lender such documents, certificates and opinions as the Agent and
the Required Lenders may reasonably request to effect the amendment
contemplated by this Amendment and to perfect, or continue the
existence, perfection and first priority of, the Agent's security
interests in the Collateral.
9.6 Headings.
The headings of this Amendment are for the purposes of
reference only and shall not affect the construction of this Amendment.
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9.7 Effectiveness.
This Amendment shall become effective upon an
execution of a counterpart hereof by the Borrower, each Subsidiary of
the Borrower, the Agent and each Lender and authorization of delivery
of such counterparts; provided that Articles I, II, III and IV
hereof shall not become effective until (i) execution of a
counterpart hereof by the Borrower, each Subsidiary of the
Borrower, the Agent and each Lender and authorization of delivery
of such counterparts and (ii) satisfaction of the conditions set
forth in Article V hereof.
9.8 Notice Addresses.
Pursuant to Section 9.4 of the Credit Agreement, each Lenders
hereby notifies each other party hereto that its notice address shall
be the address set forth below such Lender's signature on the applicable
signature page hereto.
9.9 Agent.
Each Lender acknowledges that First Union has also been
appointed as agent for Overline Lenders under the Overline Credit
Agreement and that First Union shall enter into the Collateral
Documents and perform its obligations thereunder on behalf of both
the Overline Lenders and the Lenders as Agent hereunder and agent
under the Overline Credit Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers as of the
date first above written.
COASTAL PHYSICIAN GROUP, INC.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, individually and as Agent
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
S-1
<PAGE>
CORESTATES BANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
S-2
<PAGE>
MELLON BANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
NATIONSBANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
NATIONSBANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
S-3
<PAGE>
THE BANK OF NOVA SCOTIA
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
SOCIETY NATIONAL BANK
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
BB&T
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
S-4
<PAGE>
WACHOVIA BANK OF NORTH CAROLINA,
N.A.
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
BANK OF AMERICA, ILLINOIS
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
MERRILL, LYNCH, PIERCE, FENNER
SMITH INCORPORATED
By:__________________________________
Name:
Title:
Notice Address:
=====================================
=====================================
S-5
<PAGE>
Acknowledged and Agreed to:
- --------------------------------
[LIST NAME OF SUBSIDIARY]
By:_____________________________
Name:
Title:
S-6
<PAGE>
COASTAL PHYSICIAN GROUP, INC.
SECURED OVERLINE CREDIT AGREEMENT
This SECURED OVERLINE CREDIT AGREEMENT (this "Agreement") is
entered into as of May 29, 1996 by and among COASTAL PHYSICIAN GROUP, INC., a
Delaware corporation and formerly known as Coastal Healthcare Group, Inc.
("Borrower"), the FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HERETO
and FIRST UNION NATIONAL BANK OF NORTH CAROLINA ("First Union"), as agent for
and representative of (in such capacity herein called "Agent") the Overline
Lenders.
RECITALS
WHEREAS, Borrower, the financial institutions named therein
(the "Lenders") and First Union, as agent for the Lenders, are parties to that
certain Credit Agreement dated July 29, 1994 (as amended to the date hereof, and
as further amended, restated, supplemented or otherwise modified from time to
time the "Credit Agreement") pursuant to which (i) loans in an aggregate
principal amount of $82,500,000 and letters of credit in an aggregate amount of
$1,208,333 are outstanding on the date hereof prior to the effectiveness of the
Third Amendment (as hereinafter defined) and (ii) prior to the effectiveness of
the Third Amendment and of this Agreement, no further loans or other extensions
of credit are required to be made by the Lenders to the Borrower;
WHEREAS, concurrently herewith, Borrower, First Union, as
agent, and Required Lenders under and as defined in the Credit Agreement are
entering into that certain Third Amendment and Limited Waiver to Credit
Agreement dated as of the date hereof (the "Third Amendment") pursuant to which,
among other things, Required Lenders consent to (i) Borrower incurring on a
first priority secured basis additional Indebtedness in an aggregate principal
amount of up to $40,000,000, (ii) Borrower and its Subsidiaries (other than the
HMOs) securing all obligations hereunder pursuant to the Pledge Agreements and
the Security Agreements (as such terms are defined in the Credit Agreement,
(iii) the Subsidiaries of Borrower (other than the HMOs) guaranteeing all
obligations hereunder pursuant to the Guaranty Agreement (as defined in the
Credit Agreement) and (iv) the obligations hereunder receiving priority with
respect to payments of principal and interest and the application of certain
proceeds from asset sales and equity or debt issuances as provided herein and in
the Third Amendment;
WHEREAS, as part of the cash management practices of Borrower
and its Subsidiaries, Borrower intends, from time to time in the future, to
advance to its Subsidiaries
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<PAGE>
the proceeds of Overline Loans made on and after the Effective Date and the
Subsidiaries have acknowledged that such advances are a material benefit to such
Subsidiaries. Thus, the Subsidiaries will benefit substantially both directly
and indirectly from the Overline Loans to be made under this Agreement;
WHEREAS, it is a condition precedent to the effectiveness of
this Agreement and the extension of any credit hereunder that Borrower and its
Subsidiaries (other than the HMOs) grant first priority (except with respect to
Permitted Liens as defined in the Credit Agreement) security interests in all of
their property, now existing and hereafter created or acquired, in order to
secure their obligations under this Agreement and to secure the guaranty of
payment of the obligations under this Agreement as set forth in the Guaranty
Agreement, as the case may be.
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration the receipt and adequacy of which is
hereby acknowledged, Borrower, the Overline Lenders and Agent hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the
following meanings:
"Agent" means First Union, as agent under this Agreement and
any successor Agent appointed pursuant to Article IX hereof.
"Aggregate Amounts Due" means, with respect to any Overline
Lender at any date of determination, the aggregate amount of principal and
accrued interest with respect to the outstanding Overline Loans made or
maintained by that Overline Lender.
"Agreement" means this Overline Credit Agreement among
Borrower, the Overline Lenders and Agent, as this Agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Asset Sale" means the sale by Borrower or any of its
Subsidiaries to any Person other than Borrower or any of its Wholly-Owned
Subsidiaries that are Credit Parties of (i) any of the stock of any of
Borrower's Subsidiaries, (ii) substantially all of the assets of any division or
line of business of Borrower or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of Borrower or any of its Subsidiaries
outside of the ordinary course of business.
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<PAGE>
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement entered into between an Overline Lender and an Eligible Assignee, and
accepted by the Agent, in substantially the form of Exhibit D.
"Base Rate" shall mean the higher of (i) the per annum interest
rate publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime or base rate (which may not necessarily be its best
lending rate), as adjusted to conform to changes as of the opening of business
on the date of any such change in such prime or base rate, or (ii) 0.5% in
excess of the Federal Funds Rate, as adjusted to conform to changes as of the
opening of business on the date of any such change in the Federal Funds Rate.
"Borrower" has the meaning assigned to that term in the
recitals to this Agreement.
"Borrower Net Cash Proceeds" means any Net Cash
Proceeds received by the Borrower and its Subsidiaries that are not
required to be applied to prepay Overline Loans or Reducing
Revolving Loans pursuant to subsection 2.6B.
"Cash" means money, currency or a credit balance in a
demand, time, savings, passbook or like account.
"Certificate of Exemption" has the meaning assigned to
that term in Section 2.12 hereof.
"Collateral Documents" means, collectively the
Pledge Agreements, the Security Agreements and any other document
executed by Borrower or any of the Subsidiaries granting a Lien in favor
of Agent and/or the Overline Lenders.
"Credit Agreement" has the meaning assigned to that
term in the recitals to this Agreement.
"Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable
grace or cure period.
"Effective Date" means the date on which all of the
conditions set forth in Section 4.1 hereof are satisfied or waived.
"Event of Default" has the meaning assigned to such
term in Article VIII hereof.
"First Union" has the meaning assigned to that term in
the introduction hereto.
"Foreign Bank" has the meaning assigned to that term in
Section 2.12B of this Agreement.
3
<PAGE>
"HMO Cash" means, as of any date of determination,
the sum of (i) the aggregate collected bank balances in the accounts of
the HMOs plus (ii) all Cash Equivalents and invested funds of the HMO's,
wherever located.
"Incorporated Provisions" has the meaning assigned to
that term in Section 1.3 hereof.
"Indemnified Costs" has the meaning assigned to that
term in Section 10.4 hereof.
"Indemnified Persons" has the meaning assigned to that
term in Section 10.4 hereof.
"Initial Period" means the period commencing on the
Effective Date and ending on the date that is 90 days after the
Effective Date.
"Initial Period Date" means the date that is 91 days
after the Effective Date.
"Issuing Lender" shall mean First Union, in its
capacity as issuer of the Letters of Credit, and its successors
and assigns in such capacity.
"Joint Venture" means a joint venture, partnership
or other similar arrangement, whether in corporate, partnership or other
legal form.
"L/C Supportable Indebtedness" means (i)
obligations of Borrower incurred in the ordinary course of business
with respect to worker's compensation, surety bonds and other similar
statutory obligations and (ii) such other obligations of Borrower as
shall be, for the purposes of issuing Letters of Credit in support
thereof, acceptable to Issuing Lender and as are otherwise permitted to
exist under the terms of this Agreement.
"Lenders' Percentage" means:
(i) with respect to the first $40,000,000 of
aggregate Net Cash Proceeds received by the Borrower or any of
its Subsidiaries after the Effective Date, 100%;
(ii) with respect to aggregate Net Cash Proceeds
in excess of $40,000,000 but less than or equal to $80,000,000,
75%;
(iii) with respect to aggregate Net Cash Proceeds
in excess of $80,000,000 but less than or equal to
$120,000,000, 80%; and
(iv) with respect to all aggregate Net Cash
Proceeds in excess of $120,000,000, 50%.
4
<PAGE>
"Letter of Credit" or "Letters of Credit" means
letters of credit issued or to be issued by Issuing Lender for the
account of Borrower pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any
date of determination, the sum of (i) the maximum aggregate amount
which is or at any time thereafter may become available for drawing
under all Letters of Credit then outstanding plus (ii) the aggregate
amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed by Borrower (including any such
reimbursement out of the proceeds of Overline Loans pursuant to
subsection 3.3B).
"Letter of Non-Exemption" has the meaning assigned to
that term in Section 2.12B hereof.
"Material Adverse Effect" shall mean a material
adverse effect upon (i) the financial condition, operations, business,
properties or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole, (ii) the ability of any Credit Party to
perform under any Credit Document or any other material contract to
which it is a party, (iii) the legality, validity or enforceability
of any Credit Document, (iv) the perfection or priority of the Liens
granted to the Agent under the Credit Documents or the rights and
remedies of the Agent and the Lenders under the Credit Documents;
except, in the case of clauses (iii) and (iv) above, to the extent any
such effect is caused by the act or omission on the part of the Agent or
any Lender or (v) the occurrence of both (a) a decrease in the
enrollment of any HMO to a level less than 85% of its enrollment on
April 1, 1996 and (b) a decrease in the aggregate enrollment of the
HMOs to less than 90,000.
"Net Available Cash" means, as of any date of
determination, the sum of (i) the aggregate collected bank balances in
the accounts of Borrower and its Subsidiaries, plus (ii) all Cash
Equivalents and invested funds wherever located of Borrower and its
Subsidiaries minus (iii) $8,000,000 minus (iv) HMO Cash minus (v) the
aggregate amount of reserves established for taxes actually payable as
a result of Asset Sales, provided that all such amounts are deposited in
a restricted account maintained with the Agent and can be withdrawn
only for application to taxes actually payable as a result of the
applicable Asset Sale; provided that the $3,000,000 Cash required to be
held in escrow relating to the sale of the Florida physician network to
Humana and other escrows established in connection with the sales of
assets approved by Overline Lenders shall be excluded from the
calculation of Net Available Cash.
"Net Cash Proceeds" means, with respect to any
Asset Sale, issuance of equity securities or the incurrence of any Debt
(other than Overline Loans and Reducing Revolving Loans) by the
Borrower or any of its Subsidiaries, Cash proceeds (including any Cash
received by way of deferred payment pursuant to, or monetization of, a
note receivable or otherwise, but only as and when so received)
received from such Asset Sale, issuance or incurrence, as applicable,
net of reasonable bona fide direct costs of sale or reasonable costs
incurred directly in connection with the applicable issuance or
incurrence, including income taxes paid or estimated to be actually
payable as a result thereof, after taking into account any available tax
5
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credits or deductions and any tax sharing arrangements; provided that
the amount of income taxes so estimated to be actually payable shall
be approved by the Agent, which approval shall not be unreasonably
withheld.
"Notice of Borrowing" means a notice of borrowing
substantially in the form attached as Exhibit A hereto delivered by
Borrower pursuant to subsection 2.1B with respect to a proposed
Overline Loan, including such representations as may be requested by
Agent.
"Notice of Issuance of Letter of Credit" means a
notice substantially in the form attached as Exhibit C hereto delivered
by Borrower to Agent pursuant to subsection 3.1B(i) with respect to the
proposed issuance of a Letter of Credit.
"Overline Commitment" has the meaning assigned to that
term in Section 2.1 hereof.
"Overline Lender" and "Overline Lenders" means the
persons identified as "Overline Lenders" and listed on the signature
pages of this Agreement, together with their successors and permitted
assigns pursuant to subsection 10.2.
"Overline Loan" or "Overline Loans" means the loan
or loans made by an Overline Lender or Overline Lenders pursuant to
Article Two hereof.
"Overline Loan Exposure" means, with respect to any
Overline Lender as of any date of determination (i) prior to the
termination of the Overline Commitments, that Overline Lender's
Overline Commitment and (ii) after the termination of the Overline
Commitments, the sum of (a) the aggregate outstanding principal
amount of the Overline Loans of that Overline Lender plus (b) in the
event that Overline Lender is an Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that
Overline Lender (in each case net of any participations purchased by
other Overline Lenders in such Letters of Credit or any unreimbursed
drawings thereunder) plus (c) the aggregate amount of all participations
purchased by that Overline Lender in any outstanding Letters of Credit
or any unreimbursed drawings under any Letters of Credit.
"Overline Maturity Date" means the earlier of (i) July
1, 1997 or such later date on or prior to October 1, 1997 as may be
approved in writing by each of the Overline Lenders in their sole
discretion pursuant to Section 2.15 and (ii) the date the Overline
Lenders elect to terminate the Overline Commitments pursuant to
Article VIII; provided that, if financial covenants are not established
for the period subsequent to February 1997 pursuant to
subsection 2.14, the Overline Maturity Date shall be February 28, 1997.
"Overline Note" means a promissory note,
substantially in the form attached as Exhibit D hereto, executed and
delivered by Borrower to each of the Overline Lenders pursuant to
Section 2.6 hereof, as such note may be amended, restated,
supplemented or otherwise modified from time to time in accordance
with the terms hereof.
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"Overline Obligations" means all obligations of every
nature of Borrower from time to time owed to Agent, Overline Lenders
and Issuing Lender under this Agreement.
"Pro Rata Share" means, for any Overline Lender, the
percentage obtained by dividing (x) the Overline Loan Exposure of that
Overline Lender by (y) the sum of the aggregate Overline Exposure of
all Overline Lenders. The initial Pro Rata Share of each Overline
Lender is set forth opposite the name of such Overline Lender on
Schedule I annexed hereto.
"PW Engagement Letter" means that certain engagement
letter agreement dated as of April 4, 1996 by and between Price
Waterhouse L.L.P. and the Borrower, as amended, supplemented or
otherwise modified from time to time to the extent permitted herein.
"Register" has the meaning assigned to that term in
Section 2.5 hereof.
"Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of the date hereof between
Company and the holders of the Warrants party thereto, as such
agreement may be amended, restated, supplemented or otherwise
modified from time to time.
"Reimbursement Obligation" has the meaning assigned to
that term in subsection 3.3B(iii).
"Required Overline Lenders" means Overline Lenders
holding 66-2/3% or more of the aggregate outstanding principal amount
of the Overline Loans or, if no Overline Loans are then outstanding, the
Overline Commitments.
"Restructuring Documents" means, collectively, the
Third Amendment, this Agreement, the Overline Notes, the Warrants, the
Registration Rights Agreement, the Guaranties and the Collateral
Documents.
"Stated Amount" shall mean, with respect to any
Letter of Credit at any time, the maximum amount available to be drawn
thereunder at such time (regardless of whether any conditions for
drawing could then be met).
"Taxes" has the meaning assigned to that term in
Section 2.12 hereof.
"Third Amendment" has the meaning assigned to that term
in the recitals to this Agreement.
"Total Utilization of Overline Commitments" means,
as at any date of determination, the sum of (i) the aggregate
principal amount of all outstanding Overline Loans (other than
Overline Loans made for the purpose of reimbursing the applicable
Issuing Lender for any amount drawn under any Letter of Credit but not
yet so applied) plus (ii) the Letter of
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Credit Usage plus (iii) during the Initial Period, the aggregate
amount of prepayments of Overline Loans made during the Initial
Period pursuant to subsection 2.6B(vi)(1).
"Warrants" means the warrants dated as of the date
hereof and issued to Overline Lenders by Borrower in proportion to
their Pro Rata Shares, as such warrants may be amended, restated,
supplemented or otherwise modified from time to time.
Section 1.2 References; Interpretation. Any reference
in this Agreement (i) to a Section, a Schedule or an Exhibit is a
reference to a section hereof, a schedule hereto or an exhibit hereto,
respectively; and (ii) to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or
subsection in which the reference appears. In this Agreement the
singular includes the plural and the plural the singular;
"hereof," "herein," "hereto," "hereunder" and the like mean and refer
to this Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears; words
denoting any gender include the other gender; references to statutes
are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to;
references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed
by the words "without limitation"; and references to Persons include
their respective permitted successors and assigns or, in the case
of governmental Persons, Persons succeeding to the relevant functions
of such Persons.
Section 1.3 Incorporation by Reference from Credit
Agreement. All capitalized terms used in this Agreement and not
defined in this Agreement shall have the meanings assigned to such
terms in the Credit Agreement. All definitions, representations,
warranties, covenants and other provisions contained in the Credit
Agreement which are incorporated in this Agreement by reference (the
"Incorporated Provisions") are so incorporated in the form in which
such Incorporated Provisions exist as of the date of execution of
this Agreement, or as they may be amended, modified or supplemented
in accordance with this subsection 1.3. All definitions contained in
the Credit Agreement which are used in the Incorporated Provisions and
not otherwise defined herein shall be incorporated in this Agreement by
reference, except that all references to "Event of Default," and
"Default" in the Incorporated Provisions are hereby deemed to mean
"Event of Default," and "Default" as each such respective term is
defined in subsection 1.1 hereof. All references to "Credit
Agreement," "this Agreement" or "hereto" in the definitions contained
in the Credit Agreement which are Incorporated Provisions shall be
deemed to refer to the Credit Agreement, all such references to
"Loans" shall be deemed to refer to the loans under the Credit
Agreement, all such references to "Notes" shall be deemed to refer to
the Notes issued under the Credit Agreement, all such references to
"Lenders" shall be deemed to refer to lenders party to the Credit
Agreement and all such references to "Obligations" shall be deemed to
refer to the Obligations under the Credit Agreement. From and after
the date of execution of this Agreement, any amendment or
modification of, or supplement to, any of the Incorporated Provisions
by the parties to the Credit Agreement shall not be effective to
amend, modify or supplement the Incorporated Provisions as
incorporated in this Agreement unless Required Overline Lenders or, if
required by the terms
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of this agreement, all Overline Lenders, consent to such amendment,
modification or supplement.
ARTICLE II
LOAN PROVISIONS
Section 2.1 Overline Loans and Commitments.
A. Overline Commitments.
(i) Subject to the terms and conditions of this
Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, each Overline
Lender severally agrees, subject to the limitations set
forth below with respect to the maximum amount of Overline
Loans permitted to be outstanding during the period from the
Effective Date to the Overline Maturity Date, to lend to
Borrower from time to time during the period from the Effective
Date to but excluding the Overline Maturity Date up to its
Pro Rata Share of $40,000,000. Each Overline Lender's
commitment to make its Pro Rata Share of the Overline Loans
hereunder pursuant to this Section 2.1 is herein called its
"Overline Commitment", and such commitments of all Overline
Lenders in the aggregate are herein called the "Overline
Commitments". The original amount of each Overline Lender's
Overline Commitment is set forth opposite its name on
Schedule I annexed hereto and the aggregate original amount of
the Overline Commitments is $40,000,000; provided that the
Overline Commitments of Overline Lenders shall be adjusted to
give effect to any assignments of the Overline Commitments
permitted hereunder; and provided, further that the amount
of the Overline Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to
Section 2.6.
(ii) On the Initial Period Date, each Overline
Lender shall, automatically and without the requirement that
Borrower deliver a Notice of Borrowing or satisfy the
requirements set forth in Section 4.2 make an Overline Loan in
the amount equal to the aggregate amount of prepayments from
Net Cash Proceeds received during the Initial Period in
respect of such Overline Lender's Overline Loans; provided
that the proceeds of such Overline Loans shall be used only
to prepay the outstanding Reducing Revolving Loans.
(iii) Anything contained in this Agreement to the
contrary notwithstanding, the Overline Loans and Overline
Commitments shall be subject to the following limitations in
the amounts and during the periods indicated:
(a) in no event shall the Total Utilization of
Overline Commitments at any time exceed the
Overline Commitments then in effect; and
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(b) the Total Utilization of Overline
Commitments shall not exceed the applicable
amount set forth below on the corresponding
date set forth below:
Date Maximum Total Utilization
May 31, 1996 $15,000,000
June 30, 1996 $25,000,000
July 31, 1996 $25,000,000
August 31, 1996 $28,500,000
(c) The Total Utilization of Overline
Commitments shall not exceed the applicable
amount set forth below at any time during the
corresponding periods set forth below:
Period Maximum Total Utilization
Effective Date - May 30, 1996 $19,000,000
June 1, 1996 - June 29, 1996 $29,000,000
July 1, 1996 - July 30, 1996 $29,000,000
August 1, 1996 - August 30, 1996 $32,500,000
(iv) The aggregate principal amount of the Overline
Loans shall be due and payable in full on the Overline
Maturity Date and each Overline Commitment shall terminate
on such date. Agent shall record the amount of the Overline
Loans of each Overline Lender and the payments to the
Overline Lenders in respect of the Overline Loans in the
Register as provided in Section 2.5 below.
B. Borrowing Mechanics. Overline Loans made on any
date (other than Overline Loans made pursuant to subsection 3.3B to
reimburse Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount.
Whenever Borrower desires that Overline Lenders make Overline Loans
it shall deliver to Agent a Notice of Borrowing no later than 11:00
a.m. (Charlotte time) at least one Business Day in advance of the
proposed funding. The Notice of Borrowing shall specify (i) the
proposed funding date (which shall be a Business Day) and (ii) the
amount of Overline Loans requested and shall certify that (a) Borrower
either has utilized or, simultaneously with such borrowing is
utilizing all Net Available Cash, (b) Net Available Cash has been
deducted from availability under the Overline Commitments
before determining compliance with the conditions for such
borrowing, (c) neither Borrower nor, to the best knowledge of the Plan
Manager, the Plan Manager knows any information, including any
information that supplements or revises the ARTB information most
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recently delivered to the Lenders and the Overline Lenders, that
indicates that Borrower is not (or will not be) in compliance with the
provisions of Section 6.20 of the Credit Agreement (including such
Section as incorporated by reference into this Agreement), (d)
neither Borrower nor, to the best knowledge of the Plan Manager, the
Plan Manager has any reason to believe that Borrower will not be able
to make the interest payments required under this Agreement and the
Credit Agreement in the current and immediately succeeding month, (e)
after giving effect to the proposed borrowing, Borrower shall not be
in violation of the provisions of Section 6.20(a) of the Credit
Agreement and no other Default shall exist under this Agreement and
(f) such other certifications and representations as the Agent may
request.
Borrower shall notify Agent prior to the funding
of any Overline Loans in the event that any of the matters to which
Borrower is required to certify in the applicable Notice of Borrowing
is no longer true and correct as of the applicable funding date, and the
acceptance by Borrower of the proceeds of any Overline Loans shall
constitute a re-certification by Borrower, as of the applicable
funding date, as to the matters to which Borrower is required to
certify in the applicable Notice of Borrowing.
C. Disbursement of Funds. Upon the receipt of a
Notice of Borrowing, Agent will promptly notify each Overline Lender
of the proposed borrowing, of such Overline Lender's Pro Rata Share
thereof and of the other matters specified in the Notice of Borrowing.
Each such Overline Lender will make the amount of its Pro Rata Share
of such borrowing available to Agent at its office referred to in
Section 9.4 of the Credit Agreement, for the account of Borrower, in
Dollars and in immediately available funds, prior to 12:00 noon,
Charlotte time, on the funding date. To the extent the relevant Overline
Lenders have made such amounts available to Agent as provided
hereinabove, Agent will make the aggregate of such amounts available
to Borrower's account at Agent's office and in like funds as received
by Agent, prior to 3:30 p.m., Charlotte time, on the funding date.
Unless Agent has received, prior to 12:00 noon,
Charlotte time, on any funding date, notice from an Overline Lender
that such Overline Lender will not make available to Agent its Pro
Rata Share of the relevant borrowing, Agent may assume that such
Overline Lender has made its Pro Rata Share of such borrowing available
to Agent on such funding date in accordance with the preceding
paragraph, and Agent may, in reliance upon such assumption, make a
corresponding amount available to Borrower on such funding date. If
and to the extent that such Overline Lender shall not have made
such Pro Rata Share available to Agent, and Agent shall have made
such corresponding amount available to Borrower, such Overline
Lender, on the one hand, and Borrower, on the other, severally agree
to pay to Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is
made available to Borrower until the date such amount is repaid to
Agent, (i) if recovered from such Overline Lender, at the Federal Funds
Rate, and (ii) if recovered from Borrower, at the rate of interest
applicable to Overline Loans comprising such borrowing. If such
Overline Lender shall repay to Agent such corresponding amount, such
amount so repaid shall constitute such Overline Lender's Overline
Loan as part of such borrowing for purposes of this Agreement.
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The failure of any Overline Lender to make any
Overline Loan required to be made by it as part of any borrowing shall
not relieve any other Overline Lender of its obligation, if any,
hereunder to make its Overline Loan on the respective funding date, but
no Overline Lender shall be responsible for the failure of any other
Overline Lender to make the Overline Loan to be made by such other
Overline Lender as part of any borrowing.
D. Voting Rights. Notwithstanding any other
provision contained herein or in any of the other Restructuring
Documents, any Overline Lender that violates any obligation to fund or
otherwise defaults in the funding of its Pro Rata Share of any Overline
Loans requested and permitted to be made by Borrower hereunder shall
not, for so long as such refusal has not been withdrawn or such default
has not been cured, have any rights of consent or approval or any voting
rights whatsoever with respect to any matter hereunder or under any of
the other Restructuring Documents that requires or permits the consent,
approval or action of the Overline Lenders, or any of them, and the
Overline Commitments and Overline Loans of any such Overline Lender
shall not be taken into account for purposes of determining, at any time
during the continuance of any such refusal or default, the Required
Overline Lenders or the number or percentage of Overline Lenders that
shall be required for the Overline Lenders or any of them to take or
approve, or direct Agent to take, any action hereunder.
Section 2.2 Interest. The Overline Loans shall bear
interest on the unpaid principal amount thereof from (and
including) the date made to maturity (whether by acceleration or
otherwise) at a rate equal to the sum of the Base Rate plus 2% per
annum.
Interest shall be payable on the Overline Loans in
arrears on and to the last day of each month, commencing with the first
such date to occur after the Effective Date and at maturity.
Section 2.3 Post-Maturity Interest. Any principal
payments on the Overline Loans not paid when due and, to the extent
permitted by applicable law, any interest payments on the Overline Loans
not paid when due, in each case whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, shall
thereafter bear interest payable upon demand at a rate which is 2.5%
per annum in excess of the rate of interest otherwise payable under this
Agreement and then applicable to the Overline Loans. In view, among
other things, of the fact that the Borrower has requested and
obtained nine successive temporary waivers of Events of Default under
the Credit Agreement, which expire on the date of this Agreement, so
that absent the Third Amendment and this Agreement the Agent and the
Required Lenders would be entitled to exercise their remedies, the
Borrower agrees that the post-maturity interest provided in this
Section is fair and reasonable.
Section 2.4 Computation of Interest. Interest on the
Overline Loans shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it accrues.
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Section 2.5 Register.
A. Agent shall maintain a register (the "Register") on
which it will record the Overline Commitment from time to time of each
Overline Lender, the Overline Loans maintained or made by each Overline
Lender and each repayment in respect of the principal amount of the
Overline Loans of each Overline Lender.
B. Each Overline Lender will record on the schedule
attached to its Overline Note the amount of the Overline Loans
maintained or made by it and each payment in respect thereof. Failure
to make any such recordation, or any error in such recordation, shall
not affect Borrower's obligations in respect of such Overline Loans.
As between such Overline Lender and Borrower, any such recordation
shall be conclusive and binding, absent manifest error.
Section 2.6 Commitment Reductions; Prepayments;
Application of Payments.
A. Voluntary Commitment Reductions and Prepayments.
Borrower may, on any Business Day, permanently reduce the aggregate
Overline Commitments by written notice to Agent specifying the
effective date and the aggregate amount of such reduction. Notice of
reduction having been given as aforesaid, the Overline Commitments
shall be automatically reduced pro rata on the date and in the amount
specified in such notice; provided that, in no event shall the
Overline Commitments be so reduced if, as a result of such
reduction, the aggregate amount of the Overline Commitments would be
less than the aggregate principal amount of the then outstanding
Overline Loans. Borrower may, upon written or telephonic notice
delivered to Agent on or prior to 12:00 Noon (Charlotte time) on the
date of prepayment, which notice shall be promptly confirmed in
writing, at any time prepay the Overline Loans, pro rata, in whole or
in part in any amount. Notice of prepayment having been given as
aforesaid, the principal amount of the Overline Loans specified in such
notice shall become due and payable on the prepayment date.
B. Mandatory Commitment Reductions and Prepayments.
(i) On January 2, 1997, (a) the aggregate
amount of the Overline Commitments shall be automatically
reduced to $10,000,000 and (b) the Borrower shall make
principal repayments from Net Cash Proceeds in an aggregate
amount equal to $40,000,000; provided that (1) prior to making
such repayment, the Borrower shall prepay Overline Loans
in an aggregate amount equal to the amount of Net Available
Cash on January 2, 1997 and (2) no portion of the
principal payments required to be made pursuant to this
paragraph (i) may be made with proceeds of Overline Loans or
proceeds from the escrow account referred to in Section 3.2(ii)
of the Third Amendment; provided further that payments made
prior to January 2, 1997 may be credited against such
payment to the extent and in the manner provided in Section
2.6B(vi)(4) of this Agreement.
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(ii) On each date on which (a) the aggregate
Net Cash Proceeds received by the Borrower and its
Subsidiaries after the Effective Date exceeds $80,000,000
and (b) the Borrower receives any Borrower Net Cash Proceeds,
the aggregate amount of the Overline Commitments shall be
automatically reduced, in an aggregate amount equal to the
amount of the Borrower Net Cash Proceeds received by the
Borrower and its Subsidiaries on such date.
(iii) On any date on which the Total
Utilization of Overline Commitments exceeds the aggregate
amount of the Overline Commitments, Borrower shall make a
prepayment in an aggregate amount equal to the amount of such
excess; provided that, to the extent such excess amount
required to be prepaid is greater than the aggregate
principal amount of the Overline 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 security for the Borrower's
Reimbursement Obligations, as more particularly described
in Section 3.6.
(iv) By 2:00 p.m. (Charlotte time) on each
Thursday (or, if any Thursday is not a Business Day, on the
next Business Day), Borrower shall prepay outstanding Overline
Loans in an aggregate amount equal to the amount of Net
Available Cash as of the close of business on the immediately
preceding Business Day; provided that the Overline Commitments
shall not be reduced in connection with any such
prepayment.
(v) On each date on which the Borrower is in
default under the provisions of Section 6.20 of the Credit
Agreement, the Borrower shall prepay Overline Loans in an
aggregate amount equal to the aggregate amount of prepayments
required to be in compliance with the provisions of Section
6.20 of the Credit Agreement, as incorporated herein pursuant
to Article VII hereof.
(vi) Prepayments and Reductions from
Net Cash Proceeds. Immediately upon receipt by Borrower
or any of its Subsidiaries of any Net Cash Proceeds,
Borrower shall prepay the Overline Loans and Reducing
Revolving Loans in an aggregate amount equal to the product
of (a) the amount of such Net Cash Proceeds multiplied by
(b) the applicable Lenders' Percentage as follows:
(1) During the Initial
Period, all prepayments will be applied first to
prepay Overline Loans (and availability under the
Overline Commitments will be blocked in the amount of
such prepayments until the Initial Period Date as
provided in the definition of Total Utilization) and
thereafter to prepay outstanding Reducing Revolver
Loans;
(2) On the Initial Period Date,
the Borrower shall prepay Reducing Revolving Loans in
an aggregate amount equal to the aggregate amount
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of prepayments made pursuant to paragraph (1) above
with the proceeds of Overline Loans made in
accordance with the provisions of subsection
2.1A(ii);
(3) During the period from the
Initial Period Date to but excluding January 2, 1997,
all prepayments will be applied to prepay outstanding
Reducing Revolving Loans;
(4) On January 2, 1997 (or, if the
Borrower otherwise qualifies for a cancellation
of Warrants in accordance with the terms of the
Warrants, on such earlier date of determination), the
Overline Loans shall be prepaid with the proceeds of
the Reducing Revolving Loans made pursuant to
subsection 2.1(b)(ii) of the Credit Agreement
(and such prepayment shall be credited against the
principal payment required pursuant to subsection
2.6B(i));
(5) Any prepayments from Net Cash
Proceeds received on January 2, 1997 shall be
applied first to the payment required pursuant to
subsection 2.6B(i) and thereafter to prepay Reducing
Revolving Loans; and
(6) Any prepayments from Net Cash
Proceeds received after January 2, 1997 shall be
applied to prepay outstanding Reducing Revolving
Loans.
All Borrower Net Cash Proceeds may be retained by the
Borrower and no prepayment of the Overline Loans and Reducing Revolving
Loans shall be required pursuant to this subsection 2.6B(vi) in
respect of such Borrower Net Cash Proceeds; provided that the
Overline Commitments shall be reduced as provided in subsection
2.6B(ii) above.
Concurrently with any prepayment of the Overline
Loans or Reducing Revolving Loans and/or reduction of the Overline
Commitments or the Reducing Revolving Credit Commitments pursuant to
this subsection, Borrower shall deliver to Agent an Officers'
Certificate demonstrating the derivation of the Net Cash Proceeds from
the gross proceeds thereof. In the event that Borrower shall, at
any time after receipt of Net Cash Proceeds requiring a prepayment
or a reduction of the Overline Commitments pursuant to this
subsection, determine that the prepayments and/or reductions of the
Overline Commitments previously made in respect of such Net Cash
Proceeds were in an aggregate amount less than that required by
the terms of this subsection, Borrower shall promptly make an
additional prepayment of the Overline Loans or Reducing Revolving
Loans, as the case may be (and, if applicable, the Overline Commitments
shall be permanently reduced), in the manner described above in an
amount equal to the amount of any such deficit, and Borrower shall
concurrently therewith deliver to Agent an Officers' Certificate
demonstrating the derivation of the additional Net Cash Proceeds
resulting in such deficit. Any mandatory prepayments or reductions of
the Overline Commitments pursuant to this subsection shall be
applied as specified in subsection 2.6C.
Section 2.7 Manner and Time of Payments. Unless
otherwise specified herein, each payment and prepayment of principal of
and interest on the Overline Loans shall
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be made by Borrower not later than 12:00 noon, Charlotte time, on the
date on which it is payable. Each payment and prepayment of principal
and interest on the Overline Loans shall be made in Federal funds or
other immediately available funds.
Section 2.8 Apportionment of Payments. Aggregate
principal and interest payments in respect of Overline Loans shall be
apportioned ratably among Overline Lenders, in proportion to their
respective Pro Rata Shares. Agent shall promptly distribute to each
Overline Lender at its primary address set forth below its name on
the applicable signature page hereof or such other address as any
Overline Lender may request, in accordance with Section 10.15, its
share of all such payments received by Agent.
Section 2.9 Payments on Non-Business Days. Whenever any
payment to be made hereunder shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder.
Section 2.10 Notation of Payment. Each Overline
Lender agrees that before disposing of any Note held by it, or any part
thereof (other than by granting participations therein), that
Overline Lender will make a notation thereon of all Overline Loans and
principal payments previously made thereon and of the date to which
interest thereon has been paid and will notify Borrower and Agent of the
name and address of the transferee of that Overline Note; provided that
the failure to make (or any error in the making of) a notation of
any Overline Loan made under such Overline Notes or to notify Borrower
and Agent of the name and address of such transferee shall not limit or
otherwise affect the obligation of Borrower hereunder or under such
Overline Notes with respect to any Overline Loan and payments of
principal or interest on such Overline Note.
Section 2.11 Capital Adequacy. In the event that any
Overline Lender shall have determined that the adoption or
implementation after the date hereof of any applicable law, treaty,
governmental (or quasi-governmental) rule, regulation, order or
guideline regarding capital adequacy, including, without limitation,
the regulations set forth at 12 C.F.R. Part 208 (Appendix A) and 12
C.F.R. Part 225 (Appendix A), or any change therein, or any
change in the interpretation or application thereof, or compliance by
such Overline Lender with any request or directive regarding capital
adequacy (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) from any domestic or
foreign central bank or governmental agency or body having
jurisdiction, does or shall have the effect of increasing the amount of
capital required to be maintained by such Overline Lender and
thereby reducing the rate of return on such Overline Lender's capital
as a consequence of its obligations hereunder, then from time to
time, within five days after demand from such Overline Lender (with a
copy to Agent) including a certificate setting forth in reasonable
detail the manner of calculation of the reduction in the rate of return
on such Overline Lender's capital and claiming compensation pursuant
to this Section 2.11, Borrower shall pay to Agent, for the account of
such Overline Lender, such additional amount or amounts as will
compensate such Overline Lender for such reduction. A certificate
as to the amount of such compensation, submitted to Borrower
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and Agent by such Overline Lender, shall, absent manifest error,
be final, conclusive and binding for all purposes. In determining such
amount, an Overline Lender may use any averaging and attribution method;
provided, however, that such method shall be reasonable.
Section 2.12 Taxes.
A. Any and all payments or reimbursements made
under this Agreement or under the Overline Notes shall be made
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) taxes imposed on the overall income
(whether gross or net) of an Overline Lender or Agent by the
jurisdiction in which the Overline Lender or Agent is organized,
resident or doing business, (ii) taxes, levies, imposts, deductions,
charges or withholdings which are imposed by laws, treaties or
regulations in effect as of the Effective Date; provided, however,
that any changes in laws, treaties or regulations or the interpretation
thereof after the Effective Date shall not be excluded pursuant to
this clause (ii), and (iii) taxes, levies, imposts, deductions,
charges or withholdings which an Overline Lender could have avoided in
the ordinary course of its business (including by payment of its
taxes) or without the incurrence of additional expense (all such
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes").
If Borrower shall be required by law to deduct any
Taxes from or in respect to any sum payable hereunder to any Overline
Lender or Agent, then the sum payable shall be increased as may be
necessary so that, after making all required deductions, such Overline
Lender or Agent receives an amount equal to the sum it would have
received had no such deductions been made.
B. Each Overline Lender organized under the
laws of a jurisdiction outside the United States (referred to in
this Section 2.13B as a "Foreign Bank") as to which payments to be
made under this Agreement or under the Overline Loan Notes are exempt
from or otherwise not subject to United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent
(i) a properly completed and executed Internal Revenue Service Form
4224 or Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service of the United States
certifying that such Foreign Bank is exempt from or otherwise not
subject to United States withholding tax with respect to payments to
be made to such Foreign Bank under this Agreement and under the
Overline Loan Notes (referred to in this Section 2.12B as a
"Certificate of Exemption") or (ii) a letter from any such Foreign
Bank stating that it is not entitled to any such exemption (referred to
in this Section 2.12B as a "Letter of Non-Exemption"). Each Foreign Bank
that becomes an Overline Lender under this Agreement subsequent to
the Effective Date shall provide a Certificate of Exemption or a
Letter of Non-Exemption to Borrower and Agent within 15 days after
becoming an Overline Lender under this Agreement and annually
thereafter, to be delivered no later than December 31 in the year
preceding the year to which it applies.
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If a Foreign Bank is exempt from or otherwise not
subject to United States withholding tax with respect to payments
to be made to such Foreign Bank under this Agreement and does not
provide a Certificate of Exemption to Borrower and Agent within
the time periods set forth in the preceding paragraph, Borrower shall
withhold taxes from payments to such Foreign Bank at the applicable
statutory rates and Borrower shall not be required to pay any additional
amounts as a result of such withholding as provided in Section 2.12A;
provided, however, that all such withholding and associated limitations
in payment under Section 2.12A shall cease upon delivery by such Foreign
Bank of a Certificate of Exemption to Borrower and Agent.
Section 2.13 Fees. Borrower agrees to pay to Agent in
cash on the Effective Date, for distribution to Overline Lenders in
proportion to their respective Pro Rata Shares, a facility fee equal to
2.0% of the aggregate amount of the Overline Commitments.
Section 2.14 Extension of Financial Covenants;
Termination of Commitments. The Borrower hereby agrees to deliver a
3-year business plan to the Lenders by September 30, 1996. The Borrower
hereby further agrees that if the Credit Agreement (and, by
incorporation, this Agreement) is not amended by January 15, 1997 to
establish financial covenants for the period subsequent to February
1997 satisfactory in form and substance to (i) Overline Lenders holding
82% of the Overline Commitments and (ii) Lenders holding 82% of the
Reducing Revolving Credit Commitments, the Overline Commitments
and the Reducing Revolving Credit Commitments shall automatically
terminate and all Overline Loans, Reducing Revolving Loans, and all
obligations under the Credit Agreement and this Agreement, will become
automatically due and payable on February 28, 1997.
Section 2.15 Extension of Overline Maturity Date.
If (i) no Event of Default or Default has occurred and is continuing,
(ii) financial covenants have been established for the period after
February 1997 pursuant to Section 2.14 and (iii) the accounts
receivables reviews required pursuant to Section 6.2 have been
completed satisfactorily to the Overline Lenders, Borrower may request
an extension of the Overline Maturity Date to any date on or prior to
October 1, 1997 by delivering to Agent a written request specifying
the proposed Overline Maturity Date. Agent shall promptly deliver
to Overline Lenders a copy of any extension request received by Agent
and, upon receipt thereof, each Overline Lender shall consider
such extension request and determine, in its sole discretion, whether
to approve such extension; provided that it is understood and agreed
that no Lender shall have or be deemed to have any obligation to approve
such request. If each Overline Lender approves such request in
writing, the Overline Maturity Date shall be automatically extended to
such date. Any request not approved in writing by 100% of the
Overline Lenders within five Business Days after the delivery of such
request by Agent to Overline Lenders shall be deemed rejected and the
Overline Maturity Date shall not be extended.
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Section 2.16 Priority of Payments.
Except as otherwise expressly provided herein,
including without limitation as provided in Section 2.6B(vi), all
payments and other amounts received by Agent (including without
limitation all proceeds of Collateral and payments pursuant to
Section 2.6B(i)) under the Credit Documents or the Restructuring
Documents shall be applied first to Overline Obligations then owing and
thereafter to amounts owing under or in respect of the Credit
Agreement; provided that application of any such payments or amounts to
Overline Obligations shall not constitute a waiver of any amounts due
under or in respect of the Credit Agreement.
ARTICLE III
LETTERS OF CREDIT
Section 3.1 Issuance of Letters of Credit and
Purchase of Participations Therein.
A. Letters of Credit. 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, Borrower may request
Issuing Lender at any time and from time to time on and after the
Effective Date and prior to the Overline Maturity Date to issue, for
the account of Borrower and for the benefit of any holder (or any
trustee, agent or other similar representative for any such holders)
of L/C Supportable Indebtedness, one or more irrevocable standby
letters of credit in a form customarily used by Issuing Lender or in
such other form as has been approved by Issuing Lender, in support
(directly or indirectly) of such L/C Supportable Indebtedness. All
Letters of Credit shall be denominated in Dollars. The Stated Amount
of each Letter of Credit shall not be less than such amount as may be
acceptable to Issuing Lender.
Issuing Lender will, 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, at any time and from
time to time on and after the Effective Date and prior to the Overline
Maturity Date, following the receipt of a Notice of Issuance of Letter
of Credit, issue for the account of Borrower one or more Letters of
Credit in support of such L/C Supportable Indebtedness as is permitted
to remain outstanding without giving rise to a Default or Event of
Default; provided, that 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 Issuing Lender from issuing such Letter of Credit,
or any Requirement of Law applicable to Issuing Lender or
any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over
Issuing Lender shall prohibit, or request that Issuing
Lender refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or
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shall impose upon Issuing Lender with respect to such Letter
of Credit any restriction or reserve or capital requirement
(for which 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
Issuing Lender as of the Closing Date and that Issuing
Lender in good faith deems material to it; or
(ii) Issuing Lender shall have received notice
from any Overline Lender prior to the issuance of such
Letter of Credit of the type described in the penultimate
sentence of Section 3.1B below.
Notwithstanding the foregoing, no Letter of Credit
shall be issued if (i) the Letter of Credit Usage at such time, would
exceed $2,500,000 or (ii) the sum of the Total Utilization of Overline
Commitments and accrued and unpaid interest on the Overline Loans as
of the date of the proposed issuance would exceed the aggregate
Overline Commitments at such time, or (iii) that by its terms expires
later than the tenth day prior to the Overline Maturity Date or, in any
event, more than one year after its date of issuance.
B. Mechanics of Issuance. Whenever Borrower
desires that a Letter of Credit be issued for its account, Borrower
will notify Issuing Lender (with copies to Agent) in writing, by 11:00
a.m., Charlotte time, at least three (3) Business Days' (or such shorter
period as is acceptable to Issuing Lender in any given case) prior to
the requested date of issuance thereof. Each Notice of Issuance of
Letter of Credit shall be irrevocable, shall be given in the form of
Exhibit E and shall be appropriately completed to specify (i) the
proposed date of issuance (which shall be a Business Day), (ii) the
proposed Stated Amount and expiry date of the Letter of Credit, (iii)
the name and address of the proposed beneficiary or beneficiaries of
the Letter of Credit and (iv) the L/C Supportable Indebtedness
in support of which the Letter of Credit is requested to be issued.
Borrower will also complete any application procedures and
documents required by Issuing Lender in connection with the
issuance of any Letter of Credit. Agent will, promptly upon its
receipt thereof, notify each Overline Lender of the Notice of
Issuance of Letter of Credit. The making of each Notice of Issuance
of Letter of Credit shall be deemed to be a representation and
warranty by Borrower that such Letter of Credit may be issued in
accordance with, and will not violate the requirements of, Section
3.1A above. Unless Issuing Lender has received notice from any Overline
Lender before it issues a Letter of Credit that one or more of the
conditions specified in Section 4.3 are not then satisfied, or that
the issuance of such Letter of Credit would violate Section 3.1A
above, then Issuing Lender may issue the requested Letter of Credit
in accordance with its usual and customary practices. Upon its issuance
of any Letter of Credit, Issuing Lender shall promptly notify each
Overline Lender of such issuance and of the amount of its
participation therein under Section 3.1C below.
C. Purchase of Participations. Immediately upon the
issuance by Issuing Lender of any Letter of Credit, Issuing Lender
shall be deemed to have sold and transferred to each Overline Lender,
and each Overline Lender (each, an "L/C Participant") shall be deemed
irrevocable and unconditionally to have purchased and received from
Issuing Lender, without recourse or warranty, an undivided interest
and participation, in accordance with its Pro Rata
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Share at such time, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of
Borrower under this Agreement with respect thereto and any security
therefor or guaranty pertaining thereto; provided, however, that the
fees and other charges relating to Letters of Credit described in
subsection 3.2(i)(a) shall be payable directly to Issuing Lender as
provided therein, and the L/C Participants shall have no right to
receive any portion thereof. Upon any change in the Overline
Commitments of any of the Overline Lenders, it is hereby agreed
that, with respect to all outstanding Letters of Credit and
Reimbursement Obligations, there shall be an automatic adjustment to
the participations pursuant to this subsection to reflect the new
Pro Rata Shares of the assigning Overline Lender and the
Assignee.
Section 3.2 Letter of Credit Fees. Borrower
agrees to pay the following amounts with respect to Letters of Credit
issued hereunder:
(i) with respect to each Letter of Credit, (a) a
fronting fee, payable directly to Issuing Lender for its own
account, equal to .125% per annum of the daily maximum amount
available to be drawn under such Letter of Credit and (b) a
letter of credit fee, payable to Agent for the account of
Overline Lenders, equal to 2.00% per annum of the daily amount
available to be drawn under such Letter of Credit, each such
fronting fee or letter of credit fee to be payable in arrears
on and to (but excluding) each March 31, June 30, September 30
and December 31 of each year and computed on the basis of a
360-day year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each payment of a
drawing made thereunder (without duplication of the fees
payable under clauses (i) and (ii) above), documentary and
processing charges payable directly to Issuing Lender for its
own account in accordance with Issuing Lender's standard
schedule for such charges in effect at the time of such
issuance, amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii)
of this subsection 3.2, the daily amount available to be drawn
under any Letter of Credit shall be determined as of the close of
business on any date of determination. Promptly upon receipt by
Agent of any amount described in clause (i)(b) or (ii) of this
subsection 3.2, Agent shall distribute to each Overline Lender its Pro
Rata Share of such amount.
Section 3.3 Drawings and Reimbursement of Amounts
Paid Under Letters of Credit.
A. Responsibility of Issuing Lender With Respect
to Drawings. In determining whether to pay under any Letter of Credit,
Issuing Lender shall not have any obligation relative to the L/C
Participants other than to confirm that any documents required to be
delivered under such Letter of Credit have been delivered and that they
appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be
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taken by 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 not create for Issuing Lender any resulting
liability to Borrower or any Overline Lender.
B. Reimbursement of Amounts Paid Under Letters of
Credit.
(i) In the event that Issuing Lender makes any
payment under any Letter of Credit and Borrower shall not
have timely satisfied in full its Reimbursement Obligation
to Issuing Lender pursuant to subsection 3.3B(iii) below,
and to the extent that any amounts then held in any cash
collateral account established pursuant to subsection 3.6
below shall be insufficient to satisfy such
Reimbursement Obligation in full, Issuing Lender will
promptly notify Agent, and Agent will promptly notify each
L/C Participant, of such failure. If Agent gives such notice
prior to 11:00 a.m., Charlotte time, on any Business Day to
any L/C Participant required to fund a payment under a Letter
of Credit, such L/C Participant will make available to
Agent, for the account of Issuing Lender, such L/C
Participant's Pro Rata Share of the amount of such payment on
such Business Day in immediately available funds. If Agent
gives such notice after 11:00 a.m., Charlotte time, on any
Business Day to any such L/C Participant, such L/C
Participant shall make its Pro Rata Share of such amount
available to Agent on the next succeeding Business Day. If
and to the extent such L/C Participant shall not have so made
its Pro Rata Share of the amount of such payment available to
Agent, such L/C Participant agrees to pay to Agent, for the
account of Issuing Lender, forthwith on demand such amount,
together with interest thereon, for each day from such date
until the date such amount is paid to Agent at the Federal
Funds Rate. The failure of any L/C Participant to make
available to Agent its Pro Rata Share of any payment under any
Letter of Credit shall not relieve any other L/C Participant of
its obligation hereunder to make available to Agent its Pro
Rata Share of any payment under any Letter of Credit on the
date required, as specified above, but no L/C Participant
shall be required to make available to Agent such other L/C
Participant's Pro Rata Share of any such payment. Each such
payment by an L/C Participant under this subsection 3.3B of
its Pro Rata Share of an amount paid by Issuing Lender shall be
deemed an Overline Loan by such Overline Lender (Borrower being
deemed to have given a timely Notice of Borrowing therefor)
and shall be treated as such for all purposes of this
Agreement; provided that for purposes of determining the
available unused portion of the Overline Commitment
immediately prior to giving effect to the application of the
proceeds of such Overline Loans, the Reimbursement Obligation
being satisfied thereby shall be deemed not to be outstanding
at such time; provided further that all Reimbursement
Obligations that are not reimbursed by Borrower shall
constitute Overline Obligations and shall be secured pursuant
to the Collateral Documents.
(ii) Whenever Issuing Lender receives a
payment of a Reimbursement Obligation as to which Agent
has received, for the account of Issuing Lender, any
payments from the L/C Participants pursuant to the
immediately preceding paragraph, Issuing Lender will
promptly pay to Agent, and Agent will promptly pay to each L/C
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Participant that has paid its Pro Rata Share thereof, in
immediately available funds, an amount equal to such L/C
Participant's share (based on the proportionate aggregate
amount funded by such L/C Participant to the aggregate amount
funded by all L/C Participants) of the principal amount of
such Reimbursement Obligation and interest thereon accruing
after the purchase of the respective participations.
(iii) Borrower hereby agrees to reimburse Issuing
Lender, by making payment to Agent, for the account of
Issuing Lender, in immediately available funds, for any
payment or disbursement made by Issuing Lender under any
Letter of Credit (each such amount so paid or disbursed until
reimbursed, together with interest thereon payable as provided
hereinbelow, a "Reimbursement Obligation") immediately after,
and in any event on the date of, such payment or
disbursement, with interest on the amount so paid or disbursed
by Issuing Lender, to the extent not reimbursed prior to
2:00 p.m., Charlotte time, on the date of such payment or
disbursement, from and including the date paid or disbursed
to but not including the date Issuing Lender was reimbursed
therefor, at a rate per annum equal to (i) for the period
from and including the date of the respective payment or
disbursement to the date of receipt by Borrower from Issuing
Lender or Agent of notice of such payment or disbursement, the
Base Rate as in effect from time to time during such period,
and (ii) for the period from and including the date of receipt
by Borrower from Issuing Lender or Agent of notice of such
payment or disbursement to the date Borrower satisfies
the Reimbursement Obligation created thereby, the Base Rate
as in effect from time to time during such period plus 2.00%,
such interest also to be payable on demand. Issuing Lender
will provide Agent and Borrower with prompt notice of any
payment or disbursement made under any Letter of Credit,
although the failure of, or delay in, giving any such notice
shall not release or diminish the obligations of Borrower
under this subsection or any other provision of this
Agreement. Borrower's obligation under this subsection(i)
to satisfy its Reimbursement Obligations shall be absolute
and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment
that Borrower may have or have had against any Overline
Lender (including in its capacity as Issuing Lender
or L/C Participant), including, without limitation, any
defense based upon the failure of any drawing under a Letter of
Credit (each, a "Drawing") to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by
the beneficiary of the proceeds of such Drawing; provided,
however, that Borrower shall not be obligated to reimburse
Issuing Lender for any wrongful payment made by Issuing Lender
under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part
of Issuing Lender.
Section 3.4 Obligations Absolute. The Reimbursement
Obligations of Borrower, and the obligations of the L/C Participants
to make payments to Agent, for the account of Issuing Lender, with
respect to Letters of Credit shall be irrevocable, shall remain in
effect until Issuing Lender shall have no further obligations to
make any payments or disbursements under any circumstances with
respect to any Letter of Credit and shall not be subject to
counterclaim, setoff or other defense or any other qualification or
exception
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whatsoever and shall be made in accordance with the terms and conditions
of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of
this Agreement, any of the other Restructuring Documents or any
documents or instruments relating to any Letter of Credit;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Overline
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;
(iii) the existence of any claim, setoff, defense
or other right that 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), Agent, Issuing Lender, any
Overline 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 Borrower and
the beneficiary named in any such Letter of Credit);
(iv) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(v) the exchange, surrender or impairment of any
security for the performance or observance of any of the terms
of any of the Restructuring Documents;
(vi) the occurrence of any Default or Event of
Default; or
(vii) any other circumstance or event whatsoever,
including, without limitation, any other circumstance that
might otherwise constitute a defense available to, or a
discharge of, Borrower or a guarantor.
Section 3.5 Increased Costs. If at any time after the
Effective Date the Issuing Lender or any L/C Participant determines
that the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by Issuing
Lender or any administration thereof, or compliance by Issuing Lender
or any L/C Participant with any request or directive by any such
authority (whether or not having the force of law) shall either (i)
impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by
Issuing Lender or participated in by any L/C Participant or (ii)
impose on Issuing Lender or any L/C Participant any other
conditions relating, directly or indirectly, to this Agreement or
any Letter of Credit, and the result of any of the foregoing is to
increase the cost
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to Issuing Lender or L/C Participant of issuing,maintaining or
participating in any Letter of Credit, or reduce the amount of any sum
received or receivable by Issuing Lender or such L/C Participant
hereunder or reduce the rate of return on its capital with respect to
Letters of Credit, then Borrower will, within fifteen (15) days
after delivery to Borrower by Issuing Lender or such L/C
Participant of written demand therefor (with a copy thereof to Agent),
pay to Issuing Lender or such L/C Participant such additional
amounts as shall compensate Issuing Lender or such L/C Participant
for such increase in costs or reduction in return. A certificate
submitted to Borrower by Issuing Lender or such L/C Participant, as
the case may be (a copy of which certificate shall be sent by Issuing
Lender or such L/C Participant to Agent), setting forth the basis
for the determination of such additional amount or amounts necessary
to compensate Issuing Lender or such L/C Participant as aforesaid,
shall be conclusive and binding on Borrower absent manifest error.
Section 3.6 Cash Collateral Account. At any time and
from time to time (i) during the continuance of an Event of
Default, Agent, at the direction, or with the consent, of the
Required Overline Lenders, may require Borrower to deliver to Agent
such additional amount of cash as is equal to the aggregate Stated
Amount of all Letters of Credit at any time outstanding (whether
or not any beneficiary under any Letter of Credit shall have drawn or
be entitled at such time to draw thereunder) and (ii) in the
event of a repayment under Section 2.6B(iii), Agent shall retain such
amount as is required to be retained under the proviso in Section
2.6B(iii), such amount in each case under clauses (i) and (ii) above to
be held by Agent in a non-interest bearing cash collateral account
(the "Cash Collateral Account") as security for, and for application to,
Borrower's Reimbursement Obligations. In the event of a drawing, and
subsequent payment or disbursement by Issuing Lender, under any
Letter of Credit at any time during which any amounts are held in
the Cash Collateral Account, Agent shall deliver to Issuing Lender
an amount equal to the Reimbursement Obligation created as a
result of such payment or disbursement (or, if the amounts so held are
less than such Reimbursement Obligation, all of such amounts) to
reimburse Issuing Lender therefor to the extent thereof. Any amounts
remaining in the Cash Collateral Account after the expiration of all
Letters of Credit and reimbursement in full of Issuing Lender for
all of its obligations thereunder shall be held by Agent, for the
benefit of Borrower, to be applied against the Overline Obligations in
such order as Agent may direct.
Section 3.7 Survival of Certain Obligations.
Notwithstanding any termination of the Overline Commitments or
repayment of the Overline Loans, or both, the obligations of Borrower
under this Section shall remain in full force and effect until Issuing
Lender and the L/C Participants shall have no further obligations to
make any payments or disbursements under any circumstances with
respect to any Letter of Credit.
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ARTICLE IV
CONDITIONS TO EFFECTIVENESS
Section 4.1 Conditions to Effectiveness. This
Agreement shall become effective as of the date when each of the
following shall have occurred:
A. Execution of Restructuring Documents. Agent, on
behalf of Overline Lenders, shall have received a counterpart hereof
executed by a duly authorized officer of Borrower and each Overline
Lender, and a fully executed counterpart of each other Restructuring
Document. Each Restructuring Document (including without limitation
the Third Amendment) shall have become effective in accordance with its
terms.
B. Corporate Action. Agent shall have received
resolutions of the Board of Directors of Borrower and each of its
Subsidiaries (other than the HMOs) approving and authorizing the
execution, delivery and performance of each Restructuring Document to
which it is a party, each certified as of the Effective Date by its
corporate secretary or an assistant secretary in being as full force and
effect without modification or amendment.
C. Legal Opinions. The Agent and each Overline
Lender shall have received the favorable opinion of the law firm of
Moore & Van Allen, PLLC counsel to the Borrower and its Subsidiaries,
and Joseph G. Piemont, Esq., general counsel to the Borrower and
its Subsidiaries, each dated as of the Effective Date and addressed
to the Agent and each Overline Lender, and such other opinions as the
Agent or the Overline Lenders may reasonably request, including an
opinion of Pennington & Haben, P.A., local counsel to the Florida
Subsidiaries, all in form and substance satisfactory to the Agent
and the Required Overline Lenders.
D. Fees and Expenses. Borrower shall have paid
(i) all reasonable out-of-pocket fees and expenses (including
professional fees and allocated costs of internal counsel) incurred by
Agent and each of the Overline Lenders through the Effective Date plus
post-closing amounts estimated by them, (ii) all fees payable on or
before the Effective Date pursuant to subsection 2.13, and (iii)
payment of a retainer of $50,000 to secure payment of fees and expenses
of Ernst & Young billed after the Effective Date, which retainer shall
be applied, together with interest accrued at a rate of 4% per annum, to
Ernst & Young's final invoice.
E. Representations and Warranties. The
representations and warranties contained in the Credit Agreement and
in this Agreement shall be true, correct and complete to the
satisfaction of the Agent in all respects as of the Effective Date,
except, in the case of the Credit Agreement, to the extent such
representation and warranties relate solely to or are specifically
expressed as of a particular date or period.
F. Warrants; Registration Rights Agreement.
Warrants representing 5% of the fully diluted common stock of Borrower
shall have been issued by Borrower to the Overline Lenders in proportion
to their Pro Rata Shares. A Registration Rights Agreement shall
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have been executed and delivered by the parties thereto and shall
have become effective in accordance with its terms.
G. No Event of Default or Default. No Event of
Default or Default pursuant to the Credit Agreement or this Agreement
shall have occurred and be continuing as of the Effective Date, after
giving effect to the Third Amendment.
H. Audit Opinions. The Agent and Overline
Lenders shall have received unqualified audit opinions of KPMG Peat
Marwick for Borrower and its Subsidiaries on a consolidated basis and
for each of the HMO's (provided that the financial statements for the
North Carolina and Florida HMOs shall be prepared in accordance with
applicable regulatory accounting procedures).
I. Borrower's Representation as to Material
Adverse Change. Borrower shall deliver an Officer's Certificate
representing that no Material Adverse Change shall have occurred since
the date of the PW Report and such representation shall be true and
correct.
J. Security Interests. Borrower shall have
taken or caused to be taken all such actions as are necessary or
desirable in the judgment of the Agent to create in favor of the Agent
on behalf of the Overline Lenders a valid, enforceable and perfected
first priority Lien on all existing and future property of every kind or
nature of Borrower and its Subsidiaries (other than the HMOs), wherever
located, and all proceeds and products thereof (subject only to Liens
expressly permitted under the Credit Documents) including without
limitation (i) the delivery to the Agent of Uniform Commercial Code
financing statements, executed by the applicable Credit Parties as to
the Collateral granted by such Credit Parties for all jurisdictions as
may be necessary or desirable in the sole opinion of the Agent to
perfect the Agent's security interest in such Collateral, (ii) to the
extent not previously delivered, the delivery pursuant to the applicable
Collateral Documents by the applicable Credit Parties of such
certificates (which certificates shall be registered in the name of the
Agent or properly endorsed in blank for transfer or accompanied by
irrevocable undated stock powers duly endorsed in blank, all in form and
substance satisfactory to the Agent) representing all of the capital
stock required to be pledged pursuant to the Collateral Documents, (iii)
to the extent not previously delivered, the delivery pursuant to the
applicable Collateral Documents by the applicable Credit Parties of any
existing promissory notes, which promissory notes shall be endorsed to
the order of the Agent, representing all of the pledged debt required to
be delivered pursuant to the Collateral Documents, (iv) execution and
delivery by the Agent, the applicable Credit Parties and the applicable
depository institutions of letter agreements, satisfactory in form and
substance to the Agent, with respect to the perfection of security
interests in favor of the Agent in certain of the deposit accounts of
the Credit Parties, as required pursuant to the Security Agreements, (v)
the delivery to Agent of executed mortgages satisfactory in form and
substance to the Agent pursuant to which the Borrower and its
Subsidiaries grant Liens in all of their respective real property and
the recording of such mortgages with all appropriate authorities, (vi)
delivery to the Agent of all chattel paper of the Borrower and its
Subsidiaries, and (vii) the delivery to the
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Agent of the insurance certificates required to be delivered pursuant to
Section 6(b) of the Subsidiaries Security Agreement and Section 6(b)
of the Borrower Security Agreement.
K. Receivables Reserve Policy. Borrower will
deliver to the Overline Lenders a written summary of the accounts
receivables reserve policy in effect at the time KPMG Peat Marwick
audited the 1995 financial statements.
L. Effective Date. The Effective Date shall
have occurred on or before May 31, 1996.
Section 4.2 Conditions to All Overline Loans. The
obligations of Overline Lenders to make Overline Loans on each funding
date are subject to the following further conditions precedent:
A. Agent shall have received before that funding date,
(i) an originally executed Notice of Borrowing, in each case signed
by both the plan manager and the chief executive officer, the chief
financial officer or the treasurer of Borrower or by any executive
officer of Borrower designated by any of the above-described officers
on behalf of Borrower in a writing delivered to Agent, (ii) the
officers certificate required to be delivered pursuant to Section
2.1B and (iii) the Net Available Cash Certificate required to be
delivered pursuant to Section 6.3.
B. As of that funding date:
(i) The representations and warranties contained
herein and in the other Restructuring Documents shall be
true, correct and complete to the satisfaction of the Agent
in all respects on and as of that funding date to the same
extent as though made on and as of that date, except to the
extent such representations and warranties specifically
relate to an earlier date, in which case such
representations and warranties shall have been true,
correct and complete to the satisfaction of the Agent in
all respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing
or would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute an Event of Default or a Default;
(iii) Borrower shall have performed in all material
respects all agreements and satisfied all conditions which
this Agreement provides shall be performed or satisfied by
it on or before that funding date;
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or
restrain any Overline Lender from making the Overline Loans to
be made by it on that funding date; provided that only the
Overline
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Lenders so enjoined or restrained shall be excused from its
or their funding obligations as a result of this clause (iv);
(v) The making of the Overline Loans requested on such
Funding Date shall not violate any law including, without
limitation, Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve
System;
(vi) There shall not be pending or, to the
knowledge of Borrower, threatened, any action, suit,
proceeding, governmental investigation or arbitration
against or affecting Borrower or any of its Subsidiaries or
any property of Borrower or any of its Subsidiaries that has
not been disclosed by Borrower in writing or prior to the
making of the last preceding Overline Loans (or, in the
case of the initial Overline Loans, prior to the execution of
this Agreement), and there shall have occurred no development
not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that,
in either event, in the opinion of Agent or of Required
Overline Lenders, could be expected to have a Material Adverse
Effect; and
(vii) No Material Adverse Effect shall have
occurred since the Effective Date.
Section 4.3 Conditions to Letters of Credit. The
issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit)
is subject to the following conditions precedent:
A. On or before the date of issuance of the
initial Letter of Credit pursuant to this Agreement, the initial
Overline Loans shall have been made.
B. On or before the date of issuance of such Letter of
Credit, Agent shall have received an originally executed Notice of
Issuance of Letter of Credit, in each case signed by both the plan
manager and the chief executive officer, the chief financial officer
or the treasurer of Borrower or by any executive officer of Borrower
designated by any of the above-described officers on behalf of Borrower
in a writing delivered to Agent, together with all other information
specified in subsection 3.1 and such other documents or information as
the applicable Issuing Lender may reasonably require in connection
with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of
Credit, all conditions precedent described in subsection 4.2B shall be
satisfied to the same extent as if the issuance of such Letter of
Credit were the making of an Overline Loan and the date of issuance of
such Letter of Credit were the funding date for an Overline Loan.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce Overline Lenders to enter
into this Agreement and to make the Overline Loans, Borrower
represents and warrants to Agent and each Overline Lender that the
following statements are true, correct and complete:
Section 5.1 Organization and Powers. Each Credit
Party is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each
Credit Party has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted
and proposed to be conducted, to enter into the Restructuring
Documents to which it is a party and to carry out the transactions
contemplated hereby and thereby.
Section 5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution,
delivery and performance of each of the Restructuring Documents have
been duly authorized by all necessary corporate action by each
applicable Credit Party.
B. No Conflict. The execution, delivery and
performance by each Credit Party of the Restructuring Documents to which
it is a party does not and will not (w) violate any provision of any
law, rule or regulation applicable to Borrower or any of its
Subsidiaries, the certificate of incorporation, bylaws or other
applicable charter documents of Borrower or any of its Subsidiaries, or
any order, judgment or decree of any court or other agency of government
binding on Borrower or any of its Subsidiaries, (x) conflict with,
result in a breach of or constitute a material default under any
Contractual Obligation of Borrower or any of its Subsidiaries, (y)
result in or require the creation or imposition of any Lien upon any of
the properties or assets of Borrower or any of its Subsidiaries (other
than any Lien created in favor of Lenders or Overline Lenders pursuant
to the Restructuring Documents), or (z) require any approval of
stockholders or any approval or consent of any Person (other than
lessors of real property) under any Contractual Obligation of Borrower
or any of its Subsidiaries (other than such consents as shall have been
obtained pursuant to the Third Amendment), except for any approval or
consent which the failure to obtain could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse
Effect.
C. Governmental Consents. The execution,
delivery and performance by each Credit Party of the Restructuring
Documents to which it is a party does not and will not require any
registration with, consent or approval of, or notice to, or other action
to, with or by, any federal, state, provincial or other applicable
governmental authority or regulatory body.
D. Binding Obligation. Each of the
Restructuring Documents is the legally valid and binding obligation of
each Credit Party thereto, enforceable against such Credit Party
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in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
Section 5.3 Matters Relating to Collateral.
Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by the Credit Parties, together with (i) the
actions taken on or prior to the Effective Date pursuant to subsection
3.1J and (ii) the delivery to Agent of any Pledged Securities not
delivered to Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Securities have
been so delivered) are effective to create in favor of Agent for
the benefit of Overline Lenders, as security for the Overline
Obligations, a valid and perfected first priority Lien on all of the
Collateral, and all filings and other actions necessary or desirable
to perfect and maintain the perfection and first priority status of
such Liens have been duly made or taken and remain in full force and
effect, other than the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on
behalf of Agent.
Section 5.4 Relationship with Subsidiaries.
Borrower hereby represents, warrants and acknowledges
that:
A. As a result of the interrelated nature of their
businesses and in order to achieve economies of sale and operate in
a cost-efficient manner, Borrower and the other Credit Parties engage
in numerous substantive and administrative intercompany activities and
operations, which each accounts for in its own separate books and
records, but which would not be feasible without the credit extended
by the Lenders and the Overline Lenders under the Credit Agreement
and the Overline Credit Agreement.
B. The direct and indirect benefits which each other
Credit Party receives from or as a result of the credit extended by the
Lenders and the Overline Lenders under the Credit Agreement and the
Overline Credit Agreement are substantial and material, and while
such indirect benefits are not necessarily precisely quantifiable,
all of such benefits are essential to the continuation of the operations
of each of the other Credit Parties.
C. In entering into the Third Amendment and this
Agreement, the Lenders and the Overline Lenders are relying upon
the separate corporate existence, assets, books and records of the
Credit Parties and the Liens granted by each of them in all of the
property of each including intercompany obligations owing to each.
Section 5.5 Capital Stock.
A. The authorized capital stock of Borrower
consists of 100,000,000 shares of Common Stock, par value $.01 per
share ("Common Stock") and 10,000,000 shares of Junior Participating
Cumulative Preferred Stock, par value $.01 per share ("Preferred
Stock") of which 23,835,665 shares of Common Stock and no shares of
Preferred Stock are outstanding.
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The outstanding shares of Common Stock of Borrower have been duly
authorized and are validly issued, fully paid and non-assessable.
B. Other than for (i) the Warrants, (ii) options and
rights to purchase Common Stock issued under Borrower's stock option
and employee stock purchase plans, (iii) rights of the holders of the
Preferred Stock to purchase, upon the occurrence of certain events
fractional shares of Junior Participating Cumulative Preferred Stock,
exercisable pursuant to a Rights Agreement dated as of January 26,
1995 (the "Preferred Stock Purchase Rights") and (iv) an
acquisition agreement pursuant to which Borrower, upon the occurrence of
certain events, may be required to issue additional equity securities
to the former shareholders of Better Health Plan, Inc., there are
no existing options, warrants, calls, commitments or other agreements
to which Borrower or any of its Subsidiaries is a party requiring the
issuance of any additional shares of capital stock of Borrower or
any of its Subsidiaries or other securities convertible into shares
of equity securities of Borrower or any of its Subsidiaries.
There are no stockholders' preemptive rights or rights of first
refusal or other similar rights with respect to the issuance of any
capital stock by Borrower or any of its Subsidiaries.
C. The offering, sale and delivery of the Warrants
and the issuance of Common Stock upon due exercise thereof, constitute
transactions that are exempt from the registration requirements of
Securities Act of 1933, as amended and the North Carolina Securities
Act, as amended. Borrower has duly reserved 1,254,509 shares of Common
Stock, out of authorized but unissued Common Stock for issuance upon
the exercise of Warrants and, has duly authorized the issuance of the
Preferred Stock Purchase Rights with respect to shares of Common Stock
issued upon the exercise of the Warrants. All Common Stock and
associated Preferred Share Purchase Rights issuable upon due exercise
of the Warrants for the consideration specified in the Warrants, has
been duly authorized, and, upon such issuance, will be validly issued,
fully paid and non-assessable and not subject to any preemptive
rights.
Section 5.6 Solvency. Borrower is Solvent and
the Borrower and its Subsidiaries, taken as a whole, are Solvent and, to
the best knowledge of the Borrower, each of its Subsidiaries is Solvent.
Section 5.7 Representations, Warranties and
Agreements Incorporated from Credit Agreement. Borrower hereby
makes each of the representations, warranties and agreements
contained in Article IV of the Credit Agreement, and said
representations, warranties and agreements are hereby incorporated
herein by this reference with the same effect as though set forth in
their entirety herein; it being understood that for purposes of this
Section 5.3 and this Agreement, all such provisions shall survive any
termination of the Credit Agreement.
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ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Required
Overline Lenders shall otherwise give prior written consent, Borrower
shall perform all covenants in this Article Six.
Section 6.1 Covenants Incorporated from Credit
Agreement. Borrower hereby agrees to perform all covenants set forth
in Article V of the Credit Agreement, and said covenants are hereby
incorporated herein by this reference with the same effect as though
set forth in their entirety herein; it being understood that, for
purposes of this Section 6.1 and this Agreement, all such covenants
shall survive any termination of the Credit Agreement ; provided that,
notwithstanding anything to the contrary contained herein or in the
Credit Agreement, Borrower shall not make any Acquisitions pursuant to
Section 5.10D of the Credit Agreement or create or acquire new
Restricted Subsidiaries pursuant to Section 5.11 of the Credit
Agreement.
Section 6.2 Review of Accounts Receivables.
A. Borrower hereby agrees to deliver to the Overline
Lenders by May 31, 1996 a written receivables reserve policy in
accordance with Generally Accepted Accounting Principles that is
satisfactory in form and substance to the Overline Lenders and that is
no less restrictive than the policy delivered to the Overline Lenders
pursuant to Section 4.1K. Changes to this reserve policy shall not be
made without the prior consent of each of the Overline Lenders.
B. The Borrower hereby agrees to (i) cause an
analysis of its accounts receivable to be completed within 45 days of
the end of each calendar quarter (or, if reasonably requested by the
Lenders, more frequently) by the Company's independent auditors (or
other entity satisfactory to the Required Lenders) and (ii) cause the
Lender's financial advisor to have complete access to such entity
conducting the analysis and to the results of such analysis. Such
analysis will be accompanied by Borrower's valuation of the net
collectibility of accounts receivable covered by the most recent
reported ARTB. Each accounts receivable analysis will consist of a
written agreed-upon procedures report with regard to (a) compliance
with the Borrower's written reserve policy and (b) accuracy of the
Borrower's valuation of the net collectibility of such accounts
receivable.
Section 6.3 Net Available Cash. By 2:00 p.m.
(Charlotte time) on each Thursday (or, if any Thursday is not a
Business Day on the next Business Day) and on each proposed funding
date of an Overline Loan, Borrower shall deliver to Agent an
Officer's Certificate certifying the Net Available Cash as of the
close of business on the immediately preceding Business Day.
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ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that, unless Required
Overline Lenders shall otherwise give prior written consent, Borrower
shall perform all covenants in this Article Seven.
Section 7.1 Covenants Incorporated from Credit
Agreement. Borrower hereby agrees to perform all covenants set forth
in Article VI of the Credit Agreement, and said covenants are hereby
incorporated herein by this reference with the same effect as though
set forth in their entirety herein (provided that, notwithstanding
anything to the contrary contained in this Agreement or the Credit
Agreement, Borrower shall not make any investments pursuant to
clauses (vi), (vii) and (viii) of Section 6.6 of the Credit
Agreement); it being understood that, for purposes of this Section 7.1
and this Agreement, all such covenants shall survive any
termination of the Credit Agreement.
Section 7.2 HMO Cash. Borrower shall not transfer to
any HMO, or permit any HMO to keep, cash balances in excess of the
amount reasonably required for the conduct of business of such HMO
unless such excess amounts are required by applicable law or
application of regulatory requirements.
ARTICLE VIII
EVENTS OF DEFAULT
If any of the following conditions or events
("Events of Default") shall occur:
Section 8.1 Failure to Make Payments When Due.
Failure of Borrower to pay (i) any installment or other payment of
principal of any Overline Loans hereunder when due, whether at stated
maturity, by acceleration, by notice or requirement of prepayment or
otherwise, (ii) any installment of interest on any Overline Loans
hereunder, or (iii) any other amount due under this Agreement within
(in the case of clauses (ii) and (iii) of this Section 8.1) five days
after the date due; or
Section 8.2 Default in Other Agreements. Failure of
Borrower or any of its Subsidiaries to pay or any default in the payment
of any principal or interest on any other Indebtedness of Borrower or
any such Subsidiary in the aggregate principal amount of $1,000,000
or more, or in the payment of any Contingent Obligation the aggregate
principal amount of which is $1,000,000 or more, beyond any period of
grace provided; or breach or default with respect to any other material
term of any evidence of any other Indebtedness of Borrower or any such
Subsidiary the aggregate principal amount of which is $1,000,000 or
more, or of any loan agreement, mortgage, indenture or other agreement
relating thereto, if the effect of such default or breach is to cause,
or to permit the holder or holders of that Indebtedness (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness to become
or
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be declared due prior to its stated maturity (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
Section 8.3 Breach of Certain Covenants. Failure of
Borrower to perform or comply with any term or condition contained in
Sections 6.1 (with respect to subsections 5.1, 5.2 and 5.6(b) in the
Credit Agreement) or 7.1 of this Agreement; or
Section 8.4 Default Under Credit Agreement. Any
"Event of Default" (as defined in the Credit Agreement) shall have
occurred and be continuing under the Credit Agreement; it being
understood that for purposes of this Section 8.4 and this Agreement,
all such "Events of Default" under the Credit Agreement are hereby
incorporated by reference as "Events of Default" hereunder and shall
survive any termination of the Credit Agreement; or
Section 8.5 Breach of Warranty. Any representation or
warranty of any Credit Party made herein, in any other Restructuring
Document or in any statement or certificate at any time given by any
Credit Party in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date
as of which made; or
Section 8.6 Other Defaults Under Agreement. Any
Credit Party shall default in the performance of or compliance with any
term contained herein other than those referred to above in Sections
8.1, 8.2, 8.3, 8.4 or 8.5 of this Agreement and such default shall not
have been remedied or waived within 30 days after any Credit Party
acquires knowledge thereof; or
Section 8.7 Involuntary Bankruptcy; Appointment of
Receiver, etc. (A) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of any Credit Party, in
an involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency, dissolution, liquidation, rehabilitation or
other similar law now or hereafter in effect, which decree or order is
not stayed; or (B) any other similar relief shall be granted under
any applicable federal or state law; or a decree or order of a court
having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Credit Party shall have
been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of any Credit Party for all or a
substantial part of its property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of
the property of any Credit Party, and the continuance of any such
events in subpart (B) for ten days unless dismissed, bonded or
discharged; or
Section 8.8 Voluntary Bankruptcy; Appointment of
Receiver, etc. Any Credit Party shall have an order for relief entered
with respect to it or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency,
dissolution, liquidation, rehabilitation or other similar law now
or hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion to an
involuntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by
any Credit
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Party of any assignment for the benefit of creditors; or, at any time
after the Effective Date, the admission by any Credit Party in writing
of its inability to pay its debts as such debts become due; or the Board
of Directors of Borrower or any of its Subsidiaries adopts any
resolution or otherwise authorizes action to approve any of the
foregoing; or
Section 8.9 Judgments and Attachments. Any money
judgment, writ or warrant of attachment, or similar process involving
in any case an amount in excess of $250,000 not adequately covered by
insurance shall be entered or filed against Borrower or any of its
Subsidiaries, or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 30 days
or in any event later than five days prior to the date of any proposed
sale thereunder; or
Section 8.10 Dissolution. Any order, judgment or
decree shall be entered against any Credit Party decreeing the
dissolution or split up of such Credit Party and such order shall
remain undischarged or unstayed for a period in excess of 10 days; or
Section 8.11 Restructuring Documents. Any
Restructuring Document, at any time after execution and delivery
thereof, shall for any reason cease to be a legal, valid and binding
obligation of any Credit Party that is a party thereto (including any
Credit Party that becomes a party thereto after the Closing Date),
enforceable against such Credit Party, or to give Agent the rights,
powers and remedies purported to be created thereby, including, without
limitation, in the case of any Collateral Document, a valid, first
priority perfected security interest in and Lien upon all of the
Collateral purported to be covered thereby, subject only to Permitted
Liens, in each case unless any such cessation is due to any act or
omission on the part of Agent or any Overline Lender;
Section 8.12 Guaranty Agreement. Any Credit Party or
any Person acting on behalf of any Credit Party shall deny or disaffirm
such Credit Party's obligations under the Guaranty Agreement.
Section 8.13 Change in Control. A Change of
Control shall occur.
Section 8.14 PW Engagement Letter. The PW Engagement
Letter shall be amended, modified or terminated without the prior
written approval of the Required Overline Lenders.
THEN (i) upon the occurrence of any Event of Default
described in the foregoing subsections 8.7 or 8.8, (x) the unpaid
principal amount of and accrued interest on the Overline Loans, (y)
the aggregate Stated Amount of all Letters of Credit then outstanding
(whether or not any beneficiary under any such Letter of Credit shall
have presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw under such
Letter of Credit) and (z) all other Overline Obligations under
this Agreement and the other Restructuring Documents shall
automatically become immediately due and payable and the Overline
Loan Commitments shall be terminated, without notice, presentment,
demand, protest
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or other requirements of any kind, all of which are hereby expressly
waived by Borrower and the obligation of Issuing Lender to issue
any Letter of Credit hereunder shall thereupon terminate; and (ii)
upon the occurrence of any other Event of Default, Agent may, with the
consent or at the direction of Required Overline Lenders, by written
notice to Borrower, declare all or any portion of the amounts described
in clauses (x) through (z) above to be, and the same shall forthwith
become, immediately due and payable, together with accrued interest
thereon and the Overline Commitments shall be terminated and the
obligation of Issuing Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing
shall not affect in any way the obligations of L/C Participants
under subsection 3.3B.
Any amounts described in clause (y) above, when
received by Agent shall be held by Agent in the Cash Collateral Account.
Nevertheless, if at any time after acceleration of the
maturity of the Overline Loans, Borrower shall pay all arrears of
interest and all payments on account of the principal and all other
Overline Obligations of Borrower hereunder which shall have become
due otherwise than by acceleration (including interest on principal
and, to the extent permitted by law, on overdue interest, at the rates
specified in this Agreement) and all Events of Default (other than
non-payment of principal of and accrued interest on the Overline
Loans and any other Overline Obligations, due and payable solely by
virtue of acceleration) shall be remedied, cured or waived pursuant to
Section 10.8, then Agent, with the consent or at the direction of,
Required Overline Lenders by written notice to Borrower may rescind
and annul the acceleration and its consequences; but such action
shall not affect any subsequent Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended
merely to bind Overline Lenders to a decision which may be made at the
election of Required Overline Lenders and are not intended to benefit
Borrower and do not grant Borrower the right to require Overline
Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
ARTICLE IX
AGENT
Section 9.1 Appointment. Overline Lenders hereby
designate and appoint First Union as Agent to act as specified
herein and in the other Restructuring Documents. Each Overline Lender
hereby authorizes, and each holder of any Overline Note by the
acceptance of such Overline Note shall be deemed to authorize, Agent to
take such action as agent on its behalf under the provisions of this
Agreement and the other Restructuring Documents and any other
instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and
thereunder, as are specifically delegated to or required of Agent by
the terms hereof or thereof and such other powers as are reasonably
incidental thereto. Agent may execute any of its duties under this
Agreement or any other Restructuring Document by or through agents or
attorneys-in-fact and shall not be responsible for the negligence or
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misconduct of any agents or attorneys-in-fact that it selects with
reasonable care. Each Overline Lender acknowledges that First Union has
also been appointed as agent for Lenders under the Credit Agreement and
that First Union shall enter into the Collateral Documents and perform
its obligations thereunder on behalf of both the Overline Lenders and
the Lenders as agent under both the Credit Agreement and the Overline
Credit Agreement.
Section 9.2 Nature of Duties. Agent shall not have duties or
responsibilities other than those expressly set forth in this Agreement and the
other Restructuring Documents. Neither Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it or
them as such hereunder or under any other Restructuring Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of Agent shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement or
any other Restructuring Document a fiduciary relationship in respect of any
Overline Lender or the holder of any Overline Note; and nothing in this
Agreement or any other Restructuring Document, express or implied, is intended
to or shall be so construed as to impose upon Agent any obligations or
liabilities in respect of this Agreement or any other Restructuring Document
except as expressly set forth herein or therein.
Section 9.3 Absence of Reliance on Agent.
(i) Each Overline Lender acknowledges that neither Agent nor
any of its officers, directors, employees or agents has made any
representation or warranty to it and that no act by Agent hereinafter
taken, including any review of the affairs of Borrower and its
Subsidiaries, shall be deemed to constitute any representation or
warrant by Agent to any Overline Lender.
(ii) Each Overline Lender acknowledges that, independently and
without reliance upon Agent or any other Overline Lender and based on
such documents and information as it has deemed and may deem
appropriate, (i) it has made its own appraisal of and investigation
into the business, prospects, operations, properties, financial and
other condition and creditworthiness of Borrower and its Subsidiaries
in connection with its decision to enter into this Agreement and extend
credit to Borrower hereunder, and (ii) it will continue to make its own
credit analysis, appraisals and decisions in taking or not taking
action hereunder.
(iii) Except as expressly provided in this Agreement, Agent
shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Overline Lender or the holder of any
Overline Note with any credit or other information concerning the
business, prospects, operations, properties, financial or other
condition or creditworthiness of Borrower, its Subsidiaries or any
other Person that may come into its possession, whether before the
making of the initial Overline Loans or at any time or times
thereafter.
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(iv) Agent shall not be responsible to any Overline Lender or
the holder of any Overline Note for any recitals, statements,
information, representations or warranties herein or in any other
Restructuring Document or in any document, instrument, certificate or
other writing delivered in connection herewith or therewith or for the
execution, effectiveness, genuineness, validity, enforceability,
perfection, priority or sufficiency of this agreement or any other
Restructuring Document or the financial condition of Borrower, inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Restructuring
Document, or the financial condition of Borrower, its Subsidiaries or
any other Person or the existence or possible existence of any Default
or Event of Default.
(v) Agent shall be under no obligation or duty to take any
action under this Agreement or any other Restructuring Document if
taking such action (i) would subject Agent to a tax in any jurisdiction
where it is not then subject to a tax, (ii) would require Agent to
qualify to do business in any jurisdiction where it is not then so
qualified, unless Agent receives security or indemnity satisfactory to
it against any tax or other liability in connection with such
qualification or resulting from the taking of such action in connection
therewith or (iii) would subject Agent to in personam jurisdiction in
any location where it is not then so subject.
Section 9.4 Certain Rights of Agent. If Agent shall request
instructions from the Required Overline Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Restructuring Document, Agent shall be entitled to refrain from such act or
taking such action unless and until it shall have received such instructions,
and Agent shall incur no liability by reason of so refraining. Agent shall not
be obligated to take any action hereunder or under any other Restructuring
Document (i) if such action would, in the reasonable opinion of Agent, be
contrary to applicable law or this Agreement or the other Restructuring
Documents, (ii) if it shall not receive such advice or concurrence of the
Required Overline Lenders as it reasonably deems appropriate or (iii) if it
shall not first be indemnified to its satisfaction by the Overline Lenders
requesting such action against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Overline Lender or holder of any Overline
Note shall have any right of action whatsoever against Agent as a result of
Agent's acting or refraining from acting hereunder or under any other
Restructuring Document in accordance with the instructions of the Required
Overline Lenders.
Section 9.5 Notice of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
other than any Default or Event of Default arising out of the failure to pay any
principal, interest, fees or other amounts payable to Agent for the account of
the Overline Lenders, unless Agent has received written notice from Borrower or
an Overline Lender describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that Agent receives such a
notice, Agent shall give notice thereof to the Overline Lenders as soon as
reasonably practicable; provided, however, that if any such notice purports to
have also been furnished to the Overline Lenders,
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Agent shall have no obligation to notify the Overline Lenders with respect
thereto. Each Overline Lender shall promptly give Agent such a notice upon its
actual knowledge of a Default or an Event of Default; provided, however, that
the failure of any Overline Lender to deliver such notice in the absence of
gross negligence or willful misconduct shall not affect its rights hereunder or
under the Restructuring Documents.
Section 9.6 Reliance by Agent. Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, consent, certificate, telex, teletype or facsimile message,
order or other documentary, teletransmission or telephone message believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person. Agent may consult with legal counsel (including counsel for Borrower),
independent public accountants and other experts selected by it with respect to
all matters pertaining to this Agreement and the other Restructuring Documents
and its duties hereunder and thereunder and shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the advice
of such counsel, accountants or experts.
Section 9.7 Indemnification. To the extent Agent is not
reimbursed by or on behalf of Borrower, and without limiting the obligation of
Borrower to do so, the Overline Lenders will reimburse and indemnify Agent, in
proportion to their respective Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees and expenses) or disbursements of any
kind of nature whatsoever that may at any time (including at any time following
the indefeasible repayment in full of the Overline Loans) be imposed on,
incurred by or asserted against Agent in any way relating to or arising out of
this Agreement or any other Restructuring Document or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing, and in particular will reimburse Agent
for out-of-pocket expenses promptly upon demand by Agent therefor; provided,
however, that no Overline Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements finally determined by a court of competent
jurisdiction and not subject to any appeal (or pursuant to arbitration as set
forth in Annex 1 to the Credit Agreement) to have resulted from Agent's gross
negligence or willful misconduct.
Section 9.8 Agent in its Individual Capacity. With respect to
its Overline Commitments, the Overline Loans made by it and the Overline Notes
issued to it, Agent shall have the same rights and powers under the
Restructuring Documents as any other Overline Lender or holder of an Overline
Note and may exercise the same as though it were not performing the agency
duties specified herein; and the terms "Overline Lenders," "Required Overline
Lenders," "holders of Overline Notes" and any similar terms shall, unless the
context clearly otherwise indicates, include Agent, in its individual capacity.
Agent may accept deposits from, lend money to and generally engage in any kind
of banking, trust, financial advisory or other business with Borrower or any of
its Subsidiaries or any of their respective Affiliates as it were not performing
the agency duties specified herein, and may accept fees and other
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consideration from Borrower for services in connection with this Agreement and
otherwise without having to account for the same to the Overline Lenders.
Section 9.9 Holders. Agent may deem and treat the payee of any
Overline Note as the holder thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with Agent. Any request, authority or consent of
any Person that, at the time of making such request or giving such authority or
consent, is the holder of any Overline Note, shall be conclusive and binding on
any subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Overline Note or of any Overline Note or Overline Notes issued in exchange
therefor.
Section 9.10 Successor Agent. Agent may resign at any time upon
sixty (60) days' prior written notice to Borrower and the Overline Lenders.
Agent may be removed with or without cause by the Required Overline Lenders
(and, so long as no Default or Event of Default has occurred and is continuing,
with the consent of Borrower, which consent shall not be unreasonably withheld),
at any time upon sixty (60) days' prior written notice to Borrower and Agent.
Such resignation or removal, as the case may be, shall take effect upon the
appointment of a successor Agent, as provided hereinbelow. Upon any such notice
of resignation or removal (and, in the case of removal, upon the consent of
Borrower, if required as provided hereinabove), the Required Overline Lenders
(so long as no Default or Event of Default has occurred and is continuing, with
the consent of Borrower, which consent shall not be unreasonably withheld) will
appoint from among the Overline Lenders a successor Agent. If no successor Agent
shall have been appointed within such sixty-day period, Agent may appoint, after
consulting with the Overline Lenders and Borrower, a successor agent from among
the Overline Lenders, who shall serve as Agent until such time, if any, as the
Required Overline Lenders shall have appointed a successor agent as provided
hereinabove. Upon the written acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Restructuring Documents. After any retiring
Agent's resignation as Agent, the provisions of this Article Nine shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
Section 9.11 Collateral Matters.
(i) Agent is hereby authorized on behalf of all the Overline
Lenders, without the necessity of any notice to or further consent from
the Overline Lenders, from time to time (but without any obligation) to
take any action with respect to the Collateral and the Collateral
Documents that may be necessary to perfect and maintain perfected the
Liens upon the Collateral granted pursuant to the Collateral Documents.
(ii) The Overline Lenders hereby irrevocably authorize Agent,
at its option and in its discretion, to release any Lien granted to or
held by Agent upon any Collateral (i) upon termination of the Overline
Commitments and indefeasible payment in full of all
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Overline Obligations, (ii) constituting property sold or to be sold or
disposed of as part of or in connection with a disposition permitted
hereunder, (iii) constituting property in which neither Borrower nor
any Subsidiary owned any interest at the time such Lien was granted or
at any time thereafter or (iv) if approved, authorized or ratified in
writing by each Overline Lender or the Required Overline Lenders, as
may be required with respect to any such release in accordance with
Section 10.8 of this Agreement. Upon request by Agent at any time, the
Overline Lenders will confirm in writing Agent's authority to release
Collateral pursuant to this subsection (b).
ARTICLE X
MISCELLANEOUS
Section 10.1 Representation of Overline Lenders. Each Overline
Lender hereby represents that it is a commercial lender which makes loans in the
ordinary course of its business and that it will make each Overline Loan
hereunder for its own account in the ordinary course of such business; provided,
however, that, subject to subsection 10.2, the disposition of Indebtedness owed
to or held by that Overline Lender shall at all times be within its exclusive
control.
Section 10.2 Assignments and Participations.
(i) With the prior consent of Agent and Borrower, which consent
shall not be unreasonably withheld, each Overline Lender may assign to
one or more other Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or
a portion of its Overline Commitments, the outstanding Overline Loans
made by it and the Overline Note or Overline Notes held by it);
provided, however, that (i) each such assignment, as to all of the
assigning Overline Lender's rights and obligations under this
Agreement, shall be of an equal percentage of such rights and
obligations, (ii) except in the case of an assignment to an Affiliate
of such Overline Lender or a Person that, immediately prior to such
assignment, was an Overline Lender, the amount of the Overline
Commitments of such assigning Overline Lender being assigned pursuant
to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to each such assignment) shall in no event
be less than the lesser of (y) the aggregate Overline Commitments of
such Overline Lender immediately prior to such assignment and (z)
$5,000,000, (iii) each such assignment shall be to an Eligible Assignee
and (iv) the parties to each such assignment will execute and deliver
to Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Overline Note or Overline
Notes subject to such assignment, and will pay a processing fee of
$2,500 to Agent for its own account; provided further, that each
assignment of rights and obligations under this Agreement (including
with respect to any Overline Commitments, outstanding Overline Loans
and Overline Notes) shall become effective only upon a concurrent pro
rata assignment to the
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same Eligible Assignee of all or the applicable portion of such
Overline Lender's rights and obligations as a Lender under the Credit
Agreement (including with respect to such Lender's Reducing Revolving
Credit Commitment, outstanding Reducing Revolving Loans and Reducing
Revolving Credit Notes). Upon such execution, delivery, acceptance and
recording of the Assignment and Acceptance, from and after the
effective date specified therein (a) the assignee thereunder shall be
deemed a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of such Overline
Lender hereunder with respect thereto and (b) the assigning Overline
Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of such assigning Overline Lender's rights
and obligations under this Agreement, such Overline Lender shall cease
to be a party hereto).
(ii) By executing and delivering an Assignment and Acceptance,
the assigning Overline Lender and the assignee thereunder confirm to
and agree, with each other and with the other parties hereto, as
follows: (i) other than as may be provided in such Assignment and
Acceptance, such assigning Overline Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or any other Restructuring Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Restructuring Document or any other
instrument or document furnished hereto or pursuant thereto; (ii) such
assigning Overline Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
Borrower or any of its Subsidiaries or the performance or observance by
Borrower or any of its Subsidiaries of any of their respective
obligations under this Agreement or any other Restructuring Document or
any other instrument or document furnished pursuant hereto or thereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of all financial statements and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Agreement; (iv)
such assignee will, independently and without reliance upon Agent, the
assigning Overline Lender or any other Overline Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers ad
discretion under this Agreement and the other Restructuring Documents
and any other instruments and agreements referred to herein or therein,
and to exercise such powers and to perform such duties hereunder and
thereunder, as are specifically delegated to or required of the Agent
by the terms hereof or thereof and such other powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform
in accordance with their terms all of the obligations
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that by the terms of this Agreement are required to be performed by
it as an Overline Lender.
(iii) Agent will maintain a copy of each Assignment and
Acceptance delivered to and accepted by it an a register for the
recordation of the names and addresses of the Overline Lenders and the
Overline Commitments of, and principal amount of the Overline Loans
owing to, each Overline Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent, Issuing Lender
and Overline Lenders may treat each Person whose name is recorded in
the Register as an Overline Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower,
Issuing Lender or any Overline Lender at any reasonable time and from
time to time upon reasonable prior notice.
(iv) Upon its receipt of an Assignment and Acceptance executed
by an assigning Overline Lender and an assignee, together with any
Overline Note, or Overline Notes subject to such assignment, Agent
will, if such Assignment and Acceptance has been completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give notice thereof to Borrower.
Within five (5) Business Days after its receipt of such notice,
Borrower, at its own expense, will execute and deliver to Agent in
exchange for the surrendered Overline Note or Overline Notes a new
Overline Note or Overline Notes to the order of such assignee in an
amount equal to the Overline Commitment or Overline Commitments assumed
by it pursuant to such Assignment and Acceptance and, to the extent the
assigning Overline Lender has retained its Overline Commitments
hereunder, a new Overline Note or Overline Notes to the order of the
assigning Overline Lender in an amount equal to the Overline Commitment
or Overline Commitments retained by it hereunder. Such new Overline
Note or Overline Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Overline Note or
Overline Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of
Exhibit B.
(v) Each Overline Lender may sell to one or more other Persons
participations in any portion comprising less than all of it rights and
obligations under this Agreement (including, without limitation, a
portion of its Overline Commitments, the outstanding Overline Loans
made by it and the Overline Note or Overline Notes held by it);
provided, however, that (i) such Overline Lender's obligations under
this Agreement shall remain unchanged, (ii) such Overline Lender shall
remain solely responsible for the performance of such obligations,
(iii) Borrower, Issuing Lender, Agent and the other Overline Lenders
shall continue to deal solely and directly with such Overline Lender in
connection with such Overline Lender's rights and obligations under
this Agreement, (iv) any such participation shall be in an amount of
not less than $5,000,000, (v) no Overline Lender shall sell any
participation that, when taken together with all other participations,
if any, sold by such Overline Lender, covers all of such Overline
Lender's rights and
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obligations under this Agreement (including, without limitation, all of
its Overline Commitments, the outstanding Overline Loans made by it and
the Overline Note or Notes held by it), (vi) each such participation,
as to all of the participating Overline Lender's rights and obligations
under this Agreement, shall be of an equal percentage of such rights
and obligations and (vii) no Overline Lender shall permit any
participant to have any voting rights or any right to control the vote
of such Overline Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other
Restructuring Document except as to actions of the type described in
Section 9.8(a) of the Credit Agreement. In the case of a participation,
the participant shall not have any rights under this Agreement or any
of the other Restructuring Documents, the participant's rights against
the granting Overline Lender in respect of such participation to be
those set forth in the participation agreement, and all amounts payable
by Borrower hereunder shall be determined as if such Overline Lender
had not sold such participation; provided, however, that each such
participant shall have the rights of an Overline Lender for purposes of
Sections 2.11, 2.12, and 10.5, and shall be entitled to the benefits
thereto, to the extent that the Overline Lender selling such
participation would be entitled to such benefits if the participation
had not been sold.
(vi) Issuing Lender may assign all, but not less than all, of
its rights and obligations under this Agreement, including, without
limitation, its commitment to issue Letters of Credit, to any Eligible
Assignee, and upon acceptance of such assignment, the successor Issuing
Lender shall succeed to such rights and obligations and the assigning
Issuing Lender shall be discharged therefrom.
(vii) Agent, Issuing Lender and each Overline Lender may, in
connection with any assignment or participation or proposed assignment
or participation pursuant to this Section, disclose to the assignee or
participant, or proposed assignee or participant, any information
relating to 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
Agent, Issuing Lender or such Overline Lender, as the case may be, to
keep such information confidential to the same extent required of the
Overline Lenders under Section 9.17 of the Credit Agreement (provided
that all references in such Section 9.17 to "this Agreement" shall be
deemed to refer to this Secured Overline Credit Agreement).
Section 10.3 Expenses. Whether or not the transactions
contemplated by this Agreement shall be consummated, Borrower shall be
obligated: (a) to pay or reimburse Agent and each Overline Lender upon demand
and after notice in accordance with subsection 10.15 for all reasonable expenses
(including, without limitation, attorneys' fees, allocated costs of internal
counsel and professional fees of Overline Lenders' financial advisor, but
excluding salaries of Agent's regularly employed personnel and overhead)
incurred or paid by Agent or any Overline Lender in connection with: (i) the
preparation, execution, delivery, administration, interpretation, modification,
amendment, enforcement or termination of this Agreement or the other
Restructuring Documents or any consent or waiver requested by Borrower hereunder
or
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thereunder, (ii) charges for appraisers, examiners, environmental consultants,
financial consultants, auditors or similar Persons whom Agent may engage with
respect to rendering opinions concerning the financial condition or value of
Borrower and its Subsidiaries or any of their assets or businesses; and (iii)
any commercially reasonable attempt to inspect, verify, protect, preserve,
collect, sell, liquidate or otherwise dispose of the Collateral or any other
assets of any Credit Party;
(b) to pay or reimburse Agent and each Overline Lender upon
demand and after notice in accordance with subsection 10.15 for all reasonable
expenses (including, without limitation, attorneys' fees, allocated costs of
internal counsel and professional fees of Overline Lenders' financial advisor,
but excluding salaries of Agent's or such Overline Lender's regularly employed
personnel and overhead) incurred or paid by Agent or such Overline Lender in
connection with: (i) any litigation, contest, dispute, suit or proceeding or
action (whether instituted by Agent, the Overline Lenders, or any of them,
Borrower or any other Person) in any way relating to this Agreement or the other
Restructuring Documents or to Borrower's or any Subsidiary's affairs (other than
a dispute solely between or among the Overline Lenders); (ii) any attempt by
Agent or such Overline Lender to enforce any of its rights against Borrower or
any other Person that may be obligated to Agent or such Overline Lender by
virtue of this Agreement or the other Restructuring Documents; and (iii) any
refinancing or restructuring of the credit arrangement provided under this
Agreement in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding;
(c) to pay and hold Agent and each Overline Lender harmless
from and against any and all liability and loss with respect to or resulting
from the nonpayment or delayed payment of any and all intangibles, documentary
stamp and other similar taxes, fees and excises, if any including any interest
and penalties, that may be, or be determined to be, payable in connection with
the transactions contemplated by this Agreement and the other Restructuring
Documents or in any modification hereof or thereof; and
(d) to pay and hold Agent and each Overline Lender harmless
from and against any and all finder's or brokerage fees and commissions that may
be payable in connection with the transactions contemplated by this Agreement
and the other Restructuring Documents.
Section 10.4 Indemnification. From and at all times after the
date of this Agreement, and in addition to the costs and expenses payable under
subsection 10.3 and all of Agent's and the Overline Lenders' other rights and
remedies against Borrower, Borrower agrees to indemnify and hold harmless Agent
and each Overline Lender and each of their directors, officers, employees,
counsel, agents and Affiliates (each, an "Indemnified Person") against any and
all claims, losses, damages, liabilities, costs and expenses of any kind or
nature whatsoever, including, without limitation, attorneys' fees, costs and
expenses (collectively, "Indemnified Costs") incurred by or asserted against any
such Indemnified Person from and after the date hereof, whether direct, indirect
or consequential, as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy under any
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statute or regulation, including, without limitation, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
administration, modification, performance or enforcement of this Agreement or
the other Restructuring Documents or any of the transactions contemplated herein
or therein, and including, without limitation, any matter relating to the PW
Engagement Letter or Environmental Claims, whether or not such Indemnified
Person is a party to any such action, proceeding or suit or the target of any
such inquiry or investigation; provided, however, that no Indemnified Person
shall have the right to be indemnified hereunder for any Indemnified Costs
resulting primarily from the gross negligence or willful misconduct of such
Indemnified Person (as finally determined by a court of competent jurisdiction
or pursuant to arbitration as set forth in Annex 1 to the Credit Agreement). All
of the foregoing losses, damages, costs and expenses of any Indemnified Person
shall be payable by Borrower, as and when incurred and upon demand, and shall be
additional Overline Obligations hereunder. In the event that the foregoing
indemnity is unavailable or insufficient to hold each Indemnified Person
harmless, then Borrower will contribute to amounts paid or payable by such
Indemnified Persons in respect of their losses, claims, damages or liabilities
in such proportions as appropriately reflect the relative benefits received by
and fault of Borrower and such Indemnified Persons in connection with the
matters as to which such losses, claims, damages or liabilities relate and other
equitable considerations.
Section 10.5 Set-Off. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default, each Overline Lender is
hereby authorized by Borrower at any time or from time to time, without notice
to Borrower, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts) and any other indebtedness at any time held or owing by that Overline
Lender to or for the credit or the account of Borrower or any Subsidiary against
and on account of the obligations and liabilities of Borrower or any Subsidiary
to that Overline Lender under this Agreement including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, irrespective of whether or not (a) that Overline Lender shall have
made any demand hereunder or (b) that Overline Lender shall have declared the
principal of and interest on the Overline Loans, and any other amounts due
hereunder to be due and payable pursuant to Article Nine and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Section 10.6 Ratable Sharing. Each Overline Lender agrees with
each other Overline Lender that if any of them shall, through the exercise of
any right of counterclaim, set-off, banker's lien or other remedy, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the Aggregate Amount Due
to such Overline Lender which is greater than the proportion received by any
other Overline Lender in respect to the Aggregate Amounts Due to such other
Overline Lender, then the Overline Lender receiving such proportionately greater
payment shall (y) notify each other Overline Lender and Agent of such receipt
and (z) purchase participations (which it
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shall be deemed to have done simultaneously upon the receipt of such payment) in
the Aggregate Amounts Due to the other Overline Lenders so that all such
recoveries of Aggregate Amounts Due to the Overline Lenders shall be shared by
the Overline Lenders in proportion to the Aggregate Amounts Due to all Overline
Lenders; provided that if all or part of such proportionately greater payment
received by such purchasing Overline Lender is thereafter recovered from such
Overline Lender, those purchases shall be rescinded and the purchase prices paid
for such participation shall be returned to that Overline Lender to the extent
of such recovery, but without interest. Borrower expressly consents to the
foregoing arrangements and agrees that any holder of a participation so
purchased and any other subsequent holder of such a participation otherwise
acquired may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Borrower to that holder
as fully as if Borrower owed such holder the amount of any such participation
held by that holder.
Section 10.7 Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.8 Amendments and Waivers. Except as may be otherwise
specifically set forth in this Agreement or the other Restructuring Documents,
neither this Overline Agreement nor any other Restructuring Document nor any
provisions hereof or thereof may be amended, modified, waived, discharged or
terminated, and no consent to any departure by the Borrower from any provision
hereof or thereof may be given, except in a writing signed by the Required
Overline Lenders; provided, however, that:
(i) no such amendment, modification, waiver, discharge,
termination or consent shall, without the consent of each Overline
Lender holding Overline Obligations directly affected thereby, (i)
reduce the principal amount of, or rate of interest on, any Overline
Loan, or reduce any fees or other Overline Obligations (other than fees
payable to the Agent for its own account) or any obligations of any
Person now or hereafter primarily or contingently liable with respect
to the Overline Obligations or (ii) postpone any date fixed for any
payment of principal, interest (other than additional interest payable
under Section 2.3 during the continuance of an Event of Default), fees
(other than fees payable to the Agent for its own account) or any other
Overline Obligations;
(ii) no such amendment, modification, waiver, discharge,
termination or consent shall, without the consent of all Overline
Lenders, (i) increase the Overline Commitments of any Overline Lender
(it being understood that a waiver of any Default or Event of Default
or of any mandatory reduction in the Overline Commitment shall not
constitute such an increase), (ii) change the definition of "Required
Overline Lenders" or otherwise change the number or percentage of
Overline Lenders that shall be required for the Overline Lenders or any
of them to take or approve, or direct the Agent to take, any action
hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to extend, the Overline Maturity Date
pursuant to Section 2.15, (iv) affect
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the obligation of the Lenders having Overline Commitments to become L/C
Participants, (v) amend any provision of this Section, (vi) release all
or substantially all of the Collateral or (vii) consent to the
assignment or transfer by the Borrower, or by any other Person nor or
hereafter primarily or contingently liable with respect to the Overline
Obligations, of any of its rights and obligations under this Overline
Agreement or any of the other Restructuring Documents.
(iii) No provisions relating to the rights or obligations of
the Issuing Lender under this Overline Agreement or any of the other
Restructuring Documents may be amended, modified or waived without the
consent of the Issuing Lender; and
(iv) no provisions relating to the rights or obligations of the
Agent under this Overline Agreement or any of the other Restructuring
Documents may be amended, modified or waived without the consent of the
Agent.
Section 10.9 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
Section 10.10 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF BORROWER, AGENT AND OVERLINE LENDERS HEREUNDER AND ALL OTHER
ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISION) OF THE STATE OF NORTH CAROLINA.
Section 10.11 Successors and Assigns. This Agreement shall be
binding upon Borrower and its respective successors and assigns. This Agreement
shall inure to the benefit of Agent and Overline Lenders and their respective
successors and assigns.
Section 10.12 Consent to Jurisdiction and Service of Process.
AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, BORROWER
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG
COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN
DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER RESTRUCTURING DOCUMENTS, OR ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER RESTRUCTURING
DOCUMENTS, OR ANY PROCEEDING TO WHICH Agent, ANY OVERLINE LENDER OR 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 Agent, Issuing Lender, ANY OVERLINE LENDER
OR BORROWER. BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY
49
<PAGE>
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.
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 TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION.
Section 10.13 Waiver of Jury Trial. BORROWER, AGENT, AND EACH
OVERLINE LENDER EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. Borrower,
Agent, and each Overline Lender each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on the waiver in entering into this Agreement, and that each will continue to
rely on the waiver in their related future dealings. Borrower, Agent, and each
Overline Lender, each further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE OBLIGATIONS OF BORROWER HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court. In the
event that the waiver of jury trial herein shall be determined to be invalid or
unenforceable as a matter of law with respect to any party, the provisions of
Annex I to the Credit Agreement shall govern as to matters set forth therein
with respect to such party.
Section 10.14 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument.
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Section 10.15 Notices. All notices under this Agreement shall
be delivered in accordance with the provisions of, and shall be deemed to have
been given as provided in, Section 10.14 of the Credit Agreement; provided that
the address for each party hereto shall be the address set forth on the
applicable signature page hereof, or such other address as may be designated in
a written notice delivered to Agent in accordance with the provisions of this
Section 10.15.
Section 10.16 HMO Guaranties. Overline Lenders hereby release
the guaranties of each Subsidiary of the Borrower that is a health maintenance
organization; provided upon the request of the Agent or Required Overline
Lenders and to the extent not prohibited by application of relevant health
maintenance organization laws and regulations, the Borrower shall cause each
such Subsidiary (other than Doctors Health Plan, Inc.) to deliver a guaranty of
payment of the Overline Obligations and the obligations under the Credit
Agreement substantially in the form of the Guaranty Agreement and to secure its
guaranty by granting a security interest in all of its assets pursuant to a
security agreement satisfactory in form and substance to the Agent.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Borrower, Agent and each Overline Lender
have caused this Agreement to be executed by its duly authorized officer as of
the date set forth below.
COASTAL PHYSICIANS GROUP, INC.
By:
Title:
Notice Address:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, individually and as Agent
By:
Title:
Notice Address:
CORESTATES BANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
S-1
<PAGE>
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:__________________________________
Name:
Title:
Notice Address:
MELLON BANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
NATIONSBANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
S-2
<PAGE>
NATIONSBANK, N.A.
By:__________________________________
Name:
Title:
Notice Address:
THE BANK OF NOVA SCOTIA
By:__________________________________
Name:
Title:
Notice Address:
SOCIETY NATIONAL BANK
By:__________________________________
Name:
Title:
Notice Address:
S-3
<PAGE>
BB&T
By:__________________________________
Name:
Title:
Notice Address:
WACHOVIA BANK OF NORTH CAROLINA,
N.A.
By:__________________________________
Name:
Title:
Notice Address:
BANK OF AMERICA, ILLINOIS
By:__________________________________
Name:
Title:
Notice Address:
S-4
<PAGE>
MERRILL, LYNCH, PIERCE, FENNER &
SMITH, INCORPORATED
By:__________________________________
Name:
Title:
Notice Address:
S-5
<PAGE>
FORM OF
WARRANT TO PURCHASE COMMON STOCK
at $.01 Per Share
The Warrant represented by this certificate and the shares of
Common Stock issuable upon the exercise hereof have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold, transferred or otherwise disposed of except in compliance with
said Act. The Warrant Shares subject to purchase hereunder may be
reduced in whole or in part in accordance with the provisions of
Section 3.2 hereof and shall vest in accordance with the
provisions of Section 3.2 hereof.
Certificate Number Certificate for
This certificate is transferable Warrants
in Durham, North Carolina
COASTAL PHYSICIAN GROUP, INC.
Incorporated under the laws of the State of Delaware
THIS CERTIFIES THAT, for value received,
[________________], or registered assigns, is entitled to purchase
from COASTAL PHYSICIAN GROUP, INC., a Delaware corporation (the
"Company"), at any time after the Warrants have vested in accordance
with Section 3.2 hereof, and from time to time after the date of this
Warrant and prior to 5:00 p.m., Eastern time, on the Expiration
Date, at the purchase price of $.01 per share (as such price may be
adjusted pursuant to Section 7, the "Warrant Price") the total number of
shares of common stock, $.01 par value per share (together with
associated Preferred Share Purchase Rights, the "Common Stock"),
which is equal to the number of Warrants set forth above (as such number
of shares may be adjusted pursuant to Section 3.2 and Section 7, the
"Warrant Shares"). Terms not otherwise defined herein have the
meanings stated in Section 20.
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SECTION 1.
TRANSFERABILITY OF WARRANTS
1.1 Warrant Register and Registration.
The Secretary of the Company shall keep or cause to be
kept at the office of the Company books for the registration and
transfer (the "Warrant Register") of this Warrant certificate and any
other Warrant certificate issued hereunder (collectively including the
initial Warrant, the "Warrants"). The Warrants shall be numbered and
shall be registered in the Warrant Register as they are issued. The
Company and the Secretary of the Company shall be entitled to treat a
person as the owner in fact for all purposes of each Warrant
registered in such person's name (each registered owner is herein
referred to as a "holder" of such Warrant) and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on
the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary
unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration of
transfer, or with such knowledge of such facts that its participation
therein amounts to bad faith.
1.2 Transfer.
The Warrants shall be transferable only on the Warrant
Register upon delivery thereof duly endorsed by the holder or by his
duly authorized attorney or representative, which endorsement shall
be guaranteed by a bank or trust company located in the United States
of America or by a broker or dealer that is a member of a registered
national securities exchange, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly
approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Secretary of the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall
be produced, and may be required to be deposited and remain with the
Secretary of the Company in its discretion. Upon any registration
of transfer, the Company shall deliver a new Warrant or Warrants to
the persons entitled thereto. The holder may transfer the Warrants and
the Warrant Shares without registration under the Securities Act of
1933 only if the holder shall deliver to the Company an opinion of
counsel of the holder, which opinion and counsel shall be reasonably
satisfactory to the Company and its counsel (including, without
limitation, O'Melveny & Myers which counsel shall be satisfactory
to the Company for this purpose), to the effect that such
registration is unnecessary. All transfers of the Warrants and the
Warrant Shares are also subject to the provisions of Section 7.4.
1.3 Form of Warrant.
The Warrants shall be executed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President or one of
its Vice Presidents and attested to by the Secretary
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<PAGE>
of the Company or an Assistant Secretary. The signature of any of such
officers on the Warrants may be manual or facsimile.
SECTION 2.
EXCHANGE OF WARRANTS
Each Warrant may be exchanged at the option of the holder
thereof for another Warrant or Warrants entitling the holder thereof
to purchase a like aggregate number of Warrant Shares as the Warrant or
Warrants surrendered then entitle such holder to purchase. Any holder
desiring to exchange a Warrant or Warrants shall make such request in
writing delivered to the Secretary of the Company, and shall
surrender, properly endorsed, which endorsement shall be guaranteed
as provided in Section 1.2 hereof if the new Warrant or Warrants are to
be issued other than in the name of the holder, the Warrant or Warrants
to be so exchanged at the office of the Secretary of the Company.
Thereupon, a new Warrant or Warrants, as the case may be, as so
requested, shall be delivered to the person entitled thereto.
SECTION 3.
TERM OF WARRANTS; VESTING; EXERCISE OF WARRANTS
3.1 Term of Warrants.
Each holder shall have the right, beginning on the date the
Warrants have vested pursuant to Section 3.2 and continuing until
5:00 p.m., Eastern time, on the Expiration Date, to purchase from the
Company the number of fully paid and nonassessable Warrant Shares
that the holder may at the time be entitled to purchase on exercise
of such vested Warrants at the Warrant Price. After the Expiration
Date, any previously unexercised Warrants shall be cancelled.
3.2 Vesting of Warrants.
The Warrants shall vest as follows: (i) ten percent
(10%) of the Warrants shall vest immediately upon issuance, (ii) an
additional ten percent (10%) of the Warrants shall vest on January 3,
1997, (iii) an additional ten percent (10%) of the Warrants shall
vest on April 16, 1997 and (iv) the remainder of the Warrants
which have not been cancelled by operation of the following provisos
shall also vest on April 16, 1997; provided that unvested Warrants
shall be automatically cancelled as of the dates set forth below in the
amount equal to the percentage of the total Warrants (vested and
unvested) indicated in the table below based on the reduction of
the Overall Credit Exposure effected by the Company as of, or prior
to, such date:
3
<PAGE>
=============================================================================
Reduction in Overall Credit Exposure
(millions)
- -----------------------------------------------------------------------------
Date $40.0 $60.0 $80.0 $100.0
=============================================================================
October 31, 1996 40% 60% 75% 90%
- -----------------------------------------------------------------------------
January 2, 1997 20% 50% 65% 80%
- -----------------------------------------------------------------------------
April 15, 1997 0% 30% 55% 70%
=============================================================================
; provided further that any Warrants that have not vested on the
Repayment Date shall not vest and shall be deemed cancelled.
By way of illustration of the intended operation of the first
proviso of this Section 3.2, the following example is provided: If on
January 3, 1997 (1) the vested portion of the Warrant is 20% and the
unvested portion of this Warrant is 80% and (2) the Overall Credit
Exposure has been reduced by $60,000,000 after October 31, 1996
and on or before January 2, 1997, then on January 3, 1997 this Warrant
shall consist of a vested portion equalling 20% of the original number
of the Warrants (vested and unvested) and an unvested portion of
30% of the original number of the Warrants (vested and unvested) and
Warrants for the remaining 50% of the original number of Warrants
(vested and unvested) shall be deemed cancelled.
3.3 Exercise of Warrants.
(a) A Warrant may be exercised upon surrender to the Company,
in care of the Secretary of the Company, of the Warrant to be
exercised, together with the duly completed and signed form of Election
to Purchase attached hereto, and upon payment to the Company of the
Warrant Price for the number of Warrant Shares in respect of which
such Warrant is then exercised. Payment of the aggregate Warrant
Price shall be made by either (i) check or wire transfer of immediately
available funds in accordance with written wire transfer
instructions to be provided by the Company or (ii) by permitting the
Company to retain the number of Warrant Shares as to which this Warrant
is being exercised equal to the number of Warrant Shares having a
value, based on the Closing Price on the trading day immediately prior
to the date of such exercise, equal to the product of (1) the Warrant
Price times (2) the number of Warrant Shares as to which this Warrant
is being exercised.
(b) Subject to Section 5, upon such surrender of the
Warrant and payment of the Warrant Price as aforesaid, the Company
shall issue and cause to be delivered with all reasonable dispatch to
or upon the written order of the holder and in such name or names as the
holder may designate, a certificate or certificates for the number
of full Warrant Shares so purchased upon the exercise of such
Warrants, together with cash, as provided in Section 5, in respect of
any fractional Warrant Share otherwise issuable upon such surrender.
Such certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date
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<PAGE>
of the surrender of such Warrants and payment of the Warrant Price;
provided, however, that if, at the date of surrender of such Warrant
and payment of such Warrant Price, the transfer books for the
Warrant Shares or other class of stock purchasable upon the exercise
of such Warrant shall be closed, the certificates for the Warrant
Shares in respect of which such Warrant is then exercised shall be
issuable as of the date on which such books shall next be opened
(whether before or after the Expiration Date) and until such date the
Company shall be under no duty to deliver any certificate for such
Warrant Shares; provided, further that the transfer books, unless
otherwise required by law, shall not be closed at any one time for a
period longer than 20 days.
(c) The rights of purchase represented by the vested portion
of this Warrant shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part. If a Warrant is
exercised in respect of less than all of the Warrant Shares purchasable
on such exercise at any time prior to the Expiration Date, a new Warrant
evidencing the remaining Warrant Shares will be issued, and the Company
shall deliver the new Warrant pursuant to the provisions of this
Section 3.3.
(d) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection
with a public offering of Common Stock or a Business Combination (as
defined below), such exercise may at the election of the holder be
conditioned upon the conclusion of such transaction, in which case
such exercise shall not be deemed to be effective until the
conclusion of such transaction.
SECTION 4.
ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES
The number and kind of securities purchasable upon the exercise
of each Warrant and the Warrant Price shall be subject to adjustment
from time to time upon the occurrence of certain events, as hereinafter
described.
4.1 Mechanical Adjustments.
The number of Warrant Shares purchasable upon the exercise
of each Warrant and the Warrant Price payable in connection therewith
shall be subject to adjustment from time to time as follows:
(a) If the Company shall at any time pay a dividend
on its Common Stock in shares of its Common Stock (including,
if applicable, shares of Common Stock held by the Company
in treasury or by a Subsidiary), subdivide its outstanding
shares of Common Stock into a larger number of shares or
combine its outstanding shares of Common Stock into a
smaller number of shares or otherwise effect a
reclassifica- tion or recapitalization of the Common Stock,
then in each such case the number of Warrant Shares thereafter
issuable upon exercise of this Warrant shall be adjusted so
that this Warrant shall thereafter be exercisable for the
number of Warrant Shares equal to the
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<PAGE>
number of shares of Common Stock which the holder would have
held after the occurrence of any of the events described
above had this Warrant been exercised in full immediately
prior to the occurrence of such event. An adjustment made
pursuant to this paragraph (a) shall become effective
retroactively to the related record date in the case of a
dividend and shall become effective on the related effective
date in the case of a subdivision, combination,
reclassification or recapitalization.
(b) If the Company or a Subsidiary shall at any time
issue or sell shares of Common Stock at a purchase price
per share of Common Stock (the value of any consideration,
if other than cash, to be determined as provided in
Section 4.1(g)) less than (i) 75% of the lesser of (y) the
Closing Price per share or (z) Average Market Price per share
(determined as provided below), of the Common Stock, in the
case of any such sale to an Affiliate of Company, or (ii) the
Warrant Price per share of the Common Stock in the case of any
other sale, in each case, on the date of issuance or sale
(for the purpose of this paragraph (b), the "Adjustment
Date"), then in each such case, the number of Warrant Shares
thereafter issuable upon exercise of this Warrant after such
Adjustment Date shall be determined by multiplying the number
of Warrant Shares issuable upon exercise of this Warrant on
the date immediately preceding such Adjustment Date by a
fraction, the numerator of which shall be the sum (without
duplication) of the number of shares of Common Stock
outstanding on such date of issuance or sale and the number of
additional shares of Common Stock so issued or sold, and the
denominator of which shall be the sum of the number of shares
of Common Stock outstanding on such date of issuance or sale
(excluding the number of additional shares so issued or
sold) and the number of shares of Common Stock which the
aggregate sale or issuance price of the total number of
shares so issued or sold would purchase at such Average
Market Price or Warrant Price, as applicable. For the purposes
of this paragraph (b), the number of shares of Common Stock at
any time outstanding shall not include shares held in the
treasury of the Company or by a Subsidiary.
(c) If the Company or a Subsidiary shall at any time
issue or sell Derivative Securities (as defined below)
providing for the purchase of shares of Common Stock upon
the conversion, exchange or exercise thereof at a price per
share of Common Stock (taking into account any consideration
received by the Company upon the issuance or sale of such
Derivative Securities and any additional consideration to be
received upon the conversion, exchange or exercise thereof,
the value of such consideration, if other than cash, to be
determined as provided in Section 4(g)) less than (i) 75% of
the lesser of (y) the Closing Price per share or (z) the
Average Market Price per share (determined as provided
below), of the Common Stock, in the case of any such sale to an
Affiliate of the Company, or (ii) the Warrant Price per share
of the Common Stock in the case of any other sale, in each
case, on the date of issuance or sale (for the purpose of this
paragraph (c), the "Adjustment Date"), then in each such case,
the number of Warrant Shares thereafter issuable upon exercise
of this Warrant after such Adjustment Date shall be determined
by multiplying the number of Warrant Shares issuable upon
exercise of this Warrant on the date immediately
preceding such Adjustment Date by a fraction, the
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<PAGE>
numerator of which shall be the sum of the number of shares of
Common Stock outstanding on such Adjustment Date and the
number of additional shares of Common Stock so issuable upon
the conversion, exchange or exercise of such Derivative
Securities, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on such
Adjustment Date and the number of shares of Common Stock which
the aggregate sale price of the total number of shares so
issuable would purchase at such Average Market Price or
Warrant Price, as applicable. If all the shares of Common
Stock so offered for subscription or purchase are not
delivered upon the final conversion, exchange or exercise of
such Derivative Securities, then, upon the final conversion,
exchange or exercise of such Derivative Securities, or the
expiration, cancellation or other termination thereof, the
number of Warrant Shares issuable upon exercise of this
Warrant shall thereafter be readjusted to the number of
Warrant Shares which would have been in effect had the
numerator and the denominator of the foregoing fraction and the
resulting adjustment been made based upon the number of
shares of Common Stock actually delivered upon the
conversion, exchange or exercise of such Derivative
Securities, or the expiration, cancellation or other
termination thereof rather than upon the number of shares of
Common Stock issuable at the time such Derivative Securities
were issued or sold. If the purchase price provided for in
any Derivative Securities, the additional consideration,
if any, payable upon the conversion, exchange or exercise of
any Derivative Securities or the rate at which any
Derivative Securities are convertible into or
exchangeable or exercisable for Common Stock shall change
at any time (including, without limitation, at the time of or
after such conversion, exchange or exercise), the number of
Warrant Shares issuable upon exercise of this Warrant in
effect at the time of such change shall be readjusted to the
number of Warrant Shares issuable upon exercise of this
Warrant which would have been in effect at such time had
such Derivative Securities still outstanding provided for such
changed purchase price, additional consideration or changed
conversion rate, as the case may be, on the related Adjustment
Date, and such readjustment shall become effective on the date
of such change retroactive to the Adjustment Date;
provided, that no such readjustment shall have the effect of
decreasing the number of Warrant Shares issuable upon the
exercise of this Warrant by an amount in excess of the amount
of the adjustment initially made with respect to the issuance
or sale of the Derivative Securities. For the purposes of
this paragraph (c), the number of shares of Common Stock at
any time outstanding shall not include shares held in the
treasury of the Company or by a Subsidiary. If an
adjustment is made pursuant to this subparagraph (c) in
connection with the issuance or sale of any Derivative
Securities, then no further adjustment shall be made under
any provision of this Section 4.1 in connection with the
subsequent issuance or sale of shares of Common Stock or
other securities in connection with the exercise, conversion
or exchange of such Derivative Securities (except for the
adjustments upon final conversion, exhange, exercise,
expiration, cancellation or termination of such Derivative
Securities provided for above).
(d) If the Company shall at any time declare or pay a
dividend or other distribution on its Common Stock other than
a stock dividend payable solely in shares of Common Stock or a
cash dividend paid out of current earnings (the value of any
such
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dividend or other distribution, if other than cash, to be
determined as provided in Section 4(g)), then in each such
case, the number of Warrant Shares thereafter issuable upon
exercise of this Warrant after the record date therefor (for
the purpose of this paragraph (d), the "Adjustment Date")
shall be determined by multiplying the number of Warrant
Shares issuable upon exercise of this Warrant on the date
immediately preceding such Adjustment Date by a fraction, the
numerator of which shall be the sum of the number of shares of
Common Stock outstanding on such Adjustment Date and the
number of additional shares of Common Stock which the
aggregate value of such dividend or distribution would
purchase at the Average Market Price relating to such
Adjustment Date and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding on
such Adjustment Date. For the purposes of this paragraph (d),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury
of the Company or by a Subsidiary.
(e) If the Company or a Subsidiary shall at any time
purchase shares of Common Stock at a price per share of Common
Stock (the value of any consideration, if other than cash, to
be determined as provided in Section 4(g)) less than the
Average Market Price per share of the Common Stock on the
date of such purchase (for the purpose of this paragraph
(e), the "Adjustment Date"), then in each such case, the
number of Warrant Shares thereafter issuable upon exercise
of this Warrant after such Adjustment Date shall be
determined by multiplying the number of Warrant Shares issuable
upon exercise of this Warrant on the date immediately preceding
such Adjustment Date by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding on such Adjustment Date (excluding the shares
so purchased) and the number of additional shares of Common
Stock which the aggregate purchase price of the total number of
shares so purchased would purchase at such Average Market
Price and the denominator of which shall be the sum (without
duplication) of the number of shares of Common Stock
outstanding on such Adjustment Date and the number of shares
of Common Stock so purchased. For the purposes of this
paragraph (e), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury
of the Company or by a Subsidiary.
(f) In case of any capital reorganization
or any reclassification (other than a change in par value)
of the capital stock of the Company, or of any exchange or
conversion of the Common Stock for or into securities of
another corporation, or in case of the consolidation or
merger of the Company with or into any other person (other
than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of
Common Stock) or in case of any sale or conveyance of all
or substantially all of the assets of the Company (any of the
foregoing being a "Reorganization Transaction"), the person
formed by such consolidation or resulting from such capital
reorganization, reclassification or merger shall make provision
such that this Warrant (subject to the provisions of Section
3.3(d) and Section 10, if applicable) shall thereafter be
exercisable for the kind and amount of shares of stock, other
securities, cash and other property receivable upon such
Reorganization Transaction by a holder of the shares of
Common Stock equal to the number of Warrant Shares
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issuable upon exercise of this Warrant immediately prior to
the effective date of such Reorganization Transaction,
assuming (1) such holder of Common Stock of the Company is
not a person with which the Company consolidated or into
which the Company merged or which merged into the Company or to
which such sale or transfer was made as the case may be
("constituent entity"), or an affiliate of a constituent
entity, and (2) such person failed to exercise his rights of
election (i.e., appraisal rights, dissenter's rights or other
similar rights), if any, as to the kind or amount of
securities, cash and other property receivable upon such
Reorganization Transaction and, in any case appropriate
adjustment (as determined by the Board of Directors) shall be
made in the application of the provisions herein set forth
with respect to rights and interests thereafter of the
holder, to the end that the provisions set forth herein
(including the specified changes in and other adjustments of
the number of Warrant Shares issuable upon exercise of this
Warrant) shall thereafter be applicable, as near as
reasonably may be, in relating to any shares of stock or
other securities or other property thereafter deliverable
upon exercise of this Warrant. The provisions of this
Section 4.1(f) shall apply to successive Reorganization
Transactions.
(g) If any shares of Common Stock or Derivative
Securities are issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall
be deemed to be the net amount received by the Company
therefor. In case any shares of Common Stock or Derivative
Securities are issued or sold for a consideration other than
cash, the amount of the consideration other than cash
received by the Company shall be the fair value of such
consideration, except where such consideration consists of
marketable securities, in which case the amount of
consideration received by the Company shall be the market
price thereof, in each case as of the date of such issuance or
sale. In case any shares of Common Stock or Derivative
Securities are issued to the owners of the non-surviving or
selling entity in connection with any merger or consolidation
or sale, lease or conveyance of all or substantially all
the assets of such entity, or other business combination
in which the Company is the surviving or purchasing entity, the
amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to
such shares of Common Stock or Derivative Securities, as the
case may be. The fair value of any consideration received by
the Company or dividends or distributions paid by the
Company, in each case, other than cash or marketable
securities, shall be determined jointly by the Company and the
holders of at least a majority of the total number of Warrants
(the "Required holders"). If such persons are unable to
reach agreement within a reasonable period of time, such fair
value shall be determined by an appraiser jointly selected
by the Company and the Required holders, whose
determination shall be final and binding on the Company and all
holders of the Warrants. The fees and expenses of such
appraiser shall be paid by the Company.
(h) If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution on its Common Stock
or (2) to subscribe for or purchase shares of Common Stock
or Derivative Securities, then such record date shall be
deemed to be the date of the payment or
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distribution of such dividend or other distribution or the
date of issuance and sale of any shares of Common Stock
deemed to have been issued or sold in connection therewith.
(i) All calculations under this Section 4 shall be
made to the nearest one-thousandth of a share of Common Stock.
(j) Whenever the number of Warrant Shares issuable
upon the exercise of this Warrant is adjusted or
readjusted pursuant to paragraphs (a) through (h), inclusive,
above, the Warrant Price payable upon exercise of this
Warrant shall be adjusted or readjusted by multiplying such
Warrant Price immediately prior to the related Adjustment
Date by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of this
Warrant immediately preceding such Adjustment Date, and the
denominator of which shall be the number of Warrant Shares so
purchasable immediately thereafter; provided, that no such
readjustment pursuant to paragraph (c) above with respect to
the conversion, exchange or exercise, or expiration,
cancellation or other termination, of any Derivative
Securities shall have the effect of increasing the Warrant
Price by an amount in excess of the amount of the adjustment
initially made in respect of the issuance or sale of such
Derivative Securities.
(k) If any event occurs of the type contemplated
by the provisions of this Section 4 but not expressly
provided for by such provisions (including, without
limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features, in
each case which result or could result in the issuance of
securities by the Company as opposed to the payment of cash),
then the Company's Board of Directors shall make an
appropriate adjustment in the number of Warrant Shares
issuable upon exercise of this Warrant and the Warrant Price
so as to protect the rights of this Warrant. No adjustment
to the Warrants or the Warrant Price need be made, however,
pursuant to this Section 4 or otherwise, as a result of the
issuance of securities, Derivative Securities or other equity
rights of the Company pursuant to any securities-related
employee benefit plan of the Company or its Subsidiaries.
(l) For the purpose of this Section 4, the term
"shares of Common Stock" shall mean (1) the class of stock
designated as the Common Stock of the Company at the date
of this Warrant or (2) any other class of stock resulting
from successive changes or reclassification of such
shares consisting solely of changes in par value, or from
par value to no par value, or from no par value to par value.
In the event that at any time, as a result of an adjustment
made pursuant to paragraphs (a) through (k), inclusive, above,
the holder shall become entitled to receive any shares of the
Company other than shares of Common Stock, thereafter the
number of such other shares so receivable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Warrant Shares contained in paragraphs (a) through (k),
inclusive, above, and the provisions of Sections 4.2, 4.3, 4.4
and 4.5, inclusive, with respect to the Warrant Shares, shall
apply on like terms to any such other shares.
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4.2 Time of Adjustments.
Unless otherwise expressly noted above, each adjustment
required by Section 4.1 shall be effective as and when the event
requiring such adjustment occurs.
4.3 Notice of Adjustment.
Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant or the Warrant Price is adjusted as herein
provided, the Company shall promptly mail by first class mail,
postage prepaid, to each holder a certificate of a firm of independent
public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) setting
forth the number of Warrant Shares purchasable upon the exercise
of each Warrant and the Warrant Price after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such
certificate shall be conclusive evidence of the correctness of such
adjustment.
4.4 No Adjustment for Cash Dividends.
Except as provided in Section 4.1, no adjustment shall be
made during the term of a Warrant or upon the exercise of a Warrant in
respect of any cash dividends declared or paid on the Common Stock.
4.5 Statement on Warrants.
Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon the exercise of Warrants,
Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the initial
Warrant.
SECTION 5.
FRACTIONAL INTERESTS
No fractional Warrant Shares shall be issued upon the
exercise of Warrants, but in lieu thereof the Company shall pay
therefor in cash an amount equal to the product obtained by multiplying
the Closing Price per Warrant Share on the Trading Day immediately
preceding the date of exercise of the Warrant times such fraction. If
more than one Warrant shall be presented for exercise in full at the
same time by the same holder, the number of full Warrant Shares that
shall be issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented.
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SECTION 6.
TAXES
The Company shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of Warrant
Shares in Durham, North Carolina upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any
tax or taxes that may be payable in respect of any transfer involved
in the issue or delivery of any Warrant or certificates for Warrant
Shares in a name other than that of the registered holder of such
Warrant, and no such issue or delivery shall be made unless and until
the person requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 7.
RESERVATION OF WARRANT SHARES;
PURCHASE OF WARRANTS; CANCELLATION OF WARRANTS;
RESTRICTIONS ON TRANSFER
7.1 Reservation of Warrant Shares.
(a) There have been reserved, and the Company shall at
all times reserve and keep available, free from preemptive rights, out
of its authorized and unissued Common Stock, solely for the purpose of
effecting the exercise of the Warrants, the number of shares of Common
Stock that shall from time to time be sufficient to provide for the
exercise of the rights of purchase represented by the outstanding
Warrants. All Warrants surrendered in the exercise of the rights
thereby evidenced shall thereupon be cancelled by the Company and
retired. Promptly after the Expiration Date, the Secretary of the
Company shall certify to the Company the aggregate number of Warrants
then outstanding, and thereafter no shares of Common Stock shall be
subject to reservation in respect of such Warrants. The Company shall
from time to time, in accordance with the laws of the State of
Delaware, increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining unissued
shall not be sufficient to permit the exercise of all the then
outstanding Warrants.
(b) All shares of Common Stock or other securities issued upon
exercise of the Warrants for a Warrant Price equal to at least the
par value of such Common Stock at such time will, upon issuance in
accordance with the terms hereof, be validly issued, fully paid and
nonassessable, free from all liens, charges, security interests and
encumbrances created by the Company with respect to the issuance and
delivery thereof and not subject to preemptive rights. The Company
shall not be required to issue any Common Stock or other securities
pursuant to the Warrants at a Warrant Price less than the par value
of such Common Stock or such other securities at such time; provided
however that, other than in connection with a transaction resulting in
an adjustment to the Warrant Price pursuant to Section 4, the Company
shall not increase the par value of its Common Stock to an amount in
excess of $.01 per share.
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7.2 Purchase of Warrants by the Company.
Any of the Company and its Subsidiaries shall have the right,
except as limited by law, other agreements or herein, to purchase or
otherwise acquire Warrants at such times, in such manner and for such
consideration as it may deem appropriate.
7.3 Cancellation of Warrants.
If any of the Company and its Subsidiaries shall purchase or
otherwise acquire Warrants, the same shall thereupon be cancelled
by the Company and retired. The Company shall cancel any Warrant
surrendered for exchange, substitution, transfer or exercise in whole
or in part. The Warrants shall also be subject to cancellation as set
forth in Section 3.2. At any time that the Warrants or a portion
thereof are cancelled or deemed cancelled in accordance with the terms
of this Warrant, then such Warrants or portion thereof and all rights
related thereto including, without limitation the adjustment
provisions of Section 4, shall be cancelled, void and of no further
force or effect.
7.4 Transfer Restrictions.
(a) Each holder acknowledges that the Company issued and
sold the Warrants owned by the holder and will issue and sell the
Warrant Shares in reliance upon the exemption afforded by Section 4(2)
of the Securities Act for transactions by an issuer not involving
any public offering. Each holder represents that (1) it has
acquired the Warrants and will acquire the Warrant Shares for
investment and without any view toward distribution of any of the
shares to any other person, (2) it will not sell or otherwise dispose
of the Warrants or the Warrant Shares except in compliance with the
registration requirements or exemption provisions under the Securities
Act and (3) before any sale or other disposition of any of the
Warrants or the Warrant Shares other than in a sale registered under
the Securities Act, or pursuant to Rule 144 under the Securities Act
unless the Company shall have been advised by counsel that the sale does
not meet the requirements of Rule 144 for the sale, it will deliver to
the Company an opinion of counsel reasonably satisfactory to the
Company to the effect that such registration is unnecessary.
(b) Each Warrant and each certificate for Warrant Shares
and any Warrant or any certificate issued in exchange therefor or on
conversion or upon transfer, except Warrants or certificates issued
in connection with a sale registered under the Securities Act and
except as provided below, shall bear a legend to the following effect:
"The [Warrants/shares] represented by this
certificate have not been registered under the Securities
Act of 1933 and may not be offered, sold, transferred or
otherwise disposed of except in compliance with said Act"
; provided that such legend shall be removed by
delivery of one or more substitute Warrants or certificates, as the
case may be, without such legend if the holder thereof shall have
delivered to the Company a copy of a letter from the staff of the
Securities and Exchange
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Commission or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that the legend is not
required for purposes of the Securities Act.
SECTION 8.
MUTILATED OR MISSING WARRANTS
If any Warrant shall be mutilated, lost, stolen or destroyed
and the Company shall receive evidence thereof reasonably
satisfactory to it, the Company shall issue and deliver in exchange
and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent
right or interest. An applicant for such a substitute Warrant shall
comply with such other reasonable requirements (including,
without limitation, entering into an appropriate indemnity agreement
and/or the posting of an appropriate bond) and pay such reasonable
charges as the Company may prescribe.
SECTION 9.
NO RIGHTS AS STOCKHOLDER
Nothing contained in this Warrant or in any of the Warrants
shall be construed as conferring upon the holders or their transferees
the right to vote or to receive dividends or to consent or to receive
notice as stockholders in respect of any meeting of stockholders for
the election of directors of the Company or any other matter, or any
rights whatsoever as stockholders of the Company.
SECTION 10.
NOTICE TO HOLDERS
At any time prior to the expiration of the Warrants and prior
to their exercise, if any of the following events shall occur:
(1) the Company shall declare any dividend (or
any other distribution) on Common Stock other than a cash
dividend or shall declare or authorize repurchase of in
excess of 10% of the then outstanding shares of Common
Stock; or
(2) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe
for or purchase any shares of Common Stock or any Derivative
Securities; or
(3) the Company shall propose any capital
reorganization, recapitalization, subdivision or
reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value or from
no par value to par value), or any consolidation or merger
to which the
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Company is a party for which approval of any stockholders of
the Company shall be required, or the sale, transfer or lease
of all or substantially all of the assets of the Company; or
(4) the voluntary or involuntary dissolution,
liquidation or winding up of the Company (other than in
connection with a consolidation, merger, or sale of all
or substantially all of its property, assets and business as
an entirety) shall be proposed;
then the Company shall give notice in writing of such event to the
holders at least 15 days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, or subscription
rights, or for the determination of stockholders entitled to vote on
such proposed consolidation, merger, sale, transfer or lease of
assets, dissolution, liquidation or winding up. No failure to give such
notice or any defect therein or in the mailing thereof shall affect the
validity of the corporate action required to be specified in such
notice.
SECTION 11.
LISTING ON SECURITIES EXCHANGES
The Company shall use all reasonable efforts to list on each
national securities exchange on which any Common Stock may at any time
be listed, subject to official notice of issuance upon the exercise of
this Warrant, and shall use its reasonable efforts to maintain such
listing, so long as any other shares of Common Stock shall be so
listed, all shares of Common Stock from time to time issuable upon
the exercise of this Warrant, and the Company shall use all
reasonable efforts to so list on each national securities exchange, and
shall use all reasonable efforts to maintain such listing of, any other
shares of capital stock of the Company issuable upon the exercise of
this Warrant if and so long as any shares of capital stock of the same
class shall be listed on such national securities exchange. Any such
listing shall be at the Company's expense.
SECTION 12.
NOTICES
All notices, requests and other communications with
respect to the Warrants shall be in writing. Communications may be made
by telecopy or similar writing. Each communication shall be given to
the holder at the address in the Warrant Register and the Company at its
offices at 2828 Croasdale Drive, Durham, North Carolina, 27704 or at
any other address as the holder or the Company, as the case may be, may
specify for this purpose by notice to the other party. Each
communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of
the transmission is confirmed, (2) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed with
first class postage prepaid and sent certified or registered mail,
return receipt requested or (3) if given by
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any other means, when delivered to the proper address and a written
acknowledgement of delivery is received.
SECTION 13.
NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE
(a) Prior to the Expiration Date, no failure or delay by any
holder in exercising any right, power or privilege with respect to
the Warrants shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in the Warrants shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) In view of the uniqueness of the Warrants, a holder would
not have an adequate remedy at law for money damages in the event
that any of the obligations arising under the Warrants is not performed
in accordance with its terms, and the Company therefore agrees that
the holder shall be entitled to specific enforcement of the terms of
the Warrants in addition to any other remedy to which they may be
entitled, at law or in equity.
SECTION 14.
AMENDMENTS, ETC
No amendment, modification, termination, or waiver of any
provision of a Warrant, and no consent to any departure from any
provision of the Warrant, shall be effective unless it shall be in
writing and signed and delivered by the Company and the holder, and
then it shall be effective only in the specific instance and for the
specific purpose for which it is given. The rights of the holder and
the terms and provisions of this Warrant including, without
limitation, the performance of the obligations of the Company hereunder,
shall not be affected in any manner whatsoever by the terms and
provisions of any other agreement, whether entered into prior to or
after the date of this Warrant unless the holder is an express party to
such agreement or has otherwise executed and delivered a written
acknowledgement to such agreement agreeing to be bound thereby.
SECTION 15.
GOVERNING LAW
The Warrants shall be governed by and construed in accordance
with the internal laws of the State of Delaware. All rights and
obligations of the Company shall be in addition to and not in
limitation of those provided by applicable law.
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SECTION 16.
SEVERABILITY OF PROVISIONS
Any provision of the Warrants that is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the prohibition or unenforceab- ility
without invalidating the remaining provisions of the Warrants or
affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 17.
HEADINGS AND REFERENCES
Headings in the Warrants are included for the convenience of
reference only and do not constitute a part of the Warrants for
any other purpose. References to parties and sections in the Warrant
are references to the parties or the sections of the Warrant, as the
case may be, unless the context shall require otherwise.
SECTION 18.
EXCLUSIVE JURISDICTION
Each of the Company and the holder, by acceptance hereof, (1)
agrees that any legal action with respect to the Warrant shall be
brought exclusively in the courts of the State of North Carolina or of
the United States of America for the Western District of North
Carolina, (2) accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to
the bringing of any legal action in those jurisdictions; provided,
however, that any party may assert in a legal action in any other
jurisdiction or venue each mandatory defense, third-party claim or
similar claim that, if not so asserted in such action, may not be
asserted in an original action in the courts referred to in clause (1)
above.
SECTION 19.
WAIVER OF JURY TRIAL
Each of the Company and the holder waives, by acceptance
hereof, any right to a trial by jury in any legal action to enforce
or defend any right under the Warrants or any amendment,
instrument, document or agreement delivered, or which in the future
may be delivered, in connection with the Warrants and agrees that
any legal action shall be tried before a court and not before a jury.
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SECTION 20.
DEFINITIONS
For the purpose of this Warrant, the following terms have the
following meanings:
(a) "Affiliate" of a person means any other person
(1) that directly or indirectly controls, is controlled by
or is under common control with, the person or any of its
subsidiaries, (2) that directly or indirectly beneficially
owns or holds 5% or more of any class of voting stock of the
person or any of its subsidiaries or (3) 5% or more of the
voting stock of which is directly or indirectly
beneficially owned or held by the person or any of its
subsidiaries. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person,
whether through the ownership of voting securities, by contract
or otherwise.
(b) "Average Market Price" per share of Common
Stock on any date means the average of the daily Closing Prices
for the fifteen (15) consecutive Trading Days commencing twenty
(20) Trading Days before the date of declaration or
authorization by the Board of Directors of the Company of such
issuance or distribution.
(c) "Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws
of the State of North Carolina or the State of Delaware or is
a day on which Banking institutions located in either state
are authorized or required by law or other governmental action
to close.
(d) "Business Combination" means, whether
concluded or intended to be concluded in one transaction or
series of transactions, each of the following:
(1) the merger or consolidation of any
of the Company and its Subsidiaries with or into any
person other than the Company or a wholly- owned
Subsidiary of the Company;
(2) the transfer of a substantial
portion of the assets of any of the Company and its
Subsidiaries to any person or group other than the
Company or a wholly-owned Subsidiary of the Company;
(3) an acquisition from any of the
Company, it Subsidiaries and its stockholders of any
shares of Common Stock or other securities of the
Company; or
(4) any tender offer (including a
self-tender offer) or exchange offer,
recapitalization, liquidation, dissolution or similar
transaction involving any of the Company and its
Subsidiaries;
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(e) "Closing Price" means the last reported sales
price, regular way, per share of Common Stock on such day, or
if no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in each case,
as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading, or, if the shares of Common Stock are
not listed or admitted to trading on any national securities
exchange, on the NASDAQ National Market System.
(f) "Credit Agreement" means that certain Credit
Agreement dated as of July 29, 1994 as amended by the First
Amendment to Credit Agreement dated as of April 12, 1995, the
Second Amendment to Credit Agreement dated as of August 10,
1995 and the Third Amendment, by and among the Company, the
lenders party thereto and First Union National Bank of North
Carolina, as agent, as amended to the date hereof and as
further amended, restated, supplemented or otherwise modified
from time to time.
(g) "Credit Facilities" means the Credit
Agreement and the Overline Credit Agreement, collectively.
(h) "Derivative Securities" means securities
convertible into or exchangeable or exercisable for shares of
Common Stock, rights or warrants to subscribe for or purchase
shares of Common Stock, options for the purchase of, or
calls, commitments or other claims of any character relating
to, the issuance of shares of Common Stock or any securities
convertible into or exchangeable for any of the foregoing.
(i) "Expiration Date" means May __, 2001
(j) "Overall Credit Exposure" means, as of any
date of determination, the total aggregate principal amount
of outstanding credit extensions and undrawn credit
commitments of the lenders under the Credit Facilities.
(k) "Overline Credit Agreement" means that certain
Secured Overline Credit Agreement of even date herewith by
and among the Company, the lenders party thereto and First
Union National Bank of North Carolina, as agent, as such
agreement may be amended, restated, supplemented or otherwise
modified from time to time.
(l) "Repayment Date" means the date on which all
Credit Obligations (as defined in the Credit Agreement) and
all Overline Obligations (as defined in the Overline Credit
Agreement) are paid in full in cash and the corresponding
commitments of each of the Lenders (as defined in the Credit
Agreement) and Overline Lenders (as defined in the Overline
Credit Amendment) with respect thereto are terminated and all
letters of credit issued pursuant to any of the foregoing have
been cancelled.
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(m) "Securities Act" means the Securities Act of
1933, as amended.
(n) "Subsidiary" means (A) any corporation or other
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company or
(B) a partnership or limited liability company in which the
Company or a Subsidiary of the Company is, at the date of
determination, a general or limited partner of such
partnership or a member of such limited liability company,
but only if the Company or its Subsidiary is entitled to
receive more than fifty percent of the assets of such
partnership or limited liability company upon its
dissolution.
(o) "Third Amendment" means the Third Amendment and
Limited Waiver to Credit Agreement, of even date herewith,
by and among the Company, the lenders party thereto and
First Union National Bank of North Carolina, as agent.
(p) "Trading Day" means, as applied to any class of
stock, any day on which the New York Stock Exchange or, if
shares of such stock are not listed or admitted to trading on
the New York Stock Exchange, the principal national securities
exchange on which the shares of such stock are listed or
admitted for trading or, if the shares of such stock are not
listed or admitted for trading on any national securities
exchange, any Business Day.
[Remainder of page intentionally left blank]
20
<PAGE>
THIS WARRANT is executed and delivered by the Company on the
date set forth below in __________, __________.
Dated: 1996 COASTAL PHYSICIAN GROUP, INC.
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
21
<PAGE>
COASTAL PHYSICIAN GROUP, INC.
Election to Purchase
Mail Address
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant for and to
purchase thereunder __________ shares of Common Stock and hereby makes
payment of ___________ in payment of the exercise price therefor, and
requests that certificates for such shares be issued in the name of
(Please Print Name, Address and Social Security No.)
and, if said number of shares shall not be all the shares
purchasable thereunder, that a new Warrant Certificate for the
balance remaining of the shares purchasable under the within Warrant
Certificate be registered in the name of the undersigned holder of
this Warrant or his Assignee as below indicated and delivered to
the address stated below.
Date: , 19 .
Name of holder of this Warrant or Assignee:
(Please Print)
Address:
Signature:
Note: The above signature must correspond with the name as written upon
the face of this Warrant Certificate in every particular without
alteration or enlargement or any change whatever unless this Warrant
has been assigned.
Signature Guaranteed:
22
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
its right to purchase __________ shares of Common Stock represented
by this Warrant and does hereby irrevocably constitute and appoint
_________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
DATED: , 19 .
Signature of Registered holder:
Note: The above signature must correspond with the name as written upon
the face of this Warrant Certificate in every particular without
alteration or enlargement or any change whatever unless this Warrant
has been assigned.
Signature Guaranteed:
23
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of the 29th day of
May, 1996, is made by COASTAL PHYSICIAN GROUP, INC., a Delaware corporation (the
"Grantor"), to FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the
"Agent"), for the benefit of (i) the Lenders and the Agent under the Credit
Agreement referred to hereinbelow (each Lender, the Issuing Bank and the Agent
in their respective capacities as such under the Credit Agreement, jointly and
severally, the "Credit Agreement Creditors," and each, a "Credit Agreement
Creditor"), (ii) the Overline Lenders and the Agent under the Overline Credit
Agreement (each Overline Lender, the Overline Issuing Lender (such term being
used herein with the meaning given to it under the Overline Credit Agreement)
and the Agent in their respective capacities as such under the Overline Credit
Agreement, jointly and severally, the "Overline Creditors," and each, an
"Overline Creditor") and (iii) if one or more Lenders enter into one or more
Interest Rate Protection Agreements with the Grantor, any such Lenders (each
Lender in its capacity as a party to any Interest Rate Protection Agreement,
notwithstanding that such Lender may have ceased at any time to be a Lender
under the Credit Agreement, a "Hedge Creditor," and collectively, the "Hedge
Creditors"; and the Hedge Creditors, together with the Credit Agreement
Creditors and the Overline Creditors, the "Secured Creditors"). Capitalized
terms not defined in this introductory paragraph, in the recitals below or
elsewhere herein shall, unless otherwise provided herein, have the meanings
given to them in the Credit Agreement (terms defined in the Overline Credit
Agreement also being deemed defined terms under the Credit Agreement).
RECITALS
A. The Grantor, certain banks and other financial institutions (the
"Lenders") and the Agent are parties to a Credit Agreement, dated as of July 29,
1994, as amended by a First Amendment thereto dated as of April 12, 1995 and by
a Second Amendment thereto dated as of August 10, 1995 (as so amended, and as in
effect on the date hereof, the "Existing Credit Agreement"), providing for the
availability of certain credit facilities to the Grantor upon the terms and
conditions set forth therein.
B. The Grantor, the Agent and the Lenders have entered into a Third
Amendment and Limited Waiver to Credit Agreement, dated as of May 29, 1996 (the
"Third Amendment"; and the Existing Credit Agreement, as amended by the Third
Amendment and as further amended, modified, supplemented or restated from time
to time, the "Credit Agreement"), pursuant to which the Agent and
<PAGE>
the Lenders have agreed to make certain amendments to the Existing Credit
Agreement and have made certain other agreements of material benefit to the
Grantor, including agreements to waive certain existing Events of Default (which
otherwise preclude any further borrowings by the Grantor) on the terms and
subject to the conditions set forth in the Third Amendment.
C. Additionally, the Grantor, the Agent and the Overline Lenders have
entered into a Secured Overline Credit Agreement, dated as of May 29, 1996 (as
amended, modified, supplemented or restated from time to time, the "Overline
Credit Agreement"), providing for the availability of certain credit facilities
in the aggregate principal amount of $40,000,000 to the Grantor upon the terms
and conditions set forth therein.
D. As a condition, among other things, to the effectiveness of the
Third Amendment, to the making of Loans under the Credit Agreement, to the
making of Overline Loans and the issuance of, and participation in, Letters of
Credit (such term being used herein with the meaning given to it under the
Overline Credit Agreement, except as otherwise specified) under the Overline
Credit Agreement, and to the obligation of any Hedge Creditor to enter into or
continue to perform any Interest Rate Protection Agreement, the Grantor shall
have agreed, by executing and delivering this Agreement, to secure the payment
in full of the Secured Obligations (as hereinafter defined). The Secured
Creditors are relying on this Agreement in their decision to consummate the
transactions contemplated by the Third Amendment and the Overline Credit
Agreement, to extend credit to the Grantor under the Credit Agreement and the
Overline Credit Agreement that is otherwise not available, and to enter into and
continue to perform any Interest Rate Protection Agreements, and would not be
willing to enter into the Third Amendment and the Overline Credit Agreement or
to extend credit thereunder, or to enter into or continue to perform any such
Interest Rate Protection Agreement, without this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Lenders to enter into the Third Amendment and to
make Loans to the Grantor under the Credit Agreement and to induce the Overline
Lenders to enter into the Overline Credit Agreement and to make Overline Loans
to the Grantor thereunder from time to time (which Loans and Overline Loans the
Lenders and Overline Lenders would not otherwise be required to make), to induce
the Issuing Lender to issue, and the Overline Lenders to participate in, the
Letters of Credit, and to induce the Hedge Creditors to enter into and perform
the Interest Rate Protection Agreements, the Grantor
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<PAGE>
hereby agrees as follows:
1. Security for Secured Obligations. This Agreement is made by the
Grantor to secure:
(i) the full and prompt payment to the Credit Agreement
Creditors, at any time and from time to time as and when due (whether
at the stated maturity, by acceleration or otherwise), of all of the
Credit Obligations of the Grantor, including, without limitation, (y)
all principal of and interest on the Loans, all Reimbursement
Obligations in respect of Letters of Credit (as defined in the Credit
Agreement) issued pursuant to the Credit Agreement and all fees,
expenses, indemnities and other amounts payable by the Grantor under
the Credit Agreement or any other Credit Document (including, to the
greatest extent permitted by law, interest accruing after the filing of
a petition or commencement of a case by or with respect to the Grantor
seeking relief under any bankruptcy or insolvency laws, regardless of
whether a claim for any such interest is allowed against the Grantor in
any such proceeding), and (z) all Credit Obligations that, but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due;
(ii) the full and prompt payment to the Overline Creditors,
at any time and from time to time as and when due (whether at the
stated maturity, by acceleration or otherwise), of all of the Overline
Obligations of the Grantor, including, without limitation, (y) all
principal of and interest on the Overline Loans, all Reimbursement
Obligations in respect of Letters of Credit issued pursuant to the
Overline Credit Agreement and all fees, expenses, indemnities and other
amounts payable by the Grantor under the Overline Credit Agreement or
any other Credit Document (including, to the greatest extent permitted
by law, interest accruing after the filing of a petition or
commencement of a case by or with respect to the Grantor seeking relief
under any bankruptcy or insolvency laws, regardless of whether a claim
for any such interest is allowed against the Grantor in any such
proceeding), and (z) all Overline Obligations that, but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due;
(iii) the full and prompt payment to the Hedge Creditors, at
any time and from time to time as and when due (whether at the stated
maturity, by acceleration or otherwise), of all liabilities and
obligations owing by the Grantor under any Interest Rate Protection
Agreements at any time in effect, including, without limitation,
obligations that, but for the operation of the automatic stay under
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<PAGE>
Section 362(a) of the Bankruptcy Code, would become due (all
liabilities and obligations described in this clause (iii),
collectively, the "Hedge Obligations");
(iv) any and all sums advanced by the Agent in order to
preserve the Collateral (as hereinafter defined) or to
preserve its security interest in the Collateral; and
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the
Grantor referred to in clauses (i) through (iii) above, after an Event
of Default (such term to mean and include, as relevant, for purposes of
this Agreement, any "Event of Default" within the meaning of the Credit
Agreement or the Overline Credit Agreement or any payment default under
any Interest Rate Protection Agreement continuing after any applicable
grace period) shall have occurred and be continuing, the reasonable
expenses of re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any
exercise by the Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section, collectively, the "Secured Obligations."
2. Grant of Security Interest. (a) To secure the liabilities and
obligations described under clause (i) of Section 1 and all other Secured
Obligations of the Grantor to the Agent and the Lenders now or hereafter
existing under this Agreement, the Grantor hereby pledges and assigns to the
Agent, on behalf of the Credit Agreement Creditors, and grants to the Agent, on
behalf of the Credit Agreement Creditors, a security interest in, all of the
Grantor's right, title and interest in and to the following, in each case
whether now owned or existing or hereafter acquired or arising (collectively,
the "Collateral"):
(i) All of the Grantor's accounts, as defined in the Uniform
Commercial Code, whether now owned or existing or hereafter acquired or
arising, including, without limitation, all of the Grantor's accounts
receivable (including, without limitation, any Medicare, Medicaid and
other similar accounts receivable, but excluding any such accounts
receivable to the extent the same are not permitted to be assigned
under applicable laws, rules and regulations (but not excluding the
proceeds thereof)), all rights to payment for goods sold or leased or
to be sold or to be leased (including all rights to returned or
repossessed goods) or for services rendered at any time or for services
to be rendered (including any rights to stoppage in transit,
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<PAGE>
repossession and reclamation and other rights of an unpaid vendor or
secured party), all rights under or evidenced by book debts, notes,
bills, drafts or acceptances, all choses in action and causes of
action, all chattel paper or other instruments or documents, and all
rights under security agreements, guarantees, indemnities and other
instruments and contracts securing or otherwise relating to the
foregoing, in each case whether now owned or existing or hereafter
acquired or arising (collectively, "Accounts");
(ii) All indebtedness, obligations and other amounts at any
time owing to the Grantor from its Subsidiaries and Affiliates and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness, obligations or other
amounts (collectively, "Intercompany Obligations");
(iii) All rights of the Grantor under all leases, contracts
and agreements to which the Grantor is now or hereafter a party
(including, without limitation, all rights, whether for payment or
performance, under managed care contracts, preferred provider
contracts, management and services agreements (including, without
limitation, physician practice, clinic, hospital and emergency room
management, staffing and services contracts), independent contractor
agreements with physicians, and contracts with health or medical
insurance companies relating to the payment of or reimbursement for
medical or health care services and products), together with any and
all extensions, modifications, amendments and renewals of such
contracts and agreements and all rights of the Grantor to receive
moneys due or to become due thereunder or pursuant thereto and to
amend, modify, terminate or exercise rights under such contracts and
agreements, but excluding rights under (but not excluding proceeds of)
any lease, agreement or contract that by the terms thereof, or under
applicable law, cannot be assigned or a security interest granted
therein in the manner contemplated by this Agreement unless consent
from the relevant party or parties has been obtained and under the
terms of which lease, agreement or contract any such assignment or
grant of a security interest therein in the absence of such consent
would, or could, result in the termination thereof, but only to the
extent that (y) such rights are subject to such contractual or legal
restriction and (z) such restriction is not, or could not be, rendered
ineffective pursuant to the Uniform Commercial Code of any relevant
jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity (collectively, "Contracts");
(iv) All of the Grantor's copyrights, copyright
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<PAGE>
registrations and applications for copyright registration, whether
under the laws of the United States or any other country or
jurisdiction, including all recordings, supplemental registrations and
derivative or collective work registrations, and all renewals and
extensions thereof, in each case whether now owned or existing or
hereafter acquired or arising (collectively, "Copyrights"), together
with all copyright licenses to which the Grantor is or hereafter
becomes a party and all other General Intangibles embodying,
incorporating, evidencing or otherwise relating or pertaining to any
Copyrights, in each case whether now owned or existing or hereafter
acquired or arising (collectively, together with Copyrights, "Copyright
Collateral");
(v) All of the Grantor's deposit accounts, including,
without limitation, all Cash Collateral Accounts (as hereinafter
defined), Agent Affiliate Accounts (as hereinafter defined),
Concentration Accounts (as hereinafter defined) and all other deposit
accounts, whether maintained with the Agent or any other bank or
depository institution, in each case whether now owned or existing or
hereafter acquired or arising, together with all funds held from time
to time therein and all certificates and instruments from time to time
representing, evidencing or deposited into such accounts (collectively,
"Deposit Accounts");
(vi) All of the Grantor's equipment, as defined in the
Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all machinery,
equipment, motor vehicles, computer equipment and software, parts,
supplies, appliances, fittings, furniture and fixtures of every kind
and nature, wherever located and whether or not affixed to any real
property, and all accessions, accessories, additions, attachments,
improvements, modifications and upgrades to, replacements of and
substitutions for the foregoing, in each case whether now owned or
existing or hereafter acquired or arising (collectively, "Equipment");
(vii) All of the Grantor's general intangibles, as defined in
the Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all Contracts, all
Copyright Collateral, Patent Collateral and Trademark Collateral, all
inventions, designs, trade secrets, trade processes, confidential or
proprietary technical or business information, know-how, registrations,
licenses, permits and franchises, all rights under or evidenced by book
debts, notes, bills, drafts, acceptances, choses in action, causes of
action, chattel paper or other instruments or documents, all
indebtedness, obligations and other amounts at any time owing to the
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<PAGE>
Grantor from any Person (other than Intercompany Obligations) and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness, obligations or other
amounts, all judgments, tax refund claims, claims against carriers and
shippers, claims under liens and insurance policies, all rights under
security agreements, guarantees, indemnities and other instruments and
contracts securing or otherwise relating to the foregoing, all
invoices, customer lists, books and records, ledger and account cards,
computer tapes, disks, software, printouts and other corporate or
business records relating to the foregoing, and all other intangible
personal property of every kind and nature, and all accessions,
additions, improvements, modifications and upgrades to, replacements of
and substitutions for the foregoing, in each case whether now owned or
existing or hereafter acquired or arising, but excluding Accounts
(collectively, "General Intangibles");
(viii) All of the Grantor's inventory, as defined in the
Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all goods
manufactured, acquired or held for sale or lease, all raw materials,
component materials, work-in-process and finished goods, all supplies,
goods and other items and materials used or consumed in the
manufacture, production, packaging, shipping, selling, leasing or
furnishing of such inventory or otherwise in the operation of the
business of the Grantor, all goods in which the Grantor now or at any
time hereafter has any interest or right of any kind, and all goods
that have been returned to or repossessed by or on behalf of the
Grantor, in each case whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of the
Grantor or is held by the Grantor or by others for the account of the
Grantor, and in each case whether now owned or existing or hereafter
acquired or arising (collectively, "Inventory");
(ix) All of the Grantor's letters patent, whether under the
laws of the United States or any other country or jurisdiction, all
recordings and registrations thereof and applications therefor,
including, without limitation, the inventions described therein, all
reissues, continuations, divisions, renewals, extensions,
continuations-in-part thereof, in each case whether now owned or
existing or hereafter acquired or arising (collectively, "Patents"),
together with all patent licenses to which the Grantor is or hereafter
becomes a party and all other General Intangibles embodying,
incorporating, evidencing or otherwise relating or pertaining to any
Patents, in each case whether now owned
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<PAGE>
or existing or hereafter acquired or arising (collectively, together
with Patents, "Patent Collateral");
(x) All of the Grantor's trademarks, service marks, trade
names, corporate and company names, business names, logos, trade dress,
trade styles, other source or business identifiers, designs and general
intangibles of a similar nature, whether under the laws of the United
States or any other country or jurisdiction, all recordings and
registrations thereof and applications therefor, all renewals and
extensions thereof, all rights corresponding thereto, and all goodwill
associated therewith or symbolized thereby, in each case whether now
owned or existing or hereafter acquired or arising (collectively,
"Trademarks"), together with all trademark licenses to which the
Grantor is or hereafter becomes a party and all other General
Intangibles embodying, incorporating, evidencing or otherwise relating
or pertaining to any Trademarks, in each case whether now owned or
existing or hereafter acquired or arising (collectively, together with
Trademarks, "Trademark Collateral");
(xi) To the extent not covered or not specifically excluded
by clauses (i) through (x) above, all of the Grantor's other personal
property, whether now owned or existing or hereafter arising or
acquired; and
(xii) Any and all proceeds, as defined in the Uniform
Commercial Code, products, rents and profits of or from any and all of
the foregoing and, to the extent not otherwise included, (w) all
payments under any insurance (whether or not the Agent is the loss
payee thereunder), indemnity, warranty or guaranty with respect to any
of the foregoing Collateral, (x) all payments in connection with any
requisition, condemnation, seizure or forfeiture with respect to any of
the foregoing Collateral, (y) all claims and rights to recover for any
past, present or future infringement or dilution of or injury to any
Copyright Collateral, Patent Collateral or Trademark Collateral, and
(z) all other amounts from time to time paid or payable under or with
respect to any of the foregoing Collateral (collectively, "Proceeds").
For purposes of this Agreement, the term "Proceeds" includes whatever
is receivable or received when Collateral or Proceeds are sold,
exchanged, collected or otherwise disposed of, whether voluntarily or
involuntarily.
(b) To secure the liabilities and obligations described under clause
(ii) of Section 1 and all other Secured Obligations of the Grantor to the Agent
and the Overline Lenders now or hereafter existing under this Agreement, the
Grantor hereby pledges and assigns to the Agent, on behalf of the Overline
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<PAGE>
Creditors, and grants to the Agent, on behalf of the Overline Creditors, a
security interest in, all of the Grantor's right, title and interest in and to
the Collateral.
(c) To secure the liabilities and obligations described under clause
(iii) of Section 1 and all other Secured Obligations of the Grantor to the Hedge
Creditors now or hereafter existing under this Agreement, the Grantor hereby
pledges and assigns to the Agent, on behalf of the Hedge Creditors, and grants
to the Agent, on behalf of the Hedge Creditors, a security interest in, all of
the Grantor's right, title and interest in and to the Collateral.
(d) Each of the grants of a security interest in subsections (a), (b)
and (c) of this Section 2 is, and is intended to be, a separate, independent and
distinct grant to the same extent as if each such grant were set forth in a
separate document, and such grants have been included in one document solely for
the administrative convenience of the Secured Creditors.
3. Representations and Warranties. The Grantor represents
and warrants as follows:
(a) The Grantor owns all Collateral purported to be owned by it, free
and clear of any Liens except for the Liens granted to the Agent, for the
benefit of the Secured Creditors, pursuant to this Agreement, and except for
other Permitted Liens. No security agreement, financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any government or public office, and the Grantor has not filed or
consented to the filing of any such statement or notice, except (i) Uniform
Commercial Code financing statements naming the Agent as secured party, (ii)
security instruments filed in the U.S. Copyright Office or the U.S. Patent and
Trademark Office naming the Agent as secured party and (iii) as may be otherwise
permitted by the Credit Agreement.
(b) This Agreement, together with (i) the filing of duly completed and
executed Uniform Commercial Code financing statements naming the Grantor as
debtor, the Agent as secured party, and describing the Collateral, in the
jurisdictions set forth on Annex A hereto, (ii) to the extent required by
applicable law, the filing of duly completed and executed assignments in the
forms set forth as Exhibits A and B with the U.S. Copyright Office or the U.S.
Patent and Trademark Office, as appropriate, with regard to registered Copyright
Collateral, Patent Collateral and Trademark Collateral, as the case may be, and
(iii) the delivery to the Agent of all chattel paper, promissory notes and other
instruments included in the Collateral, creates, and at all times shall
constitute, a valid and perfected security interest in and Lien upon the
Collateral
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in favor of the Agent, for the benefit of the Secured Creditors, to the extent a
security interest therein can be perfected by such filings or possession of such
chattel paper, promissory notes or instruments, as applicable, superior and
prior to the rights of all other Persons therein (except for Permitted Liens),
and no other or additional filings, registrations, recordings or actions are or
shall be necessary or appropriate in order to maintain the perfection and
priority of such Lien and security interest, other than continuation statements
required under the applicable Uniform Commercial Code (it being specifically
noted that the Agent may at its option, but shall not be required to, require
that any bank or other depository institution at which a Deposit Account is
maintained enter into a written agreement or take such other action as may be
necessary to perfect the security interest of the Agent in such Deposit Account
and the funds therein).
(c) No authorization, consent or approval of, or declaration or filing
with, any Governmental Authority (including, without limitation, any notice
filing with state tax or revenue authorities required to be made by account
creditors in order to enforce any Accounts in such state) is required for the
valid execution, delivery and performance by the Grantor of this Agreement, the
grant by it of the Lien and security interest in favor of the Agent provided for
herein, or the exercise by the Agent of its rights and remedies hereunder,
except for (i) the filings described in subsection (a) above and (ii) in the
case of Accounts owing under any Contract with a federal governmental agency or
authority, the filing by the Agent of a notice of assignment of moneys due or to
become due thereunder in accordance with the federal Assignment of Claims Act of
1940, as amended, and the regulations promulgated thereunder, but only if such
assignment is not prohibited by the terms of such Contract.
(d) Except for (i) the provisions of the federal Medicare and Medicaid
Act and the regulations thereunder restricting assignments of Medicare and
Medicaid accounts receivable (but not the Proceeds thereof) and any similar
restrictions under applicable state law, and (ii) the provisions of the federal
Anti-Assignment Act and Anti-Claims Act, as amended, and any similar
restrictions under applicable state law, there are no statutory or regulatory
restrictions, prohibitions or limitations on the Grantor's ability to grant to
the Agent a Lien upon and security interest in the Collateral pursuant to this
Agreement or on the exercise by the Agent of its rights and remedies hereunder
(including any foreclosure upon or collection of the Collateral), and there are
no contractual restrictions on the Grantor's ability so to grant such Lien and
security interest.
(e) Annex B lists, as to the Grantor, (i) the address of its chief
executive office and each place of business, (ii) the address of each location
of all original invoices, ledgers,
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chattel paper, instruments and other records or information evidencing or
relating to the Accounts, General Intangibles or other Collateral, and (iii) the
address of each location at which any Equipment or Inventory (other than mobile
goods and goods in transit) is kept or maintained, in each instance except for
any new locations established in accordance with the provisions of Section 4(b).
Except as may be otherwise noted therein, all locations identified in Annex B
are leased by the Grantor. The Grantor does not presently conduct business under
any prior or other corporate name or under any trade or fictitious name, except
as indicated on Annex B, and the Grantor has not entered into any contract or
granted any Lien within the past five years under any name other than its legal
corporate name or a trade or fictitious name indicated on Annex B.
(f) Each Account is, or at the time it arises will be, (i) a bona fide,
valid and legally enforceable indebtedness of the account debtor according to
its terms, arising out of or in connection with the sale, lease or performance
of goods or services by the Grantor, (ii) subject to no offsets, discounts,
counterclaims, contra accounts or any other defense of any kind and character,
other than warranties and discounts customarily given by the Grantor in the
ordinary course of its business and warranties provided by applicable law and
other than patient or payor refund obligations arising in the ordinary course of
business as a result of overpayment, (iii) to the extent listed on any schedule
of Accounts at any time furnished to the Agent, a true and correct statement of
the amount actually and unconditionally owing thereunder, maturing as stated in
such schedule and in the invoice covering the transaction creating such Account,
and (iv) not evidenced by an instrument or chattel paper; or if so, such
instrument or chattel paper (other than invoices and related correspondence and
supporting documentation) shall promptly be duly endorsed to the order of the
Agent and delivered to the Agent to be held as Collateral hereunder. To the
Grantor's knowledge, there are no facts, events or occurrences that would in any
way impair the validity or enforcement of any Accounts except as set forth
above. No bill of lading, warehouse receipt or other document or instrument of
title is outstanding with respect to any Collateral other than mobile goods and
other than Inventory in transit in the ordinary course of business to a location
set forth on Annex B or to a customer of the Grantor.
(g) As to each Contract to which the Grantor is or hereafter becomes a
party and that is material to its business, (i) the Grantor is not in default in
any material respect under such Contract, and to the knowledge of the Grantor,
none of the other parties to such Contract is in default in any material respect
thereunder (except as shall have been disclosed in writing to the Agent), (ii)
such Contract is, or at the time of execution will be, the legal, valid and
binding obligation of all
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parties thereto, enforceable against such parties in accordance with the
respective terms thereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and no defense, offset, deduction or counterclaim will exist
thereunder in favor of any such party (it being recognized that from time to
time, under a Contract that has expired by its terms, the parties may continue
to perform pending execution of written extensions or renewals, the Grantor
hereby representing that any Accounts or other rights accrued under such oral
arrangements are not at any time in the aggregate material to its business), and
(iii) the performance by the Grantor of its obligations under such Contract in
accordance with its terms will not contravene any Requirement of Law or any
contractual restriction binding on or affecting the Grantor or any of its
properties, and will not result in or require the creation of any Lien upon or
with respect to any of its properties.
(h) Annexes C, D and E correctly set forth all registered Copyrights,
Patents and Trademarks owned by the Grantor and currently used or proposed to be
used in its business. The Grantor owns and possesses the unqualified right to
use all such Copyrights, Patents and Trademarks listed under its name; all
registrations therefor have been validly issued under applicable law and are in
full force and effect; no claim has been made that any of the Copyrights,
Patents or Trademarks is invalid or unenforceable or violates or infringes the
rights of any other Person, and there is no such violation or infringement in
existence; and to the knowledge of the Grantor, no other Person is infringing
upon the rights of the Grantor with regard to any of the Copyrights, Patents or
Trademarks.
(i) As of the date hereof, all Proceeds of Accounts or other Collateral
are deposited as promptly as practicably possible after receipt into a Deposit
Account maintained by the Grantor, and the balances in such account, if in
excess of $1,000, are transferred not less frequently than weekly (by wire or
Automated Clearinghouse) to a cash concentration account listed on Annex F
(collectively, "Concentration Accounts"). Annex F sets forth a complete list of
all Concentration Accounts and shows, as to each Concentration Account, the name
and location of the bank or depository institution where such Concentration
Account is maintained, the account number and the account name. Each
Concentration Account is maintained with (i) the Agent or (ii) a bank or other
depository institution that has executed and delivered to the Agent an
agreement, in form and substance satisfactory to the Agent, that, among other
things, acknowledges the security interest of the Agent in all funds, monies,
securities and instruments deposited in such Concentration Account and pursuant
to which such bank or depository institution agrees to transfer such funds,
monies, securities and instruments to the Agent promptly upon demand at
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any time after the occurrence and during the continuance of an Event of Default
(each, a "Concentration Agreement"). The Grantor represents and warrants that
the Accounts processed through the Concentration Accounts constitute 100% of the
aggregate Accounts of the Grantor and its Subsidiaries that are Grantor under
the Subsidiaries Security Agreement (other than Healthcare Automation, Inc. and
Physicians Planning Group, Inc.).
4. Certain Covenants. The Grantor covenants and agrees as follows:
(a) So long as no Event of Default shall have occurred and be
continuing, the Grantor may, in any lawful manner not inconsistent with the
provisions of this Agreement and the other Credit Documents (including without
limitation the restrictions and other provisions in the Overline Credit
Agreement relating to Net Available Cash, as defined therein), use, control and
manage the Collateral in the operation of its business, and receive and use the
income, revenue and profits arising therefrom and the Proceeds thereof, in the
same manner and with the same effect as if this Agreement had not been made;
provided, however, that the Grantor will not sell or otherwise dispose of, grant
any option with respect to, or mortgage, pledge, grant any Lien with respect to
or otherwise encumber any of the Collateral or any interest therein, except for
the security interest created in favor of the Agent hereunder and except as may
be otherwise expressly permitted in accordance with the terms of this Agreement,
the Credit Agreement or the Overline Credit Agreement (including any applicable
provisions therein regarding delivery of proceeds of sale or disposition to the
Agent). The Grantor shall not invoke or assert the benefit of any rule of law or
statute now or hereafter in effect, including, without limitation, any right to
prior notice or judicial hearing in connection with the Agent's possession,
custody or disposition of any Collateral and any appraisal, valuation, stay,
extension, moratorium or redemption law, or take or fail to take any other
action, that would, or could reasonably be expected to, have the effect of
delaying, impeding or preventing the exercise of any rights and remedies in
respect of any Collateral, the absolute sale of any Collateral or the possession
thereof by any purchaser at any sale thereof, and the Grantor hereby waives the
benefit of all such laws.
(b) The Grantor will not (i) change its name, identity or corporate
structure, (ii) change its chief executive office from the location thereof
listed on Annex B, or (iii) remove any Collateral (other than mobile goods and
goods in transit), or any books, records or other information relating to
Collateral, from the applicable location thereof listed on Annex B, or keep or
maintain any Collateral at a location not listed on Annex B, unless in each case
the Grantor has (1) given twenty (20) days' prior written notice to the Agent of
its intention to do so, together with information regarding any such new
location and
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such other information in connection with such proposed action as the Agent may
reasonably request, and (2) delivered to the Agent ten (10) days prior to any
such change or removal such documents, instruments and financing statements as
may be required by the Agent, all in form and substance satisfactory to the
Agent, paid all necessary filing and recording fees and taxes, and taken all
other actions reasonably requested by the Agent (including, at the request of
the Agent, delivery of opinions of counsel reasonably satisfactory to the Agent
to the effect that all such actions have been taken), in order to perfect and
maintain the Lien upon and security interest in the Collateral provided for
herein in accordance with the provisions of Sections 3(a) and 3(b).
(c) The Grantor will keep and maintain at its own cost and expense
satisfactory and complete records of the Accounts and all other Collateral,
including, without limitation, records of all payments received, all credits
granted thereon, all merchandise returned and all other documentation relating
thereto, and will furnish to the Agent from time to time such statements,
schedules and reports (including, without limitation, accounts receivable aging
schedules) with regard to the Collateral as the Agent may reasonably request.
The Grantor shall, from time to time at such times as may be reasonably
requested and upon reasonable notice, (i) make available to the Agent for
inspection and review at the Grantor's offices copies of all invoices and other
documents and information relating to the Collateral (including, without
limitation, itemized schedules of all collections of Accounts, showing the name
of each account debtor, the amount of each payment and such other information as
the Agent shall reasonably request), and (ii) permit the Agent or its
representatives to visit its offices or the premises upon which any Collateral
may be located, inspect its books and records and make copies and memoranda
thereof, inspect the Collateral, discuss its finances and affairs with its
officers, employees and independent accountants and take any other actions
necessary for the protection of the interests of the Secured Creditors in the
Collateral. At the request of the Agent, the Grantor will legend, in form and
manner satisfactory to the Agent, the books, records and materials evidencing or
relating to the Collateral with an appropriate reference to the fact that the
Collateral has been assigned to the Agent and that the Agent has a security
interest therein.
(d) Unless notified otherwise by the Agent in accordance with the terms
hereof, the Grantor shall endeavor to collect its Accounts and all amounts owing
to it under the Contracts included within the Collateral, in the ordinary course
of its business consistent with past practices and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balances
thereof, and in connection therewith shall, at the request of the Agent, take
such action as the Agent may
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deem necessary or advisable (within applicable laws) to enforce such collection.
The Grantor shall not, except to the extent done in the ordinary course of its
business consistent with past practices and in accordance with sound business
judgment and provided that no Event of Default shall have occurred and be
continuing, (i) grant any extension of the time for payment of any Account or
amount owing under any Contract, (ii) compromise or settle any Account or amount
owing under any Contract for less than the full amount thereof, (iii) release,
in whole or in part, any Person or property liable for the payment of any
Account or amount owing under any Contract, or (iv) allow any credit or discount
on any Account or amount owing under any Contract. The Grantor shall promptly
inform the Agent of any disputes with any account debtor or obligor and of any
claimed offset and counterclaim that may be asserted with respect thereto
involving, in each case, $25,000 or more, where the Grantor reasonably believes
that the likelihood of payment by such account debtor is materially impaired,
indicating in detail the reason for the dispute, all claims relating thereto and
the amount in controversy. The Agent shall have the right to make test
verifications of Accounts in any reasonable manner and through any reasonable
medium, and the Grantor agrees to furnish all such reasonable assistance and
information as the Agent may require in connection therewith.
(e) The Grantor agrees that, if any Intercompany Obligations or other
Collateral shall at any time be evidenced by a promissory note or other
instrument or chattel paper, the same shall promptly be duly endorsed to the
order of the Agent and delivered to the Agent to be held as Collateral
hereunder. Notwithstanding any other provision of this Agreement or any of the
other Credit Documents, unless directed to do so by the Agent, the Grantor shall
not, at any time after the occurrence and during the continuance of an Event of
Default except as may be otherwise permitted by the Agent, collect, realize upon
or receive any payment or distribution with respect to any Intercompany
Obligations owed directly or indirectly to the Grantor, or seek or endeavor to
do the same, and all such rights to collect, realize upon and receive any such
payment or distribution shall vest solely in the Agent at all times after the
occurrence and during the continuance of an Event of Default.
(f) The Grantor will, in accordance with sound business practices,
maintain all Equipment used by it in its business (other than obsolete
Equipment) in good repair, working order and condition (normal wear and tear
excepted) and make all necessary repairs and replacements thereof so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. The Grantor shall not knowingly permit any Equipment to become a
fixture to any real property.
(g) The Grantor will, in accordance with sound business
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practices, maintain all Inventory held by it or on its behalf in good saleable
or useable condition. Unless notified otherwise by the Agent in accordance with
the terms hereof, the Grantor may, in any lawful manner not inconsistent with
the provisions of this Agreement and the other Credit Documents, process, use
and, in the ordinary course of business but not otherwise, sell its Inventory.
Without limiting the generality of the foregoing, the Grantor agrees that it
shall not permit any Inventory to be in the possession of any bailee,
warehouseman, agent or processor at any time unless such bailee, warehouseman,
agent or processor shall have been notified of the security interest created by
this Agreement and the Grantor shall have exercised its reasonable best efforts
to obtain, at the Grantor's sole cost and expense, a written agreement to hold
such Inventory subject to the security interest created by this Agreement and
the instructions of the Agent and to waive and release any Lien it may have with
respect to such Inventory, such agreement to be in form and substance reasonably
satisfactory to the Agent.
(h) The Grantor will, at its expense, at all times perform and comply
with, in all material respects, all terms and provisions of each Contract
material to its business included within the Collateral to which it is or
hereafter becomes a party required to be performed or complied with by it and
enforce the terms and provisions thereof in accordance with its terms, and will
not waive, amend or modify any provision thereof in any manner other than in the
ordinary course of business of the Grantor in accordance with past practices and
for a valid economic reason benefitting the Grantor (provided that in no event
may any waiver, amendment or modification be made that would materially
adversely affect the interests of the Agent and the Secured Creditors). With
regard to all leases, contracts and agreements that are excluded by the terms of
clause (iii) of Section 2 from the definition of the term "Contracts," the
Grantor covenants and agrees to exercise all of its material rights and remedies
under such leases, agreements and contracts in a commercially reasonable manner
consistent with the interests of the Agent and the Secured Creditors. The
Grantor will not enter into any lease, agreement or contract material to its
business that by its terms prohibits the assignment of the Grantor's rights and
interest thereunder in the manner contemplated by this Agreement, other than as
may be entered into in the ordinary course of business of the Grantor in
accordance with past practices and for a valid economic reason benefitting the
Grantor. The Grantor further covenants and agrees to use commercially reasonable
efforts to obtain any required consent to the collateral assignment of any
material contract upon the reasonable request of the Agent. Notwithstanding
anything herein to the contrary, (i) the Grantor shall remain liable under all
Contracts included within the Collateral to perform all of their respective
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Agent
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of any of its rights or remedies hereunder shall not release the Grantor from
any of its obligations under any of such Contracts, and (iii) the Agent shall
not have any obligation or liability by reason of this Agreement under any of
such Contracts, nor shall the Agent be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder. The powers, rights and
remedies conferred on the Agent hereunder are solely to protect its interest and
privilege in such Contracts, as Collateral, and shall not impose any duty upon
it to exercise any such powers, rights or remedies.
(i) If the Grantor is now or hereafter becomes a party to any Contract
with any federal or state governmental agency or authority (including, without
limitation, the United States Department of Defense or any branch of the United
States Armed Forces, the United States Department of Veterans Affairs, or any
state correctional agency or authority), it shall, as promptly as reasonably
possible after the date hereof with respect to each such Contract (collectively,
"Government Contracts") to which it is a party and which are in effect as of the
date hereof, and as promptly as reasonably possible after execution thereof with
respect to any Government Contract entered into by the Grantor after the date
hereof, prepare, execute and deliver to the Agent an assignment of moneys due or
to become due under such Government Contract, in such form and manner as shall
be prescribed by applicable laws and regulations or as shall be otherwise
acceptable to the Agent and with a number of originals thereof, together with
such other information, as shall be sufficient to permit the Agent to file
notices of such assignment with the applicable governmental authorities
(provided that the Agent will not deliver any such notices of assignment for
filing unless an Event of Default shall have occurred and be continuing). In
particular (but without limitation of the foregoing), as to assignments subject
to and permitted by the federal Assignment of Claims Act of 1940, as amended,
the Grantor shall prepare, execute and deliver all instruments of assignment in
accordance with the procedures set forth in FAR ss.32.800 (48 CFR ss.32.800) et
seq. or any successor provision and shall provide all relevant information
necessary for the Agent to file notices of assignment, including names and
addresses of the applicable administrative contracting officer and disbursing
officer. The Grantor shall not enter into any Government Contract after the date
hereof that by its terms prohibits assignment to the Agent of moneys due or to
become due thereunder.
(j) The Grantor will, at its own expense, execute, deliver and record,
as promptly as possible (but in any event within 10 days) after the date hereof
fully completed assignments in the forms of Exhibits A and B, as applicable, in
the U.S. Copyright Office or the U.S. Patent and Trademark Office pursuant to 35
U.S.C. ss.261, 15 U.S.C. ss.1060 or 17 U.S.C. ss.205, as applicable,
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with regard to any Copyright Collateral, Patent Collateral or Trademark
Collateral, as the case may be, described in Annex C, D or E hereto. In the
event that after the date hereof the Grantor shall acquire any registered
Copyright, Patent or Trademark, or effect any registration of any Copyright,
Patent or Trademark or file any application for registration thereof, whether
within the United States or any other country or jurisdiction, the Grantor shall
promptly furnish written notice thereof to the Agent together with information
sufficient to permit the Agent, upon its receipt of such notice, to (and the
Grantor hereby authorizes the Agent to) modify this Agreement, as appropriate,
by amending Annexes C, D and E hereto or to add additional exhibits hereto to
include any Copyright, Patent or Trademark that becomes part of the Collateral
under this Agreement, and the Grantor shall additionally, at its own expense,
execute, deliver and record, as promptly as possible (but in any event within 10
days) after the date of such acquisition, registration or application, as
applicable, with regard to United States Patents, Trademarks and Copyrights,
fully completed assignments in the forms of Exhibits A and B, as applicable, in
the U.S. Copyright Office or the U.S. Patent and Trademark Office as more fully
described hereinabove, together in all instances with any other agreements,
instruments and documents that the Agent may reasonably request from time to
time to further effect and confirm the assignment and security interest created
by this Agreement in such Copyrights, Patents and Trademarks, and the Grantor
hereby appoints the Agent its attorney-in-fact to execute, deliver and record
any and all such agreements, instruments and documents for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed and such
power, being coupled with an interest, shall be irrevocable for so long as this
Agreement shall be in effect with respect to the Grantor.
(k) The Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark used in the conduct of its business, use
its best efforts to (i) maintain such Trademark in full force and effect, free
from any claim of abandonment or invalidity for non-use, (ii) maintain the
quality of products and services offered under such Trademark, (iii) display
such Trademark with notice of federal registration to the extent required by
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third-party rights.
(l) The Grantor (either itself or through its licensees or
sublicensees) will refrain from committing any act, or omitting any act, whereby
any Patent used in the conduct of the Grantor's business may become invalidated
or dedicated to the public, and shall continue to mark any products covered by a
Patent with the relevant patent number as required by applicable patent laws.
(m) The Grantor (either itself or through its licensees or
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sublicensees) will, for each work covered by a Copyright, continue to publish,
reproduce, display, adopt and distribute the work with appropriate copyright
notice as required under applicable copyright laws.
(n) The Grantor shall notify the Agent immediately if it knows or has
reason to know that any Patent, Trademark or Copyright used in the conduct of
its business may become abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the U.S. Patent and Trademark
Office, U.S. Copyright Office or any court) regarding the Grantor's ownership of
any Patent, Trademark or Copyright, its right to register the same, or to keep
and maintain the same.
(o) The Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the U.S. Patent and Trademark Office, U.S.
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, to
maintain and pursue each application relating to any Patents, Trademarks or
Copyrights (and to obtain the relevant grant or registration) and to maintain
each registration of any Patents, Trademarks and Copyrights used in the conduct
of the Grantor's business, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and maintenance fees, and, if
consistent with sound business judgment, to initiate opposition, interference
and cancellation proceedings against third parties.
(p) In the event that any Collateral consisting of a Patent, Trademark
or Copyright used in the conduct of the Grantor's business is believed
infringed, misappropriated or diluted by a third party, the Grantor shall notify
the Agent promptly after it learns thereof and shall, if consistent with sound
business judgment, promptly sue for infringement, misappropriation or dilution
and to recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as are appropriate under the circumstances
to protect such Collateral.
(q) The Grantor will cause all Proceeds of its Accounts and other
Collateral to be deposited in a Deposit Account maintained by it or for its
benefit as promptly as practicably possible after receipt thereof by or on its
behalf and will cause the balances in each such Deposit Account, if in excess of
$1,000, to be transferred daily (by wire or Automated Clearinghouse) to a
Concentration Account maintained with the Agent or with another bank or
depository institution that has, together with the Grantor, executed and
delivered to the Agent a duly completed Concentration Agreement; provided that
all balances in Deposit
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Accounts maintained with the Agent or any bank or depository institution that is
an Affiliate of the Agent (including, without limitation, First Union National
Bank of Florida and First Union National Bank of Georgia) shall be transferred
not less frequently than weekly to a Concentration Account. As promptly as
reasonably possible after the date hereof with respect to each such Affiliate of
the Agent ("Agent Affiliate") at which any Deposit Accounts ("Agent Affiliate
Accounts") are maintained as of the date hereof, and concurrently with the
establishment of an Agent Affiliate Account with any other Agent Affiliate after
the date hereof, the Grantor will execute and deliver, and will cause the
applicable Agent Affiliate to execute and deliver, an agreement, in form and
substance satisfactory to the Agent, that, among other things, acknowledges the
security interest of the Agent in all funds, monies, securities and instruments
deposited in such Agent Affiliate Account and pursuant to which such bank or
depository institution agrees to transfer such funds, monies, securities and
instruments to the Agent promptly upon demand at any time after the occurrence
and during the continuance of an Event of Default (each, a "Collection
Agreement"). The Grantor will provide each bank or depository institution at
which any Deposit Account is maintained from time to time with such transfer
instructions and other information as such bank or depository institution may
require in order to permit the Grantor to comply with the provisions of this
subsection. All costs and expenses incurred in connection with the establishment
and maintenance of such Deposit Accounts and the transfers of funds therefrom as
described in this subsection shall be for the account of the Grantor. The
Grantor will from time to time take all such action as may be necessary to cause
to be established and maintained with the Agent a centralized disbursement
arrangement satisfactory to the Agent, whereby funds on deposit in the
Concentration Accounts in amounts necessary to fund disbursements shall be
further concentrated at one or more accounts ("Centralized Disbursement
Accounts") maintained with the Agent (which Centralized Disbursement Accounts
may also be Concentration Accounts maintained with the Agent and in any event
shall be deemed Concentration Accounts for all purposes of this Agreement), at a
frequency acceptable to the Agent, for the purpose of centralizing cash
disbursements to third parties such that no cash disbursements or withdrawals
(including checks, payroll or other disbursements) shall be made from any
Deposit Account other than a Centralized Disbursement Account. No Proceeds of
Accounts or any other Collateral will be deposited in or at any time transferred
to a Deposit Account other than a Concentration Account, an Agent Affiliate
Account, or a Deposit Account the balances in which Deposit Account are
transferred not less frequently than daily to a Concentration Account. The
Grantor shall not cause or permit any funds or other property not constituting
Proceeds of Collateral to be deposited into any Deposit Account. So long as no
Event of Default shall have occurred and be continuing, the Grantor shall have
the right to
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collect, withdraw and direct the disposition of funds on deposit in the
Concentration Accounts in a manner not inconsistent with the provisions of this
Agreement or any of the other Credit Documents (subject to the requirement
hereinabove regarding the establishment and maintenance of a centralized
disbursement arrangement); provided, however, that, upon the occurrence and
during the continuance of an Event of Default and notice thereof from the Agent
to the Grantor, the Agent shall have exclusive dominion and control over all
Concentration Accounts, with the powers and rights granted herein and in the
applicable Concentration Agreements with respect thereto, and the Grantor shall
not have any right to collect, withdraw or direct the disposition of funds on
deposit therein and shall not take any action to effect the same.
(r) The Grantor will at all times defend the Agent's right, title and
security interest in and to the Collateral and the Proceeds thereof, for the
benefit of the Secured Creditors, against the claims and demands of all other
Persons.
5. Cash Collateral Accounts. Upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right to cause to
be established and maintained, at its principal office or such other location or
locations as it may establish from time to time in its discretion, one or more
cash collateral bank accounts (collectively, "Cash Collateral Accounts") for the
collection of Proceeds of the Collateral. Such Proceeds, when deposited, shall
continue to constitute Collateral for the Secured Obligations and shall not
constitute payment thereof until applied as herein provided. The Agent shall
have sole dominion and control over all funds deposited in the Cash Collateral
Account, and such funds may be withdrawn therefrom only by the Agent. Upon the
occurrence and during the continuance of an Event of Default, the Agent shall
have the right to (and, if directed by the Required Lenders pursuant to the
Credit Agreement or the Required Overline Lenders pursuant to the Overline
Credit Agreement, as applicable), shall) apply amounts held in the Cash
Collateral Accounts in payment of the Secured Obligations in the manner provided
for in Section 8.
6. Taxes, Insurance.
(a) The Grantor will pay and discharge (i) 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 (ii) all lawful claims that, if unpaid, might become a Lien upon
any of its properties; provided, however, that the Grantor shall not 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 Grantor has
maintained adequate reserves with respect thereto in accordance with Generally
Accepted Accounting
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Principles, unless and until any tax lien notice has become effective with
respect thereto or until any Lien resulting therefrom attaches to its properties
and becomes enforceable against its other creditors.
(b) The Grantor will maintain and pay for, or cause to be maintained
and paid for, insurance covering commercial general liability, professional
liability, property and casualty, business interruption and such other risks,
and in such amounts and with such financially sound and reputable insurance
companies, as are usually and customarily carried by companies engaged in
similar businesses, and will deliver certificates of such insurance to the Agent
with standard loss payable endorsements naming the Agent as loss payee (on
property and casualty policies) and additional insured (on liability policies)
as its interests may appear. Each such policy of insurance shall contain a
clause requiring the insurer to give not less than thirty (30) days' prior
written notice to the Agent before any cancellation of the policies for any
reason whatsoever and shall provide that any loss shall be payable in accordance
with the terms thereof notwithstanding any act of any the Grantor that might
result in the forfeiture of such insurance. The Grantor will direct all insurers
under policies of property and casualty insurance on the Collateral to pay all
proceeds payable thereunder directly to the Agent. The Agent shall hold all such
proceeds for the account of the Grantor. So long as no Default or Event of
Default has occurred and is continuing, the Agent shall, at the Grantor's
request, disburse such proceeds as payment for the purpose of replacing or
repairing destroyed or damaged assets, as and when required to be paid and upon
presentation of evidence satisfactory to the Agent of such required payments and
such other documents as the Agent may reasonably request, or apply such proceeds
in whole or in part as a prepayment of the Overline Loans and/or Loans in the
order and manner provided in the Credit Agreement and the Overline Credit
Agreement (such proceeds for purposes of this subsection (b) being deemed to be
"Net Cash Proceeds" within the meaning of the Overline Credit Agreement). Upon
and during the continuance of a Default or Event of Default, the Agent shall
apply such proceeds in the order and manner provided in the Credit Agreement and
the Overline Credit Agreement. The Grantor hereby irrevocably makes, constitutes
and appoints the Agent at all times during the continuance of an Event of
Default, its true and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing its name on any check, draft, instrument or other item or payment for
the proceeds of such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance.
(c) If the Grantor fails to obtain and maintain any of the policies of
insurance required to be maintained hereunder or to
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pay any premium in whole or in part, the Agent may, without waiving or releasing
any obligation or Default, at the Grantor' expense, but without any obligation
to do so, procure such policies or pay such premiums. All sums so disbursed by
the Agent, including reasonable attorneys' fees, court costs, expenses and other
charges related thereto, shall be payable by the Grantor to the Agent on demand
and shall be additional Secured Obligations hereunder, secured by the
Collateral.
(d) The Grantor will deliver to the Agent, promptly as rendered, true
copies of all material claims and reports made in any reporting forms to
insurance companies. Not less than 30 days prior to the expiration date of the
insurance policies required to be maintained by the Grantor hereunder, the
Grantor will deliver to the Agent one or more certificates of insurance
evidencing renewal of the insurance coverage required hereunder plus such other
evidence of payment of premiums therefor as the Agent may request. Upon the
reasonable request of the Agent from time to time, the Grantor shall deliver to
the Agent evidence that the insurance required to be maintained pursuant to this
Section is in effect.
7. Remedies Upon Event of Default. In case an Event of Default shall
have occurred and be continuing, the Agent shall be entitled to exercise all of
its rights, powers and remedies (whether vested in it by this Agreement, any
other Credit Document, any Interest Rate Protection Agreement or by law,
including all the rights and remedies of a secured party under the applicable
Uniform Commercial Code) for the protection and enforcement of the rights of the
Secured Creditors in respect of the Collateral, and shall be entitled, in
particular (but without limitation of the foregoing), to exercise the following
rights, which the Grantor hereby agrees to be commercially reasonable:
(i) to notify any or all account debtors or obligors under
any Accounts, Contracts or other Collateral of the security interest in
favor of the Agent created hereby and to direct all such Persons to
make payments of all amounts due thereon or thereunder directly to the
Agent or to a Concentration Account or Cash Collateral Account
designated by the Agent; and in such instance and from and after such
notice, all amounts and Proceeds (including wire transfers, checks and
other instruments) received by the Grantor in respect of any Accounts
or other Collateral shall be received in trust for the benefit of the
Agent hereunder, shall be segregated from the other funds of the
Grantor and shall be forthwith deposited into a Concentration Account
or Cash Collateral Account or paid over or delivered to the Agent in
the same form as so received (with any necessary endorsements or
assignments), to be held as Collateral and applied to the Secured
Obligations as provided herein;
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(ii) to take possession of, receive, endorse, assign and
deliver, in its own name or in the name of the Grantor, all checks,
notes, drafts and other instruments relating to any Collateral,
including receiving, opening and properly disposing of all mail
addressed to the Grantor concerning Accounts and other Collateral; to
verify with account debtors or other contract parties the validity,
amount or any other matter relating to any Accounts or other
Collateral, in its own name or in the name of the Grantor; to
accelerate any indebtedness or other obligation constituting Collateral
that may be accelerated in accordance with its terms; to take or bring
all actions and suits deemed necessary or appropriate to effect
collections and to enforce payment of any Accounts or other Collateral;
to settle, compromise or release in whole or in part any amounts owing
on Accounts or other Collateral; and to extend the time of payment of
any and all Accounts or other amounts owing under any Collateral and to
make allowances and adjustments with respect thereto, all in the same
manner and to the same extent as the Grantor might have done;
(iii) to notify any or all depository institutions with which
any Concentration Accounts are maintained, in accordance with the terms
of the applicable Concentration Agreements, to remit and transfer all
monies, securities and other property on deposit in such Concentration
Accounts or deposited or received for deposit thereafter to the Agent,
for deposit in the Cash Collateral Accounts or such other accounts as
may be designated by the Agent, for application to the Secured
Obligations as provided herein;
(iv) to transfer all or any part of the Collateral into
the Agent's name or the name of its nominee or nominees;
(v) to assign any Copyright Collateral, Patent Collateral or
Trademark Collateral, for such term or terms, on such conditions and in
such manner as the Agent shall determine; and to license and (to the
extent permitted by applicable law) sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive
basis, any Copyright Collateral, Patent Collateral or Trademark
Collateral, throughout the world, for such term or terms, on such
conditions and in such manner as the Agent shall determine;
(vi) to require the Grantor to, and the Grantor hereby agrees
that it will at its expense and upon request of the Agent forthwith,
assemble all or any part of the Collateral as directed by the Agent and
make it available to the Agent at a place designated by the Agent;
(vii) to enter and remain upon the premises of any of
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the Grantor and take possession of all or any part of the Collateral,
with or without judicial process; to use the materials, services, books
and records of the Grantor for the purpose of liquidating or collecting
the Collateral, whether by foreclosure, auction or otherwise; and to
remove the same to the premises of the Agent or any designated agent
for such time as the Agent may desire, in order to effectively collect
or liquidate the Collateral; and
(viii) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by the Grantor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and to adjourn the same
from time to time, and for such price or prices and on such terms as
the Agent in its sole and absolute discretion may determine to be
commercially reasonable; provided, that, unless the Collateral
threatens to decline speedily in value, there shall be given to the
Grantor at least ten (10) days' notice of the time and place of any
such public sale or the time after which any private sale may be made.
The Grantor hereby waives and releases, to the fullest extent permitted
by law, any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the
Secured Obligations or otherwise. At any such sale, unless prohibited
by applicable law, the Agent on behalf of the Secured Creditors may bid
for and purchase all or any part of the Collateral so sold free from
any such right or equity of redemption, and the Agent shall be
entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral, to use
and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by the Agent at such sale.
Neither the Agent nor any other Secured Creditor shall be liable for
failure to collect or realize upon any or all of the Collateral or for
any delay in so doing, nor shall any of them be under any obligation to
take any action whatsoever with regard thereto.
8. Application of Proceeds.
(a) Except as specifically otherwise provided in the Credit Agreement
and the Overline Credit Agreement, all moneys received by the Agent upon any
collection, sale or other disposition of the Collateral, together with all other
moneys received by the Agent hereunder, shall be applied as follows:
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(i) first, to the payment of all Secured Obligations owing
to the Agent of the type described in clauses (iv) and (v) of Section
1;
(ii) second, after payment in full of the amounts specified
in clause (i) above, to the payment of all other Secured Obligations
owing to the Overline Creditors in such manner and order and at such
time as the Agent shall elect, each Overline Creditor to receive an
amount equal to the outstanding amount of the Secured Obligations then
owing to it or, if such payment is insufficient to pay in full all such
Secured Obligations, its Pro Rata Share (as hereinafter defined) of
such payment;
(iii) third, after payment in full of the amounts specified in
clause (ii) above, to the payment of all other Secured Obligations
owing to the Credit Agreement Creditors (including in their capacity as
Hedge Creditors) in such manner and order and at such time as the Agent
shall elect, each Credit Agreement Creditor to receive an amount equal
to the outstanding amount of the Secured Obligations then owing to it
or, if such payment is insufficient to pay in full all such Secured
Obligations, its Pro Rata Share (as hereinafter defined) of such
payment; and
(iv) fourth, after payment in full of the amounts specified
in clauses (i), (ii) and (iii) above, and following the termination of
this Agreement pursuant to Section 15(a), to the Grantor or to any
other Person that may be lawfully entitled to receive such surplus.
(b) For purposes of clauses (ii) and (iii) of subsection (a) above,
"Pro Rata Share" shall mean, when calculating a Secured Creditor's portion of
any distribution or amount hereunder, that amount (expressed as a percentage)
equal to a fraction the numerator of which is the then outstanding amount of the
relevant Secured Obligations owing to such Secured Creditor and the denominator
of which is the then outstanding amount of all relevant Secured Obligations.
(c) For purposes of applying amounts in accordance with this Section,
the Agent shall be entitled to rely upon the Hedge Creditors or their
representative under any Interest Rate Protection Agreements for a determination
of the outstanding Secured Obligations owed to the Hedge Creditors. Unless it
has actual knowledge (including by way of written notice from a Hedge Creditor)
to the contrary, the Agent, in acting hereunder, shall be entitled to assume
that no Interest Rate Protection Agreements, or Hedge Obligations in respect
thereof, are in existence.
(d) The Grantor shall remain jointly and severally liable
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to the extent of any deficiency between the amount of the Proceeds of the
Collateral and the aggregate amount of the sums referred to in clauses (i), (ii)
and (iii) of subsection (a) above.
9. Purchase of Collateral. Upon any sale of any Collateral by the Agent
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Agent or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the Agent
or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
10. Grant of License. For the purpose of enabling the Agent to exercise
rights and remedies under Section 7 at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, the Grantor hereby grants to the
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantor) to use, license or sublicense any
Patent Collateral, Trademark Collateral or Copyright Collateral now owned or
licensed or hereafter acquired or licensed by the Grantor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use of
such license or sublicense by the Agent shall be exercised, at the option of the
Agent, only upon the occurrence and during the continuation of an Event of
Default; provided that any license, sublicense or other transaction entered into
by the Agent in accordance herewith shall be binding upon the Grantor
notwithstanding any subsequent cure of an Event of Default.
11. Indemnification. The Grantor agrees to indemnify and hold harmless
the Agent and each other Secured Creditor from and against any and all claims,
demands, losses, judgments and liabilities of every kind or nature, and to
reimburse the Agent and each other Secured Creditor for all costs and expenses
(including, without limitation, reasonable attorneys' fees), arising out of or
resulting from the execution, amendment, administration or enforcement of this
Agreement or the exercise by the Agent or any other Secured Creditor of any
rights or remedies granted hereunder, under the other Credit Documents or under
any Interest Rate Protection Agreements, including, without limitation, from the
exercise by the Agent of any of its powers or rights under Sections 7, 12(b) or
12(c); provided that neither the Agent nor any other Secured Creditor shall be
entitled to indemnification pursuant to this Section for claims, demands,
losses, judgments and liabilities to the extent caused by its gross negligence
or willful misconduct. In no event shall the
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Agent or any other Secured Creditor be liable for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent that
the obligations of the Grantor under this Section are unenforceable for any
reason, the Grantor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations that is permissible under
applicable law.
12. Further Assurances; Agent as Attorney-In-Fact; Agent May
Perform.
(a) The Grantor agrees that it will join with the Agent to execute and,
at its own expense, file and refile under any applicable Uniform Commercial Code
such financing statements, continuation statements and other documents and
instruments in such offices as the Agent may reasonably deem necessary or
appropriate, and wherever required or permitted by law, in order to perfect and
preserve the Agent's security interest in the Collateral, and hereby authorizes
the Agent to file financing statements and amendments thereto relating to all or
any part of the Collateral without the signature of the Grantor where permitted
by law, and agrees to do such further acts and things (including, without
limitation, making any notice filings with state tax or revenue authorities
required to be made by account creditors in order to enforce any Accounts in
such state) and to execute and deliver to the Agent such additional conveyances,
assignments, agreements and instruments as the Agent may reasonably require or
deem advisable to perfect, establish, confirm and maintain the security interest
and Lien provided for herein, to carry out the purposes of this Agreement or to
further assure and confirm unto the Agent its rights, powers and remedies
hereunder.
(b) The Grantor hereby irrevocably appoints the Agent its lawful
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor, the Agent or otherwise, and with full power of
substitution in the premises, from time to time in the Agent's reasonable
discretion to take any action and to execute any instrument that the Agent may
reasonably deem necessary or advisable to accomplish the purpose of this
Agreement, including, without limitation:
(i) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(ii) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i)
above;
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(iii) to obtain, maintain and adjust any property or casualty
insurance required to be maintained by the Grantor under Section 6 and
direct the payment of proceeds thereof to the Agent;
(iv) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral, the legality
or validity thereof and the amounts necessary to discharge the same to
be determined by the Agent in its sole discretion, any such payments
made by the Agent to become Secured Obligations of the Grantor to the
Agent, due and payable immediately and without demand;
(v) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent and the other Secured Creditors with respect to any of the
Collateral; and
(vi) to perform the affirmative obligations of the Grantor
under this Agreement (including, without limitation, obligations under
Section 12(a));
and, in the case of each of clauses (i) through (vi) above, the Agent shall use
its best efforts to give the Grantor notice of any action taken by it in
accordance with this Section as soon as practicable after such action is taken;
provided, however, that the failure to give any such notice shall not in any way
impair the authority of the Agent pursuant to this Section or the validity of
any action taken by the Agent pursuant hereto, or result in any liability on the
part of the Agent or any other Secured Creditor to the Grantor or any of its
Subsidiaries. The exercise by the Agent of any of its rights pursuant to this
Section shall not create any further obligation on the part of the Agent to
exercise any other rights hereunder or to take any other or further action in
respect thereof. The power of attorney granted by the Grantor under this
Section, being coupled with an interest, is irrevocable for so long as this
Agreement shall be in effect.
(c) If the Grantor fails to perform any agreement contained herein
after written request to do so by the Agent, the Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses so incurred in
connection therewith shall be payable by the Grantor pursuant to Section 11.
13. The Agent. The Agent will hold all items of the Collateral at any
time received under this Agreement in accordance with the provisions hereof. It
is expressly understood and agreed that the obligations of the Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement and the
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other Credit Documents, are only those expressly set forth in this Agreement and
the other Credit Documents. The Agent shall act hereunder at the direction, or
with the consent, of the Required Lenders and the Required Overline Lenders, as
applicable, on the terms and conditions set forth in the Credit Agreement and
the Overline Credit Agreement, as the case may be. Except for treatment of the
Collateral in its possession in a manner substantially equivalent to that which
the Agent, in its individual capacity, accords its own property of a similar
nature, and the accounting for moneys actually received by it hereunder, the
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to the Collateral. Neither the Agent nor any other Secured Creditor
shall be liable to the Grantor (i) for any loss or damage sustained by it, or
(ii) for any loss, damage, depreciation or other diminution in the value of any
of the Collateral that may occur as a result of or in connection with or that is
in any way related to any exercise by the Agent or any other Secured Creditor of
any right or remedy under this Agreement or any other act or failure to act on
the part of the Agent or any other Secured Creditor, except to the extent that
the same is caused by its own gross negligence or willful misconduct.
14. Grantor' Obligations Absolute, etc. The obligations of the Grantor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any extension, amendment,
modification or restatement of or supplement to the Credit Agreement, the
Overline Credit Agreement, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement referred to therein,
or any assignment or transfer of any of the foregoing or any rights and
obligations thereunder; (b) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of this Agreement, the Credit Agreement,
the Overline Credit Agreement, any of the other Credit Documents, any Interest
Rate Protection Agreements or any other instrument or agreement referred to
therein; (c) any furnishing of any additional security to the Agent or its
assignee or any acceptance thereof or any release of any Collateral by the Agent
or its assignee; (d) any limitation on or release of any party's liability or
obligations under this Agreement, the Credit Agreement, the Overline Credit
Agreement, the Guaranty, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement referred to therein,
or any invalidity or unenforceability thereof, in whole or in part; or (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Grantor or any of its
Subsidiaries, or
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any action taken with respect to this Agreement by any trustee or receiver, or
by any court, in any such proceeding, whether or not the Grantor shall have
notice or knowledge of any of the foregoing.
15. Termination, Release.
(a) After the occurrence of the Termination Date (as hereinafter
defined), this Agreement shall terminate and the Grantor shall be automatically
released hereunder, and the Agent, at the request and expense of the Grantor,
will execute and deliver to the Grantor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement (including,
without limitation, UCC-3 termination statements to the extent necessary), and
will duly assign, transfer and deliver to the Grantor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Agent and has not theretofore been sold or otherwise applied
or released pursuant to this Agreement, together with any moneys at the time
held by the Agent hereunder. For purposes of this Agreement, "Termination Date"
shall mean the date upon which all Overline Obligations, all Credit Obligations
and all obligations of the Grantor hereunder have been indefeasibly paid in
full, the Overline Commitments and all Letters of Credit under the Overline
Credit Agreement have been terminated, the Commitments and all Letters of Credit
(as defined in the Credit Agreement) under the Credit Agreement have been
terminated and all Interest Rate Protection Agreements have been terminated.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by the Credit Agreement and the Overline Credit Agreement
or is otherwise released at the direction of the Required Lenders or the
Required Overline Lenders, as applicable (or all of the Lenders or Overline
Lenders, if required by the Overline Credit Agreement or the Credit Agreement,
as the case may be), the Agent, at the request and expense of the Grantor, will
duly assign, transfer and deliver to the Grantor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Agent and has
not theretofore been released pursuant to this Agreement.
(c) At any time that the Grantor desires that Collateral be released as
provided in subsections (a) or (b) above, it will deliver to the Agent a
certificate signed by its chief financial officer or another principal executive
officer stating that the release of the respective Collateral is permitted
pursuant to subsection (a) or (b) above. If requested by the Agent (although the
Agent shall have no obligation to make any such request), the Grantor will
furnish appropriate legal opinions from counsel reasonably acceptable to the
Agent to the effect set forth in the
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immediately preceding sentence.
16. Amendments, etc. No amendment, modification, waiver, discharge or
termination of this Agreement or any provision hereof, nor any consent to any
departure by the Grantor therefrom, shall in any event be effective unless in
writing and signed by the Agent, acting with the concurrence of such of the
Lenders or Overline Lenders, as applicable, as may be required under the Credit
Agreement or the Overline Credit Agreement, as the case may be, to concur
therein, and the Grantor directly affected thereby (or by the Grantor on its
behalf pursuant to the power of attorney granted in Section 19(b)); provided,
however, that any amendment, modification, waiver, discharge, termination or
consent at any time affecting the rights and benefits of a single Group (as
hereinafter defined) of Secured Creditors, and not all Secured Creditors in a
like or similar manner, shall require only the consent of the Required Parties
(as hereinafter defined) of such Group at such time. For purposes of the
preceding sentence, the term "Group" shall mean and refer to (i) the Credit
Agreement Creditors as holders of the Credit Obligations, (ii) the Overline
Creditors as holders of the Overline Obligations, or (iii) the Hedge Creditors
as holders of the Hedge Obligations, and the term "Required Parties" shall mean,
at any time, (A) with respect to the Credit Obligations, such of the Lenders as
may be required under the Credit Agreement then to concur in the action being
taken, (B) with respect to the Overline Obligations, such of the Overline
Lenders as may be required under the Overline Credit Agreement then to concur in
the action being taken, and (C) with respect to the Hedge Obligations, the
holders of at least a majority of the aggregate obligations of the Grantor
outstanding at such time under all Interest Rate Protection Agreements.
17. No Waivers, etc. The enumeration of the rights and remedies of the
Agent and the other Secured Creditors set forth in this Agreement, the Credit
Agreement, the Overline Credit Agreement, the other Credit Documents or any
Interest Rate Protection Agreements is not intended to be exhaustive, and the
exercise by the Agent or any other Secured Creditor of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder, under the Credit Agreement, under the Overline Credit Agreement,
under the other Credit Documents, under any Interest Rate Protection Agreements
or under any other agreement between the Grantor and the Secured Creditors, or
any of them, or that may now or hereafter exist in law or in equity or by suit
or otherwise. No delay or failure to take action on the part of the Agent or any
other Secured Creditor 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
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other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between any of the Grantor and the Agent
or any other Secured Creditor or their agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or to constitute a
waiver of any Event of Default. No notice to or demand upon the Grantor in any
case shall entitle the Grantor 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 other Secured Creditor to exercise any right or remedy or take any other
or further action in any circumstances without notice or demand.
18. Assignment. The Grantor may not assign this Agreement or any of its
rights or obligations hereunder. Any Secured Creditor may assign or otherwise
transfer its interest in this Agreement, in whole or in part, in connection with
an assignment or other transfer of any or all Secured Obligations held by such
Secured Creditor in accordance with the Credit Agreement or the Overline Credit
Agreement (including by the sale of participations), any applicable Interest
Rate Protection Agreement or other relevant documents, it being understood and
agreed that upon any such assignment or other transfer by any Secured Creditor,
the Person that becomes the holder of the Secured Obligations that are the
subject of such assignment or other transfer shall (except as may be otherwise
provided by such Secured Creditor as a term or condition of such assignment or
other transfer) have and may exercise all of the rights granted to such Secured
Creditor under this Agreement to the extent of that part of or interest in the
Secured Obligations so assigned or transferred to such Person. The Grantor
hereby irrevocably waives notice of and consents in advance to the assignment or
other transfer as provided above from time to time by any Secured Creditor of
the Secured Obligations held by it, or any part thereof or interest therein, and
of the corresponding rights and interest of such Secured Creditor hereunder in
connection therewith.
19. Notice. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:
<TABLE>
<S> <C>
If to the Grantor: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Chief Financial Officer
Telephone: (919) 383-0355
Telecopy: (919) 383-3660
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With copies to: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Joseph G. Piemont, Esq.
Telephone: (919) 383-0355
Telecopy: (919) 383-7611
If to any Credit
Agreement Creditor
(including the
Agent): At its address for notices set forth
in the Credit Agreement
If to any Secured
Overline Creditor: At its address for notices set forth
in the Credit Agreement (or, if not a
party thereto, the Overline Credit
Agreement)
If to any Hedge
Creditor: At such address for notices as such
Hedge Creditor shall have specified
to the Grantor
</TABLE>
or to such other address as any of the Persons listed above may designate for
itself by like notice to the other Persons listed above. 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.
20. Binding Effect; Survival. This Agreement shall create a continuing
security interest in the Collateral and shall secure the payment and performance
of all of the Secured Obligations as the same may arise and be outstanding at
any time and from time to time from and after the date hereof, shall be binding
upon and enforceable against the Grantor and its successors and permitted
assigns and shall inure to the benefit of and be enforceable by each Secured
Creditor and its successors and assigns. All representations, warranties,
covenants and agreements herein shall survive the execution and delivery of this
Agreement and shall continue in effect until the termination in full of this
Agreement.
21. Governing Law. This Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of North
Carolina (without regard to the conflicts of law provisions thereof).
22. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
23. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders. All terms in this Agreement that are not capitalized shall have the
meanings provided by the applicable Uniform Commercial Code to the extent the
same are used or defined therein.
24. 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.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed under seal by its duly authorized officer as of the date first above
written.
COASTAL PHYSICIAN GROUP, INC.
By: _______________________________
Title: ____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Agent
By: _________________________________
Title: ______________________________
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AMENDED AND RESTATED PLEDGE AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this
"Agreement"), dated as of the 29th day of May, 1996, is made by
COASTAL PHYSICIAN GROUP, INC., a Delaware corporation (the
"Pledgor"), to FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as
Agent (the "Pledgee"), for the benefit of (i) the Lenders and the
Agent under the Credit Agreement referred to hereinbelow (each
Lender, the Issuing Bank and the Agent in their respective
capacities as such under the Credit Agreement, jointly and
severally, the "Credit Agreement Creditors," and each, a "Credit
Agreement Creditor"), (ii) the Overline Lenders and the Agent
under the Overline Credit Agreement (each Overline Lender, the
Overline Issuing Lender (such term being used herein with the
meaning given to it under the Overline Credit Agreement) and the
Agent in their respective capacities as such under the Overline
Credit Agreement, jointly and severally, the "Overline
Creditors," and each, an "Overline Creditor") and (iii) if one or
more Lenders enter into one or more Interest Rate Protection
Agreements with the Pledgor, any such Lenders (each Lender in its
capacity as a party to any Interest Rate Protection Agreement,
notwithstanding that such Lender may have ceased at any time to
be a Lender under the Credit Agreement, a "Hedge Creditor," and
collectively, the "Hedge Creditors"; and the Hedge Creditors,
together with the Credit Agreement Creditors and the Overline
Creditors, the "Secured Creditors"). Capitalized terms not
defined in this introductory paragraph, in the recitals below or
elsewhere herein shall, unless otherwise provided herein, have
the meanings given to them in the Credit Agreement (terms defined
in the Overline Credit Agreement also being deemed defined terms
under the Credit Agreement).
RECITALS
A. The Pledgor, certain banks and other financial
institutions (the "Lenders") and the Agent are parties to a
Credit Agreement, dated as of July 29, 1994, as amended by a
First Amendment thereto dated as of April 12, 1995 and by a
Second Amendment thereto dated as of August 10, 1995 (as so
amended, and as in effect on the date hereof, the "Existing
Credit Agreement"), providing for the availability of certain
credit facilities to the Pledgor upon the terms and conditions
set forth therein.
B. In connection with the closing of the initial
extensions of credit under the Credit Agreement, and as a
condition thereto, the Pledgor executed and delivered a Pledge
Agreement, dated as of July 29, 1994 (as in effect on the date
hereof, the "Existing Pledge Agreement"), whereby the Pledgor
pledged and granted to the Pledgee a security interest in all of
<PAGE>
the Collateral (as defined in the Existing Pledge Agreement) as
security for the Obligations (as defined in the Existing Pledge
Agreement).
C. The Pledgor, the Agent and the Lenders have entered
into a Third Amendment and Limited Waiver to Credit Agreement,
dated as of May 29, 1996 (the "Third Amendment"; and the Existing
Credit Agreement, as amended by the Third Amendment and as
further amended, modified, supplemented or restated from time to
time, the "Credit Agreement"), pursuant to which the Agent and
the Lenders have agreed to make certain amendments to the
Existing Credit Agreement and have made certain other agreements
of material benefit to the Pledgor, including agreements to waive
certain existing Events of Default on the terms and subject to
the conditions set forth in the Third Amendment.
D. Additionally, the Pledgor, the Agent and the Overline
Lenders have entered into a Secured Overline Credit Agreement,
dated as of May 29, 1996 (as amended, modified, supplemented or
restated from time to time, the "Overline Credit Agreement"),
providing for the availability of certain credit facilities in
the aggregate principal amount of $40,000,000 to the Pledgor upon
the terms and conditions set forth therein.
E. As a condition, among other things, to the
effectiveness of the Third Amendment, to the making of Loans
under the Credit Agreement, to the making of Overline Loans and
the issuance of, and participation in, Letters of Credit (such
term being used herein with the meaning given to it under the
Overline Credit Agreement, except as otherwise specified) under
the Overline Credit Agreement, and to the obligation of any Hedge
Creditor to enter into or continue to perform any Interest Rate
Protection Agreement, the Pledgor shall have agreed, by executing
and delivering this Agreement, which amends and restates the
Existing Pledge Agreement, (i) to confirm and ratify the pledge
to the Pledgee under the Existing Pledge Agreement, for the
benefit of the Credit Agreement Creditors and any Lenders that
are or may become Hedge Creditors, of the Collateral (as
hereinafter defined) and (ii) to pledge to the Pledgee, for the
benefit of the Overline Creditors, the Collateral, in each case
in order to secure the payment in full of the Secured Obligations
(as hereinafter defined). The Secured Creditors are relying on
this Agreement in their decision to consummate the transactions
contemplated by the Third Amendment and the Overline Credit
Agreement, to extend credit to the Pledgor under the Credit
Agreement and the Overline Credit Agreement that is otherwise not
available, and to enter into and continue to perform any Interest
Rate Protection Agreements, and would not be willing to enter
into the Third Amendment and the Overline Credit Agreement or to
extend credit thereunder, or to enter into or continue to perform
any such Interest Rate Protection Agreement, without this
Agreement.
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<PAGE>
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, to induce the Lenders to enter
into the Third Amendment and to make Loans to the Pledgor under
the Credit Agreement and to induce the Overline Lenders to enter
into the Overline Credit Agreement and to make Overline Loans to
the Pledgor thereunder from time to time (which Loans and
Overline Loans the Lenders and Overline Lenders would not
otherwise be required to make), to induce the Issuing Lender to
issue, and the Overline Lenders to participate in, the Letters of
Credit, and to induce the Hedge Creditors to enter into and
perform the Interest Rate Protection Agreements, the Pledgor
hereby agrees as follows:
1. Security for Secured Obligations. This Agreement is made
by the Pledgor for the benefit of the Secured Creditors to
secure:
(i) the full and prompt payment to the Credit
Agreement Creditors, at any time and from time to time as
and when due (whether at the stated maturity, by
acceleration or otherwise), of all of the Credit Obligations
of the Pledgor, including, without limitation, (y) all
principal of and interest on the Loans, all Reimbursement
Obligations in respect of Letters of Credit (as defined in
the Credit Agreement) issued pursuant to the Credit
Agreement and all fees, expenses, indemnities and other
amounts payable by the Pledgor under the Credit Agreement or
any other Credit Document (including, to the greatest extent
permitted by law, interest accruing after the filing of a
petition or commencement of a case by or with respect to the
Pledgor seeking relief under any bankruptcy or insolvency
laws, regardless of whether a claim for any such interest is
allowed against the Pledgor in any such proceeding), and
(z) all Credit Obligations that, but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due;
(ii) the full and prompt payment to the Overline
Creditors, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or
otherwise), of all of the Overline Obligations of the
Pledgor, including, without limitation, (y) all principal of
and interest on the Overline Loans, all Reimbursement
Obligations in respect of Letters of Credit issued pursuant
to the Overline Credit Agreement and all fees, expenses,
indemnities and other amounts payable by the Pledgor under
the Overline Credit Agreement or any other Credit Document
(including, to the greatest extent permitted by law,
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<PAGE>
interest accruing after the filing of a petition or
commencement of a case by or with respect to the Pledgor
seeking relief under any bankruptcy or insolvency laws,
regardless of whether a claim for any such interest is
allowed against the Pledgor in any such proceeding), and
(z) all Overline Obligations that, but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due;
(iii) the full and prompt payment to the Hedge
Creditors, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or
otherwise), of all liabilities and obligations owing by the
Pledgor under any Interest Rate Protection Agreements at any
time in effect, including, without limitation, obligations
that, but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due (all
liabilities and obligations described in this clause (iii),
collectively, the "Hedge Obligations");
(iv) any and all sums advanced by the Pledgee in order
to preserve the Collateral or to preserve its security
interest in the Collateral; and
(v) in the event of any proceeding for the collection
or enforcement of any indebtedness, obligations or
liabilities of the Pledgor referred to in clauses (i)
through (iii) above, after an Event of Default (such term to
mean and include, as relevant, for purposes of this
Agreement, any "Event of Default" within the meaning of the
Credit Agreement or the Overline Credit Agreement or any
payment default under any Interest Rate Protection Agreement
continuing after any applicable grace period) shall have
occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of
any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in
clauses (i) through (v) of this Section, collectively, the
"Secured Obligations."
2. Certain Definitions; Closing Representations.
(a) As used herein, (i) the term "Stock" shall mean all of
the issued and outstanding shares of capital stock, now owned or
at any time hereafter acquired by the Pledgor, of any of its
Subsidiaries that are corporations; (ii) the term "Interests"
shall mean all of the right, title and interest of the Pledgor,
now owned or at any time hereafter acquired by the Pledgor, in
any of its Subsidiaries that are not corporations (including,
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<PAGE>
without limitation, any partnerships and joint ventures), and
shall include, without limitation, all rights and interests of
the Pledgor existing under all partnership, joint venture or
other agreements creating or governing such right, title and
interest, to which the Pledgor is now or may hereafter become a
party (as the same may be amended, modified, supplemented or
restated from time to time, collectively, the "Investment
Agreements"), including, without limitation, all rights of the
Pledgor to receive payments or other distributions thereunder,
and all rights granted or terms supplied by applicable law
thereunder or in connection therewith; and (iii) the term
"Securities" shall mean all of the Stock and the Interests. The
use of the term "Securities" hereunder to refer collectively to
the Stock and the Interests is for convenience of description
only and shall not be construed to mean or suggest that any of
the Stock or Interests constitutes a "security" within the
meaning of applicable federal or state securities laws.
(b) All Stock at any time pledged hereunder is hereinafter
called the "Pledged Stock"; all Interests at any time pledged
hereunder are hereinafter called the "Pledged Interests"; all
Pledged Stock and Pledged Interests together are called the
"Pledged Securities"; and the Pledged Securities, together with
all proceeds thereof, including any securities and moneys
received and at the time held by the Pledgee hereunder, are
hereinafter called the "Collateral."
(c) The Pledgor represents and warrants, as to the Stock
and Interests owned by the Pledgor and required to be pledged
hereunder, that on the date hereof (i) the Stock consists of the
number and type of shares of the capital stock of the
corporations as described in Part I of Annex A; (ii) such Stock
constitutes that percentage of the issued and outstanding capital
stock of the issuing corporation as is set forth in Part I of
Annex A; (iii) the Pledgor has no Interests and is not a party to
any Investment Agreements; and (iv) the Pledgor is the holder of
record and sole beneficial owner of the Stock, and there exist no
warrants, options, preemptive rights or other rights or
restrictions in favor of third parties in respect of any of the
Stock other than as evidenced by this Agreement.
(d) The Pledgor represents and warrants that the chart
attached hereto as Schedule 1 accurately and completely reflects
the corporate structure and ownership of all of the Subsidiaries
of the Pledgor as of the date hereof.
3. Pledge of Securities.
(a) To secure the liabilities and obligations described
under clause (i) of Section 1 and all other Secured Obligations
of the Pledgor to the Agent and the Lenders now or hereafter
existing under this Agreement, the Pledgor (i) hereby confirms
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<PAGE>
and ratifies its pledge, assignment and grant to the Pledgee,
under the Existing Pledge Agreement, of a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by the Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by the Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby confirms and
ratifies its assignment, transfer, hypothecation and setting over
to the Pledgee, under the Existing Pledge Agreement, of all of
the Pledgor's right, title and interest in and to such Securities
(and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee upon the terms and
conditions set forth in this Agreement.
(b) To secure the liabilities and obligations described
under clause (ii) of Section 1 and all other Secured Obligations
of the Pledgor to the Agent and the Overline Lenders now or
hereafter existing under this Agreement, the Pledgor (i) hereby
pledges, assigns and grants to the Pledgee a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by the Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by the Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby assigns,
transfers, hypothecates and sets over to the Pledgee all of the
Pledgor's right, title and interest in and to such Securities
(and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee upon the terms and
conditions set forth in this Agreement.
(c) To secure the liabilities and obligations described
under clause (iii) of Section 1 and all other Secured Obligations
of the Pledgor to the Hedge Creditors now or hereafter existing
under this Agreement, the Pledgor (i) hereby confirms and
ratifies its pledge, assignment and grant under the Existing
Pledge Agreement, to the Pledgee for the benefit of any Lenders
that are or may become Hedge Creditors, of a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by the Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by the Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby confirms and
ratifies its assignment, transfer, hypothecation and setting over
under the Existing Pledge Agreement, to the Pledgee for the
benefit of any Lenders that are or may become Hedge Creditors, of
all of the Pledgor's right, title and interest in and to such
Securities (and in and to the certificates or instruments
evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
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<PAGE>
(d) Each of the grants of a security interest in
subsections (a), (b) and (c) of this Section 3 is, and is
intended to be, a separate, independent and distinct grant to the
same extent as if each such grant were set forth in a separate
document, and such grants have been included in one document
solely for the administrative convenience of the Secured
Creditors.
4. Additional Securities.
(a) If the Pledgor shall acquire (by purchase, stock
dividend or otherwise) any additional Securities (or certificates
or instruments representing Securities) at any time or from time
to time after the date hereof, such Securities shall be
automatically deemed to be Pledged Securities and to be pledged
to the Pledgee pursuant to Section 3, and the Pledgor will
forthwith deposit such Securities (or certificates or instruments
representing Securities) as security with the Pledgee and deliver
to the Pledgee any certificates or instruments therefor,
accompanied by undated stock powers duly executed in blank by the
Pledgor, or such other instruments of transfer as are acceptable
to the Pledgee, and will promptly thereafter deliver to the
Pledgee a fully completed and duly executed amendment to this
Agreement in the form of Exhibit A (each, a "Pledge Amendment")
in respect of such additional Securities. The Pledgor hereby
authorizes the Pledgee to attach each Pledge Amendment to this
Agreement and agrees that all such Securities listed on any
Pledge Amendment shall for all purposes be deemed Pledged
Securities hereunder. Additionally, if the Pledgor shall acquire
any Interests at any time or from time to time after the date
hereof, the Pledgor will deliver, prior to or concurrently with
the relevant Pledge Amendment, complete and correct copies of all
Investment Agreements to which such Interests relate, including
all schedules and exhibits thereto (and will from time to time
thereafter, promptly upon any amendment or modification thereof,
deliver a complete and correct copy of the same to the Pledgee),
and will use its best efforts to deliver to the Pledgee, prior to
or concurrently with the relevant Pledge Amendment, the consents
of all Persons required to be obtained under the provisions of
the relevant Investment Agreements or under applicable law as a
condition to the valid and lawful pledge of such Interests to the
Pledgee, each in form and substance satisfactory to the Pledgee.
In the event that any pledge of Interests hereunder would be
voidable absent any such consents, such pledge shall be deemed
void ab initio, and the Pledgor will repledge such Interests
hereunder by executing and delivering a new Pledge Amendment
promptly upon obtaining such consents.
(b) Notwithstanding anything to the contrary contained
herein, if any Securities (whether now owned or hereafter
acquired) are "uncertificated securities" within the meaning of
the applicable Uniform Commercial Code or are otherwise not
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<PAGE>
evidenced by any stock certificate or similar certificate or
instrument, the Pledgor will promptly notify the Pledgee thereof
and will promptly take all actions required to perfect the
security interest of the Pledgee under applicable law, including,
as applicable, under Article 8 or 9 of the applicable Uniform
Commercial Code, and, without limitation of the foregoing, will,
prior to or concurrently with the pledge hereunder of any
Interests to which the provisions of this subsection (b) apply,
deliver to the relevant partnership, joint venture or other
Person a fully completed and duly executed letter in the form of
Exhibit B-1, and will obtain from such partnership, joint venture
or other Person, and deliver to the Pledgee, promptly upon the
registration of such pledge on the books of the issuer and in any
event within two (2) days thereafter, a fully completed and duly
executed letter in the form of Exhibit B-2. The Pledgor further
agrees to take such actions as the Pledgee reasonably deems
necessary or desirable to effect the foregoing and to permit the
Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory
to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon request of the Pledgee.
5. Sub-Agents, Endorsements. The Pledgee shall have the
right to appoint one or more sub-agents for the purpose of
retaining physical possession of the certificates and other
instruments evidencing the Pledged Securities, which may be held
(in the discretion of the Pledgee) in the name of the Pledgor,
endorsed or assigned in blank or in favor of the Pledgee or any
nominees or nominees of the Pledgee or a sub-agent appointed by
the Pledgee.
6. Voting Prior to Event of Default. Unless and until an
Event of Default shall have occurred and be continuing, the
Pledgor shall be entitled to vote any and all Pledged Securities
owned by it, and to give consents, waivers or ratifications in
respect thereof; provided, that no vote shall be cast, nor any
consent, waiver or ratification given or any action taken, nor
any other action taken or fail to be taken, that would, or could
reasonably be expected to, violate or be inconsistent with any of
the terms of this Agreement, the Credit Agreement, the Overline
Credit Agreement, any other Credit Document, any Interest Rate
Protection Agreement or any Investment Agreement, or have the
effect of impairing the position or interests of the Pledgee or
any other Secured Creditor. All such rights of the Pledgor to
vote and to give consents, waivers and ratifications shall cease
immediately upon the occurrence and at all times during the
continuance of an Event of Default, during which time the
provisions of Section 8 shall be applicable with respect to the
matters referred to in this Section.
7. Dividends and Other Distributions. Unless an Event of
Default shall have occurred and be continuing (or would occur as
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a result thereof), all cash dividends or distributions payable in
respect of the Pledged Stock and Pledged Interests may be paid to
the Pledgor; provided, that all cash dividends or distributions
payable in respect of the Pledged Stock or the Pledged Interests
in connection with the dissolution, liquidation, recapitalization
or reclassification of the capital of any Subsidiary (other than
any such transaction permitted by the Credit Agreement and the
Overline Credit Agreement) that are determined by the Pledgee, in
its sole and absolute discretion, to represent in whole or in
part an extraordinary, liquidating or other distribution in
return of capital shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in
return of capital, to the Pledgee and retained by it as part of
the Collateral (unless such cash dividends are applied to the
repayment of the Secured Obligations as provided in Section 9).
The Pledgee also shall be entitled to receive directly, and to
retain as part of the Collateral:
(i) all other or additional stock or other securities
or property (other than cash) paid or distributed by way of
dividend or otherwise in respect of the Pledged Stock or the
Pledged Interests;
(ii) all other or additional stock or other securities
or property (including cash, unless applied to the repayment
of the Secured Obligations as provided in Section 9) paid or
distributed in respect of the Pledged Stock or the Pledged
Interests by way of stock split, spin-off, split-up,
reclassification, combination of shares or similar
rearrangement; and
(iii) all other or additional stock or other securities
or property (including cash, unless applied to the repayment
of the Secured Obligations as provided in Section 9) paid or
distributed in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization
(other than any such transaction permitted by the Credit
Agreement).
Nothing contained in this Section shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in
any form in accordance with Section 4. All dividends,
distributions or other payments that are received by the Pledgor
contrary to the provisions of this Section and Section 8 shall be
received in trust for the benefit of the Pledgee, shall be
segregated from other property or funds of the Pledgor and shall
be forthwith paid over to the Pledgee as Collateral in the same
form as so received (with any necessary endorsements).
8. Remedies Upon Event of Default. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall
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be entitled to exercise all of its rights, powers and remedies
(whether vested in it by this Agreement, any other Credit
Document, any Interest Rate Protection Agreement or by law,
including all the rights and remedies of a secured party under
the applicable Uniform Commercial Code) for the protection and
enforcement of the rights of the Secured Creditors in respect of
the Collateral, and shall be entitled, in particular (but without
limitation of the foregoing), to exercise the following rights,
which the Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 7 to the Pledgor;
(ii) to transfer all or any part of the Collateral into
the Pledgee's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Pledged Securities
(whether or not transferred into the name of the Pledgee)
and give all consents, waivers and ratifications in respect
of the Collateral and otherwise act with respect thereto as
though it were the outright owner thereof (the Pledgor
hereby constituting and appointing the Pledgee as the proxy
and attorney-in-fact of the Pledgor, with full power of
substitution to do so, which power, being coupled with an
interest, is irrevocable for so long as this Agreement shall
be in effect); and
(iv) at any time or from time to time to sell, assign
and deliver, or grant options to purchase, all or any part
of the Collateral, or any interest therein, at any public or
private sale, without demand of performance, advertisement
or notice of intention to sell or of the time or place of
sale or adjournment thereof or to redeem or otherwise (all
of which are hereby waived by the Pledgor), for cash, on
credit or for other property, for immediate or future
delivery without any assumption of credit risk, and to
adjourn the same from time to time, and for such price or
prices and on such terms as the Pledgee in its sole and
absolute discretion may determine to be commercially
reasonable; provided, that, unless the Collateral threatens
to decline speedily in value, there shall be given to the
Pledgor at least ten (10) days' notice of the time and place
of any such public sale or the time after which any private
sale may be made. The Pledgor hereby waives and releases,
to the fullest extent permitted by law, any right or equity
of redemption with respect to the Collateral, whether before
or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the
Secured Obligations or otherwise. At any such sale, unless
prohibited by applicable law, the Pledgee on behalf of the
Secured Creditors may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity
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of redemption, and the Pledgee shall be entitled, for the
purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral, to
use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by
the Pledgee at such sale. Neither the Pledgee nor any other
Secured Creditor shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay
in so doing, nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
Notwithstanding any other provision contained herein or in any
other Credit Document or Investment Agreement, in no event shall
the Pledgee or any other Secured Creditor have or assume any of
the obligations or liabilities of the Pledgor under any
Investment Agreement by virtue of this Agreement or any
foreclosure or other action taken by the Pledgee hereunder, even
if the Pledgee is deemed to have become a "substitute partner" or
acquired any similar status under the terms of any Investment
Agreement or applicable law, except to the extent the Pledgee
shall have expressly agreed otherwise in writing.
9. Application of Proceeds.
(a) Except as specifically otherwise provided in the Credit
Agreement and the Overline Credit Agreement, all moneys received
by the Pledgee upon any collection, sale or other disposition of
the Collateral, together with all other moneys received by the
Pledgee hereunder, shall be applied as follows:
(i) first, to the payment of all Secured Obligations
owing to the Pledgee of the type described in clauses (iv)
and (v) of Section 1;
(ii) second, after payment in full of the amounts
specified in clause (i) above, to the payment of all other
Secured Obligations owing to the Overline Creditors in such
manner and order and at such time as the Pledgee shall
elect, each Overline Creditor to receive an amount equal to
the outstanding amount of the Secured Obligations then owing
to it or, if such payment is insufficient to pay in full all
such Secured Obligations, its Pro Rata Share (as hereinafter
defined) of such payment;
(iii) third, after payment in full of the amounts
specified in clause (ii) above, to the payment of all other
Secured Obligations owing to the Credit Agreement Creditors
(including in their capacity as Hedge Creditors) in such
manner and order and at such time as the Pledgee shall
elect, each Credit Agreement Creditor to receive an amount
equal to the outstanding amount of the Secured Obligations
then owing to it or, if such payment is insufficient to pay
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in full all such Secured Obligations, its Pro Rata Share (as
hereinafter defined) of such payment; and
(iv) fourth, after payment in full of the amounts
specified in clauses (i), (ii) and (iii) above, and
following the termination of this Agreement pursuant to
Section 18(a), to the Pledgor or to any other Person that
may be lawfully entitled to receive such surplus.
(b) For purposes of clauses (ii) and (iii) of
subsection (a) above, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount hereunder, that amount (expressed as a percentage) equal
to a fraction the numerator of which is the then outstanding
amount of the relevant Secured Obligations owing to such Secured
Creditor and the denominator of which is the then outstanding
amount of all relevant Secured Obligations.
(c) For purposes of applying amounts in accordance with
this Section, the Pledgee shall be entitled to rely upon the
Hedge Creditors or their representative under any Interest Rate
Protection Agreements for a determination of the outstanding
Secured Obligations owed to the Hedge Creditors. Unless it has
actual knowledge (including by way of written notice from a Hedge
Creditor) to the contrary, the Pledgee, in acting hereunder,
shall be entitled to assume that no Interest Rate Protection
Agreements, or Hedge Obligations in respect thereof, are in
existence.
(d) The Pledgor shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (i),
(ii) and (iii) of subsection (a) above.
10. Purchase of Collateral. Upon any sale of any Collateral
by the Pledgee hereunder (whether by virtue of the power of sale
herein granted, pursuant to judicial process or otherwise), the
receipt of the Pledgee or the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase
money paid over to the Pledgee or such officer or be answerable
in any way for the misapplication or nonapplication thereof.
11. Indemnification. The Pledgor agrees to indemnify and
hold harmless the Pledgee and each other Secured Creditor from
and against any and all claims, demands, losses, judgments and
liabilities of every kind or nature, and to reimburse the Pledgee
and each other Secured Creditor for all costs and expenses
(including, without limitation, reasonable attorneys' fees),
arising out of or resulting from this Agreement or the exercise
by the Pledgee or any other Secured Creditor of any rights or
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remedies granted hereunder, under the other Credit Documents or
under any Interest Rate Protection Agreements, including, without
limitation, from the exercise by the Pledgee of any of its powers
or rights under Sections 8, 12(b) or 12(c); provided that neither
the Pledgee nor any other Secured Creditor shall be entitled to
indemnification pursuant to this Section for claims, demands,
losses, judgments and liabilities to the extent caused by its
gross negligence or willful misconduct. In no event shall the
Pledgee or any other Secured Creditor be liable for any matter or
thing in connection with this Agreement other than to account for
moneys actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of the Pledgor
under this Section are unenforceable for any reason, the Pledgor
hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations that is permissible under
applicable law.
12. Further Assurances; Pledgee as Attorney-In-Fact; Pledgee
May Perform.
(a) The Pledgor agrees that it will join with the Pledgee
to execute and, at its own expense, file and refile under any
applicable Uniform Commercial Code such financing statements,
continuation statements and other documents and instruments in
such offices as the Pledgee may reasonably deem necessary or
appropriate, and wherever required or permitted by law, in order
to perfect and preserve the Pledgee's security interest in the
Collateral, and hereby authorizes the Pledgee to file financing
statements and amendments thereto relating to all or any part of
the Collateral without the signature of the Pledgor where
permitted by law, and agrees to do such further acts and things
and to execute and deliver to the Pledgee such additional
conveyances, assignments, voting proxies, agreements and
instruments as the Pledgee may reasonably require or deem
advisable to carry out the purposes of this Agreement or to
further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
(b) The Pledgor hereby irrevocably appoints the Pledgee its
lawful attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor, the Pledgee
or otherwise, and with full power of substitution in the
premises, from time to time in the Pledgee's reasonable
discretion (but subject to the rights of the Pledgor under
Sections 6 and 7) to take any action and to execute any
instrument that the Pledgee may reasonably deem necessary or
advisable to accomplish the purpose of this Agreement, including,
without limitation:
(i) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of
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the Collateral;
(ii) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper in connection
with clause (i) above;
(iii) to file any claims or take any action or institute
any proceedings that the Pledgee may deem necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Pledgee and the other
Secured Creditors with respect to any of the Collateral;
(iv) upon the occurrence of a breach, default or event
of default by the Pledgor under any Investment Agreement
(whether or not the same shall constitute a Default or Event
of Default), the Pledgor hereby agreeing promptly to notify
the Pledgee thereof, to correct or cure the same (to the
extent the Pledgor shall have failed to do so promptly upon
request by the Pledgee) in such manner and to such extent as
the Pledgee shall reasonably deem necessary to protect its
security interest in the Pledged Interests thereunder,
including, without limitation, to appear in and defend any
action or proceeding purporting to affect such Interests or
the rights and powers of the Secured Creditors, to perform
and discharge any material obligation, covenant and
agreement of the Pledgor under such Investment Agreement,
and, in exercising any such powers, to incur and pay, for
the account of the Pledgor, necessary and reasonable costs
and expenses (including reasonable attorneys' fees), but
without any obligation on the part of the Pledgee to do any
of the foregoing; and
(v) to perform the affirmative obligations of the
Pledgor under this Agreement (including, without limitation,
obligations under Section 12(a));
and, in the case of each of clauses (i) through (v) above, the
Pledgee shall use its best efforts to give the Pledgor notice of
any action taken by it in accordance with this Section as soon as
practicable after such action is taken; provided, however, that
the failure to give any such notice shall not in any way impair
the authority of the Pledgee pursuant to this Section or the
validity of any action taken by the Pledgee pursuant hereto, or
result in any liability on the part of the Pledgee or any other
Secured Creditor to the Pledgor or any of its Subsidiaries. The
exercise by the Pledgee of any of its rights pursuant to this
Section shall not create any further obligation on the part of
the Pledgee to exercise any other rights hereunder or to take any
other or further action in respect thereof. The power of
attorney granted under this Section, being coupled with an
interest, is irrevocable for so long as this Agreement shall be
in effect.
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<PAGE>
(c) If the Pledgor fails to perform any agreement contained
herein after written request to do so by the Pledgee, the Pledgee
may itself perform, or cause performance of, such agreement, and
the reasonable expenses so incurred in connection therewith shall
be payable by the Pledgor pursuant to Section 11.
13. The Pledgee as Agent. The Pledgee will hold all items
of the Collateral at any time received under this Agreement in
accordance with the provisions hereof. It is expressly
understood and agreed that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect
to the disposition thereof, and otherwise under this Agreement
and the other Credit Documents, are only those expressly set
forth in this Agreement and the other Credit Documents. The
Pledgee shall act hereunder at the direction, or with the
consent, of the Required Lenders and the Required Overline
Lenders, as applicable, on the terms and conditions set forth in
the Credit Agreement and the Overline Credit Agreement, as the
case may be. Except for treatment of the Collateral in its
possession in a manner substantially equivalent to that which the
Pledgee, in its individual capacity, accords its own property of
a similar nature, and the accounting for moneys actually received
by it hereunder, the Pledgee shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to
the Collateral. Neither the Pledgee nor any other Secured
Creditor shall be liable to the Pledgor (i) for any loss or
damage sustained by it, or (ii) for any loss, damage,
depreciation or other diminution in the value of any of the
Collateral that may occur as a result of or in connection with or
that is in any way related to any exercise by the Pledgee or any
other Secured Creditor of any right or remedy under this
Agreement or any other act or failure to act on the part of the
Pledgee or any other Secured Creditor, except to the extent that
the same is caused by its own gross negligence or willful
misconduct.
14. Transfer by the Pledgor; Certain Actions. The Pledgor
will not (i) sell or otherwise dispose of, grant any option with
respect to, or mortgage, pledge, grant any Lien with respect to
or otherwise encumber any of the Collateral or any interest
therein, except for the security interest created in favor of the
Pledgee hereunder and except as may be otherwise expressly
permitted in accordance with the terms of the Credit Agreement
and the Overline Credit Agreement, (ii) withdraw as a
shareholder, partner, joint venturer or investor in any
Subsidiary, file or pursue any action that may cause a
dissolution or liquidation of any Subsidiary or seek any
partition or similar relief in respect thereof, except as may be
otherwise expressly permitted in accordance with the terms of the
Credit Agreement and the Overline Credit Agreement, or
(iii) amend, modify or terminate any Investment Agreement, or
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agree to do or cause to be done any of the foregoing, in a manner
that would have the effect of impairing the position or interests
of the Pledgee or any other Secured Creditor.
15. Representations, Warranties and Covenants of the
Pledgor. The Pledgor represents and warrants that, as of the
date hereof and as of the date of execution of any Pledge
Amendment: (a) it is, or at the time when pledged hereunder will
be, the sole legal, record and beneficial owner of, and has, or
at the time pledged hereunder will have, good and marketable
title to, all Securities pledged hereunder, subject to no Lien
whatsoever other than the security interest created by this
Agreement; (b) it has the full power, authority and legal right
to pledge all the Securities pledged and to be pledged pursuant
to this Agreement; (c) this Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes a legal,
valid and binding obligation of the Pledgor, enforceable in
accordance with its terms; (d) no authorization, consent or
approval of, or declaration or filing with, any Governmental
Authority is required for the valid execution, delivery and
performance by the Pledgor of this Agreement or the consummation
by it of the transactions contemplated hereby; (e) neither the
execution, delivery or performance of this Agreement by the
Pledgor nor compliance by it herewith: (i) conflicts or will
conflict with or results or will result in any material breach
of, or constitutes or will constitute with the passage of time or
the giving of notice or both, a material default under, (x) the
articles of incorporation or bylaws of the Pledgor, (y) any law,
order, writ, injunction or decree of any court or Governmental
Authority, or (z) any written or oral agreement or instrument to
which the Pledgor is a party or by which it, or any of its
properties, is bound, including, without limitation, any
Investment Agreement, (ii) results or will result in the creation
or imposition of any Lien upon the properties of the Pledgor
pursuant to any such agreement or instrument, except as
contemplated by this Agreement, or (iii) requires or will require
any consent or approval of any partners or other Persons under
any Investment Agreements or other agreements or instruments,
other than consents and approvals that have already been obtained
and delivered in writing to the Pledgee; (f) all the shares of
the Pledged Stock have been duly and validly issued, are fully
paid and nonassessable and are subject to no preemptive rights,
options to purchase or similar rights; (g) all of the Interests,
if any, have been validly acquired and are fully paid for, and
the Pledgor is not subject under any Investment Agreement absent
its approval to any call for, or otherwise to make, any
additional capital contributions; (h) as to any Pledged
Securities pledged pursuant to a Pledge Amendment, (x) the
Pledged Stock consists of the number and type of shares of the
capital stock of the corporations as described in Part I of
Annex A to such Pledge Amendment and constitutes that percentage
of the issued and outstanding capital stock of the issuing
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<PAGE>
corporation as is set forth in Part I of such Annex A and (y) the
Pledged Interests consist of the interests described in Part II
of such Annex A and constitute that percentage of the ownership
interests in the relevant Persons as is set forth in Part II of
such Annex A; (i) the Pledgor has furnished the Pledgee with
correct and complete copies of all Investment Agreements to which
the Pledgor is a party, each such Investment Agreement is in full
force and effect and there exists no default, breach or event of
default thereunder by any party, and, to the knowledge of the
Pledgor, each such Investment Agreement sets forth the entire
agreement and understanding of the parties thereto in respect of
the subject matter thereof, and there are no other agreements or
understandings, written or oral, relating to the matters covered
thereby; and (j) assuming (y) in the case of certificated
Securities, continuous possession by the Pledgee of the
Securities, and (z) in the case of all other Securities, the
transfer (within the meaning of Section 8-313 of the applicable
Uniform Commercial Code) thereof to the Pledgee, the pledge,
assignment and delivery of the Securities pursuant to this
Agreement creates a valid and perfected first priority security
interest in the Securities, and the proceeds thereof, subject to
no prior Lien or to any agreement purporting to grant to any
other Person a Lien on the property or assets of the Pledgor that
would include the Securities. The Pledgor covenants and agrees
that it will (i) notify the Pledgee promptly in writing upon the
termination or reduction of any of its Interests (and will not
consent to any of the same) and upon any breach, default or event
of default by the Pledgor or (promptly upon obtaining knowledge
thereof) by any other party under any Investment Agreement,
(ii) defend the Pledgee's right, title and security interest in
and to the Securities and the proceeds thereof against the claims
and demands of all other Persons, and (iii) have like title to
and the right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the
Pledgee and the Secured Creditors.
16. Pledgor's Obligations Absolute, etc. The obligations of
the Pledgor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any
extension, amendment, modification or restatement of or
supplement to the Credit Agreement, the Overline Credit
Agreement, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement, or any
assignment or transfer of any of the foregoing or any rights and
obligations thereunder; (b) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of
this Agreement, the Credit Agreement, the Overline Credit
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Agreement, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement; (c) any
furnishing of any additional security to the Pledgee or its
assignee or any acceptance thereof or any release of any
Collateral by the Pledgee or its assignee; (d) any limitation on
or release of any party's liability or obligations under this
Agreement, the Credit Agreement, the Overline Credit Agreement,
the Guaranty, any of the other Credit Documents, any Interest
Rate Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement, or any
invalidity or unenforceability thereof, in whole or in part; or
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any of its Subsidiaries, or any action
taken with respect to this Agreement or any Investment Agreement
by any trustee or receiver, or by any court, in any such
proceeding, whether or not the Pledgor shall have notice or
knowledge of any of the foregoing.
17. Registration, Sales Absent Registration.
(a) If, at any time after the occurrence and during the
continuance of an Event of Default, the Pledgor shall have
received from the Pledgee a written request or requests that the
Pledgor cause any registration, qualification or compliance under
any federal or state securities law or laws to be effected with
respect to all or any part of any Pledged Securities, the Pledgor
will, as soon as practicable and at its expense, use its best
efforts to cause such registration to be effected and be kept
effective and will use its best efforts to cause such
qualification and compliance to be effected and be kept effective
as may be so requested and as would permit or facilitate the sale
and distribution of such Pledged Securities, including, without
limitation, registration under the Securities Act of 1933, as
amended (the "Securities Act"), appropriate qualifications under
applicable blue sky or other state securities laws and
appropriate compliance with any other applicable requirements of
Governmental Authorities; provided, that the Pledgee shall
furnish to the Pledgor such information regarding the Pledgee as
the Pledgor may reasonably request in writing and as shall be
required in connection with any such registration, qualification
or compliance. The Pledgor will cause the Pledgee to be kept
reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the
completion thereof, will furnish to the Pledgee such number of
prospectuses, offering circulars or other documents incident
thereto as the Pledgee from time to time may reasonably request,
and will indemnify the Pledgee and all others participating in
the distribution of such Pledged Securities against all claims,
losses, damages and liabilities caused by any untrue statement
(or alleged untrue statement) of a material fact contained
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therein (or in any related registration statement, notification
or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification
or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement
or omission based upon information furnished in writing to the
Pledgor by the Pledgee expressly for use therein.
(b) If, at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged
Securities pursuant to Section 8, such Pledged Securities or the
part thereof to be sold shall not, for any reason whatsoever, be
effectively registered under the Securities Act, the Pledgee may,
in its sole and absolute discretion, sell such Pledged Securities
or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such
registration. Without limiting the foregoing, in any such event
the Pledgee, in its sole and absolute discretion, (i) may proceed
to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Securities
or part thereof shall have been filed under the Securities Act,
(ii) may approach and negotiate with a single possible purchaser
to effect such sale and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a
view to the distribution or sale of such Pledged Securities or
part thereof. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price that the Pledgee, in its
sole and absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were
deferred until after registration as aforesaid.
18. Termination, Release.
(a) After the occurrence of the Termination Date (as
hereinafter defined), this Agreement shall terminate and the
Pledgor shall be automatically released hereunder, and the
Pledgee, at the request and expense of the Pledgor, will execute
and deliver to the Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement
(including, without limitation, UCC-3 termination statements to
the extent necessary), and will duly assign, transfer and deliver
to the Pledgor (without recourse and without any representation
or warranty) such of the Collateral as may be in the possession
of the Pledgee and has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any
moneys at the time held by the Pledgee hereunder. For purposes
of this Agreement, "Termination Date" shall mean the date upon
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which all Overline Obligations, all Credit Obligations and all
obligations of the Pledgor hereunder have been indefeasibly paid
in full, the Overline Commitments and all Letters of Credit under
the Overline Credit Agreement have been terminated, the
Commitments and all Letters of Credit (as defined in the Credit
Agreement) under the Credit Agreement have been terminated and
all Interest Rate Protection Agreements have been terminated.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement and the
Overline Credit Agreement or is otherwise released at the
direction of the Required Lenders or the Required Overline
Lenders, as applicable (or all of the Lenders or Overline
Lenders, if required by the Overline Credit Agreement or the
Credit Agreement, as the case may be), the Pledgee, at the
request and expense of the Pledgor, will duly assign, transfer
and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Collateral as is then
being (or has been) so sold or released and as may be in the
possession of the Pledgee and has not theretofore been released
pursuant to this Agreement.
(c) At any time that the Pledgor desires that Collateral be
released as provided in subsections (a) or (b) above, it will
deliver to the Pledgee a certificate signed by its chief
financial officer or another principal executive officer stating
that the release of the respective Collateral is permitted
pursuant to subsection (a) or (b) above. If requested by the
Pledgee (although the Pledgee shall have no obligation to make
any such request), the Pledgor will furnish appropriate a legal
opinions from counsel reasonably acceptable to the Pledgee to the
effect set forth in the immediately preceding sentence.
19. Amendments, etc. No amendment, modification, waiver,
discharge or termination of this Agreement or any provision
hereof, nor any consent to any departure by the Pledgor
therefrom, shall in any event be effective unless in writing and
signed by the Pledgor and the Pledgee, acting with the
concurrence of such of the Lenders or Overline Lenders, as
applicable, as may be required under the Credit Agreement or the
Overline Credit Agreement, as the case may be, to concur therein;
provided, however, that any amendment, modification, waiver,
discharge, termination or consent at any time affecting the
rights and benefits of a single Group (as hereinafter defined) of
Secured Creditors, and not all Secured Creditors in a like or
similar manner, shall require only the consent of the Required
Parties (as hereinafter defined) of such Group at such time. For
purposes of the preceding sentence, the term "Group" shall mean
and refer to (i) the Credit Agreement Creditors as holders of the
Credit Obligations, (ii) the Overline Creditors as holders of the
Overline Obligations, or (iii) the Hedge Creditors as holders of
the Hedge Obligations, and the term "Required Parties" shall
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mean, at any time, (A) with respect to the Credit Obligations,
such of the Lenders as may be required under the Credit Agreement
then to concur in the action being taken, (B) with respect to the
Overline Obligations, such of the Overline Lenders as may be
required under the Overline Credit Agreement then to concur in
the action being taken, and (C) with respect to the Hedge
Obligations, the holders of at least a majority of the aggregate
obligations of the Pledgor outstanding at such time under all
Interest Rate Protection Agreements.
20. No Waivers, etc. The enumeration of the rights and
remedies of the Pledgee and the other Secured Creditors set forth
in this Agreement, the Credit Agreement, the Overline Credit
Agreement, the other Credit Documents or any Interest Rate
Protection Agreements is not intended to be exhaustive, and the
exercise by the Pledgee or any other Secured Creditor of any
right or remedy shall not preclude the exercise of any other
rights or remedies, all of which shall be cumulative, and shall
be in addition to any other right or remedy given hereunder,
under the Credit Agreement, under the Overline Credit Agreement,
under the other Credit Documents, under any Interest Rate
Protection Agreements or under any other agreement between the
Pledgor and the Secured Creditors, or any of them, or that may
now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the
Pledgee or any other Secured Creditor in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default. No course of
dealing between any of the Pledgor and the Pledgee or any other
Secured Creditor or their agents or employees shall be effective
to change, modify or discharge any provision of this Agreement or
to constitute a waiver of any Event of Default. No notice to or
demand upon the Pledgor in any case shall entitle the Pledgor to
any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Pledgee
or any other Secured Creditor to exercise any right or remedy or
take any other or further action in any circumstances without
notice or demand.
21. Assignment. The Pledgor may not assign this Agreement
or any of its rights or obligations hereunder. Any Secured
Creditor may assign or otherwise transfer its interest in this
Agreement, in whole or in part, in connection with an assignment
or other transfer of any or all Secured Obligations held by such
Secured Creditor in accordance with the Credit Agreement or the
Overline Credit Agreement (including by the sale of
participations), any applicable Interest Rate Protection
Agreement or other relevant documents, it being understood and
agreed that upon any such assignment or other transfer by any
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Secured Creditor, the Person that becomes the holder of the
Secured Obligations that are the subject of such assignment or
other transfer shall (except as may be otherwise provided by such
Secured Creditor as a term or condition of such assignment or
other transfer) have and may exercise all of the rights granted
to such Secured Creditor under this Agreement to the extent of
that part of or interest in the Secured Obligations so assigned
or transferred to such Person. The Pledgor hereby irrevocably
waives notice of and consents in advance to the assignment or
other transfer as provided above from time to time by any Secured
Creditor of the Secured Obligations held by it, or any part
thereof or interest therein, and of the corresponding rights and
interest of such Secured Creditor hereunder in connection
therewith.
22. Notice. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telex,
facsimile transmission or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered to the
party to be notified at the following addresses:
If to the Pledgor: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Chief Financial Officer
Telephone: (919) 383-0355
Telecopy: (919) 383-3660
With copies to: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Joseph G. Piemont, Esq.
Telephone: (919) 383-0355
Telecopy: (919) 383-7611
If to any Credit
Agreement Creditor
(including the
Pledgee): At its address for notices set forth
in the Credit Agreement
If to any Overline
Creditor: At its address for notices set forth
in the Credit Agreement (or, if not a
party thereto, the Overline Credit
Agreement)
If to any Hedge
Creditor: At such address for notices as such
Hedge Creditor shall have specified
to the Pledgor
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or to such other address as any of the Persons listed above may
designate for itself by like notice to the other Persons listed
above. 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 Pledgee shall not be effective until
received by the Pledgee.
23. Binding Effect; Survival. This Agreement shall be
binding upon and enforceable against the Pledgor and its
successors and permitted assigns. This Agreement shall inure to
the benefit of and be enforceable by each Secured Creditor and
its successors and assigns. All representations, warranties,
covenants and agreements herein shall survive the execution and
delivery of this Agreement and any Pledge Amendment and shall
continue in effect until the termination in full of this
Agreement.
24. Governing Law. This Agreement 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).
25. Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
26. Interpretation. The captions to the various sections
and subsections of this Agreement have been inserted for
convenience only and shall not limit or affect any of the terms
hereof. Unless the context otherwise requires, words in the
singular include the plural and words in the plural include the
singular, and the use of any gender shall be applicable to all
genders.
27. Counterparts. 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.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be executed under seal by its duly authorized officer as of the
date first above written.
COASTAL PHYSICIAN GROUP, INC.
By: _______________________________
Title: ____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Pledgee
By: _________________________________
Title: ______________________________
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<PAGE>
AMENDED AND RESTATED SUBSIDIARIES PLEDGE AGREEMENT
THIS AMENDED AND RESTATED SUBSIDIARIES PLEDGE AGREEMENT
(this "Agreement"), dated as of the 29th day of May, 1996, is
made by the undersigned corporations and the other Persons from
time to time parties hereto (collectively, the "Pledgors," and
individually, a "Pledgor"), each a Subsidiary of Coastal
Physician Group, Inc., a Delaware corporation (the "Borrower"),
to FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the
"Pledgee"), for the benefit of (i) the Lenders and the Agent
under the Credit Agreement referred to hereinbelow (each Lender,
the Issuing Bank and the Agent in their respective capacities as
such under the Credit Agreement, jointly and severally, the
"Credit Agreement Creditors," and each, a "Credit Agreement
Creditor"), (ii) the Overline Lenders and the Agent under the
Overline Credit Agreement (each Overline Lender, the Overline
Issuing Lender (such term being used herein with the meaning
given to it under the Overline Credit Agreement) and the Agent in
their respective capacities as such under the Overline Credit
Agreement, jointly and severally, the "Overline Creditors," and
each, an "Overline Creditor") and (iii) if one or more Lenders
enter into one or more Interest Rate Protection Agreements with
the Borrower, any such Lenders (each Lender in its capacity as a
party to any Interest Rate Protection Agreement, notwithstanding
that such Lender may have ceased at any time to be a Lender under
the Credit Agreement, a "Hedge Creditor," and collectively, the
"Hedge Creditors"; and the Hedge Creditors, together with the
Credit Agreement Creditors and the Overline Creditors, the
"Secured Creditors"). Capitalized terms not defined in this
introductory paragraph, in the recitals below or elsewhere herein
shall, unless otherwise provided herein, have the meanings given
to them in the Credit Agreement (terms defined in the Overline
Credit Agreement also being deemed defined terms under the Credit
Agreement).
RECITALS
A. The Borrower, certain banks and other financial
institutions (the "Lenders") and the Agent are parties to a
Credit Agreement, dated as of July 29, 1994, as amended by a
First Amendment thereto dated as of April 12, 1995 and by a
Second Amendment thereto dated as of August 10, 1995 (as so
amended, and as in effect on the date hereof, the "Existing
Credit Agreement"), providing for the availability of certain
credit facilities to the Borrower upon the terms and conditions
set forth therein.
B. Each of the undersigned Pledgors is a Subsidiary of the
Borrower and is a party (i) together with the other Subsidiaries
of the Borrower, to a Guaranty Agreement, dated as of July 29,
1994 (as in effect on the date hereof, the "Existing Guaranty"),
whereby each Pledgor, together with such other Subsidiaries,
unconditionally guaranteed all Guaranteed Obligations (as defined
in the Existing Guaranty) of the Borrower under the Credit
Documents and the Interest Rate Protection Agreements, and
(ii) to a Subsidiaries Pledge Agreement, dated as of July 29,
1994 (as in effect on the date hereof, the "Existing
<PAGE>
Pledge Agreement"), whereby each Pledgor pledged and granted to the
Pledgee a security interest in all of its Collateral (as defined
in the Existing Pledge Agreement) as security for the Obligations
(as defined in the Existing Pledge Agreement).
C. The Borrower, the Agent and the Lenders have entered
into a Third Amendment and Limited Waiver to Credit Agreement,
dated as of May 29, 1996 (the "Third Amendment"; and the Existing
Credit Agreement, as amended by the Third Amendment and as
further amended, modified, supplemented or restated from time to
time, the "Credit Agreement"), pursuant to which the Agent and
the Lenders have agreed to make certain amendments to the
Existing Credit Agreement and have made certain other agreements
of material benefit to the Borrower and the Pledgors, including
agreements to waive certain existing Events of Default on the
terms and subject to the conditions set forth in the Third
Amendment.
D. Additionally, the Borrower, the Agent and the Overline
Lenders have entered into a Secured Overline Credit Agreement,
dated as of May 29, 1996 (as amended, modified, supplemented or
restated from time to time, the "Overline Credit Agreement"),
providing for the availability of certain credit facilities in
the aggregate principal amount of $40,000,000 to the Borrower
upon the terms and conditions set forth therein.
E. In connection with the consummation of the transactions
contemplated by the Third Amendment and the Overline Credit
Agreement, and as a condition thereto, each of the Pledgors,
together with the other Subsidiaries of the Borrower, has entered
into an Amended and Restated Guaranty Agreement, dated as of the
date hereof (as amended, modified, supplemented or restated from
time to time, the "Guaranty"), which amends and restates the
Existing Guaranty and pursuant to which each Pledgor, together
with such other Subsidiaries of the Borrower, has agreed (i) to
confirm and ratify the guarantee under the Existing Guaranty to
the Credit Agreement Creditors and any Lenders that are or may
become Hedge Creditors of payment in full of the Guaranteed
Obligations (as defined in the Guaranty) and (ii) to guarantee to
the Overline Creditors the payment in full of the Guaranteed
Obligations.
F. As a further condition, among other things, to the
effectiveness of the Third Amendment, to the making of Loans
under the Credit Agreement, to the making of Overline Loans and
the issuance of, and participation in, Letters of Credit (such
term being used herein with the meaning given to it under the
Overline Credit Agreement, except as otherwise specified) under
the Overline Credit Agreement, and to the obligation of any Hedge
Creditor to enter into or continue to perform any Interest Rate
Protection Agreement, each Pledgor shall have agreed, by
executing and delivering this Agreement, which amends and
restates the Existing Pledge Agreement, (i) to confirm and ratify
the pledge to the Pledgee under the Existing Pledge Agreement,
for the benefit of the Credit Agreement Creditors and any Lenders
that are or may become Hedge Creditors, of the Collateral (as
hereinafter defined) and (ii) to pledge to the Pledgee, for the
benefit of the Overline Creditors, the Collateral, in each case
in order to secure the payment in full of the Secured
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<PAGE>
Obligations (as hereinafter defined). The Secured Creditors are relying
on this Agreement in their decision to consummate the transactions
contemplated by the Third Amendment and the Overline Credit
Agreement, to extend credit to the Borrower under the Credit
Agreement and the Overline Credit Agreement that is otherwise not
available, and to enter into and continue to perform any Interest
Rate Protection Agreements, and would not be willing to enter
into the Third Amendment and the Overline Credit Agreement or to
extend credit thereunder, or to enter into or continue to perform
any such Interest Rate Protection Agreement, without this
Agreement.
G. Without the execution and delivery of the Third
Amendment and the Overline Credit Agreement, there would be a
material adverse effect upon the businesses of the Borrower and
the Pledgors.
H. Each Pledgor has obtained and will continue to obtain
substantial and material benefits from the extension of credit to
the Borrower under the Credit Agreement and the Overline Credit
Agreement, and from the entering into of any Interest Rate
Protection Agreements, which it could not obtain otherwise and
which benefits are hereby acknowledged, and, accordingly, has
agreed to execute and deliver this Agreement, which is a
condition to the effectiveness of the Third Amendment and the
Overline Credit Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, to induce the Lenders to enter
into the Third Amendment and to make Loans to the Borrower under
the Credit Agreement and to induce the Overline Lenders to enter
into the Overline Credit Agreement and to make Overline Loans to
the Borrower thereunder from time to time (which Loans and
Overline Loans the Lenders and Overline Lenders would not
otherwise be required to make), to induce the Issuing Lender to
issue, and the Overline Lenders to participate in, the Letters of
Credit, and to induce the Hedge Parties to enter into and perform
the Interest Rate Protection Agreements, each Pledgor hereby
agrees as follows:
1. Security for Secured Obligations. This Agreement is made
by each Pledgor for the benefit of the Secured Creditors to
secure:
(i) the full and prompt payment to the Credit
Agreement Creditors, at any time and from time to time as
and when due (whether at the stated maturity, by
acceleration or otherwise) of all liabilities and
obligations of the Pledgors, whether now existing or
hereafter incurred, in respect of the guarantee of the
Credit Obligations set forth in Section 1(a)(i) of the
Guaranty;
(ii) the full and prompt payment to the Overline
Creditors, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or
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<PAGE>
otherwise) of all liabilities and obligations of the
Pledgors, whether now existing or hereafter incurred, in
respect of the guarantee of the Overline Obligations set
forth in Section 1(a)(ii) of the Guaranty;
(iii) the full and prompt payment to the Hedge
Creditors, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or
otherwise) of all liabilities and obligations of the
Pledgors, whether now existing or hereafter incurred, in
respect of the guarantee of the Hedge Obligations set forth
in Section 1(a)(iii) of the Guaranty;
(iv) the full and prompt payment to the Secured
Creditors, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or
otherwise) of all liabilities and obligations of the
Pledgors, whether now existing or hereafter incurred, set
forth in Section 1(a)(iv) of the Guaranty;
(v) any and all sums advanced by the Pledgee in order
to preserve the Collateral (as hereinafter defined) or to
preserve its security interest in the Collateral; and
(vi) in the event of any proceeding for the collection
or enforcement of any indebtedness, obligations or
liabilities of such Pledgor referred to in clauses (i)
through (iv) above, after an Event of Default (such term to
mean and include, as relevant, for purposes of this
Agreement, any "Event of Default" within the meaning of the
Credit Agreement or the Overline Credit Agreement or any
payment default under any Interest Rate Protection Agreement
continuing after any applicable grace period) shall have
occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of
any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in
clauses (i) through (vi) of this Section, collectively, the
"Secured Obligations."
2. Certain Definitions; Closing Representations.
(a) As used herein, (i) the term "Stock" shall mean all of
the issued and outstanding shares of capital stock, now owned or
at any time hereafter acquired by any Pledgor, of any of its
Subsidiaries that are corporations; (ii) the term "Interests"
shall mean all of the right, title and interest of any Pledgor,
now owned or at any time hereafter acquired by such Pledgor, in
any of its Subsidiaries that are not corporations (including,
without limitation, any partnerships and joint ventures), and
shall include, without limitation, all rights and interests of
such Pledgor existing under all partnership, joint venture or
other agreements creating or governing such right, title and
interest, to which such Pledgor is now or may hereafter become a
party (as the same may be amended, modified, supplemented or
restated
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<PAGE>
from time to time, collectively, the "Investment
Agreements"), including, without limitation, all rights of such
Pledgor to receive payments or other distributions thereunder,
and all rights granted or terms supplied by applicable law
thereunder or in connection therewith; and (iii) the term
"Securities" shall mean all of the Stock and the Interests. The
use of the term "Securities" hereunder to refer collectively to
the Stock and the Interests is for convenience of description
only and shall not be construed to mean or suggest that any of
the Stock or Interests constitutes a "security" within the
meaning of applicable federal or state securities laws.
(b) All Stock at any time pledged hereunder is hereinafter
called the "Pledged Stock"; all Interests at any time pledged
hereunder are hereinafter called the "Pledged Interests"; all
Pledged Stock and Pledged Interests together are called the
"Pledged Securities"; and the Pledged Securities, together with
all proceeds thereof, including any securities and moneys
received and at the time held by the Pledgee hereunder, are
hereinafter called the "Collateral."
(c) Each Pledgor represents and warrants, as to the Stock
and Interests owned by such Pledgor and required to be pledged
hereunder, that on the date hereof (i) the Stock consists of the
number and type of shares of the capital stock of the corpora-
tions as described in Part I of Annex A under the name of such
Pledgor; (ii) such Stock constitutes that percentage of the
issued and outstanding capital stock of the issuing corporation
as is set forth in Part I of Annex A under the name of such
Pledgor; (iii) such Pledgor has no Interests and is not a party
to any Investment Agreements; and (iv) such Pledgor is the holder
of record and sole beneficial owner of its Stock, and there exist
no warrants, options, preemptive rights or other rights or
restrictions in favor of third parties in respect of any of such
Stock other than as evidenced by this Agreement.
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<PAGE>
3. Pledge of Securities.
(a) To secure the liabilities and obligations described
under clause (i) of Section 1 and all other Secured Obligations
of the Pledgors to the Agent and the Lenders now or hereafter
existing under this Agreement, each Pledgor (i) hereby confirms
and ratifies its pledge, assignment and grant to the Pledgee,
under the Existing Pledge Agreement, of a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by such Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby confirms and
ratifies its assignment, transfer, hypothecation and setting over
to the Pledgee, under the Existing Pledge Agreement, of all of
such Pledgor's right, title and interest in and to such
Securities (and in and to the certificates or instruments
evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
(b) To secure the liabilities and obligations described
under clause (ii) of Section 1 and all other Secured Obligations
of the Pledgors to the Agent and the Overline Lenders now or
hereafter existing under this Agreement, each Pledgor (i) hereby
pledges, assigns and grants to the Pledgee a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by such Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby assigns,
transfers, hypothecates and sets over to the Pledgee all of such
Pledgor's right, title and interest in and to such Securities
(and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee upon the terms and
conditions set forth in this Agreement.
(c) To secure the liabilities and obligations described
under clause (iii) of Section 1 and all other Secured Obligations
of the Pledgors to the Hedge Creditors now or hereafter existing
under this Agreement, each Pledgor (i) hereby confirms and
ratifies its pledge, assignment and grant under the Existing
Pledge Agreement, to the Pledgee for the benefit of any Lenders
that are or may become Hedge Creditors, of a security interest in
all of the Collateral (as hereinafter defined), (ii) hereby
deposits with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates
therefor, accompanied by undated stock powers duly executed in
blank by such Pledgor, or such other instruments of transfer as
are acceptable to the Pledgee and (iii) hereby confirms and
ratifies its assignment, transfer, hypothecation and setting over
under the Existing Pledge Agreement, to the Pledgee for the
benefit of any Lenders that are or may become Hedge Creditors, of
all of such Pledgor's right, title and interest in and to such
Securities (and in and to the certificates or instruments
evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
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<PAGE>
(d) Each of the grants of a security interest in
subsections (a), (b) and (c) of this Section 3 is, and is
intended to be, a separate, independent and distinct grant to the
same extent as if each such grant were set forth in a separate
document, and such grants have been included in one document
solely for the administrative convenience of the Secured
Creditors.
4. Additional Securities.
(a) If any Pledgor shall acquire (by purchase, stock
dividend or otherwise) any additional Securities (or certificates
or instruments representing Securities) at any time or from time
to time after the date hereof, such Securities shall be
automatically deemed to be Pledged Securities and to be pledged
to the Pledgee pursuant to Section 3, and such Pledgor will
forthwith deposit such Securities (or certificates or instruments
representing Securities) as security with the Pledgee and deliver
to the Pledgee any certificates or instruments therefor,
accompanied by undated stock powers duly executed in blank by
such Pledgor, or such other instruments of transfer as are
acceptable to the Pledgee, and will promptly thereafter deliver
to the Pledgee a fully completed and duly executed amendment to
this Agreement in the form of Exhibit A (each, a "Pledge
Amendment") in respect of such additional Securities. Each
Pledgor hereby authorizes the Pledgee to attach each Pledge
Amendment to this Agreement and agrees that all such Securities
listed on any Pledge Amendment shall for all purposes be deemed
Pledged Securities hereunder. Additionally, if any Pledgor shall
acquire any Interests at any time or from time to time after the
date hereof, such Pledgor will deliver, prior to or concurrently
with its relevant Pledge Amendment, complete and correct copies
of all Investment Agreements to which such Interests relate,
including all schedules and exhibits thereto (and will from time
to time thereafter, promptly upon any amendment or modification
thereof, deliver a complete and correct copy of the same to the
Pledgee), and will use its best efforts to deliver to the
Pledgee, prior to or concurrently with the relevant Pledge
Amendment, the consents of all Persons required to be obtained
under the provisions of the relevant Investment Agreements or
under applicable law as a condition to the valid and lawful
pledge of such Interests to the Pledgee, each in form and
substance satisfactory to the Pledgee. In the event that any
pledge of Interests hereunder would be voidable absent any such
consents, such pledge shall be deemed void ab initio, and such
Pledgor will repledge such Interests hereunder by executing and
delivering a new Pledge Amendment promptly upon obtaining such
consents.
(b) Notwithstanding anything to the contrary contained
herein, if any Securities (whether now owned or hereafter
acquired) are "uncertificated securities" within the meaning of
the applicable Uniform Commercial Code or are otherwise not
evidenced by any stock certificate or similar certificate or
instrument, the respective Pledgor will promptly notify the
Pledgee thereof and will promptly take all actions required to
perfect the security interest of the Pledgee under applicable
law, including, as applicable, under Article 8 or 9 of the
applicable Uniform Commercial Code, and, without limitation of
the foregoing, will, prior to or concurrently with the pledge
hereunder of any Interests to which the provisions of this
subsection (b) apply, deliver to the relevant partnership, joint
venture or other Person a fully completed and duly executed
letter in the form of Exhibit B-1, and will obtain from such
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<PAGE>
partnership, joint venture or other Person, and deliver to the
Pledgee, promptly upon the registration of such pledge on the
books of the issuer and in any event within two (2) days
thereafter, a fully completed and duly executed letter in the
form of Exhibit B-2. Each Pledgor further agrees to take such
actions as the Pledgee reasonably deems necessary or desirable to
effect the foregoing and to permit the Pledgee to exercise any of
its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Pledgee with
respect to any such pledge of uncertificated Securities promptly
upon request of the Pledgee.
5. Sub-Agents, Endorsements. The Pledgee shall have the
right to appoint one or more sub-agents for the purpose of
retaining physical possession of the certificates and other
instruments evidencing the Pledged Securities, which may be held
(in the discretion of the Pledgee) in the name of the respective
Pledgor, endorsed or assigned in blank or in favor of the Pledgee
or any nominees or nominees of the Pledgee or a sub-agent
appointed by the Pledgee.
6. Voting Prior to Event of Default. Unless and until an
Event of Default shall have occurred and be continuing, each
Pledgor shall be entitled to vote any and all Pledged Securities
owned by it, and to give consents, waivers or ratifications in
respect thereof; provided, that no vote shall be cast, nor any
consent, waiver or ratification given or any action taken, nor
any other action taken or fail to be taken, that would, or could
reasonably be expected to, violate or be inconsistent with any of
the terms of this Agreement, the Credit Agreement, the Overline
Credit Agreement, any other Credit Document, any Interest Rate
Protection Agreement or any Investment Agreement, or have the
effect of impairing the position or interests of the Pledgee or
any other Secured Creditor. All such rights of each Pledgor to
vote and to give consents, waivers and ratifications shall cease
immediately upon the occurrence and at all times during the
continuance of an Event of Default, during which time the
provisions of Section 8 shall be applicable with respect to the
matters referred to in this Section.
7. Dividends and Other Distributions. Unless an Event of
Default shall have occurred and be continuing (or would occur as
a result thereof), all cash dividends or distributions payable in
respect of the Pledged Stock and Pledged Interests may be paid to
the respective Pledgor; provided, that all cash dividends or
distributions payable in respect of the Pledged Stock or the
Pledged Interests in connection with the dissolution,
liquidation, recapitalization or reclassification of the capital
of any Subsidiary of any Pledgor (other than any such transaction
permitted by the Credit Agreement and the Overline Credit
Agreement) that are determined by the Pledgee, in its sole and
absolute discretion, to represent in whole or in part an
extraordinary, liquidating or other distribution in return of
capital shall be paid, to the extent so determined to represent
an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the
Collateral (unless such cash dividends are applied to the
repayment of the Secured Obligations as provided in Section 9).
The Pledgee also shall be entitled to receive directly, and to
retain as part of the Collateral:
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<PAGE>
(i) all other or additional stock or other securities
or property (other than cash) paid or distributed by way of
dividend or otherwise in respect of the Pledged Stock or the
Pledged Interests;
(ii) all other or additional stock or other securities
or property (including cash, unless applied to the repayment
of the Secured Obligations as provided in Section 9) paid or
distributed in respect of the Pledged Stock or the Pledged
Interests by way of stock split, spin-off, split-up,
reclassification, combination of shares or similar
rearrangement; and
(iii) all other or additional stock or other securities
or property (including cash, unless applied to the repayment
of the Secured Obligations as provided in Section 9) paid or
distributed in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization
(other than any such transaction permitted by the Credit
Agreement).
Nothing contained in this Section shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in
any form in accordance with Section 4. All dividends,
distributions or other payments that are received by any Pledgor
contrary to the provisions of this Section and Section 8 shall be
received in trust for the benefit of the Pledgee, shall be
segregated from other property or funds of such Pledgor and shall
be forthwith paid over to the Pledgee as Collateral in the same
form as so received (with any necessary endorsements).
8. Remedies Upon Event of Default. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall
be entitled to exercise all of its rights, powers and remedies
(whether vested in it by this Agreement, any other Credit
Document, any Interest Rate Protection Agreement or by law,
including all the rights and remedies of a secured party under
the applicable Uniform Commercial Code) for the protection and
enforcement of the rights of the Secured Creditors in respect of
the Collateral, and shall be entitled, in particular (but without
limitation of the foregoing), to exercise the following rights,
which each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 7 to such
Pledgor;
(ii) to transfer all or any part of the Collateral into
the Pledgee's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Pledged Securities
(whether or not transferred into the name of the Pledgee)
and give all consents, waivers and ratifications in respect
of the Collateral and otherwise act with respect thereto as
though it were the outright owner thereof (each Pledgor
hereby constituting and appointing the Pledgee as the proxy
and attorney-in-fact of such Pledgor, with full
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power of substitution to do so, which power, being coupled with an
interest, is irrevocable for so long as this Agreement shall
be in effect); and
(iv) at any time or from time to time to sell, assign
and deliver, or grant options to purchase, all or any part
of the Collateral, or any interest therein, at any public or
private sale, without demand of performance, advertisement
or notice of intention to sell or of the time or place of
sale or adjournment thereof or to redeem or otherwise (all
of which are hereby waived by each Pledgor), for cash, on
credit or for other property, for immediate or future
delivery without any assumption of credit risk, and to
adjourn the same from time to time, and for such price or
prices and on such terms as the Pledgee in its sole and
absolute discretion may determine to be commercially
reasonable; provided, that, unless the Collateral threatens
to decline speedily in value, there shall be given to such
Pledgor at least ten (10) days' notice of the time and place
of any such public sale or the time after which any private
sale may be made. Each Pledgor hereby waives and releases,
to the fullest extent permitted by law, any right or equity
of redemption with respect to the Collateral, whether before
or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the
Secured Obligations or otherwise. At any such sale, unless
prohibited by applicable law, the Pledgee on behalf of the
Secured Creditors may bid for and purchase all or any part
of the Collateral so sold free from any such right or equity
of redemption, and the Pledgee shall be entitled, for the
purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral, to
use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by
the Pledgee at such sale. Neither the Pledgee nor any other
Secured Creditor shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay
in so doing, nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
Notwithstanding any other provision contained herein or in any
other Credit Document or Investment Agreement, in no event shall
the Pledgee or any other Secured Creditor have or assume any of
the obligations or liabilities of any Pledgor under any
Investment Agreement by virtue of this Agreement or any
foreclosure or other action taken by the Pledgee hereunder, even
if the Pledgee is deemed to have become a "substitute partner" or
acquired any similar status under the terms of any Investment
Agreement or applicable law, except to the extent the Pledgee
shall have expressly agreed otherwise in writing.
9. Application of Proceeds.
(a) Except as specifically otherwise provided in the Credit
Agreement and the Overline Credit Agreement, all moneys received
by the Pledgee upon any collection, sale or other disposition of
the Collateral, together with all other moneys received by the
Pledgee hereunder, shall be applied as follows:
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(i) first, to the payment of all Secured Obligations
owing to the Pledgee of the type described in clauses (v)
and (vi) of Section 1;
(ii) second, after payment in full of the amounts
specified in clause (i) above, to the payment of all other
Secured Obligations owing to the Overline Creditors in such
manner and order and at such time as the Pledgee shall
elect, each Overline Creditor to receive an amount equal to
the outstanding amount of the Secured Obligations then owing
to it or, if such payment is insufficient to pay in full all
such Secured Obligations, its Pro Rata Share (as hereinafter
defined) of such payment;
(iii) third, after payment in full of the amounts
specified in clause (ii) above, to the payment of all other
Secured Obligations owing to the Credit Agreement Creditors
(including in their capacity as Hedge Creditors) in such
manner and order and at such time as the Pledgee shall
elect, each Credit Agreement Creditor to receive an amount
equal to the outstanding amount of the Secured Obligations
then owing to it or, if such payment is insufficient to pay
in full all such Secured Obligations, its Pro Rata Share (as
hereinafter defined) of such payment; and
(iv) fourth, after payment in full of the amounts
specified in clauses (i), (ii) and (iii) above, and
following the termination of this Agreement (as to all
Pledgors) pursuant to Section 18(a), to the Pledgors or to
any other Person that may be lawfully entitled to receive
such surplus.
(b) For purposes of clauses (ii) and (iii) of
subsection (a) above, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount hereunder, that amount (expressed as a percentage) equal
to a fraction the numerator of which is the then outstanding
amount of the relevant Secured Obligations owing to such Secured
Creditor and the denominator of which is the then outstanding
amount of all relevant Secured Obligations.
(c) For purposes of applying amounts in accordance with
this Section, the Pledgee shall be entitled to rely upon the
Hedge Creditors or their representative under any Interest Rate
Protection Agreements for a determination of the outstanding
Secured Obligations owed to the Hedge Creditors. Unless it has
actual knowledge (including by way of written notice from a Hedge
Creditor) to the contrary, the Pledgee, in acting hereunder,
shall be entitled to assume that no Interest Rate Protection
Agreements, or Hedge Obligations (as defined in the Guaranty) in
respect thereof, are in existence.
(d) The Pledgors shall remain jointly and severally liable
to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums
referred to in clauses (i), (ii) and (iii) of subsection (a)
above.
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10. Purchase of Collateral. Upon any sale of any Collateral
by the Pledgee hereunder (whether by virtue of the power of sale
herein granted, pursuant to judicial process or otherwise), the
receipt of the Pledgee or the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase
money paid over to the Pledgee or such officer or be answerable
in any way for the misapplication or nonapplication thereof.
11. Indemnification. The Pledgors agree, jointly and
severally, to indemnify and hold harmless the Pledgee and each
other Secured Creditor from and against any and all claims,
demands, losses, judgments and liabilities of every kind or
nature, and to reimburse the Pledgee and each other Secured
Creditor for all costs and expenses (including, without
limitation, reasonable attorneys' fees), arising out of or
resulting from this Agreement or the exercise by the Pledgee or
any other Secured Creditor of any rights or remedies granted
hereunder, under the other Credit Documents or under any Interest
Rate Protection Agreements, including, without limitation, from
the exercise by the Pledgee of any of its powers or rights under
Sections 8, 12(b) or 12(c); provided that neither the Pledgee nor
any other Secured Creditor shall be entitled to indemnification
pursuant to this Section for claims, demands, losses, judgments
and liabilities to the extent caused by its gross negligence or
willful misconduct. In no event shall the Pledgee or any other
Secured Creditor be liable for any matter or thing in connection
with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to
the extent that the obligations of any of the Pledgors under this
Section are unenforceable for any reason, each Pledgor hereby
agrees to make the maximum contribution to the payment and
satisfaction of such obligations that is permissible under
applicable law.
12. Further Assurances; Pledgee as Attorney-In-Fact; Pledgee
May Perform.
(a) Each Pledgor agrees that it will join with the Pledgee
to execute and, at its own expense, file and refile under any
applicable Uniform Commercial Code such financing statements,
continuation statements and other documents and instruments in
such offices as the Pledgee may reasonably deem necessary or
appropriate, and wherever required or permitted by law, in order
to perfect and preserve the Pledgee's security interest in the
Collateral, and hereby authorizes the Pledgee to file financing
statements and amendments thereto relating to all or any part of
the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things
and to execute and deliver to the Pledgee such additional
conveyances, assignments, voting proxies, agreements and
instruments as the Pledgee may reasonably require or deem
advisable to carry out the purposes of this Agreement or to
further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
(b) Each Pledgor hereby irrevocably appoints the Pledgee
its lawful attorney-in-fact, with full authority in the place and
stead of such Pledgor and in the name of such Pledgor, the
Pledgee or otherwise, and with full power of substitution in the
premises, from
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time to time in the Pledgee's reasonable discretion (but subject to the
rights of such Pledgor under Sections 6 and 7) to take any action and to
execute any instrument that the Pledgee may reasonably deem necessary or
advisable to accomplish the purpose of this Agreement, including,
without limitation:
(i) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of
the Collateral;
(ii) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper in connection
with clause (i) above;
(iii) to file any claims or take any action or institute
any proceedings that the Pledgee may deem necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Pledgee and the other
Secured Creditors with respect to any of the Collateral;
(iv) upon the occurrence of a breach, default or event
of default by any Pledgor under any Investment Agreement to
which such Pledgor is a party (whether or not the same shall
constitute a Default or Event of Default), each Pledgor
hereby agreeing promptly to notify the Pledgee thereof, to
correct or cure the same (to the extent the respective
Pledgor shall have failed to do so promptly upon request by
the Pledgee) in such manner and to such extent as the
Pledgee shall reasonably deem necessary to protect its
security interest in the Pledged Interests thereunder,
including, without limitation, to appear in and defend any
action or proceeding purporting to affect such Interests or
the rights and powers of the Secured Creditors, to perform
and discharge any material obligation, covenant and
agreement of the respective Pledgor under such Investment
Agreement, and, in exercising any such powers, to incur and
pay, for the account of the respective Pledgor, necessary
and reasonable costs and expenses (including reasonable
attorneys' fees), but without any obligation on the part of
the Pledgee to do any of the foregoing; and
(v) to perform the affirmative obligations of the
Pledgors under this Agreement (including, without
limitation, obligations under Section 12(a));
and, in the case of each of clauses (i) through (v) above, the
Pledgee shall use its best efforts to give the affected Pledgor
notice of any action taken by it in accordance with this Section
as soon as practicable after such action is taken; provided,
however, that the failure to give any such notice shall not in
any way impair the authority of the Pledgee pursuant to this
Section or the validity of any action taken by the Pledgee
pursuant hereto, or result in any liability on the part of the
Pledgee or any other Secured Creditor to any Pledgor or any of
its Subsidiaries. The exercise by the Pledgee of any of its
rights pursuant to this Section shall not create any further
obligation on the part of the Pledgee to exercise any other
rights hereunder or to take any other or further action in
respect thereof. The power of attorney
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granted by each Pledgor under this Section, being coupled with an
interest, is irrevocable for so long as this Agreement shall be in
effect with respect to such Pledgor.
(c) If any Pledgor fails to perform any agreement contained
herein after written request to do so by the Pledgee, the Pledgee
may itself perform, or cause performance of, such agreement, and
the reasonable expenses so incurred in connection therewith shall
be payable by the Pledgors pursuant to Section 11.
13. The Pledgee as Agent. The Pledgee will hold all items
of the Collateral at any time received under this Agreement in
accordance with the terms hereof. It is expressly understood and
agreed that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement and the
other Credit Documents, are only those expressly set forth in
this Agreement and the other Credit Documents. The Pledgee shall
act hereunder at the direction, or with the consent, of the
Required Lenders and the Required Overline Lenders, as
applicable, on the terms and conditions set forth in the Credit
Agreement and the Overline Credit Agreement, as the case may be.
Except for treatment of the Collateral in its possession in a
manner substantially equivalent to that which the Pledgee, in its
individual capacity, accords its own property of a similar
nature, and the accounting for moneys actually received by it
hereunder, the Pledgee shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to the
Collateral. Neither the Pledgee nor any other Secured Creditor
shall be liable to any Pledgor (i) for any loss or damage
sustained by it, or (ii) for any loss, damage, depreciation or
other diminution in the value of any of the Collateral that may
occur as a result of or in connection with or that is in any way
related to any exercise by the Pledgee or any other Secured
Creditor of any right or remedy under this Agreement or any other
act or failure to act on the part of the Pledgee or any other
Secured Creditor, except to the extent that the same is caused by
its own gross negligence or willful misconduct.
14. Transfer by the Pledgors; Certain Actions. No Pledgor
will (i) sell or otherwise dispose of, grant any option with
respect to, or mortgage, pledge, grant any Lien with respect to
or otherwise encumber any of the Collateral or any interest
therein, except for the security interest created in favor of the
Pledgee hereunder and except as may be otherwise expressly
permitted in accordance with the terms of the Credit Agreement
and the Overline Credit Agreement, (ii) withdraw as a
shareholder, partner, joint venturer or investor in any of its
Subsidiaries, file or pursue any action that may cause a
dissolution or liquidation of any of its Subsidiaries or seek any
partition or similar relief in respect thereof, except as may be
otherwise expressly permitted in accordance with the terms of the
Credit Agreement and the Overline Credit Agreement, or
(iii) amend, modify or terminate any Investment Agreement to
which it is a party, or agree to do or cause to be done any of
the foregoing, in a manner that would have the effect of
impairing the position or interests of the Pledgee or any other
Secured Creditor.
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15. Representations, Warranties and Covenants of the
Pledgors. Each Pledgor represents and warrants that, as of the
date hereof and as of the date of its execution of any Pledge
Amendment (or, in the case of any Person that becomes a Pledgor
after the date hereof, as of the date of its execution of any
Pledgor Accession (as hereinafter defined) and as of the date of
its execution of any Pledge Amendment): (a) it is, or at the time
when pledged hereunder will be, the sole legal, record and
beneficial owner of, and has, or at the time pledged hereunder
will have, good and marketable title to, all Securities pledged
hereunder, subject to no Lien whatsoever other than the security
interest created by this Agreement; (b) it has the full power,
authority and legal right to pledge all the Securities pledged
and to be pledged pursuant to this Agreement; (c) this Agreement
has been duly authorized, executed and delivered by such Pledgor
and constitutes a legal, valid and binding obligation of such
Pledgor, enforceable in accordance with its terms; (d) no
authorization, consent or approval of, or declaration or filing
with, any Governmental Authority is required for the valid
execution, delivery and performance by such Pledgor of this
Agreement or the consummation by it of the transactions
contemplated hereby; (e) neither the execution, delivery or
performance of this Agreement by such Pledgor nor compliance by
it herewith: (i) conflicts or will conflict with or results or
will result in any material breach of, or constitutes or will
constitute with the passage of time or the giving of notice or
both, a material default under, (x) the articles of
incorporation, bylaws or other organizational documents of such
Pledgor, (y) any law, order, writ, injunction or decree of any
court or Governmental Authority, or (z) any written or oral
agreement or instrument to which such Pledgor is a party or by
which it, or any of its properties, is bound, including, without
limitation, any Investment Agreement to which it is a party, (ii)
results or will result in the creation or imposition of any Lien
upon the properties of such Pledgor pursuant to any such
agreement or instrument, except as contemplated by this
Agreement, or (iii) requires or will require any consent or
approval of any partners or other Persons under any Investment
Agreements or other agreements or instruments to which it is a
party, other than consents and approvals that have already been
obtained and delivered in writing to the Pledgee; (f) all the
shares of the Pledged Stock have been duly and validly issued,
are fully paid and nonassessable and are subject to no preemptive
rights, options to purchase or similar rights; (g) all of the
Interests, if any, have been validly acquired and are fully paid
for, and such Pledgor is not subject under any Investment
Agreement absent its approval to any call for, or otherwise to
make, any additional capital contributions; (h) as to any Pledged
Securities pledged pursuant to a Pledge Amendment or Pledgor
Accession, (x) the Pledged Stock consists of the number and type
of shares of the capital stock of the corporations as described
in Part I of Annex A to such Pledge Amendment or Pledgor
Accession and constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set
forth in Part I of such Annex A and (y) the Pledged Interests
consist of the interests described in Part II of such Annex A and
constitute that percentage of the ownership interests in the
relevant Persons as is set forth in Part II of such Annex A;
(i) such Pledgor has furnished the Pledgee with correct and
complete copies of all Investment Agreements to which such
Pledgor is a party, each such Investment Agreement is in full
force and effect and there exists no default, breach or event of
default thereunder by any party, and, to the knowledge of such
Pledgor, each such Investment Agreement sets forth the entire
agreement
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and understanding of the parties thereto in respect of
the subject matter thereof, and there are no other agreements or
understandings, written or oral, relating to the matters covered
thereby; and (j) assuming (y) in the case of certificated
Securities, continuous possession by the Pledgee of the
Securities, and (z) in the case of all other Securities, the
transfer (within the meaning of Section 8-313 of the applicable
Uniform Commercial Code) thereof to the Pledgee, the pledge,
assignment and delivery of the Securities pursuant to this
Agreement creates a valid and perfected first priority security
interest in the Securities, and the proceeds thereof, subject to
no prior Lien or to any agreement purporting to grant to any
other Person a Lien on the property or assets of such Pledgor
that would include the Securities. Each Pledgor covenants and
agrees that it will (i) notify the Pledgee promptly in writing
upon the termination or reduction of any of its Interests (and
will not consent to any of the same) and upon any breach, default
or event of default by such Pledgor or (promptly upon obtaining
knowledge thereof) by any other party under any Investment
Agreement, (ii) defend the Pledgee's right, title and security
interest in and to the Securities and the proceeds thereof
against the claims and demands of all other Persons, and
(iii) have like title to and the right to pledge any other
property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise defend the right thereto
and security interest therein of the Pledgee and the Secured
Creditors.
16. Pledgors' Obligations Absolute, etc. The obligations of
each Pledgor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any
extension, amendment, modification or restatement of or
supplement to the Credit Agreement, the Overline Credit
Agreement, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement, or any
assignment or transfer of any of the foregoing or any rights and
obligations thereunder; (b) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of
this Agreement, the Credit Agreement, the Overline Credit
Agreement, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement; (c) any
furnishing of any additional security to the Pledgee or its
assignee or any acceptance thereof or any release of any
Collateral by the Pledgee or its assignee; (d) any limitation on
or release of any party's liability or obligations under this
Agreement, the Credit Agreement, the Overline Credit Agreement,
the Guaranty, any of the other Credit Documents, any Interest
Rate Protection Agreements or any other instrument or agreement
referred to therein, or any Investment Agreement, or any
invalidity or unenforceability thereof, in whole or in part; or
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding
relating to such Pledgor or any of its Subsidiaries, or any
action taken with respect to this Agreement or any Investment
Agreement by any trustee or receiver, or by any court, in any
such proceeding, whether or not such Pledgor shall have notice or
knowledge of any of the foregoing.
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17. Registration, Sales Absent Registration.
(a) If, at any time after the occurrence and during the
continuance of an Event of Default, any Pledgor shall have
received from the Pledgee a written request or requests that such
Pledgor cause any registration, qualification or compliance under
any federal or state securities law or laws to be effected with
respect to all or any part of any Pledged Securities, such
Pledgor will, as soon as practicable and at its expense, use its
best efforts to cause such registration to be effected and be
kept effective and will use its best efforts to cause such
qualification and compliance to be effected and be kept effective
as may be so requested and as would permit or facilitate the sale
and distribution of such Pledged Securities, including, without
limitation, registration under the Securities Act of 1933, as
amended (the "Securities Act"), appropriate qualifications under
applicable blue sky or other state securities laws and
appropriate compliance with any other applicable requirements of
Governmental Authorities; provided, that the Pledgee shall
furnish to such Pledgor such information regarding the Pledgee as
such Pledgor may reasonably request in writing and as shall be
required in connection with any such registration, qualification
or compliance. Such Pledgor will cause the Pledgee to be kept
reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the
completion thereof, will furnish to the Pledgee such number of
prospectuses, offering circulars or other documents incident
thereto as the Pledgee from time to time may reasonably request,
and will indemnify the Pledgee and all others participating in
the distribution of such Pledged Securities against all claims,
losses, damages and liabilities caused by any untrue statement
(or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification
or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification
or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement
or omission based upon information furnished in writing to such
Pledgor by the Pledgee expressly for use therein.
(b) If, at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged
Securities pursuant to Section 8, such Pledged Securities or the
part thereof to be sold shall not, for any reason whatsoever, be
effectively registered under the Securities Act, the Pledgee may,
in its sole and absolute discretion, sell such Pledged Securities
or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such
registration. Without limiting the foregoing, in any such event
the Pledgee, in its sole and absolute discretion, (i) may proceed
to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Securities
or part thereof shall have been filed under the Securities Act,
(ii) may approach and negotiate with a single possible purchaser
to effect such sale and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a
view to the distribution or sale of such Pledged Securities or
part thereof. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price that the Pledgee, in its
sole and
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absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were
deferred until after registration as aforesaid.
18. Termination, Release.
(a) After the occurrence of the Termination Date (as
hereinafter defined) with respect to any Pledgor, this Agreement
shall terminate as to such Pledgor and such Pledgor shall be
automatically released hereunder, and the Pledgee, at the request
and expense of such Pledgor, will execute and deliver to such
Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement (including,
without limitation, UCC-3 termination statements to the extent
necessary), and will duly assign, transfer and deliver to such
Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of
the Pledgee and has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any
moneys at the time held by the Pledgee hereunder. For purposes
of this Agreement, "Termination Date" shall mean, with respect to
any Pledgor, the earlier to occur of (i) the date upon which all
Overline Obligations, all Credit Obligations and all obligations
of the Pledgors hereunder and under the Guaranty have been
indefeasibly paid in full, the Overline Commitments and all
Letters of Credit under the Overline Credit Agreement have been
terminated, the Commitments and all Letters of Credit (as defined
in the Credit Agreement) under the Credit Agreement have been
terminated and all Interest Rate Protection Agreements have been
terminated or (ii) the date upon which such Pledgor has been
released from the Guaranty, and its obligations thereunder
discharged, pursuant to Section 16 thereof.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement and the
Overline Credit Agreement or is otherwise released at the
direction of the Required Lenders or the Required Overline
Lenders, as applicable (or all of the Lenders or Overline
Lenders, if required by the Overline Credit Agreement or the
Credit Agreement, as the case may be), the Pledgee, at the
request and expense of the respective Pledgor, will duly assign,
transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in
the possession of the Pledgee and has not theretofore been
released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be
released as provided in subsections (a) or (b) above, it will
deliver to the Pledgee a certificate signed by its chief
financial officer or another principal executive officer stating
that the release of the respective Collateral is permitted
pursuant to subsection (a) or (b) above. If requested by the
Pledgee (although the Pledgee shall have no obligation to make
any such request), such Pledgor will furnish appropriate a legal
opinions from counsel reasonably acceptable to the Pledgee to the
effect set forth in the immediately preceding sentence.
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19. Amendments, etc. No amendment, modification, waiver,
discharge or termination of this Agreement or any provision
hereof, nor any consent to any departure by any Pledgor
therefrom, shall in any event be effective unless in writing and
signed by the Pledgee, acting with the concurrence of such of the
Lenders or Overline Lenders, as applicable, as may be required
under the Credit Agreement or the Overline Credit Agreement, as
the case may be, to concur therein, and each Pledgor directly
affected thereby (or by the Borrower on its behalf pursuant to
the power of attorney granted in Section 22(b)); provided,
however, that (x) the Pledgee may, in accordance with the
provisions of the Credit Agreement, from time to time require
Subsidiaries of the Borrower not already parties hereto, that
create or acquire Subsidiaries, to become Pledgors hereunder by
executing an instrument of accession hereto in the form of
Exhibit C (each, a "Pledgor Accession"), (y) certain Pledgors may
from time to time be released automatically herefrom in
accordance with the provisions of Section 17 and (z) the Required
Lenders or the Required Overline Lenders, as applicable (or such
of the Lenders or Overline Lenders, as applicable, as may in any
particular case be required thereunder) may from time to time
(but without any obligation to do so) release, or direct the
Pledgee to release, any Pledgor hereunder, in each case under
clauses (x), (y) and (z) above without the necessity of obtaining
the consent of any other Pledgor (it being understood that the
release or addition hereunder of any Pledgor or of any of its
Collateral shall not constitute a change, waiver, discharge or
termination affecting any Pledgor other than the Pledgor so
released or added); and provided further that any amendment,
modification, waiver, discharge, termination or consent at any
time affecting the rights and benefits of a single Group (as
hereinafter defined) of Secured Creditors, and not all Secured
Creditors in a like or similar manner, shall require only the
consent of the Required Parties (as hereinafter defined) of such
Group at such time. For purposes of the preceding sentence, the
term "Group" shall mean and refer to (i) the Credit Agreement
Creditors as holders of the Credit Obligations, (ii) the Overline
Creditors as holders of the Overline Obligations, or (iii) the
Hedge Creditors as holders of the Hedge Obligations, and the term
"Required Parties" shall mean, at any time, (A) with respect to
the Credit Obligations, such of the Lenders as may be required
under the Credit Agreement then to concur in the action being
taken, (B) with respect to the Overline Obligations, such of the
Overline Lenders as may be required under the Overline Credit
Agreement then to concur in the action being taken, and (C) with
respect to the Hedge Obligations, the holders of at least a
majority of the aggregate obligations of the Pledgor outstanding
at such time under all Interest Rate Protection Agreements.
20. No Waivers, etc. The enumeration of the rights and
remedies of the Pledgee and the other Secured Creditors set forth
in this Agreement, the Credit Agreement, the Overline Credit
Agreement, the other Credit Documents or any Interest Rate
Protection Agreements is not intended to be exhaustive, and the
exercise by the Pledgee or any other Secured Creditor of any
right or remedy shall not preclude the exercise of any other
rights or remedies, all of which shall be cumulative, and shall
be in addition to any other right or remedy given hereunder,
under the Credit Agreement, under the Overline Credit Agreement,
under the other Credit Documents, under any Interest Rate
Protection Agreements or under any other agreement between any
Pledgor and the Secured Creditors, or any of them, or that
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may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the
Pledgee or any other Secured Creditor in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default. No course of
dealing between any of the Pledgors and the Pledgee or any other
Secured Creditor or their agents or employees shall be effective
to change, modify or discharge any provision of this Agreement or
to constitute a waiver of any Event of Default. No notice to or
demand upon any Pledgor in any case shall entitle such Pledgor or
any other Pledgor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
right of the Pledgee or any other Secured Creditor to exercise
any right or remedy or take any other or further action in any
circumstances without notice or demand.
21. Assignment. No Pledgor may assign this Agreement or any
of its rights or obligations hereunder. Any Secured Creditor may
assign or otherwise transfer its interest in this Agreement, in
whole or in part, in connection with an assignment or other
transfer of any or all Secured Obligations held by such Secured
Creditor in accordance with the Credit Agreement or the Overline
Credit Agreement (including by the sale of participations), any
applicable Interest Rate Protection Agreement or other relevant
documents, it being understood and agreed that upon any such
assignment or other transfer by any Secured Creditor, the Person
that becomes the holder of the Secured Obligations that are the
subject of such assignment or other transfer shall (except as may
be otherwise provided by such Secured Creditor as a term or
condition of such assignment or other transfer) have and may
exercise all of the rights granted to such Secured Creditor under
this Agreement to the extent of that part of or interest in the
Secured Obligations so assigned or transferred to such Person.
The Pledgor hereby irrevocably waives notice of and consents in
advance to the assignment or other transfer as provided above
from time to time by any Secured Creditor of the Secured
Obligations held by it, or any part thereof or interest therein,
and of the corresponding rights and interest of such Secured
Creditor hereunder in connection therewith.
22. Notice; Borrower as Attorney-In-Fact.
(a) All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex,
facsimile transmission or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered to the
party to be notified at the following addresses:
If to any Pledgor: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Chief Financial Officer
Telephone: (919) 383-0355
Telecopy: (919) 383-3660
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With copies to: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Joseph G. Piemont, Esq.
Telephone: (919) 383-0355
Telecopy: (919) 383-7611
If to any Credit
Agreement Creditor
(including the
Pledgee): At its address for notices set forth
in the Credit Agreement
If to any Overline
Creditor: At its address for notices set forth
in the Credit Agreement (or, if not a
party thereto, the Overline Credit
Agreement)
If to any Hedge
Creditor: At such address for notices as such
Hedge Creditor shall have specified
to the Borrower
or to such other address as any of the Persons listed above may
designate for itself by like notice to the other Persons listed
above. 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 Pledgee shall not be effective until
received by the Pledgee.
(b) Each Pledgor hereby irrevocably designates and appoints
the Borrower as its representative for the purpose of receiving
any notice or other communication hereunder, and agrees that any
notice or other communication given to the Borrower at the
address and in the manner specified herein shall be deemed notice
to all Pledgors. Further, each Pledgor does hereby irrevocably
make, constitute and appoint the Borrower as the true and lawful
attorney-in-fact of such Pledgor, with full authority in the
place and stead of such Pledgor and in the name of such Pledgor,
the Borrower or otherwise, and with full power of substitution in
the premises, from time to time in the Borrower's discretion to
agree on behalf of, and sign the name of such Pledgor to, any
amendment, modification or supplement to, restatement of, or
waiver or consent in connection with, this Agreement or any other
Credit Document, notice or other similar document, and to execute
any other documents or instruments, take any other action and do
all other things, in each case on behalf of such
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Pledgor, that the Borrower may deem necessary or advisable to carry
out and accomplish the purposes of this Agreement and the other Credit
Documents. The Borrower will not be liable for any act or
omission nor for any error of judgment or mistake of fact unless
such act, omission, error or mistake shall occur as a result of
the gross negligence or willful misconduct of the Borrower. This
power, being coupled with an interest, is irrevocable by any
Pledgor for so long as this Agreement shall be in effect with
respect to such Pledgor. By its signature hereto, the Borrower
consents to its appointment as representative to receive notices
for and agrees promptly to distribute such notices to, and
consents to its appointment as the attorney-in-fact for, each
Pledgor as provided for herein.
23. Binding Effect; Survival. This Agreement shall be
binding upon and enforceable against each Pledgor and its
successors and permitted assigns. This Agreement shall inure to
the benefit of and be enforceable by each Secured Creditor and
its successors and assigns. All representations, warranties,
covenants and agreements herein shall survive the execution and
delivery of this Agreement, any Pledge Amendment and any Pledgor
Accession and shall continue in effect until the termination in
full of this Agreement.
24. Governing Law. This Agreement 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).
25. Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
26. Interpretation. The captions to the various sections
and subsections of this Agreement have been inserted for
convenience only and shall not limit or affect any of the terms
hereof. Unless the context otherwise requires, words in the
singular include the plural and words in the plural include the
singular, and the use of any gender shall be applicable to all
genders.
27. 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, as to any Pledgor, upon the execution of
a counterpart hereof or amendment or supplement hereto by such
Pledgor.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, each Pledgor has caused this Agreement
to be executed under seal by its duly authorized officer as of
the date first above written.
THE SIGNATURES OF THE PLEDGORS EXECUTING THIS AGREEMENT
AS OF THE DATE FIRST ABOVE WRITTEN ARE ON THE FOLLOWING
SEQUENTIALLY NUMBERED SIGNATURE PAGES.
The Borrower hereby joins in this Agreement for purposes of
evidencing its consent to, and agreement to perform, the
provisions of Section 22(b).
COASTAL PHYSICIAN GROUP, INC.
By: _______________________________
Title: ____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Pledgee
By: _________________________________
Title: ______________________________
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AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT, dated as of
the 29th day of May, 1996 (this "Guaranty"), is made by the
undersigned corporations and the other Persons from time to time
parties hereto (collectively, the "Guarantors," and individually,
a "Guarantor"), each a Subsidiary of Coastal Physician Group,
Inc., a Delaware corporation (the "Borrower"), in favor of
(i) the Lenders and the Agent under the Credit Agreement referred
to hereinbelow (each Lender, the Issuing Bank and the Agent in
their respective capacities as such under the Credit Agreement,
jointly and severally, the "Credit Agreement Parties," and each,
a "Credit Agreement Party"), (ii) the Overline Lenders and the
Agent under the Overline Credit Agreement (each Overline Lender,
the Issuing Lender (such term being used herein with the meaning
given to it under the Overline Credit Agreement) and the Agent in
their respective capacities as such under the Overline Credit
Agreement, jointly and severally, the "Overline Parties," and
each, an "Overline Party") and (iii) if one or more Lenders enter
into one or more Interest Rate Protection Agreements with the
Borrower, any such Lenders (each Lender in its capacity as a
party to any Interest Rate Protection Agreement, notwithstanding
that such Lender may have ceased at any time to be a Lender under
the Credit Agreement, a "Hedge Party," and collectively, the
"Hedge Parties"; and the Hedge Parties, together with the Credit
Agreement Parties and the Overline Parties, the "Guaranteed
Parties"). Capitalized terms not defined in this introductory
paragraph, in the recitals below or elsewhere herein shall,
unless otherwise provided herein, have the meanings given to them
in the Credit Agreement (terms defined in the Overline Credit
Agreement also being deemed defined terms under the Credit
Agreement).
RECITALS
A. The Borrower, certain banks and other financial
institutions (the "Lenders") and First Union National Bank of
North Carolina, as Agent (the "Agent"), are parties to a Credit
Agreement, dated as of July 29, 1994, as amended by a First
Amendment thereto dated as of April 12, 1995 and by a Second
Amendment thereto dated as of August 10, 1995 (as so amended, and
as in effect on the date hereof, the "Existing Credit
Agreement"), providing for the availability of certain credit
facilities to the Borrower upon the terms and conditions set
forth therein.
B. Each of the undersigned Guarantors is a Subsidiary of
the Borrower and is a party to a Guaranty Agreement, dated as of
July 29, 1994 (as in effect on the date hereof, the "Existing
Guaranty"), whereby each Guarantor has unconditionally guaranteed
<PAGE>
all Guaranteed Obligations (as defined in the Existing Guaranty)
of the Borrower under the Credit Documents and the Interest Rate
Protection Agreements.
C. The Borrower, the Agent and the Lenders have entered
into a Third Amendment and Limited Waiver to Credit Agreement,
dated as of May 29, 1996 (the "Third Amendment"; and the Existing
Credit Agreement, as amended by the Third Amendment and as
further amended, modified, supplemented or restated from time to
time, the "Credit Agreement"), pursuant to which the Agent and
the Lenders have agreed to make certain amendments to the
Existing Credit Agreement and have made certain other agreements
of material benefit to the Borrower and the Guarantors, including
agreements to waive certain existing Events of Default on the
terms and subject to the conditions set forth in the Third
Amendment.
D. Additionally, the Borrower, the Agent and the Overline
Lenders have entered into a Secured Overline Credit Agreement,
dated as of May 29, 1996 (as amended, modified, supplemented or
restated from time to time, the "Overline Credit Agreement"),
providing for the availability of certain credit facilities in
the aggregate principal amount of $40,000,000 to the Borrower
upon the terms and conditions set forth therein.
E. As a condition, among other things, to the
effectiveness of the Third Amendment, to the making of Loans
under the Credit Agreement, to the making of Overline Loans and
the issuance of, and participation in, Letters of Credit (such
term being used herein with the meaning given to it under the
Overline Credit Agreement, except as otherwise specified) under
the Overline Credit Agreement, and to the obligation of any Hedge
Party to enter into or continue to perform any Interest Rate
Protection Agreement, the Guarantors jointly and severally shall
have agreed, by executing and delivering this Guaranty, which
amends and restates the Existing Guaranty, (i) to confirm and
ratify the guarantee under the Existing Guaranty to the Credit
Agreement Parties and any Lenders that are or may become Hedge
Parties of payment in full of the Guaranteed Obligations (as
hereinafter defined) and (ii) to guarantee to the Overline
Parties the payment in full of the Guaranteed Obligations. The
Guaranteed Parties are relying on this Guaranty in their decision
to consummate the transactions contemplated by the Third
Amendment and the Overline Credit Agreement, to extend credit to
the Borrower under the Credit Agreement and the Overline Credit
Agreement that is not otherwise available, and to enter into and
continue to perform any Interest Rate Protection Agreements, and
would not be willing to enter into the Third Amendment and the
Overline Credit Agreement or to extend credit thereunder, or to
enter into or continue to perform any such Interest Rate
Protection Agreement, without this Guaranty.
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<PAGE>
F. Without the execution and delivery of the Third
Amendment and the Overline Credit Agreement, there would be a
material adverse effect upon the businesses of the Borrower and
the Guarantors.
G. Each Guarantor has obtained and will continue to obtain
substantial and material benefits from the extension of credit to
the Borrower under the Credit Agreement and the Overline Credit
Agreement, and from the entering into of any Interest Rate
Protection Agreements, which it could not obtain otherwise and
which benefits are hereby acknowledged, and, accordingly, has
agreed to execute and deliver this Guaranty, which is a condition
to the effectiveness of the Third Amendment and the Overline
Credit Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, to induce the Lenders to enter
into the Third Amendment and to make Loans to the Borrower under
the Credit Agreement and to induce the Overline Lenders to enter
into the Overline Credit Agreement and to make Overline Loans to
the Borrower thereunder from time to time (which Loans and
Overline Loans the Lenders and Overline Lenders would not
otherwise be required to make), to induce the Issuing Lender to
issue, and the Overline Lenders to participate in, the Letters of
Credit, and to induce the Hedge Parties to enter into and perform
the Interest Rate Protection Agreements, each Guarantor hereby
agrees as follows:
1. Guaranty.
(a) Each Guarantor hereby irrevocably, absolutely and
unconditionally, and jointly and severally:
(i) confirms and ratifies its guarantee under the
Existing Guaranty to the Credit Agreement Parties of the
full and prompt payment, at any time and from time to time
as and when due (whether at the stated maturity, by
acceleration or otherwise), of all of the Credit Obligations
of the Borrower, including, without limitation, (y) all
principal of and interest on the Loans, all Reimbursement
Obligations in respect of Letters of Credit (as defined in
the Credit Agreement) issued pursuant to the Credit
Agreement and all fees, expenses, indemnities and other
amounts payable by the Borrower under the Credit Agreement
or any other Credit Document (including, to the greatest
extent permitted by law, interest accruing after the filing
of a petition or commencement of a case by or with respect
to the Borrower seeking relief under any Insolvency Laws (as
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<PAGE>
hereinafter defined), regardless of whether a claim for any
such interest is allowed against the Borrower in any such
proceeding), and (z) all Credit Obligations that, but for
the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due;
(ii) guarantees to the Overline Parties the full and
prompt payment, at any time and from time to time as and
when due (whether at the stated maturity, by acceleration or
otherwise), of all of the Overline Obligations of the
Borrower, including, without limitation, (y) all principal
of and interest on the Overline Loans, all Reimbursement
Obligations in respect of Letters of Credit issued pursuant
to the Overline Credit Agreement and all fees, expenses,
indemnities and other amounts payable by the Borrower under
the Overline Credit Agreement or any other Credit Document
(including, to the greatest extent permitted by law,
interest accruing after the filing of a petition or
commencement of a case by or with respect to the Borrower
seeking relief under any Insolvency Laws (as hereinafter
defined), regardless of whether a claim for any such
interest is allowed against the Borrower in any such
proceeding), and (z) all Overline Obligations that, but for
the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due;
(iii) confirms and ratifies its guarantee under the
Existing Guaranty, to any Lenders that are or may become
Hedge Parties, of the full and prompt payment, at any time
and from time to time as and when due (whether at the stated
maturity, by acceleration or otherwise), of all liabilities
and obligations owing by the Borrower under any Interest
Rate Protection Agreements at any time in effect, including,
without limitation, obligations that, but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due (all liabilities and obligations
described in this clause (iii), collectively, the "Hedge
Obligations"; and the Hedge Obligations, together with the
Credit Obligations and the Overline Obligations described in
clauses (i) and (ii) hereinabove, the "Guaranteed
Obligations"); and
(iv) agrees to pay upon demand all costs and expenses
(including, without limitation, reasonable attorneys' fees
and expenses, including the allocated costs of in-house
counsel) incurred or paid by (y) any Guaranteed Party in
connection with any suit, action or proceeding to enforce or
protect any rights of such Guaranteed Party hereunder,
including costs and expenses for which such Guaranteed Party
is entitled to reimbursement under or pursuant to the Credit
Agreement, the Overline Credit Agreement, any other Credit
Document or any Interest Rate Protection Agreement, and
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(z) the Agent in connection with any amendment,
modification, waiver or consent hereof or pursuant hereto
(all liabilities and obligations described in this
clause (iv), collectively, the "Other Obligations"; and the
Other Obligations, together with the Guaranteed Obligations,
the "Total Obligations");
provided, however, that (x) the guaranty set forth in this
Section shall be effective as to any Hedge Obligations only if
the relevant Hedge Party and the Borrower, on behalf of the
Guarantors in its capacity as appointed under Section 17(b),
shall have executed and delivered to the Agent an acknowledgement
to this Guaranty in the form of Exhibit A, the Borrower hereby
agreeing to do so and to cause the relevant Hedge Party to do so
promptly upon the execution of each Interest Rate Protection
Agreement, and (y) notwithstanding any other provisions contained
herein, in any other Credit Document or in any Interest Rate
Protection Agreement, no provision of this Guaranty shall require
or permit the collection from any Guarantor of interest in excess
of the maximum rate or amount that such Guarantor may be required
or permitted to pay pursuant to any applicable law.
(b) Notwithstanding any other provisions contained herein,
in any other Credit Document or in any Interest Rate Protection
Agreement, if any Insolvency Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable
to the obligations of any Guarantor under this Guaranty, the
liability of such Guarantor under this Guaranty as of any date
shall be limited to a maximum aggregate amount (the "Maximum
Guaranteed Amount") equal to the greatest amount that would not
render such Guarantor's obligations under this Guaranty subject
to avoidance, discharge or reduction as of such date as a
fraudulent transfer or conveyance under applicable federal and
state laws pertaining to bankruptcy, reorganization, arrangement,
moratorium, readjustment of debts, dissolution, liquidation or
other debtor relief, specifically including, without limitation,
the Bankruptcy Code and any fraudulent transfer and fraudulent
conveyance laws (collectively, "Insolvency Laws"), in each
instance after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under
applicable Insolvency Laws (specifically excluding, however, any
liabilities of such Guarantor (i) in respect of intercompany
indebtedness to the Borrower or any of its Affiliates to the
extent that such indebtedness would be discharged in an amount
equal to the amount paid by such Guarantor hereunder and
(ii) under any Guaranty of Subordinated Debt which guaranty
contains a limitation as to maximum amount similar to that set
forth in this subsection (b), pursuant to which the liability of
such Guarantor hereunder is included in the liabilities taken
into account in determining such maximum amount, and after giving
effect as assets to the value (as determined under applicable
Insolvency Laws) of any rights to subrogation, contribution,
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reimbursement, indemnity or similar rights of such Guarantor
pursuant to (y) applicable law or (z) any agreement (including
this Guaranty) providing for an equitable allocation among such
Guarantor and other Affiliates of the Borrower of obligations
arising under guaranties by such parties). The provisions of
this subsection (b) are intended solely to preserve the rights of
the Guaranteed Parties hereunder to the maximum extent that would
cause or permit the obligations of any Guarantor hereunder not to
be subject to reduction, avoidance, discharge or other limitation
under Insolvency Laws, and no Guarantor or any other Person shall
have any right or claim under this subsection (b) as against any
Guaranteed Party that would not otherwise be available to such
Guarantor or other Person under Insolvency Laws.
(c) The Guarantors desire to allocate among themselves, in
a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution
is made hereunder on any date by a Guarantor (a "Funding
Guarantor") that exceeds its Fair Share (as hereinafter defined)
as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as hereinafter
defined) as of such date, with the result that all such
contributions will cause each Guarantor's Aggregate Payments (as
hereinafter defined) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Guaranteed Amount (as hereinafter defined) with
respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Guaranteed Amounts with respect to all Guarantors,
multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Guarantors hereunder in respect
of the obligations guaranteed. "Fair Share Shortfall" means,
with respect to a Guarantor as of any date of determination, the
excess, if any, of the Fair Share of such Guarantor over the
Aggregate Payments of such Guarantor. "Adjusted Maximum
Guaranteed Amount" means, with respect to a Guarantor as of any
date of determination, the Maximum Guaranteed Amount of such
Guarantor, determined in accordance with the provisions of
subsection (b) above; provided that, solely for purposes of
calculating the "Adjusted Maximum Guaranteed Amount" with respect
to any Guarantor for purposes of this subsection (c), any assets
or liabilities of such Guarantor arising by virtue of any rights
to subrogation, reimbursement or indemnity or any rights to or
obligations of contribution hereunder shall not be considered as
assets or liabilities of such Guarantor. "Aggregate Payments"
means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the aggregate amount of all
payments and distributions made on or before such date by such
Guarantor in respect of this Guaranty (including, without
limitation, in respect of this subsection (c)), minus (ii) the
aggregate amount of all payments received on or before such date
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by such Guarantor from the other Guarantors as contributions
under this subsection (c). The amounts payable as contributions
hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding
Guarantor. Each Funding Guarantor's right of contribution under
this subsection (c) shall be subject to the provisions of
Section 5. The allocation among Guarantors of their obligations
as set forth in this subsection (c) shall not be construed in any
way to limit the liability of any Guarantor hereunder to the
Guaranteed Parties.
(d) The guaranty of each Guarantor set forth in this
Section is a guaranty of payment as a primary obligor, and not a
guaranty of collection. Each Guarantor hereby acknowledges and
agrees that the Guaranteed Obligations, at any time and from time
to time, may exceed the Maximum Guaranteed Amount of such
Guarantor and of any other Guarantor and may exceed the aggregate
of the Maximum Guaranteed Amounts of all Guarantors, in each case
without discharging, releasing, limiting, deferring, reducing or
otherwise affecting the obligations of any Guarantor hereunder to
any extent, except as specifically provided otherwise in this
Section, or impairing or otherwise affecting the rights, powers
and remedies of any Guaranteed Party hereunder, under any other
Credit Document or under any Interest Rate Protection Agreement.
2. Absolute and Primary Liability. Each Guarantor agrees
that its obligations hereunder are irrevocable, absolute and
unconditional, are exclusive and independent of any security for
or other guaranty of any Guaranteed Obligations or other
obligations of the Borrower, whether given by such Guarantor, any
other Guarantor or other surety or guarantor of any Guaranteed
Obligations (any such other Guarantor or other surety or
Guarantor, each, an "Other Guarantor"), and shall not be
discharged, released, limited, deferred, reduced or otherwise
affected to any extent by reason of any of the following, whether
or not such Guarantor has notice or knowledge thereof:
(i) any manner of application of payments made by the
Borrower, such Guarantor, any Other Guarantor or any other
Person, or received or collected therefrom by any of the
Guaranteed Parties by virtue of any action, proceeding, set-off,
appropriation or application at any time or from time to time, in
each case in payment of or reduction of any Guaranteed Obligations,
and any direction by the Borrower or such Guarantor, Other Guarantor
or other Person as to application of payment in connection therewith;
(ii) the invalidity or unenforceability of any
Guaranteed Obligations, any Collateral or other security
therefor, or any Credit Document, Interest Rate Protection
Agreement or other agreement or instrument delivered
pursuant thereto;
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(iii) any bankruptcy, reorganization, arrangement,
liquidation or insolvency of, or dissolution, termination,
reorganization or other change in the corporate structure or
existence of, the Borrower or any Other Guarantor, whether
or not resulting in a corresponding discharge, reduction or
restructuring of any Guaranteed Obligations or the guaranty
obligations of such Other Guarantor;
(iv) any payment made on any Guaranteed Obligations
that is repaid to the Borrower or any Other Guarantor
pursuant to court order in a proceeding pursuant to any
Insolvency Laws;
(v) any liability of such Guarantor by endorsement or
in any other way other than under this Guaranty, at any time
created or arising, for any indebtedness owing by the
Borrower to any Guaranteed Party;
(vi) the application of any statute, regulation, order,
rule, decree or other determination of any court or other
Governmental Authority, the effect of which is to extend the
term or time for payment of any Guaranteed Obligations; or
(vii) the occurrence of any other event or the existence
of any other circumstances (other than all of the following:
(w) the indefeasible payment in full of the Total
Obligations, (x) the termination of the Overline Commitments
and all Letters of Credit under the Overline Credit
Agreement, (y) the termination of the Commitments and all
Letters of Credit (as defined in the Credit Agreement) under
the Credit Agreement and (z) the termination of all Interest
Rate Protection Agreements (the events in clauses (w), (x),
(y) and (z) above, collectively, the "Termination
Requirements")) that might to any extent constitute a legal
or equitable discharge of, or a defense, set-off or
counterclaim available to, a surety or guarantor, including
the allegation or assertion by the Borrower of any defenses,
set-offs or counterclaims against any Guaranteed Party.
3. Releases, Extensions, Modifications, etc. Each Guarantor
agrees that the Guaranteed Parties, or any of them, may at any
time and from time to time, upon or without any terms or
conditions and in whole or in part:
(i) change the manner, place or terms of payment of,
change or extend the time for payment of, or renew,
accelerate or otherwise alter, any Guaranteed Obligations,
any guaranty or other liability incurred directly or
indirectly in respect of any Guaranteed Obligations, or any
Collateral or other security therefor;
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(ii) sell, exchange, release, substitute, surrender,
compromise, realize upon or otherwise deal with in any
manner and in any order, or fail to protect, perfect,
secure, insure, continue or maintain any Liens in, any
Collateral or other security for any Guaranteed Obligations
or for any guaranty or other liability incurred directly or
indirectly in respect thereof;
(iii) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to or
substitutions for, any Guaranteed Obligations or any
guaranty or other liability incurred directly or indirectly
in respect thereof, or subordinate the payment of the same
to the payment of any other obligations;
(iv) make or permit any amendment, modification or
supplement to or restatement of, or consent to any
rescission or waiver of or departure from, any provisions
(including provisions relating to Events of Default) of the
Credit Agreement, the Overline Credit Agreement, any other
Credit Document, any Interest Rate Protection Agreement or
any agreement or instrument delivered pursuant to any of the
foregoing;
(v) accept or require any guaranty or undertaking of
any other Person as to any Guaranteed Obligations or any
other indebtedness of the Borrower, including any pledge of
security to secure any such guaranty;
(vi) apply, to indebtedness of the Borrower to the
Guaranteed Parties other than the Guaranteed Obligations,
any amounts (by whomsoever paid and howsoever realized),
regardless of what Guaranteed Obligations may remain unpaid
after any such application; and
(vii) exercise or refrain from exercising (whether
voluntarily or involuntarily as a result of court order,
operation of law or otherwise) any rights and remedies
available under the Credit Documents or any Interest Rate
Protection Agreements, including, without limitation,
foreclosing on any Collateral or any other security held by
or for the benefit of any Guaranteed Party in any order and
by any manner of sale permitted under the Credit Documents,
any Interest Rate Protection Agreements and applicable law,
whether or not every aspect of such sale is commercially
reasonable;
in each case, without notice to or further assent by any of the
Guarantors, whose obligations hereunder shall not be discharged,
released, limited, deferred, reduced or otherwise affected in any
manner or to any extent by reason of any of the foregoing,
notwithstanding that any such action or failure to act may impair
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or extinguish any right of indemnification, contribution,
reimbursement or subrogation or other right or remedy of any
Guarantor against the Borrower or any Other Guarantor or with
respect to any Collateral or other security for the Guaranteed
Obligations or for the obligations of any such Other Guarantor.
4. Waiver of Certain Rights. (a) Each Guarantor hereby
knowingly, voluntarily and expressly waives:
(i) all presentments, demands for payment, demands for
performance, protests and notices, including, without
limitation, notices of nonpayment or other nonperformance
(including notices of default under any Credit Document or
any Interest Rate Protection Agreement with respect to any
Guaranteed Obligations), protest, dishonor, acceptance
hereof, extension of additional credit to the Borrower, the
consummation of any Permitted Acquisitions or other
Acquisitions that may be permitted from time to time
pursuant to the Credit Agreement and of any of the matters
referred to in Sections 2 and 3 and of any rights to consent
thereto;
(ii) any right to require the Guaranteed Parties, or
any of them, (y) to proceed against, or to exhaust or have
resort to any Collateral or other security from or any
deposit balance or other credit in favor of, the Borrower,
any Other Guarantor or any other Person, or (z) to pursue
any other remedy or enforce any other right; and, without
limiting the generality of the foregoing, each Guarantor
hereby specifically waives the benefits of Sections 26-7
through 26-9, inclusive, of the General Statutes of North
Carolina, as amended from time to time, and any similar
statute or law of any other jurisdiction, as the same may be
amended from time to time;
(iii) any defenses based on or arising by reason of any
defense (other than satisfaction of the Termination
Requirements) of the Borrower, any Other Guarantor or any
other Person, including, without limitation, any defense
based on or arising from a lack of authority or other
disability of the Borrower, any Other Guarantor or any other
Person, the invalidity or unenforceability of any Guaranteed
Obligations, any Collateral or other security therefor, or
any Credit Document, Interest Rate Protection Agreement or
other agreement or instrument delivered pursuant thereto, or
the cessation of the liability of the Borrower for any
reason other than the satisfaction of the Termination
Requirements;
(iv) any defenses based on (y) any Guaranteed Party's
acts or omissions in the administration of the Guaranteed
Obligations, the guaranty obligations of any Guarantor or
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Other Guarantor or any Collateral or other security therefor
or (z) promptness, diligence or any requirement that any
Guaranteed Party protect, perfect, secure or insure any
Liens in any Collateral or other security now or hereafter
directly or indirectly securing the Guaranteed Obligations
or continue or maintain the same;
(v) any right to assert against any Guaranteed Party,
as a defense, counterclaim, crossclaim or set-off, any
defense, counterclaim, claim, right of recoupment or set-off
that it may at any time have against any Guaranteed Party or
any other Person, other than compulsory counterclaims; and
(vi) any defenses based on or afforded by any
applicable laws that limit the liability of or exonerate
guarantors and sureties or that may in any other way
conflict with the terms of this Guaranty.
(b) As used in this subsection (b), any reference to "the
principal" includes the Borrower, and any reference to "the
creditor" includes each Guaranteed Party. In accordance with
Section 2856 of the California Civil Code:
(i) each Guarantor agrees (y) to waive any and all
rights of subrogation and reimbursement against the Borrower
or against any collateral or security granted by the
Borrower for any of the Guaranteed Obligations and (ii) to
withhold the exercise of any and all rights of contribution
against any other guarantor of any of the Guaranteed
Obligations and against any collateral or security granted
by any such other guarantor for any of the Guaranteed
Obligations until all of the Termination Requirements have
been satisfied;
(ii) each Guarantor waives any and all other rights and
defenses available to such Guarantor by reason of Sections
2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including without limitation any and all rights
or defenses such Guarantor may have by reason of protection
afforded to the principal with respect to any of the
Guaranteed Obligations, or to any other guarantor (including
any other Guarantor) of any of the Guaranteed Obligations
with respect to any of such guarantor's obligations
hereunder or under any other guaranty, in either case
pursuant to the antideficiency or other laws of the State of
California limiting or discharging the principal's
indebtedness or such guarantor's obligations, including
without limitation Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure; and
(c) each Guarantor waives all rights and defenses
arising out of an election of remedies by the creditor, even
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though that election of remedies, such as a nonjudicial
foreclosure with respect to security for any Guaranteed
Obligations, has destroyed such Guarantor's rights of
subrogation and reimbursement against the principal by the
operation of Section 580d of the Code of Civil Procedure or
otherwise; and even though that election of remedies by the
creditor, such as nonjudicial foreclosure with respect to
security for an obligation of any other guarantor (including
any other Guarantor) of any of the Guaranteed Obligations,
has destroyed such Guarantor's rights of contribution
against such other guarantor.
No other provision of this Guaranty shall be construed as
limiting the generality of any of the covenants and waivers set
forth in this subsection (b). In accordance with Section 18,
this Guaranty shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of
North Carolina, without regard to conflicts of laws principles.
This subsection (b) is included solely out of an abundance of
caution, and shall not be construed to mean that any of the
above-referenced provisions of California law are in any way
applicable to this Guaranty or to any of the Guaranteed
Obligations.
5. Guarantors' Rights of Subrogation, Contribution, Etc.
Each Guarantor hereby waives any claim, right or remedy, direct
or indirect, that such Guarantor now has or may hereafter have
against the Borrower or any of its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or
otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that such Guarantor
now has or may hereafter have against the Borrower, (b) any right
to enforce, or to participate in, any claim, right or remedy that
any Guaranteed Party now has or may hereafter have against the
Borrower, and (c) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any
Guaranteed Party. In addition, until the satisfaction of the
Termination Requirements, each Guarantor shall withhold exercise
of any right of contribution such Guarantor may have against any
other Guarantor as contemplated by Section 1(c). Each Guarantor
further agrees that, to the extent the waiver or agreement to
withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void
or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Guarantor may have against
the Borrower or against any collateral or security, and any
rights of contribution such Guarantor may have against any other
Guarantor, shall be junior and subordinate to any rights any
Guaranteed Party may have against the Borrower, to all right,
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title and interest any Guaranteed Party may have in any such
collateral or security, and to any right any Guaranteed Party may
have against each such other Guarantor. If any amount shall be
paid to any Guarantor on account of any such subrogation,
reimbursement, indemnification or contribution rights at any time
prior to satisfaction of the Termination Requirements, such
amount shall be held in trust for and on behalf of the Guaranteed
Parties and shall forthwith be paid over to the Agent for the
benefit of the Guaranteed Parties to be credited and applied
against the Total Obligations, whether matured or unmatured, in
accordance with the terms hereof.
6. Representations and Warranties. Each Guarantor
represents and warrants to the Guaranteed Parties as follows:
(a) Such Guarantor (i) is a corporation or partnership duly
organized, validly existing and in good standing under the laws
of its state of incorporation or organization; (ii) is qualified
to do business and is in good standing in every other
jurisdiction where the nature of its business or the ownership of
its properties requires it to be so qualified, except to the
extent failure to so qualify would not have a material adverse
effect upon the financial condition, operations, business,
properties or prospects of such Guarantor; and (iii) has the full
power, authority and legal right to execute and deliver this
Guaranty and to perform and observe the terms and provisions
hereof.
(b) There are no judgments, injunctions or similar orders
or decrees, and no actions, suits, investigations or proceedings
pending or, to the knowledge of such Guarantor, threatened, at
law or in equity before any court or administrative officer or
Governmental Authority, (i) that question the validity of this
Guaranty or (ii) otherwise against or affecting such Guarantor
that, individually or in the aggregate, if adversely determined,
may have a material adverse effect upon the financial condition,
operations, business, properties or prospects of such Guarantor.
(c) This Guaranty has been duly authorized by all necessary
corporate or partnership action on the part of such Guarantor,
has been validly executed and delivered by such Guarantor and is
the legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms.
(d) Neither the execution, delivery or performance of this
Guaranty by such Guarantor nor compliance by it herewith:
(i) conflicts or will conflict with or results or will result in
any material breach of, or constitutes or will constitute with
the passage of time or the giving of notice or both, a material
default under, (x) the articles of incorporation, bylaws or other
organizational documents of such Guarantor, (y) any law, order,
writ, injunction or decree of any court or Governmental
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<PAGE>
Authority, or (z) any written or oral agreement or instrument to
which such Guarantor is a party or by which it, or any of its
properties, is bound, or (ii) results or will result in the
creation or imposition of any Lien upon the properties of such
Guarantor pursuant to any such agreement or instrument.
(e) No authorization, consent or approval of, or
declaration or filing with, any Governmental Authority is
required for the valid execution, delivery and performance by
such Guarantor of this Guaranty or the consummation by it of the
transactions contemplated hereby.
(f) Such Guarantor has been provided with a true and
complete copy of the executed Credit Agreement, as in effect as
of the date it became a party hereto, and its principal officers
are familiar with the contents thereof, particularly insofar as
the contents thereof relate or apply to such Guarantor.
7. Representations Regarding Nature of Operations. Each
Guarantor further represents and warrants as follows:
(a) As a result of the interrelated nature of their
businesses and in order to achieve economics of scale and operate
in a cost-efficient manner, the Borrower and the Guarantors
engage in numerous substantive and administrative intercompany
activities and operations, which each accounts for in its own
separate books and records, but which would not be feasible
without the credit extended by the Lenders and the Overline
Lenders under the Credit Agreement and the Overline Credit
Agreement.
(b) The direct and indirect benefits which each Guarantor
receives from or as a result of the credit extended by the
Lenders and the Overline Lenders under the Credit Agreement and
the Overline Credit Agreement are substantial and material, and
while such indirect benefits are not necessarily precisely
quantifiable, all of such benefits are essential to the
continuation of the operations of each of the Guarantors.
8. Financial Condition of Borrower. Each Guarantor
represents that it has knowledge of the Borrower's financial
condition and affairs and that it has adequate means to obtain
from the Borrower on an ongoing basis information relating
thereto and to the Borrower's ability to pay and perform the
Guaranteed Obligations, and agrees to assume the responsibility
for keeping, and to keep, so informed for so long as this
Guaranty is in effect with respect to such Guarantor. Each
Guarantor agrees that the Guaranteed Parties will have no
obligation to investigate the financial condition or affairs of
the Borrower for the benefit of any Guarantor nor to advise any
Guarantor of any fact respecting, or any change in, the financial
condition or affairs of the Borrower that might become known to
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<PAGE>
any Guaranteed Party at any time, whether or not such Guaranteed
Party knows or believes or has reason to know or believe that any
such fact or change is unknown to any Guarantor, or might (or
does) materially increase the risk of any Guarantor as guarantor,
or might (or would) affect the willingness of any Guarantor to
continue as a guarantor of the Guaranteed Obligations.
9. Payments; Application; Set-Off.
(a) Each Guarantor agrees that, upon the failure of the
Borrower to pay any of the Guaranteed Obligations when and as the
same shall become due (whether at the stated maturity, by
acceleration or otherwise), and without limitation of any other
right or remedy that any Guaranteed Party may have at law or in
equity against such Guarantor, such Guarantor will, subject to
the proviso at the end of Section 1(a), forthwith pay or cause to
be paid to the Agent, for the benefit of the Guaranteed Parties,
an amount equal to the amount of the Guaranteed Obligations then
due and owing as aforesaid. All payments made by each Guarantor
hereunder will be made to the Agent without set-off, counterclaim
or other defense in Dollars and net of any applicable withholding
or other taxes.
(b) All payments made from time to time hereunder shall be
applied upon receipt as follows:
(i) first, to the payment of all Other Obligations
owing to the Agent;
(ii) second, after payment in full of the amounts
specified in clause (i) above, to the payment of all other
Total Obligations owing to the Overline Parties in such
manner and order and at such time as the Agent shall elect,
each Overline Party to receive an amount equal to the
outstanding amount of the Total Obligations then owing to it
or, if such payment is insufficient to pay in full all such
Total Obligations, its Pro Rata Share (as hereinafter
defined) of such payment;
(iii) third, after payment in full of the amounts
specified in clause (ii) above, to the payment of all other
Total Obligations owing to the Credit Agreement Parties
(including in their capacity as Hedge Parties) in such
manner and order and at such time as the Agent shall elect,
each Credit Agreement Party to receive an amount equal to
the outstanding amount of the Total Obligations then owing
to it or, if such payment is insufficient to pay in full all
such Total Obligations, its Pro Rata Share (as hereinafter
defined) of such payment; and
(iv) fourth, after payment in full of the amounts
specified in clauses (i), (ii) and (iii) above, and
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following the termination of this Guaranty (as to all
Guarantors) pursuant to Section 14, to the Guarantors or to
any other Person that may be lawfully entitled to receive
such surplus.
(c) For purposes of clauses (ii) and (iii) of
subsection (b) above, "Pro Rata Share" shall mean, when
calculating a Guaranteed Party's portion of any payment
hereunder, that amount (expressed as a percentage) equal to a
fraction the numerator of which is the then outstanding amount of
the relevant Total Obligations owing to such Guaranteed Party and
the denominator of which is the then outstanding amount of all
relevant Total Obligations.
(d) For purposes of applying payments in accordance with
this Section, the Agent shall be entitled to rely upon the Hedge
Parties or their representative under any Interest Rate
Protection Agreements for a determination (which the Hedge
Parties agree to provide or cause to be provided upon request of
the Agent) of the outstanding Total Obligations owed to the Hedge
Parties. Unless it has actual knowledge (including by way of
written acknowledgement from a Hedge Party in the form of
Exhibit A) to the contrary, the Agent, in acting hereunder, shall
be entitled to assume that no Interest Rate Protection
Agreements, or Hedge Obligations in respect thereof, are in
existence.
(e) The Guarantors shall remain jointly and severally
liable to the extent of any deficiency between the amount of all
payments made hereunder and the aggregate amount of the sums
referred to in clauses (i), (ii) and (iii) of subsection (b)
above.
(f) In addition to all other rights and remedies available
under the Credit Documents and any Interest Rate Protection
Agreements or applicable law or otherwise, upon and at any time
after the occurrence and during the continuance of any Event of
Default (such term to mean and include, for purposes of this
Section, any "Event of Default" within the meaning of the Credit
Agreement or any payment default under any Interest Rate
Protection Agreement continuing after any applicable grace
period), each Guaranteed Party and each of its Affiliates may,
and is hereby authorized by each Guarantor, 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
each Guarantor, 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, and any other indebtedness
at any time owing, by such Guaranteed Party or any of its
Affiliates to or for the credit or the account of such Guarantor
against any or all of the obligations of such Guarantor to such
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Guaranteed Party hereunder now or hereafter existing, whether or
not such obligations may be contingent or unmatured. Each
Guaranteed Party agrees promptly to notify such Guarantor 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.
10. Enforcement. The Guaranteed Parties agree that, except
as set forth in Section 9(f), this Guaranty may be enforced only
by the action of the Agent, acting upon the instructions or with
the consent of the Required Lenders as provided for in the Credit
Agreement or the Required Overline Lenders as provided for in the
Overline Credit Agreement, as applicable, and that no Guaranteed
Party shall have any right individually to enforce or seek to
enforce this Guaranty or to realize upon any Collateral or other
security given to secure the payment and performance of the
Guarantors' obligations hereunder. The obligations of each
Guarantor hereunder are independent of the obligations of the
Borrower and any Other Guarantor, and a separate action or
actions may be brought against each Guarantor whether or not
action is brought against the Borrower or any Other Guarantor and
whether or not the Borrower or any Other Guarantor is joined in
any such action. Each Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder or the
enforcement thereof and, without limitation of the foregoing,
specifically agrees that any acknowledgement or new promise,
whether by payment or otherwise and whether by the Borrower or
any Other Guarantor, with respect to any Guaranteed Obligations
shall, if the statute of limitations in favor of such Guarantor
against any Guaranteed Party shall have commenced to run, toll
the running of such statute of limitations, and if the period of
such statute of limitations shall have expired, prevent the
operation of such statute of limitations. Additionally, in the
event the Borrower or any Guarantor becomes a debtor within the
meaning of the Bankruptcy Code, the Agent shall be entitled, at
its option, to file applicable proofs of claim on each
Guarantor's behalf and vote the rights of each such Guarantor in
any plan of reorganization, and may demand, sue for, collect and
receive every payment and distribution on any indebtedness of the
Borrower or such Guarantor to any other Guarantor in any such
proceeding.
11. Amendments, etc. No amendment, modification, waiver,
discharge or termination of this Guaranty or any provision
hereof, nor any consent to any departure by any Guarantor
therefrom, shall in any event be effective unless in writing and
signed by the Agent, acting with the concurrence of such of the
Lenders or Overline Lenders, as applicable, as may be required
under the Credit Agreement or the Overline Credit Agreement, as
the case may be, to concur therein, and each Guarantor directly
affected thereby (or by the Borrower on its behalf pursuant to
the power of attorney granted in Section 17(b)); provided,
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however, that (x) the Agent may, in accordance with the
provisions of the Credit Agreement, from time to time require
Subsidiaries of the Borrower not already parties hereto to become
Guarantors hereunder by executing an instrument of accession
hereto in the form of Exhibit B (each, a "Guarantor Accession"),
(y) certain Guarantors may from time to time be released
automatically herefrom in accordance with the provisions of
Section 16 and (z) the Required Lenders or the Required Overline
Lenders, as applicable (or such of the Lenders or Overline
Lenders, as applicable, as may in any particular case be required
thereunder) may from time to time (but without any obligation to
do so) release, or direct the Agent to release, any Guarantor
hereunder, in each case under clauses (x), (y) and (z) above
without the necessity of obtaining the consent of any other
Guarantor (it being understood that the release or addition
hereunder of any Guarantor shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the
Guarantor so released or added); and provided further that any
amendment, modification, waiver, discharge, termination or
consent at any time affecting the rights and benefits of a single
Group (as hereinafter defined) of Guaranteed Parties, and not all
Guaranteed Parties in a like or similar manner, shall require
only the consent of the Required Parties (as hereinafter defined)
of such Group at such time. For purposes of the preceding
sentence, the term "Group" shall mean and refer to (i) the Credit
Agreement Parties as holders of the Credit Obligations, (ii) the
Overline Parties as holders of the Overline Obligations, or
(iii) the Hedge Parties as holders of the Hedge Obligations, and
the term "Required Parties" shall mean, at any time, (A) with
respect to the Credit Obligations, such of the Lenders as may be
required under the Credit Agreement then to concur in the action
being taken, (B) with respect to the Overline Obligations, such
of the Overline Lenders as may be required under the Overline
Credit Agreement then to concur in the action being taken, and
(C) with respect to the Hedge Obligations, the holders of at
least a majority of the aggregate obligations of the Borrower
outstanding at such time under all Interest Rate Protection
Agreements.
12. No Waivers, etc. No delay or failure to take action on
the part of any Guaranteed Party in exercising any right, power
or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a
waiver of any Event of Default. No course of dealing between any
of the Guarantors and the Guaranteed Parties or their agents or
employees shall be effective to change, modify or discharge any
provision of this Guaranty or to constitute a waiver of any Event
of Default. No notice to or demand upon any Guarantor in any
case shall entitle such Guarantor or any Other Guarantor to any
other or further notice or demand in similar or other
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circumstances or constitute a waiver of the right of any
Guaranteed Party to exercise any right or remedy or take any
other or further action in any circumstances without notice or
demand. All rights and remedies under this Guaranty and the
other Credit Documents are cumulative to, and not exclusive of,
any rights or remedies that are available at law, in equity or
otherwise.
13. Assignment. No Guarantor may assign this Guaranty or
any of its rights or obligations hereunder. Any Guaranteed Party
may assign or otherwise transfer its interest in this Guaranty,
in whole or in part, in connection with an assignment or other
transfer of any or all Guaranteed Obligations held by such
Guaranteed Party in accordance with the Credit Agreement or the
Overline Credit Agreement (including by the sale of
participations), any applicable Interest Rate Protection
Agreement or other relevant documents, it being understood and
agreed that upon any such assignment or other transfer by any
Guaranteed Party, the Person that becomes the holder of the
Guaranteed Obligations that are the subject of such assignment or
other transfer shall (except as may be otherwise provided by such
Guaranteed Party as a term or condition of such assignment or
other transfer) have and may exercise all of the rights granted
to such Guaranteed Party under this Guaranty to the extent of
that part of or interest in the Guaranteed Obligations so
assigned or transferred to such Person; provided, however, that,
except as may be otherwise permitted by the Credit Agreement or
the Overline Credit Agreement, as applicable, no participant
(within the meaning of the Credit Agreement or the Overline
Credit Agreement, as the case may be) in any of the Guaranteed
Obligations shall be entitled to exercise any rights under
Section 9(f). Each Guarantor hereby irrevocably waives notice of
and consents in advance to the assignment or other transfer as
provided above from time to time by any Guaranteed Party of the
Guaranteed Obligations held by it, or any part thereof or
interest therein, and of the corresponding rights and interest of
such Guaranteed Party hereunder in connection therewith.
14. Continuing Guaranty; Term. This Guaranty is a
continuing guaranty and covers all of the Guaranteed Obligations
as the same may arise and be outstanding from time to time and at
any time from and after the date hereof to the termination hereof
as to all Guarantors, whether pursuant to any extensions of
credit to the Borrower under the Credit Agreement or the Overline
Credit Agreement after the date hereof or otherwise. Unless
sooner terminated (as to any particular Guarantor) pursuant to
Section 16 or otherwise in accordance with the terms hereof, this
Guaranty and the obligations of the Guarantors hereunder shall
continue in effect until satisfaction of the Termination
Requirements. Each Guarantor agrees that to the extent all or
part of any payment of the Guaranteed Obligations made by any
Person is subsequently invalidated, declared to be fraudulent or
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preferential, set aside or required to be repaid by or on behalf
of any Guaranteed Party to a trustee, receiver or any other party
under any Insolvency Laws (the amount of any such payment, a
"Reclaimed Amount"), then, to the extent of such Reclaimed
Amount, this Guaranty shall continue in full force and effect or
be revived and reinstated, as the case may be, as to the
Guaranteed Obligations intended to be satisfied as if such
payment had not been received; and each Guarantor acknowledges
that the term "Guaranteed Obligations" includes all Reclaimed
Amounts that may arise from time to time.
15. Bankruptcy; Post-Petition Interest. (a) So long as any
Guaranteed Obligations remain outstanding, no Guarantor shall
commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency proceedings of or
against the Borrower. The obligations of the Guarantors under
this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the
Borrower or by any defense which the Borrower may have by reason
of the order, decree or decision of any court or administrative
body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any
interest on any portion of the Guaranteed Obligations which
accrues after the commencement of any proceeding referred to in
subsection (a) above (or, if interest on any portion of the
Guaranteed Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as
would have accrued on such portion of the Guaranteed Obligations
if said proceedings had not been commenced) shall be included in
the Guaranteed Obligations because it is the intention of each
Guarantor and the Guaranteed Parties that the Guaranteed
Obligations which are guaranteed by the Guarantors pursuant to
this Guaranty should be determined without regard to any rule of
law or order which may relieve the Borrower of any portion of
such Guaranteed Obligations. Each Guarantor will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee
for the benefit of creditors or similar person to pay to the
Guaranteed Parties, or allow the claim of the Guaranteed Parties
in respect of, any such interest accruing after the date on which
such proceeding is commenced.
16. Discharge of Guarantor. In the event that all of the
capital stock of any Guarantor is sold, exchanged or otherwise
disposed of (including by merger or consolidation) in a
transaction permitted by the terms of the Credit Agreement or to
which the Required Lenders or the Required Overline Lenders, as
applicable (or all of the Lenders or Overline Lenders, if
required by the Credit Agreement or the Overline Credit
Agreement, as the case may be), have consented and any proceeds
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of such disposition have been applied as may be required or
permitted under or pursuant to the Credit Agreement (or the
Overline Credit Agreement, as applicable) or such consent, then,
to the extent applicable, each Guarantor (i) all of the capital
stock of which is so disposed of or (ii) that is a direct Wholly
Owned Subsidiary of a Guarantor all of the capital stock of which
is so disposed of, shall be released from this Guaranty and its
obligations hereunder shall be automatically discharged without
any further action by any Person, and as to each such Guarantor,
this Guaranty shall terminate and have no further force or
effect.
17. Notice; Borrower as Attorney-In-Fact.
(a) All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex,
facsimile transmission or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered to the
party to be notified at the following addresses:
If to any Guarantor: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Chief Financial Officer
Telephone: (919) 383-0355
Telecopy: (919) 383-3660
With copies to: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Joseph G. Piemont, Esq.
Telephone: (919) 383-0355
Telecopy: (919) 383-7611
If to any Credit
Agreement Party
(including the
Agent): At its address for notices set forth
in the Credit Agreement
If to any Secured
Overline Party: At its address for notices set forth
in the Credit Agreement (or, if not a
party thereto, the Overline Credit
Agreement)
If to any Hedge
Party: At such address for notices as such
Hedge Party shall have specified to
the Borrower
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<PAGE>
or to such other address as any of the Persons listed above may
designate for itself by like notice to the other Persons listed
above. 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.
(b) Each Guarantor hereby irrevocably designates and
appoints the Borrower as its representative for the purpose of
receiving any notice or other communication hereunder, and agrees
that any notice or other communication given to the Borrower at
the address and in the manner specified herein shall be deemed
notice to all Guarantors. Further, each Guarantor does hereby
irrevocably make, constitute and appoint the Borrower as the true
and lawful attorney-in-fact of such Guarantor, with full
authority in the place and stead of such Guarantor and in the
name of such Guarantor, the Borrower or otherwise, and with full
power of substitution in the premises, from time to time in the
Borrower's discretion to agree on behalf of, and sign the name of
such Guarantor to, any amendment, modification or supplement to,
restatement of, or waiver or consent in connection with, this
Guaranty or any other Credit Document, notice or other similar
document, and to execute any other documents or instruments, take
any other action and do all other things, in each case on behalf
of such Guarantor, that the Borrower may deem necessary or
advisable to carry out and accomplish the purposes of this
Guaranty and the other Credit Documents. The Borrower will not
be liable for any act or omission nor for any error of judgment
or mistake of fact unless such act, omission, error or mistake
shall occur as a result of the gross negligence or willful
misconduct of the Borrower. This power, being coupled with an
interest, is irrevocable by any Guarantor for so long as this
Guaranty shall be in effect with respect to such Guarantor. By
its signature hereto, the Borrower consents to its appointment as
representative to receive notices for and agrees promptly to
distribute such notices to, and consents to its appointment as
the attorney-in-fact for, each Guarantor as provided for herein.
18. Governing Law; Appointment of Agent for Service of
Process; Consent to Jurisdiction. THIS GUARANTY HAS BEEN
EXECUTED, DELIVERED AND ACCEPTED AT, AND SHALL BE DEEMED TO HAVE
BEEN MADE IN, NORTH CAROLINA AND SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE GUARANTEED PARTIES AND THE
GUARANTORS DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NORTH
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<PAGE>
CAROLINA. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY
RECEIVED, EACH GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY
FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF
NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER
ANY OF THE OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER CREDIT
DOCUMENTS, OR ANY PROCEEDING TO WHICH ANY GUARANTEED PARTY OR
SUCH GUARANTOR 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 ANY GUARANTEED PARTY OR SUCH GUARANTOR. EACH GUARANTOR
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. EACH GUARANTOR HEREBY
IRREVOCABLY DESIGNATES AND APPOINTS THE BORROWER, LOCATED AT 2828
CROASDAILE DRIVE, DURHAM, NORTH CAROLINA 27705, AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE ON ITS BEHALF ALL SERVICE OF
PROCESS IN SUCH JURISDICTION IN ANY ACTION OR PROCEEDING,
CONSENTS THAT ALL SERVICE OF PROCESS UPON IT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO SUCH AGENT AT ITS
ADDRESS SET FORTH HEREINABOVE (AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF
OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES
MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED) AND AGREES
THAT SERVICE SO MADE SHALL BE EFFECTIVE AND BINDING UPON SUCH
GUARANTOR IN EVERY RESPECT. IF FOR ANY REASON SUCH AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH GUARANTOR AGREES TO
DESIGNATE A NEW AGENT IN NORTH CAROLINA ON THE TERMS AND FOR THE
PURPOSES OF THIS SECTION SATISFACTORY TO THE AGENT (ON BEHALF OF
THE GUARANTEED PARTIES) HEREUNDER. NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY GUARANTEED PARTY
OTHERWISE SO ENTITLED TO BRING ANY ACTION OR PROCEEDING AGAINST
ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
19. Waiver of Jury Trial. EACH GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, EACH GUARANTEED PARTY, HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE
RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER
CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH ANY GUARANTEED PARTY
OR SUCH GUARANTOR 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 ANY GUARANTEED PARTY OR SUCH GUARANTOR. The scope of this
waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims and all other
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<PAGE>
common law and statutory claims. Each Guarantor and, by its
acceptance of the benefits hereof, each Guaranteed Party,
(i) acknowledges that this waiver is a material inducement to
enter into a business relationship, that it has relied on this
waiver in entering into this Guaranty or accepting the benefits
hereof, as the case may be, and that it will continue to rely on
this waiver in its related future dealings with the other parties
hereto, and (ii) further warrants and represents that it has
reviewed this waiver with its legal counsel and that, based upon
such review, it knowingly and voluntarily waives its jury trial
rights to the extent permitted by applicable law. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, MODIFICATIONS OR SUPPLEMENTS TO OR RESTATEMENTS OF
THIS GUARANTY OR ANY OF THE OTHER CREDIT DOCUMENTS. IN THE EVENT
OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT. IN THE EVENT THAT THE WAIVER OF JURY TRIAL
HEREIN SHALL BE DETERMINED TO BE INVALID OR UNENFORCEABLE AS A
MATTER OF LAW WITH RESPECT TO ANY PARTY, THE PROVISIONS OF
ANNEX 1 SHALL GOVERN AS TO THE MATTERS SET FORTH THEREIN WITH
RESPECT TO SUCH PARTY.
20. Binding Effect; Survival. This Guaranty shall be
binding upon and enforceable against each Guarantor and its
successors and permitted assigns. This Guaranty shall inure to
the benefit of and be enforceable by each Guaranteed Party and
its successors and assigns. All representations, warranties,
covenants and agreements herein shall survive the execution and
delivery of this Guaranty and any Guarantor Accession.
21. Severability. To the extent any provision of this
Guaranty is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
22. Interpretation. The captions to the various sections
and subsections of this Guaranty have been inserted for
convenience only and shall not limit or affect any of the terms
hereof. Unless the context otherwise requires, words in the
singular include the plural and words in the plural include the
singular, and the use of any gender shall be applicable to all
genders.
23. Counterparts; Effectiveness. This Guaranty 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 Guaranty
shall become effective, as to any Guarantor, upon the execution
of a counterpart hereof or a Guarantor Accession or other
amendment or supplement hereto by such Guarantor.<PAGE>
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty
to be executed under seal by its duly authorized officer as of
the date first above written.
THE SIGNATURES OF THE GUARANTORS EXECUTING THIS GUARANTY
AS OF THE DATE FIRST ABOVE WRITTEN ARE ON THE FOLLOWING
SEQUENTIALLY NUMBERED SIGNATURE PAGES.
The Borrower hereby joins in this Guaranty for purposes of
evidencing its consent to, and agreement to perform, the
provisions of clause (x) of the proviso at the end of
Section 1(a) and the provisions of Section 17(b).
COASTAL PHYSICIAN GROUP, INC.
By: _______________________________
Title: ____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Agent
By: _________________________________
Title: ______________________________
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<PAGE>
SUBSIDIARIES SECURITY AGREEMENT
THIS SUBSIDIARIES SECURITY AGREEMENT (this "Agreement"), dated as of
the 29th day of May, 1996, is made by the undersigned corporations and the other
Persons from time to time parties hereto (collectively, the "Grantors," and
individually, a "Grantor"), each a Subsidiary of Coastal Physician Group, Inc.,
a Delaware corporation (the "Borrower"), to FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Agent (the "Agent"), for the benefit of (i) the Lenders and the
Agent under the Credit Agreement referred to hereinbelow (each Lender, the
Issuing Bank and the Agent in their respective capacities as such under the
Credit Agreement, jointly and severally, the "Credit Agreement Creditors," and
each, a "Credit Agreement Creditor"), (ii) the Overline Lenders and the Agent
under the Overline Credit Agreement (each Overline Lender, the Overline Issuing
Lender (such term being used herein with the meaning given to it under the
Overline Credit Agreement) and the Agent in their respective capacities as such
under the Overline Credit Agreement, jointly and severally, the "Overline
Creditors," and each, an "Overline Creditor") and (iii) if one or more Lenders
enter into one or more Interest Rate Protection Agreements with the Borrower,
any such Lenders (each Lender in its capacity as a party to any Interest Rate
Protection Agreement, notwithstanding that such Lender may have ceased at any
time to be a Lender under the Credit Agreement, a "Hedge Creditor," and
collectively, the "Hedge Creditors"; and the Hedge Creditors, together with the
Credit Agreement Creditors and the Overline Creditors, the "Secured Creditors").
Capitalized terms not defined in this introductory paragraph, in the recitals
below or elsewhere herein shall, unless otherwise provided herein, have the
meanings given to them in the Credit Agreement (terms defined in the Overline
Credit Agreement also being deemed defined terms under the Credit Agreement).
RECITALS
A. The Borrower, certain banks and other financial institutions (the
"Lenders") and the Agent are parties to a Credit Agreement, dated as of July 29,
1994, as amended by a First Amendment thereto dated as of April 12, 1995 and by
a Second Amendment thereto dated as of August 10, 1995 (as so amended, and as in
effect on the date hereof, the "Existing Credit Agreement"), providing for the
availability of certain credit facilities to the Borrower upon the terms and
conditions set forth therein.
B. The Borrower, the Agent and the Lenders have entered into a Third
Amendment and Limited Waiver to Credit Agreement, dated as of May 29, 1996 (the
"Third Amendment"; and the Existing
<PAGE>
Credit Agreement, as amended by the Third Amendment and as further amended,
modified, supplemented or restated from time to time, the "Credit Agreement"),
pursuant to which the Agent and the Lenders have agreed to make certain
amendments to the Existing Credit Agreement and have made certain other
agreements of material benefit to the Borrower and the Grantors, including
agreements to waive certain existing Events of Default (which otherwise preclude
any further borrowings by the Borrower) on the terms and subject to the
conditions set forth in the Third Amendment.
C. Additionally, the Borrower, the Agent and the Overline Lenders have
entered into a Secured Overline Credit Agreement, dated as of May 29, 1996 (as
amended, modified, supplemented or restated from time to time, the "Overline
Credit Agreement"), providing for the availability of certain credit facilities
in the aggregate principal amount of $40,000,000 to the Borrower upon the terms
and conditions set forth therein.
D. Each of the Grantors is a direct or indirect Subsidiary of the
Borrower and is a party to a Guaranty Agreement, dated as of July 29, 1994, as
amended and restated as of the date hereof (as so amended and restated, and as
further amended, modified, supplemented or restated from time to time, the
"Guaranty"), whereby each Grantor has unconditionally guaranteed all Guaranteed
Obligations (as defined in the Guaranty) of the Borrower under the Credit
Agreement, the Overline Credit Agreement, the other Credit Documents and the
Interest Rate Protection Agreements.
E. As a further condition, among other things, to the effectiveness of
the Third Amendment, to the making of Loans under the Credit Agreement, to the
making of Overline Loans and the issuance of, and participation in, Letters of
Credit (such term being used herein with the meaning given to it under the
Overline Credit Agreement, except as otherwise specified) under the Overline
Credit Agreement, and to the obligation of any Hedge Creditor to enter into or
continue to perform any Interest Rate Protection Agreement, each Grantor shall
have agreed, by executing and delivering this Agreement, to secure the payment
in full of its obligations under the Guaranty. The Secured Creditors are relying
on this Agreement in their decision to consummate the transactions contemplated
by the Third Amendment and the Overline Credit Agreement, to extend credit to
the Borrower under the Credit Agreement and the Overline Credit Agreement that
is otherwise not available, and to enter into and continue to perform any
Interest Rate Protection Agreements, and would not be willing to enter into the
Third Amendment and the Overline Credit Agreement or to extend credit
thereunder, or to enter into or continue to perform any such Interest Rate
Protection Agreement, without this Agreement.
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<PAGE>
F. Without the execution and delivery of the Third Amendment and the
Overline Credit Agreement, there would be a material adverse effect upon the
businesses of the Borrower and the Grantors.
G. As set forth in the Guaranty, each Grantor has obtained and will
continue to obtain substantial and material benefits from the extension of
credit to the Borrower under the Credit Agreement and the Overline Credit
Agreement, and from the entering into of any Interest Rate Protection
Agreements, which it could not obtain otherwise and which benefits are hereby
acknowledged, and, accordingly, has agreed to execute and deliver this
Agreement, which is a condition to the effectiveness of the Third Amendment and
the Overline Credit Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Lenders to enter into the Third Amendment and to
make Loans to the Borrower under the Credit Agreement and to induce the Overline
Lenders to enter into the Overline Credit Agreement and to make Overline Loans
to the Borrower thereunder from time to time (which Loans and Overline Loans the
Lenders and Overline Lenders would not otherwise be required to make), to induce
the Issuing Lender to issue, and the Overline Lenders to participate in, the
Letters of Credit, and to induce the Hedge Creditors to enter into and perform
the Interest Rate Protection Agreements, each Grantor hereby agrees as follows:
1. Security for Secured Obligations. This Agreement is made
by each Grantor to secure:
(i) the full and prompt payment to the Credit Agreement
Creditors, at any time and from time to time as and when due (whether
at the stated maturity, by acceleration or otherwise), of all
liabilities and obligations of the Grantors, whether now existing or
hereafter incurred, in respect of the guarantee of the Credit
Obligations set forth in Section 1(a)(i) of the Guaranty;
(ii) the full and prompt payment to the Overline Creditors,
at any time and from time to time as and when due (whether at the
stated maturity, by acceleration or otherwise), of all liabilities and
obligations of the Grantors, whether now existing or hereafter
incurred, in respect of the guarantee of the Overline Obligations set
forth in Section 1(a)(ii) of the Guaranty;
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<PAGE>
(iii) the full and prompt payment to the Hedge Creditors, at
any time and from time to time as and when due (whether at the stated
maturity, by acceleration or otherwise), of all liabilities and
obligations of the Grantors, whether now existing or hereafter
incurred, in respect of the guarantee of the Hedge Obligations (such
term being used in this Agreement with the meaning given to it under
the Guaranty) set forth in Section 1(a)(iii) of the Guaranty;
(iv) the full and prompt payment to the Secured Creditors, at
any time and from time to time as and when due, of all liabilities and
obligations of the Grantors, whether now existing or hereafter
incurred, set forth in Section 1(a)(iv) of the Guaranty;
(v) any and all sums advanced by the Agent in order to
preserve the Collateral (as hereinafter defined) or to preserve its
security interest in the Collateral; and
(vi) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of such
Grantor referred to in clauses (i) through (iv) above, after an Event
of Default (such term to mean and include, as relevant, for purposes of
this Agreement, any "Event of Default" within the meaning of the Credit
Agreement or the Overline Credit Agreement or any payment default under
any Interest Rate Protection Agreement continuing after any applicable
grace period) shall have occurred and be continuing, the reasonable
expenses of re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any
exercise by the Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (vi) of this Section, collectively, the "Secured Obligations."
2. Grant of Security Interest. (a) To secure the liabilities and
obligations described under clause (i) of Section 1 and all other Secured
Obligations of the Grantors to the Agent and the Lenders now or hereafter
existing under this Agreement, each Grantor hereby pledges and assigns to the
Agent, on behalf of the Credit Agreement Creditors, and grants to the Agent, on
behalf of the Credit Agreement Creditors, a security interest in, all of such
Grantor's right, title and interest in and to the following, in each case
whether now owned or existing or hereafter acquired or arising (collectively,
the "Collateral"):
(i) All of such Grantor's accounts, as defined in the
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<PAGE>
Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all of such
Grantor's accounts receivable (including, without limitation, any
Medicare, Medicaid and other similar accounts receivable, but excluding
any such accounts receivable to the extent the same are not permitted
to be assigned under applicable laws, rules and regulations (but not
excluding the proceeds thereof)), all rights to payment for goods sold
or leased or to be sold or to be leased (including all rights to
returned or repossessed goods) or for services rendered at any time or
for services to be rendered (including any rights to stoppage in
transit, repossession and reclamation and other rights of an unpaid
vendor or secured party), all rights under or evidenced by book debts,
notes, bills, drafts or acceptances, all choses in action and causes of
action, all chattel paper or other instruments or documents, and all
rights under security agreements, guarantees, indemnities and other
instruments and contracts securing or otherwise relating to the
foregoing, in each case whether now owned or existing or hereafter
acquired or arising (collectively, "Accounts");
(ii) All indebtedness, obligations and other amounts at any
time owing to such Grantor from the Borrower or other Subsidiaries and
Affiliates of the Borrower and all interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
indebtedness, obligations or other amounts (collectively, "Intercompany
Obligations");
(iii) All rights of such Grantor under all leases, contracts
and agreements to which such Grantor is now or hereafter a party
(including, without limitation, all rights, whether for payment or
performance, under managed care contracts, preferred provider
contracts, management and services agreements (including, without
limitation, physician practice, clinic, hospital and emergency room
management, staffing and services contracts), independent contractor
agreements with physicians, and contracts with health or medical
insurance companies relating to the payment of or reimbursement for
medical or health care services and products), together with any and
all extensions, modifications, amendments and renewals of such
contracts and agreements and all rights of such Grantor to receive
moneys due or to become due thereunder or pursuant thereto and to
amend, modify, terminate or exercise rights under such contracts and
agreements, but excluding rights under (but not excluding proceeds of)
any lease, agreement or contract that by the terms thereof, or under
applicable law, cannot be assigned or a security interest granted
therein in the manner contemplated by this Agreement unless
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<PAGE>
consent from the relevant party or parties has been obtained and under
the terms of which lease, agreement or contract any such assignment or
grant of a security interest therein in the absence of such consent
would, or could, result in the termination thereof, but only to the
extent that (y) such rights are subject to such contractual or legal
restriction and (z) such restriction is not, or could not be, rendered
ineffective pursuant to the Uniform Commercial Code of any relevant
jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity (collectively, "Contracts");
(iv) All of such Grantor's copyrights, copyright
registrations and applications for copyright registration, whether
under the laws of the United States or any other country or
jurisdiction, including all recordings, supplemental registrations and
derivative or collective work registrations, and all renewals and
extensions thereof, in each case whether now owned or existing or
hereafter acquired or arising (collectively, "Copyrights"), together
with all copyright licenses to which such Grantor is or hereafter
becomes a party and all other General Intangibles embodying,
incorporating, evidencing or otherwise relating or pertaining to any
Copyrights, in each case whether now owned or existing or hereafter
acquired or arising (collectively, together with Copyrights, "Copyright
Collateral");
(v) All of such Grantor's deposit accounts, including,
without limitation, all Cash Collateral Accounts (as hereinafter
defined), Agent Affiliate Accounts (as hereinafter defined),
Concentration Accounts (as hereinafter defined) and all other deposit
accounts, whether maintained with the Agent or any other bank or
depository institution, in each case whether now owned or existing or
hereafter acquired or arising (other than trust accounts required to be
maintained by FirstCollect, Inc. under Section 58-70-65 of the General
Statutes of North Carolina, as amended), together with all funds held
from time to time therein and all certificates and instruments from
time to time representing, evidencing or deposited into such accounts
(collectively, "Deposit Accounts");
(vi) All of such Grantor's equipment, as defined in the
Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all machinery,
equipment, motor vehicles, computer equipment and software, parts,
supplies, appliances, fittings, furniture and fixtures of every kind
and nature, wherever located and whether or not affixed to any real
property, and all accessions, accessories, additions, attachments,
improvements, modifications and
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<PAGE>
upgrades to, replacements of and substitutions for the foregoing, in
each case whether now owned or existing or hereafter acquired or
arising (collectively, "Equipment");
(vii) All of such Grantor's general intangibles, as defined in
the Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all Contracts, all
Copyright Collateral, Patent Collateral and Trademark Collateral, all
inventions, designs, trade secrets, trade processes, confidential or
proprietary technical or business information, know-how, registrations,
licenses, permits and franchises, all rights under or evidenced by book
debts, notes, bills, drafts, acceptances, choses in action, causes of
action, chattel paper or other instruments or documents, all
indebtedness, obligations and other amounts at any time owing to such
Grantor from any Person (other than Intercompany Obligations) and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness, obligations or other
amounts, all judgments, tax refund claims, claims against carriers and
shippers, claims under liens and insurance policies, all rights under
security agreements, guarantees, indemnities and other instruments and
contracts securing or otherwise relating to the foregoing, all
invoices, customer lists, books and records, ledger and account cards,
computer tapes, disks, software, printouts and other corporate or
business records relating to the foregoing, and all other intangible
personal property of every kind and nature, and all accessions,
additions, improvements, modifications and upgrades to, replacements of
and substitutions for the foregoing, in each case whether now owned or
existing or hereafter acquired or arising, but excluding Accounts
(collectively, "General Intangibles");
(viii) All of such Grantor's inventory, as defined in the
Uniform Commercial Code, whether now owned or existing or hereafter
acquired or arising, including, without limitation, all goods
manufactured, acquired or held for sale or lease, all raw materials,
component materials, work-in-process and finished goods, all supplies,
goods and other items and materials used or consumed in the
manufacture, production, packaging, shipping, selling, leasing or
furnishing of such inventory or otherwise in the operation of the
business of such Grantor, all goods in which such Grantor now or at any
time hereafter has any interest or right of any kind, and all goods
that have been returned to or repossessed by or on behalf of such
Grantor, in each case whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of such
Grantor or is held by such Grantor or by others for the
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<PAGE>
account of such Grantor, and in each case whether now owned or existing
or hereafter acquired or arising (collectively, "Inventory");
(ix) All of such Grantor's letters patent, whether under the
laws of the United States or any other country or jurisdiction, all
recordings and registrations thereof and applications therefor,
including, without limitation, the inventions described therein, all
reissues, continuations, divisions, renewals, extensions,
continuations-in-part thereof, in each case whether now owned or
existing or hereafter acquired or arising (collectively, "Patents"),
together with all patent licenses to which such Grantor is or hereafter
becomes a party and all other General Intangibles embodying,
incorporating, evidencing or otherwise relating or pertaining to any
Patents, in each case whether now owned or existing or hereafter
acquired or arising (collectively, together with Patents, "Patent
Collateral");
(x) All of such Grantor's trademarks, service marks, trade
names, corporate and company names, business names, logos, trade dress,
trade styles, other source or business identifiers, designs and general
intangibles of a similar nature, whether under the laws of the United
States or any other country or jurisdiction, all recordings and
registrations thereof and applications therefor, all renewals and
extensions thereof, all rights corresponding thereto, and all goodwill
associated therewith or symbolized thereby, in each case whether now
owned or existing or hereafter acquired or arising (collectively,
"Trademarks"), together with all trademark licenses to which such
Grantor is or hereafter becomes a party and all other General
Intangibles embodying, incorporating, evidencing or otherwise relating
or pertaining to any Trademarks, in each case whether now owned or
existing or hereafter acquired or arising (collectively, together with
Trademarks, "Trademark Collateral");
(xi) To the extent not covered or not specifically excluded
by clauses (i) through (x) above, all of such Grantor's other personal
property, whether now owned or existing or hereafter arising or
acquired; and
(xii) Any and all proceeds, as defined in the Uniform
Commercial Code, products, rents and profits of or from any and all of
the foregoing and, to the extent not otherwise included, (w) all
payments under any insurance (whether or not the Agent is the loss
payee thereunder), indemnity, warranty or guaranty with respect to any
of the foregoing Collateral, (x) all payments in connection with any
requisition, condemnation, seizure or forfeiture with
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respect to any of the foregoing Collateral, (y) all claims and rights
to recover for any past, present or future infringement or dilution of
or injury to any Copyright Collateral, Patent Collateral or Trademark
Collateral, and (z) all other amounts from time to time paid or payable
under or with respect to any of the foregoing Collateral (collectively,
"Proceeds"). For purposes of this Agreement, the term "Proceeds"
includes whatever is receivable or received when Collateral or Proceeds
are sold, exchanged, collected or otherwise disposed of, whether
voluntarily or involuntarily.
(b) To secure the liabilities and obligations described under clause
(ii) of Section 1 and all other Secured Obligations of the Grantors to the Agent
and the Overline Lenders now or hereafter existing under this Agreement, each
Grantor hereby pledges and assigns to the Agent, on behalf of the Overline
Creditors, and grants to the Agent, on behalf of the Overline Creditors, a
security interest in, all of such Grantor's right, title and interest in and to
the Collateral.
(c) To secure the liabilities and obligations described under clause
(iii) of Section 1 and all other Secured Obligations of the Grantors to the
Hedge Creditors now or hereafter existing under this Agreement, each Grantor
hereby pledges and assigns to the Agent, on behalf of the Hedge Creditors, and
grants to the Agent, on behalf of the Hedge Creditors, a security interest in,
all of such Grantor's right, title and interest in and to the Collateral.
(d) Each of the grants of a security interest in subsections (a), (b)
and (c) of this Section 2 is, and is intended to be, a separate, independent and
distinct grant to the same extent as if each such grant were set forth in a
separate document, and such grants have been included in one document solely for
the administrative convenience of the Secured Creditors.
3. Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) Each Grantor owns all Collateral purported to be owned by it, free
and clear of any Liens except for the Liens granted to the Agent, for the
benefit of the Secured Creditors, pursuant to this Agreement, and except for
other Permitted Liens. No security agreement, financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any government or public office, and no Grantor has filed or consented
to the filing of any such statement or notice, except (i) Uniform Commercial
Code financing statements naming the Agent as secured party, (ii) security
instruments filed in the U.S. Copyright Office or the U.S. Patent and Trademark
Office
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naming the Agent as secured party and (iii) as may be otherwise permitted by the
Credit Agreement.
(b) This Agreement, together with (i) the filing, with regard to each
Grantor, of duly completed and executed Uniform Commercial Code financing
statements naming such Grantor as debtor, the Agent as secured party, and
describing the Collateral, in the jurisdictions set forth beneath such Grantor's
name on Annex A hereto, (ii) to the extent required by applicable law, the
filing, with regard to each relevant Grantor, of duly completed and executed
assignments in the forms set forth as Exhibits A and B with the U.S. Copyright
Office or the U.S. Patent and Trademark Office, as appropriate, with regard to
registered Copyright Collateral, Patent Collateral and Trademark Collateral of
such Grantor, as the case may be, and (iii) the delivery to the Agent of all
chattel paper, promissory notes and other instruments included in the
Collateral, creates, and at all times shall constitute, a valid and perfected
security interest in and Lien upon the Collateral owned by such Grantor in favor
of the Agent, for the benefit of the Secured Creditors, to the extent a security
interest therein can be perfected by such filings or possession of such chattel
paper, promissory notes or instruments, as applicable, superior and prior to the
rights of all other Persons therein (except for Permitted Liens), and no other
or additional filings, registrations, recordings or actions are or shall be
necessary or appropriate in order to maintain the perfection and priority of
such Lien and security interest, other than continuation statements required
under the applicable Uniform Commercial Code (it being specifically noted that
the Agent may at its option, but shall not be required to, require that any bank
or other depository institution at which a Deposit Account is maintained enter
into a written agreement or take such other action as may be necessary to
perfect the security interest of the Agent in such Deposit Account and the funds
therein).
(c) No authorization, consent or approval of, or declaration or filing
with, any Governmental Authority (including, without limitation, any notice
filing with state tax or revenue authorities required to be made by account
creditors in order to enforce any Accounts in such state) is required for the
valid execution, delivery and performance by such Grantor of this Agreement, the
grant by it of the Lien and security interest in favor of the Agent provided for
herein, or the exercise by the Agent of its rights and remedies hereunder,
except for (i) the filings described in subsection (a) above and (ii) in the
case of Accounts owing under any Contract with a federal governmental agency or
authority, the filing by the Agent of a notice of assignment of moneys due or to
become due thereunder in accordance with the federal Assignment of Claims Act of
1940, as amended, and the regulations promulgated thereunder, but only if such
assignment is not prohibited by the terms of such Contract.
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(d) Except for (i) the provisions of the federal Medicare and Medicaid
Act and the regulations thereunder restricting assignments of Medicare and
Medicaid accounts receivable (but not the Proceeds thereof) and any similar
restrictions under applicable state law, and (ii) the provisions of the federal
Anti-Assignment Act and Anti-Claims Act, as amended, and any similar
restrictions under applicable state law, there are no statutory or regulatory
restrictions, prohibitions or limitations on such Grantor's ability to grant to
the Agent a Lien upon and security interest in its Collateral pursuant to this
Agreement or on the exercise by the Agent of its rights and remedies hereunder
(including any foreclosure upon or collection of such Collateral), and there are
no contractual restrictions on such Grantor's ability so to grant such Lien and
security interest.
(e) Annex B lists, as to each Grantor, (i) the address of its chief
executive office and each place of business, (ii) the address of each location
of all original invoices, ledgers, chattel paper, instruments and other records
or information evidencing or relating to the Accounts, General Intangibles or
other Collateral of such Grantor, and (iii) the address of each location at
which any Equipment or Inventory (other than mobile goods and goods in transit)
owned by such Grantor is kept or maintained, in each instance except for any new
locations established in accordance with the provisions of Section 4(b). Except
as may be otherwise noted therein, all locations identified in Annex B are
leased by the applicable Grantors. No Grantor presently conducts business under
any prior or other corporate name or under any trade or fictitious name, except
as indicated beneath its name on Annex B, and no Grantor has entered into any
contract or granted any Lien within the past five years under any name other
than its legal corporate name or a trade or fictitious name indicated beneath
its name on Annex B.
(f) Each Account is, or at the time it arises will be, (i) a bona fide,
valid and legally enforceable indebtedness of the account debtor according to
its terms, arising out of or in connection with the sale, lease or performance
of goods or services by such Grantor, (ii) subject to no offsets, discounts,
counterclaims, contra accounts or any other defense of any kind and character,
other than warranties and discounts customarily given by such Grantor in the
ordinary course of its business and warranties provided by applicable law and
other than patient or payor refund obligations arising in the ordinary course of
business as a result of overpayment, (iii) to the extent listed on any schedule
of Accounts at any time furnished to the Agent, a true and correct statement of
the amount actually and unconditionally owing thereunder, maturing as stated in
such schedule and in the invoice covering the transaction creating such Account,
and (iv) not evidenced by an instrument or chattel paper; or if so, such
instrument or chattel paper (other than invoices and related correspondence and
supporting documentation)
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shall promptly be duly endorsed to the order of the Agent and delivered to the
Agent to be held as Collateral hereunder. To each Grantor's knowledge, there are
no facts, events or occurrences that would in any way impair the validity or
enforcement of any Accounts except as set forth above. No bill of lading,
warehouse receipt or other document or instrument of title is outstanding with
respect to any Collateral other than mobile goods and other than Inventory in
transit in the ordinary course of business to a location set forth on Annex B or
to a customer of a Grantor.
(g) As to each Contract to which any Grantor is or hereafter becomes a
party and that is material to its business, (i) such Grantor is not in default
in any material respect under such Contract, and to the knowledge of such
Grantor, none of the other parties to such Contract is in default in any
material respect thereunder (except as shall have been disclosed in writing to
the Agent), (ii) such Contract is, or at the time of execution will be, the
legal, valid and binding obligation of all parties thereto, enforceable against
such parties in accordance with the respective terms thereof, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and no defense, offset, deduction or
counterclaim will exist thereunder in favor of any such party (it being
recognized that from time to time, under a Contract that has expired by its
terms, the parties may continue to perform pending execution of written
extensions or renewals, each Grantor hereby representing that any Accounts or
other rights accrued under such oral arrangements are not at any time in the
aggregate material to its business), and (iii) the performance by such Grantor
of its obligations under such Contract in accordance with its terms will not
contravene any Requirement of Law or any contractual restriction binding on or
affecting such Grantor or any of its properties, and will not result in or
require the creation of any Lien upon or with respect to any of its properties.
(h) Annexes C, D and E correctly set forth all registered Copyrights,
Patents and Trademarks owned by any Grantor and currently used or proposed to be
used in its business. Each such Grantor owns and possesses the unqualified right
to use all such Copyrights, Patents and Trademarks listed under its name; all
registrations therefor have been validly issued under applicable law and are in
full force and effect; no claim has been made that any of the Copyrights,
Patents or Trademarks is invalid or unenforceable or violates or infringes the
rights of any other Person, and there is no such violation or infringement in
existence; and to the knowledge of such Grantor, no other Person is infringing
upon the rights of such Grantor with regard to any of the Copyrights, Patents or
Trademarks.
(i) As of the date hereof, all Proceeds of Accounts or
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other Collateral of any Grantor are deposited as promptly as practicably
possible after receipt into a Deposit Account maintained by a Grantor, and the
balances in such account, if in excess of $1,000 (or, as to cash concentration
accounts maintained by Healthcare Automation, Inc. or Physicians Planning Group,
Inc., to the extent of amounts in excess of operating and payroll requirements),
are transferred not less frequently than weekly (by wire or Automated
Clearinghouse) to a cash concentration account listed on Annex F (collectively,
"Concentration Accounts"). Annex F sets forth a complete list of all
Concentration Accounts and shows, as to each Concentration Account, the name of
the Grantor maintaining such Concentration Account (or, if the Borrower
maintains such Concentration Account, the name of the Borrower), the name and
location of the bank or depository institution where such Concentration Account
is maintained, the account number and the account name. Each Concentration
Account is maintained with (i) the Agent or (ii) a bank or other depository
institution that has executed and delivered to the Agent an agreement, in form
and substance satisfactory to the Agent, that, among other things, acknowledges
the security interest of the Agent in all funds, monies, securities and
instruments deposited in such Concentration Account and pursuant to which such
bank or depository institution agrees to transfer such funds, monies, securities
and instruments to the Agent promptly upon demand at any time after the
occurrence and during the continuance of an Event of Default (each, a
"Concentration Agreement").
4. Certain Covenants. Each Grantor covenants and agrees as
follows:
(a) So long as no Event of Default shall have occurred and be
continuing, each Grantor may, in any lawful manner not inconsistent with the
provisions of this Agreement and the other Credit Documents (including without
limitation the restrictions and other provisions in the Overline Credit
Agreement relating to Net Available Cash, as defined therein), use, control and
manage the Collateral owned by it in the operation of its business, and receive
and use the income, revenue and profits arising therefrom and the Proceeds
thereof, in the same manner and with the same effect as if this Agreement had
not been made; provided, however, that no Grantor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge, grant any Lien with
respect to or otherwise encumber any of the Collateral or any interest therein,
except for the security interest created in favor of the Agent hereunder and
except as may be otherwise expressly permitted in accordance with the terms of
this Agreement, the Credit Agreement or the Overline Credit Agreement (including
any applicable provisions therein regarding delivery of proceeds of sale or
disposition to the Agent). No Grantor shall invoke or assert the benefit of any
rule of law or statute now or hereafter in effect, including, without
limitation, any
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right to prior notice or judicial hearing in connection with the Agent's
possession, custody or disposition of any Collateral and any appraisal,
valuation, stay, extension, moratorium or redemption law, or take or fail to
take any other action, that would, or could reasonably be expected to, have the
effect of delaying, impeding or preventing the exercise of any rights and
remedies in respect of any Collateral, the absolute sale of any Collateral or
the possession thereof by any purchaser at any sale thereof, and each Grantor
hereby waives the benefit of all such laws.
(b) No Grantor will (i) change its name, identity or corporate
structure, (ii) change its chief executive office from the applicable location
thereof listed on Annex B, or (iii) remove any Collateral (other than mobile
goods and goods in transit), or any books, records or other information relating
to Collateral, from the applicable location thereof listed on Annex B, or keep
or maintain any such Collateral at a location not listed on Annex B, unless in
each case such Grantor has (1) given twenty (20) days' prior written notice to
the Agent of its intention to do so, together with information regarding any
such new location and such other information in connection with such proposed
action as the Agent may reasonably request, and (2) delivered to the Agent ten
(10) days prior to any such change or removal such documents, instruments and
financing statements as may be required by the Agent, all in form and substance
satisfactory to the Agent, paid all necessary filing and recording fees and
taxes, and taken all other actions reasonably requested by the Agent (including,
at the request of the Agent, delivery of opinions of counsel reasonably
satisfactory to the Agent to the effect that all such actions have been taken),
in order to perfect and maintain the Lien upon and security interest in the
Collateral provided for herein in accordance with the provisions of Sections
3(a) and 3(b).
(c) Each Grantor will keep and maintain at its own cost and expense
satisfactory and complete records of the Accounts and all other Collateral,
including, without limitation, records of all payments received, all credits
granted thereon, all merchandise returned and all other documentation relating
thereto, and will furnish to the Agent from time to time such statements,
schedules and reports (including, without limitation, accounts receivable aging
schedules) with regard to the Collateral as the Agent may reasonably request.
Each Grantor shall, from time to time at such times as may be reasonably
requested and upon reasonable notice, (i) make available to the Agent for
inspection and review at such Grantor's offices copies of all invoices and other
documents and information relating to the Collateral (including, without
limitation, itemized schedules of all collections of Accounts, showing the name
of each account debtor, the amount of each payment and such other information as
the Agent shall reasonably request), and (ii) permit the Agent or its
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representatives to visit its offices or the premises upon which any Collateral
may be located, inspect its books and records and make copies and memoranda
thereof, inspect the Collateral, discuss its finances and affairs with its
officers, employees and independent accountants and take any other actions
necessary for the protection of the interests of the Secured Creditors in the
Collateral. At the request of the Agent, each Grantor will legend, in form and
manner satisfactory to the Agent, the books, records and materials evidencing or
relating to the Collateral with an appropriate reference to the fact that such
Collateral has been assigned to the Agent and that the Agent has a security
interest therein.
(d) Unless notified otherwise by the Agent in accordance with the terms
hereof, each Grantor shall endeavor to collect its Accounts and all amounts
owing to it under the Contracts included within the Collateral to which it is a
party, in the ordinary course of its business consistent with past practices and
shall apply forthwith upon receipt thereof all such amounts as are so collected
to the outstanding balances thereof, and in connection therewith shall, at the
request of the Agent, take such action as the Agent may deem necessary or
advisable (within applicable laws) to enforce such collection. No Grantor shall,
except to the extent done in the ordinary course of its business consistent with
past practices and in accordance with sound business judgment and provided that
no Event of Default shall have occurred and be continuing, (i) grant any
extension of the time for payment of any Account or amount owing under any
Contract, (ii) compromise or settle any Account or amount owing under any
Contract for less than the full amount thereof, (iii) release, in whole or in
part, any Person or property liable for the payment of any Account or amount
owing under any Contract, or (iv) allow any credit or discount on any Account or
amount owing under any Contract. Each Grantor shall promptly inform the Agent of
any disputes with any account debtor or obligor and of any claimed offset and
counterclaim that may be asserted with respect thereto involving, in each case,
$25,000 or more, where such Grantor reasonably believes that the likelihood of
payment by such account debtor is materially impaired, indicating in detail the
reason for the dispute, all claims relating thereto and the amount in
controversy. The Agent shall have the right to make test verifications of
Accounts in any reasonable manner and through any reasonable medium, and each
Grantor agrees to furnish all such reasonable assistance and information as the
Agent may require in connection therewith.
(e) Each Grantor agrees that, if any Intercompany Obligations or other
Collateral shall at any time be evidenced by a promissory note or other
instrument or chattel paper, the same shall promptly be duly endorsed to the
order of the Agent and delivered to the Agent to be held as Collateral
hereunder. Notwithstanding any other provision of this Agreement or any of
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the other Credit Documents, unless directed to do so by the Agent, no Grantor
shall, at any time after the occurrence and during the continuance of an Event
of Default except as may be otherwise permitted by the Agent, collect, realize
upon or receive any payment or distribution with respect to any Intercompany
Obligations owed directly or indirectly to such Grantor, or seek or endeavor to
do the same, and all such rights to collect, realize upon and receive any such
payment or distribution shall vest solely in the Agent at all times after the
occurrence and during the continuance of an Event of Default.
(f) Each Grantor will, in accordance with sound business practices,
maintain all Equipment used by it in its business (other than obsolete
Equipment) in good repair, working order and condition (normal wear and tear
excepted) and make all necessary repairs and replacements thereof so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. No Grantor shall knowingly permit any Equipment to become a fixture
to any real property.
(g) Each Grantor will, in accordance with sound business practices,
maintain all Inventory held by it or on its behalf in good saleable or useable
condition. Unless notified otherwise by the Agent in accordance with the terms
hereof, each Grantor may, in any lawful manner not inconsistent with the
provisions of this Agreement and the other Credit Documents, process, use and,
in the ordinary course of business but not otherwise, sell its Inventory.
Without limiting the generality of the foregoing, each Grantor agrees that it
shall not permit any Inventory to be in the possession of any bailee,
warehouseman, agent or processor at any time unless such bailee, warehouseman,
agent or processor shall have been notified of the security interest created by
this Agreement and such Grantor shall have exercised its reasonable best efforts
to obtain, at such Grantor's sole cost and expense, a written agreement to hold
such Inventory subject to the security interest created by this Agreement and
the instructions of the Agent and to waive and release any Lien it may have with
respect to such Inventory, such agreement to be in form and substance reasonably
satisfactory to the Agent.
(h) Each Grantor will, at its expense, at all times perform and comply
with, in all material respects, all terms and provisions of each Contract
material to its business included within the Collateral to which it is or
hereafter becomes a party required to be performed or complied with by it and
enforce the terms and provisions thereof in accordance with its terms, and will
not waive, amend or modify any provision thereof in any manner other than in the
ordinary course of business of such Grantor in accordance with past practices
and for a valid economic reason benefitting such Grantor (provided that in no
event may any waiver, amendment or modification be made that would materially
adversely affect the interests of the Agent and
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the Secured Creditors). With regard to all leases, contracts and agreements that
are excluded by the terms of clause (iii) of Section 2 from the definition of
the term "Contracts," each Grantor covenants and agrees to exercise all of its
material rights and remedies under such leases, agreements and contracts in a
commercially reasonable manner consistent with the interests of the Agent and
the Secured Creditors. No Grantor will enter into any lease, agreement or
contract material to its business that by its terms prohibits the assignment of
the Grantor's rights and interest thereunder in the manner contemplated by this
Agreement, other than as may be entered into in the ordinary course of business
of such Grantor in accordance with past practices and for a valid economic
reason benefitting such Grantor. Each Grantor further covenants and agrees to
use commercially reasonable efforts to obtain any required consent to the
collateral assignment of any material contract upon the reasonable request of
the Agent. Notwithstanding anything herein to the contrary, (i) the Grantors
shall remain liable under all Contracts included within the Collateral to
perform all of their respective obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Agent of any of
its rights or remedies hereunder shall not release any Grantor from any of its
obligations under any of such Contracts, and (iii) the Agent shall not have any
obligation or liability by reason of this Agreement under any of such Contracts,
nor shall the Agent be obligated to perform any of the obligations or duties of
the Grantors thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder. The powers, rights and remedies conferred on the
Agent hereunder are solely to protect its interest and privilege in such
Contracts, as Collateral, and shall not impose any duty upon it to exercise any
such powers, rights or remedies.
(i) Each Grantor that is or hereafter becomes a party to any Contract
with any federal or state governmental agency or authority (including, without
limitation, the United States Department of Defense or any branch of the United
States Armed Forces, the United States Department of Veterans Affairs, or any
state correctional agency or authority) shall, as promptly as reasonably
possible after the date hereof with respect to each such Contract (collectively,
"Government Contracts") to which it is a party and which are in effect as of the
date hereof, and as promptly as reasonably possible after execution thereof with
respect to any Government Contract entered into by such Grantor after the date
hereof, prepare, execute and deliver to the Agent an assignment of moneys due or
to become due under such Government Contract, in such form and manner as shall
be prescribed by applicable laws and regulations or as shall be otherwise
acceptable to the Agent and with a number of originals thereof, together with
such other information, as shall be sufficient to permit the Agent to file
notices of such assignment with the applicable governmental authorities
(provided that the
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Agent will not deliver any such notices of assignment for filing unless an Event
of Default shall have occurred and be continuing). In particular (but without
limitation of the foregoing), as to assignments subject to and permitted by the
federal Assignment of Claims Act of 1940, as amended, each applicable Grantor
shall prepare, execute and deliver all instruments of assignment in accordance
with the procedures set forth in FAR ss.32.800 (48 CFR ss.32.800) et seq. or any
successor provision and shall provide all relevant information necessary for the
Agent to file notices of assignment, including names and addresses of the
applicable administrative contracting officer and disbursing officer. No Grantor
shall enter into any Government Contract after the date hereof that by its terms
prohibits assignment to the Agent of moneys due or to become due thereunder.
(j) Each relevant Grantor will, at its own expense, execute, deliver
and record, as promptly as possible (but in any event within 10 days) after the
date hereof fully completed assignments in the forms of Exhibits A and B, as
applicable, in the U.S. Copyright Office or the U.S. Patent and Trademark Office
pursuant to 35 U.S.C. ss.261, 15 U.S.C. ss.1060 or 17 U.S.C. ss.205, as
applicable. In the event that after the date hereof any Grantor shall acquire
any registered Copyright, Patent or Trademark, or effect any registration of any
Copyright, Patent or Trademark or file any application for registration thereof,
whether within the United States or any other country or jurisdiction, such
Grantor shall promptly furnish written notice thereof to the Agent together with
information sufficient to permit the Agent, upon its receipt of such notice, to
(and each Grantor hereby authorizes the Agent to) modify this Agreement, as
appropriate, by amending Annexes C, D and E hereto or to add additional exhibits
hereto to include any Copyright, Patent or Trademark that becomes part of the
Collateral under this Agreement, and such Grantor shall additionally, at its own
expense, execute, deliver and record, as promptly as possible (but in any event
within 10 days) after the date of such acquisition, registration or application,
as applicable, with regard to United States Patents, Trademarks and Copyrights,
fully completed assignments in the forms of Exhibits A and B, as applicable, in
the U.S. Copyright Office or the U.S. Patent and Trademark Office as more fully
described hereinabove, together in all instances with any other agreements,
instruments and documents that the Agent may reasonably request from time to
time to further effect and confirm the assignment and security interest created
by this Agreement in such Copyrights, Patents and Trademarks, and each Grantor
hereby appoints the Agent its attorney-in-fact to execute, deliver and record
any and all such agreements, instruments and documents for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed and such
power, being coupled with an interest, shall be irrevocable for so long as this
Agreement shall be in effect with respect to such
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Grantor.
(k) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark used in the conduct of such Grantor's
business, use its best efforts to (i) maintain such Trademark in full force and
effect, free from any claim of abandonment or invalidity for non-use, (ii)
maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of federal registration to the extent
required by applicable law and (iv) not knowingly use or knowingly permit the
use of such Trademark in violation of any third-party rights.
(l) Each Grantor (either itself or through its licensees or
sublicensees) will refrain from committing any act, or omitting any act, whereby
any Patent used in the conduct of such Grantor's business may become invalidated
or dedicated to the public, and shall continue to mark any products covered by a
Patent with the relevant patent number as required by applicable patent laws.
(m) Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a Copyright, continue to publish,
reproduce, display, adopt and distribute the work with appropriate copyright
notice as required under applicable copyright laws.
(n) Each Grantor shall notify the Agent immediately if it knows or has
reason to know that any Patent, Trademark or Copyright used in the conduct of
its business may become abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the U.S. Patent and Trademark
Office, U.S. Copyright Office or any court) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(o) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the U.S. Patent and Trademark Office, U.S.
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, to
maintain and pursue each application relating to any Patents, Trademarks or
Copyrights (and to obtain the relevant grant or registration) and to maintain
each registration of any Patents, Trademarks and Copyrights used in the conduct
of such Grantor's business, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and maintenance fees, and, if
consistent with sound business judgment, to initiate opposition, interference
and cancellation proceedings against third parties.
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(p) In the event that any Collateral consisting of a Patent, Trademark
or Copyright used in the conduct of any Grantor's business is believed
infringed, misappropriated or diluted by a third party, such Grantor shall
notify the Agent promptly after it learns thereof and shall, if consistent with
sound business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(q) Each Grantor will cause all Proceeds of its Accounts and other
Collateral to be deposited in a Deposit Account maintained by it or for its
benefit as promptly as practicably possible after receipt thereof by or on
behalf of such Grantor and will cause the balances in each such Deposit Account,
if in excess of $1,000 (or, as to cash concentration accounts maintained by
Healthcare Automation, Inc. or Physicians Planning Group, Inc., to the extent of
amounts in excess of operating and payroll requirements), to be transferred
daily (by wire or Automated Clearinghouse) to a Concentration Account maintained
with the Agent or with another bank or depository institution that has, together
with such Grantor, executed and delivered to the Agent a duly completed
Concentration Agreement; provided that all balances in Deposit Accounts
maintained with the Agent or any bank or depository institution that is an
Affiliate of the Agent (including, without limitation, First Union National Bank
of Florida and First Union National Bank of Georgia) shall be transferred not
less frequently than weekly to a Concentration Account. As promptly as
reasonably possible after the date hereof with respect to each such Affiliate of
the Agent ("Agent Affiliate") at which any Deposit Accounts ("Agent Affiliate
Accounts") are maintained as of the date hereof, and concurrently with the
establishment of an Agent Affiliate Account with any other Agent Affiliate after
the date hereof, each applicable Grantor will execute and deliver, and will
cause the applicable Agent Affiliate to execute and deliver, an agreement, in
form and substance satisfactory to the Agent, that, among other things,
acknowledges the security interest of the Agent in all funds, monies, securities
and instruments deposited in such Agent Affiliate Account and pursuant to which
such bank or depository institution agrees to transfer such funds, monies,
securities and instruments to the Agent promptly upon demand at any time after
the occurrence and during the continuance of an Event of Default (each, a
"Collection Agreement"). Each Grantor will provide each bank or depository
institution at which any Deposit Account is maintained from time to time with
such transfer instructions and other information as such bank or depository
institution may require in order to permit the Grantors to comply with the
provisions of this subsection. All costs and expenses incurred in connection
with the establishment and maintenance of such Deposit Accounts and the
transfers of funds therefrom as
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described in this subsection shall be for the account of the Grantors. Each
Grantor will from time to time take all such action as may be necessary to cause
to be established and maintained with the Agent a centralized disbursement
arrangement satisfactory to the Agent, whereby funds on deposit in the
Concentration Accounts in amounts necessary to fund disbursements shall be
further concentrated at one or more accounts ("Centralized Disbursement
Accounts") maintained with the Agent (which Centralized Disbursement Accounts
may also be Concentration Accounts maintained with the Agent and in any event
shall be deemed Concentration Accounts for all purposes of this Agreement), at a
frequency acceptable to the Agent, for the purpose of centralizing cash
disbursements to third parties such that no cash disbursements or withdrawals
(including checks, payroll or other disbursements) shall be made from any
Deposit Account other than a Centralized Disbursement Account (other than
operating and payroll disbursements of Healthcare Automation, Inc. or Physicians
Planning Group, Inc., which may be made from cash concentration Deposit Accounts
maintained by it). No Proceeds of Accounts or any other Collateral will be
deposited in or at any time transferred to a Deposit Account other than a
Concentration Account, an Agent Affiliate Account, or a Deposit Account the
balances in which Deposit Account are transferred not less frequently than daily
to a Concentration Account. No Grantor shall cause or permit any funds or other
property not constituting Proceeds of Collateral to be deposited into any
Deposit Account. So long as no Event of Default shall have occurred and be
continuing, each Grantor shall have the right to collect, withdraw and direct
the disposition of funds on deposit in the Concentration Accounts in a manner
not inconsistent with the provisions of this Agreement or any of the other
Credit Documents (subject to the requirement hereinabove regarding the
establishment and maintenance of a centralized disbursement arrangement);
provided, however, that, upon the occurrence and during the continuance of an
Event of Default and notice thereof from the Agent to the Borrower, the Agent
shall have exclusive dominion and control over all Concentration Accounts, with
the powers and rights granted herein and in the applicable Concentration
Agreements with respect thereto, and no Grantor shall have any right to collect,
withdraw or direct the disposition of funds on deposit therein or shall take any
action to effect the same.
(r) FirstCollect, Inc. will promptly remit to the applicable creditors
all funds deposited from time to time into trust accounts required to be
maintained by it under Section 58- 70-65 of the General Statutes of North
Carolina, as amended, will promptly disburse any remaining funds retained for
its account into a Deposit Account, and will not cause any other funds or
Proceeds of any Collateral to be deposited into or maintained in any such trust
account or to be commingled with such trust funds.
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(s) Each Grantor will at all times defend the Agent's right, title and
security interest in and to the Collateral and the Proceeds thereof, for the
benefit of the Secured Creditors, against the claims and demands of all other
Persons.
5. Cash Collateral Accounts. Upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right to cause to
be established and maintained, at its principal office or such other location or
locations as it may establish from time to time in its discretion, one or more
cash collateral bank accounts (collectively, "Cash Collateral Accounts") for the
collection of Proceeds of the Collateral. Such Proceeds, when deposited, shall
continue to constitute Collateral for the Secured Obligations and shall not
constitute payment thereof until applied as herein provided. The Agent shall
have sole dominion and control over all funds deposited in the Cash Collateral
Account, and such funds may be withdrawn therefrom only by the Agent. Upon the
occurrence and during the continuance of an Event of Default, the Agent shall
have the right to (and, if directed by the Required Lenders pursuant to the
Credit Agreement or the Required Overline Lenders pursuant to the Overline
Credit Agreement, as applicable), shall) apply amounts held in the Cash
Collateral Accounts in payment of the Secured Obligations in the manner provided
for in Section 8.
6. Taxes, Insurance.
(a) Each Grantor will pay and discharge (i) 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 (ii) all lawful claims that, if unpaid, might become a Lien upon
any of its properties; provided, however, that no Grantor 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 such Grantor has maintained
adequate reserves with respect thereto in accordance with Generally Accepted
Accounting Principles, unless and until any tax lien notice has become effective
with respect thereto or until any Lien resulting therefrom attaches to its
properties and becomes enforceable against its other creditors.
(b) Each Grantor will maintain and pay for, or cause to be maintained
and paid for, insurance covering commercial general liability, professional
liability, property and casualty, business interruption and such other risks,
and in such amounts and with such financially sound and reputable insurance
companies, as are usually and customarily carried by companies engaged in
similar businesses, and will deliver certificates of such insurance to the Agent
with standard loss payable endorsements naming the Agent as loss payee (on
property and casualty policies) and additional insured (on liability policies)
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as its interests may appear. Each such policy of insurance shall contain a
clause requiring the insurer to give not less than thirty (30) days' prior
written notice to the Agent before any cancellation of the policies for any
reason whatsoever and shall provide that any loss shall be payable in accordance
with the terms thereof notwithstanding any act of any such Grantor that might
result in the forfeiture of such insurance. Each Grantor will direct all
insurers under policies of property and casualty insurance on the Collateral to
pay all proceeds payable thereunder directly to the Agent. The Agent shall hold
all such proceeds for the account of such Grantor. So long as no Default or
Event of Default has occurred and is continuing, the Agent shall, at such
Grantor's request, disburse such proceeds as payment for the purpose of
replacing or repairing destroyed or damaged assets, as and when required to be
paid and upon presentation of evidence satisfactory to the Agent of such
required payments and such other documents as the Agent may reasonably request,
or apply such proceeds in whole or in part as a prepayment of the Overline Loans
and/or Loans in the order and manner provided in the Credit Agreement and the
Overline Credit Agreement (such proceeds for purposes of this subsection (b)
being deemed to be "Net Cash Proceeds" within the meaning of the Overline Credit
Agreement). Upon and during the continuance of a Default or Event of Default,
the Agent shall apply such proceeds in the order and manner provided in the
Credit Agreement and the Overline Credit Agreement. Each Grantor hereby
irrevocably makes, constitutes and appoints the Agent at all times during the
continuance of an Event of Default, its true and lawful attorney (and
agent-in-fact) for the purpose of making, settling and adjusting claims under
such policies of insurance, endorsing its name on any check, draft, instrument
or other item or payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance.
(c) If any Grantor fails to obtain and maintain any of the policies of
insurance required to be maintained hereunder or to pay any premium in whole or
in part, the Agent may, without waiving or releasing any obligation or Default,
at the Grantors' expense, but without any obligation to do so, procure such
policies or pay such premiums. All sums so disbursed by the Agent, including
reasonable attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable by the Grantors to the Agent on demand and shall be
additional Secured Obligations hereunder, secured by the Collateral.
(d) Each Grantor will deliver to the Agent, promptly as rendered, true
copies of all material claims and reports made in any reporting forms to
insurance companies. Not less than 30 days prior to the expiration date of the
insurance policies required to be maintained by any Grantor hereunder, such
Grantor will deliver to the Agent one or more certificates of insurance
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evidencing renewal of the insurance coverage required hereunder plus such other
evidence of payment of premiums therefor as the Agent may request. Upon the
reasonable request of the Agent from time to time, each Grantor shall deliver to
the Agent evidence that the insurance required to be maintained pursuant to this
Section is in effect.
7. Remedies Upon Event of Default. In case an Event of Default shall
have occurred and be continuing, the Agent shall be entitled to exercise all of
its rights, powers and remedies (whether vested in it by this Agreement, any
other Credit Document, any Interest Rate Protection Agreement or by law,
including all the rights and remedies of a secured party under the applicable
Uniform Commercial Code) for the protection and enforcement of the rights of the
Secured Creditors in respect of the Collateral, and shall be entitled, in
particular (but without limitation of the foregoing), to exercise the following
rights, which each Grantor hereby agrees to be commercially reasonable:
(i) to notify any or all account debtors or obligors under
any Accounts, Contracts or other Collateral of the security interest in
favor of the Agent created hereby and to direct all such Persons to
make payments of all amounts due thereon or thereunder directly to the
Agent or to a Concentration Account or Cash Collateral Account
designated by the Agent; and in such instance and from and after such
notice, all amounts and Proceeds (including wire transfers, checks and
other instruments) received by any Grantor in respect of any Accounts
or other Collateral shall be received in trust for the benefit of the
Agent hereunder, shall be segregated from the other funds of such
Grantor and shall be forthwith deposited into a Concentration Account
or Cash Collateral Account or paid over or delivered to the Agent in
the same form as so received (with any necessary endorsements or
assignments), to be held as Collateral and applied to the Secured
Obligations as provided herein;
(ii) to take possession of, receive, endorse, assign and
deliver, in its own name or in the name of the Grantors, all checks,
notes, drafts and other instruments relating to any Collateral,
including receiving, opening and properly disposing of all mail
addressed to the Grantors concerning Accounts and other Collateral; to
verify with account debtors or other contract parties the validity,
amount or any other matter relating to any Accounts or other
Collateral, in its own name or in the name of the Grantors; to
accelerate any indebtedness or other obligation constituting Collateral
that may be accelerated in accordance with its terms; to take or bring
all actions and suits deemed necessary or appropriate to effect
collections and to enforce payment of any Accounts or other Collateral;
to settle, compromise or release in whole or in part any
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amounts owing on Accounts or other Collateral; and to extend the time
of payment of any and all Accounts or other amounts owing under any
Collateral and to make allowances and adjustments with respect thereto,
all in the same manner and to the same extent as the Grantors might
have done;
(iii) to notify any or all depository institutions with which
any Concentration Accounts are maintained, in accordance with the terms
of the applicable Concentration Agreements, to remit and transfer all
monies, securities and other property on deposit in such Concentration
Accounts or deposited or received for deposit thereafter to the Agent,
for deposit in the Cash Collateral Accounts or such other accounts as
may be designated by the Agent, for application to the Secured
Obligations as provided herein;
(iv) to transfer all or any part of the Collateral into
the Agent's name or the name of its nominee or nominees;
(v) to assign any Copyright Collateral, Patent Collateral or
Trademark Collateral, for such term or terms, on such conditions and in
such manner as the Agent shall determine; and to license and (to the
extent permitted by applicable law) sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive
basis, any Copyright Collateral, Patent Collateral or Trademark
Collateral, throughout the world, for such term or terms, on such
conditions and in such manner as the Agent shall determine;
(vi) to require each Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or any part of the Collateral as directed by
the Agent and make it available to the Agent at a place designated by
the Agent;
(vii) to enter and remain upon the premises of any of the
Grantors and take possession of all or any part of the Collateral, with
or without judicial process; to use the materials, services, books and
records of the Grantors for the purpose of liquidating or collecting
the Collateral, whether by foreclosure, auction or otherwise; and to
remove the same to the premises of the Agent or any designated agent
for such time as the Agent may desire, in order to effectively collect
or liquidate the Collateral; and
(viii) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all
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of which are hereby waived by each Grantor), for cash, on credit or for
other property, for immediate or future delivery without any assumption
of credit risk, and to adjourn the same from time to time, and for such
price or prices and on such terms as the Agent in its sole and absolute
discretion may determine to be commercially reasonable; provided, that,
unless the Collateral threatens to decline speedily in value, there
shall be given to such Grantor at least ten (10) days' notice of the
time and place of any such public sale or the time after which any
private sale may be made. Each Grantor hereby waives and releases, to
the fullest extent permitted by law, any right or equity of redemption
with respect to the Collateral, whether before or after sale hereunder,
and all rights, if any, of marshalling the Collateral and any other
security for the Secured Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Agent on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption, and the Agent
shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral,
to use and apply any of the Secured Obligations as a credit on account
of the purchase price for any Collateral payable by the Agent at such
sale. Neither the Agent nor any other Secured Creditor shall be liable
for failure to collect or realize upon any or all of the Collateral or
for any delay in so doing, nor shall any of them be under any
obligation to take any action whatsoever with regard thereto.
8. Application of Proceeds.
(a) Except as specifically otherwise provided in the Credit Agreement
and the Overline Credit Agreement, all moneys received by the Agent upon any
collection, sale or other disposition of the Collateral, together with all other
moneys received by the Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Secured Obligations owing to
the Agent of the type described in clauses (v) and (vi) of Section 1;
(ii) second, after payment in full of the amounts specified
in clause (i) above, to the payment of all other Secured Obligations
owing to the Overline Creditors in such manner and order and at such
time as the Agent shall elect, each Overline Creditor to receive an
amount equal to the outstanding amount of the Secured Obligations then
owing to it or, if such payment is insufficient to pay in full all such
Secured Obligations, its Pro Rata Share (as hereinafter defined) of
such payment;
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(iii) third, after payment in full of the amounts specified in
clause (ii) above, to the payment of all other Secured Obligations
owing to the Credit Agreement Creditors (including in their capacity as
Hedge Creditors) in such manner and order and at such time as the Agent
shall elect, each Credit Agreement Creditor to receive an amount equal
to the outstanding amount of the Secured Obligations then owing to it
or, if such payment is insufficient to pay in full all such Secured
Obligations, its Pro Rata Share (as hereinafter defined) of such
payment; and
(iv) fourth, after payment in full of the amounts specified
in clauses (i), (ii) and (iii) above, and following the termination of
this Agreement (as to all Grantors) pursuant to Section 15(a), to the
Grantors or to any other Person that may be lawfully entitled to
receive such surplus.
(b) For purposes of clauses (ii) and (iii) of subsection (a) above,
"Pro Rata Share" shall mean, when calculating a Secured Creditor's portion of
any distribution or amount hereunder, that amount (expressed as a percentage)
equal to a fraction the numerator of which is the then outstanding amount of the
relevant Secured Obligations owing to such Secured Creditor and the denominator
of which is the then outstanding amount of all relevant Secured Obligations.
(c) For purposes of applying amounts in accordance with this Section,
the Agent shall be entitled to rely upon the Hedge Creditors or their
representative under any Interest Rate Protection Agreements for a determination
of the outstanding Secured Obligations owed to the Hedge Creditors. Unless it
has actual knowledge (including by way of written notice from a Hedge Creditor)
to the contrary, the Agent, in acting hereunder, shall be entitled to assume
that no Interest Rate Protection Agreements, or Hedge Obligations in respect
thereof, are in existence.
(d) The Grantors shall remain jointly and severally liable to the
extent of any deficiency between the amount of the Proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (i), (ii) and (iii)
of subsection (a) above.
9. Purchase of Collateral. Upon any sale of any Collateral by the Agent
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Agent or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the Agent
or such officer or be answerable in
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any way for the misapplication or nonapplication thereof.
10. Grant of License. For the purpose of enabling the Agent to exercise
rights and remedies under Section 7 at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to such Grantor) to use, license or sublicense any
Patent Collateral, Trademark Collateral or Copyright Collateral now owned or
licensed or hereafter acquired or licensed by such Grantor, and wherever the
same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof. The
use of such license or sublicense by the Agent shall be exercised, at the option
of the Agent, only upon the occurrence and during the continuation of an Event
of Default; provided that any license, sublicense or other transaction entered
into by the Agent in accordance herewith shall be binding upon the applicable
Grantor notwithstanding any subsequent cure of an Event of Default.
11. Indemnification. The Grantors agree, jointly and severally, to
indemnify and hold harmless the Agent and each other Secured Creditor from and
against any and all claims, demands, losses, judgments and liabilities of every
kind or nature, and to reimburse the Agent and each other Secured Creditor for
all costs and expenses (including, without limitation, reasonable attorneys'
fees), arising out of or resulting from the execution, amendment, administration
or enforcement of this Agreement or the exercise by the Agent or any other
Secured Creditor of any rights or remedies granted hereunder, under the other
Credit Documents or under any Interest Rate Protection Agreements, including,
without limitation, from the exercise by the Agent of any of its powers or
rights under Sections 7, 12(b) or 12(c); provided that neither the Agent nor any
other Secured Creditor shall be entitled to indemnification pursuant to this
Section for claims, demands, losses, judgments and liabilities to the extent
caused by its gross negligence or willful misconduct. In no event shall the
Agent or any other Secured Creditor be liable for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent that
the obligations of any of the Grantors under this Section are unenforceable for
any reason, each Grantor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations that is permissible under
applicable law.
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12. Further Assurances; Agent as Attorney-In-Fact; Agent May
Perform.
(a) Each Grantor agrees that it will join with the Agent to execute
and, at its own expense, file and refile under any applicable Uniform Commercial
Code such financing statements, continuation statements and other documents and
instruments in such offices as the Agent may reasonably deem necessary or
appropriate, and wherever required or permitted by law, in order to perfect and
preserve the Agent's security interest in the Collateral, and hereby authorizes
the Agent to file financing statements and amendments thereto relating to all or
any part of the Collateral without the signature of such Grantor where permitted
by law, and agrees to do such further acts and things (including, without
limitation, making any notice filings with state tax or revenue authorities
required to be made by account creditors in order to enforce any Accounts in
such state) and to execute and deliver to the Agent such additional conveyances,
assignments, agreements and instruments as the Agent may reasonably require or
deem advisable to perfect, establish, confirm and maintain the security interest
and Lien provided for herein, to carry out the purposes of this Agreement or to
further assure and confirm unto the Agent its rights, powers and remedies
hereunder.
(b) Each Grantor hereby irrevocably appoints the Agent its lawful
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, the Agent or otherwise, and with full power of
substitution in the premises, from time to time in the Agent's reasonable
discretion to take any action and to execute any instrument that the Agent may
reasonably deem necessary or advisable to accomplish the purpose of this
Agreement, including, without limitation:
(i) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(ii) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i)
above;
(iii) to obtain, maintain and adjust any property or casualty
insurance required to be maintained by such Grantor under Section 6 and
direct the payment of proceeds thereof to the Agent;
(iv) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral, the legality
or validity thereof and the amounts necessary to discharge the same to
be determined by the
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Agent in its sole discretion, any such payments made by the Agent to
become Secured Obligations of the Grantors to the Agent, due and
payable immediately and without demand;
(v) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent and the other Secured Creditors with respect to any of the
Collateral; and
(vi) to perform the affirmative obligations of the Grantors
under this Agreement (including, without limitation, obligations under
Section 12(a));
and, in the case of each of clauses (i) through (vi) above, the Agent shall use
its best efforts to give the affected Grantor notice of any action taken by it
in accordance with this Section as soon as practicable after such action is
taken; provided, however, that the failure to give any such notice shall not in
any way impair the authority of the Agent pursuant to this Section or the
validity of any action taken by the Agent pursuant hereto, or result in any
liability on the part of the Agent or any other Secured Creditor to any Grantor
or any of its Subsidiaries. The exercise by the Agent of any of its rights
pursuant to this Section shall not create any further obligation on the part of
the Agent to exercise any other rights hereunder or to take any other or further
action in respect thereof. The power of attorney granted by each Grantor under
this Section, being coupled with an interest, is irrevocable for so long as this
Agreement shall be in effect with respect to such Grantor.
(c) If any Grantor fails to perform any agreement contained herein
after written request to do so by the Agent, the Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses so incurred in
connection therewith shall be payable by the Grantors pursuant to Section 11.
13. The Agent. The Agent will hold all items of the Collateral at any
time received under this Agreement in accordance with the provisions hereof. It
is expressly understood and agreed that the obligations of the Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement and the other Credit Documents, are
only those expressly set forth in this Agreement and the other Credit Documents.
The Agent shall act hereunder at the direction, or with the consent, of the
Required Lenders and the Required Overline Lenders, as applicable, on the terms
and conditions set forth in the Credit Agreement and the Overline Credit
Agreement, as the case may be. Except for treatment of the Collateral in its
possession in a manner substantially equivalent to that which the Agent, in its
individual capacity, accords its own property of a similar
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nature, and the accounting for moneys actually received by it hereunder, the
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to the Collateral. Neither the Agent nor any other Secured Creditor
shall be liable to any Grantor (i) for any loss or damage sustained by it, or
(ii) for any loss, damage, depreciation or other diminution in the value of any
of the Collateral that may occur as a result of or in connection with or that is
in any way related to any exercise by the Agent or any other Secured Creditor of
any right or remedy under this Agreement or any other act or failure to act on
the part of the Agent or any other Secured Creditor, except to the extent that
the same is caused by its own gross negligence or willful misconduct.
14. Grantors' Obligations Absolute, etc. The obligations of each
Grantor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any extension,
amendment, modification or restatement of or supplement to the Credit Agreement,
the Overline Credit Agreement, any of the other Credit Documents, any Interest
Rate Protection Agreements or any other instrument or agreement referred to
therein, or any assignment or transfer of any of the foregoing or any rights and
obligations thereunder; (b) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of this Agreement, the Credit Agreement,
the Overline Credit Agreement, any of the other Credit Documents, any Interest
Rate Protection Agreements or any other instrument or agreement referred to
therein; (c) any furnishing of any additional security to the Agent or its
assignee or any acceptance thereof or any release of any Collateral by the Agent
or its assignee; (d) any limitation on or release of any party's liability or
obligations under this Agreement, the Credit Agreement, the Overline Credit
Agreement, the Guaranty, any of the other Credit Documents, any Interest Rate
Protection Agreements or any other instrument or agreement referred to therein,
or any invalidity or unenforceability thereof, in whole or in part; or (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Grantor or any of its
Subsidiaries, or any action taken with respect to this Agreement by any trustee
or receiver, or by any court, in any such proceeding, whether or not such
Grantor shall have notice or knowledge of any of the foregoing.
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15. Termination, Release.
(a) After the occurrence of the Termination Date (as hereinafter
defined) with respect to any Grantor, this Agreement shall terminate as to such
Grantor and such Grantor shall be automatically released hereunder, and the
Agent, at the request and expense of such Grantor, will execute and deliver to
such Grantor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement (including, without limitation, UCC-3
termination statements to the extent necessary), and will duly assign, transfer
and deliver to such Grantor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Agent and
has not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Agent hereunder. For
purposes of this Agreement, "Termination Date" shall mean, with respect to any
Grantor, the earlier to occur of (i) the date upon which all Overline
Obligations, all Credit Obligations and all obligations of the Grantors
hereunder and under the Guaranty have been indefeasibly paid in full, the
Overline Commitments and all Letters of Credit under the Overline Credit
Agreement have been terminated, the Commitments and all Letters of Credit (as
defined in the Credit Agreement) under the Credit Agreement have been terminated
and all Interest Rate Protection Agreements have been terminated or (ii) the
date upon which such Grantor has been released from the Guaranty, and its
obligations thereunder discharged, pursuant to Section 16 thereof.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by the Credit Agreement and the Overline Credit Agreement
or is otherwise released at the direction of the Required Lenders or the
Required Overline Lenders, as applicable (or all of the Lenders or Overline
Lenders, if required by the Overline Credit Agreement or the Credit Agreement,
as the case may be), the Agent, at the request and expense of the respective
Grantor, will duly assign, transfer and deliver to such Grantor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in the possession
of the Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that any Grantor desires that Collateral be released as
provided in subsections (a) or (b) above, it will deliver to the Agent a
certificate signed by its chief financial officer or another principal executive
officer stating that the release of the respective Collateral is permitted
pursuant to subsection (a) or (b) above. If requested by the Agent (although the
Agent shall have no obligation to make any such request), such Grantor will
furnish appropriate legal opinions from counsel reasonably acceptable to the
Agent to the effect set forth in the
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immediately preceding sentence.
16. Amendments, etc; Additional Grantors.
(a) No amendment, modification, waiver, discharge or termination of
this Agreement or any provision hereof, nor any consent to any departure by any
Grantor therefrom, shall in any event be effective unless in writing and signed
by the Agent, acting with the concurrence of such of the Lenders or Overline
Lenders, as applicable, as may be required under the Credit Agreement or the
Overline Credit Agreement, as the case may be, to concur therein, and each
Grantor directly affected thereby (or by the Borrower on its behalf pursuant to
the power of attorney granted in Section 19(b)); provided, however, that (x) the
Agent may, in accordance with the provisions of the Credit Agreement, from time
to time require Subsidiaries of the Borrower not already parties hereto to
become Grantors hereunder by executing an instrument of accession hereto in the
form of Exhibit C (each, a "Grantor Accession"), (y) certain Grantors may from
time to time be released automatically herefrom in accordance with the
provisions of Section 15 and (z) the Required Lenders or the Required Overline
Lenders, as applicable (or such of the Lenders or Overline Lenders, as
applicable, as may in any particular case be required thereunder) may from time
to time (but without any obligation to do so) release, or direct the Agent to
release, any Grantor hereunder, in each case under clauses (x), (y) and (z)
above without the necessity of obtaining the consent of any other Grantor (it
being understood that the release or addition hereunder of any Grantor or of any
of its Collateral shall not constitute a change, waiver, discharge or
termination affecting any Grantor other than the Grantor so released or added);
and provided further that any amendment, modification, waiver, discharge,
termination or consent at any time affecting the rights and benefits of a single
Group (as hereinafter defined) of Secured Creditors, and not all Secured
Creditors in a like or similar manner, shall require only the consent of the
Required Parties (as hereinafter defined) of such Group at such time. For
purposes of the preceding sentence, the term "Group" shall mean and refer to (i)
the Credit Agreement Creditors as holders of the Credit Obligations, (ii) the
Overline Creditors as holders of the Overline Obligations, or (iii) the Hedge
Creditors as holders of the Hedge Obligations, and the term "Required Parties"
shall mean, at any time, (A) with respect to the Credit Obligations, such of the
Lenders as may be required under the Credit Agreement then to concur in the
action being taken, (B) with respect to the Overline Obligations, such of the
Overline Lenders as may be required under the Overline Credit Agreement then to
concur in the action being taken, and (C) with respect to the Hedge Obligations,
the holders of at least a majority of the aggregate obligations of the Borrower
outstanding at such time under all Interest Rate Protection Agreements.
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(b) Concurrently with the execution of a Grantor Accession, each
Grantor that becomes a party to this Agreement pursuant thereto shall take all
necessary actions of the types described in Section 12(a) and shall provide
addendums to the Exhibits to this Agreement setting forth the information called
for therein as it applies to such Grantor, whereupon such Exhibits shall
automatically be deemed to be amended to include such additional information.
17. No Waivers, etc. The enumeration of the rights and remedies of the
Agent and the other Secured Creditors set forth in this Agreement, the Credit
Agreement, the Overline Credit Agreement, the other Credit Documents or any
Interest Rate Protection Agreements is not intended to be exhaustive, and the
exercise by the Agent or any other Secured Creditor of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder, under the Credit Agreement, under the Overline Credit Agreement,
under the other Credit Documents, under any Interest Rate Protection Agreements
or under any other agreement between any Grantor and the Secured Creditors, or
any of them, or that may now or hereafter exist in law or in equity or by suit
or otherwise. No delay or failure to take action on the part of the Agent or any
other Secured Creditor in exercising any right, power or privilege shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between any of the Grantors and the Agent
or any other Secured Creditor or their agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or to constitute a
waiver of any Event of Default. No notice to or demand upon any Grantor in any
case shall entitle such Grantor or any other Grantor 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 other Secured Creditor to exercise any right or remedy
or take any other or further action in any circumstances without notice or
demand.
18. Assignment. No Grantor may assign this Agreement or any of its
rights or obligations hereunder. Any Secured Creditor may assign or otherwise
transfer its interest in this Agreement, in whole or in part, in connection with
an assignment or other transfer of any or all Secured Obligations held by such
Secured Creditor in accordance with the Credit Agreement or the Overline Credit
Agreement (including by the sale of participations), any applicable Interest
Rate Protection Agreement or other relevant documents, it being understood and
agreed that upon any such assignment or other transfer by any Secured Creditor,
the Person that becomes the holder of the Secured Obligations that are the
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subject of such assignment or other transfer shall (except as may be otherwise
provided by such Secured Creditor as a term or condition of such assignment or
other transfer) have and may exercise all of the rights granted to such Secured
Creditor under this Agreement to the extent of that part of or interest in the
Secured Obligations so assigned or transferred to such Person. Each Grantor
hereby irrevocably waives notice of and consents in advance to the assignment or
other transfer as provided above from time to time by any Secured Creditor of
the Secured Obligations held by it, or any part thereof or interest therein, and
of the corresponding rights and interest of such Secured Creditor hereunder in
connection therewith.
19. Notice; Borrower as Attorney-In-Fact.
(a) 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:
<TABLE>
<S> <C>
If to any Grantor: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Chief Financial Officer
Telephone: (919) 383-0355
Telecopy: (919) 383-3660
With copies to: Coastal Physician Group, Inc.
2828 Croasdaile Drive
Durham, North Carolina 27705
Attention: Joseph G. Piemont, Esq.
Telephone: (919) 383-0355
Telecopy: (919) 383-7611
If to any Credit
Agreement Creditor
(including the
Agent): At its address for notices set forth
in the Credit Agreement
If to any Secured
Overline Creditor: At its address for notices set forth
in the Credit Agreement (or, if not a
party thereto, the Overline Credit
Agreement)
If to any Hedge
Creditor: At such address for notices as such
Hedge Creditor shall have specified
to the Borrower
</TABLE>
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<PAGE>
or to such other address as any of the Persons listed above may designate for
itself by like notice to the other Persons listed above. 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.
(b) Each Grantor hereby irrevocably designates and appoints the
Borrower as its representative for the purpose of receiving any notice or other
communication hereunder, and agrees that any notice or other communication given
to the Borrower at the address and in the manner specified herein shall be
deemed notice to all Grantors. Further, each Grantor does hereby irrevocably
make, constitute and appoint the Borrower as the true and lawful
attorney-in-fact of such Grantor, with full authority in the place and stead of
such Grantor and in the name of such Grantor, the Borrower or otherwise, and
with full power of substitution in the premises, from time to time in the
Borrower's discretion to agree on behalf of, and sign the name of such Grantor
to, any amendment, modification or supplement to, restatement of, or waiver or
consent in connection with, this Agreement or any other Credit Document, notice
or other similar document, and to execute any other documents or instruments,
take any other action and do all other things, in each case on behalf of such
Grantor, that the Borrower may deem necessary or advisable to carry out and
accomplish the purposes of this Agreement and the other Credit Documents. The
Borrower will not be liable for any act or omission nor for any error of
judgment or mistake of fact unless such act, omission, error or mistake shall
occur as a result of the gross negligence or willful misconduct of the Borrower.
This power, being coupled with an interest, is irrevocable by any Grantor for so
long as this Agreement shall be in effect with respect to such Grantor. By its
signature hereto, the Borrower consents to its appointment as representative to
receive notices for and agrees promptly to distribute such notices to, and
consents to its appointment as the attorney-in-fact for, each Grantor as
provided for herein.
20. Binding Effect; Survival. This Agreement shall create a continuing
security interest in the Collateral and shall secure the payment and performance
of all of the Secured Obligations as the same may arise and be outstanding at
any time and from time to time from and after the date hereof, shall be binding
upon and enforceable against each Grantor and its successors and permitted
assigns and shall inure to the benefit of and be enforceable by
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each Secured Creditor and its successors and assigns. All representations,
warranties, covenants and agreements herein shall survive the execution and
delivery of this Agreement and any Grantor Accession and shall continue in
effect until the termination in full of this Agreement.
21. Governing Law. This Agreement 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).
22. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
23. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders. All terms in this Agreement that are not capitalized shall have the
meanings provided by the applicable Uniform Commercial Code to the extent the
same are used or defined therein.
24. 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, as to any Grantor, upon the execution of a counterpart
hereof or amendment or supplement hereto by such Grantor.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
executed under seal by its duly authorized officer as of the date first above
written.
THE SIGNATURES OF THE GRANTORS EXECUTING THIS AGREEMENT
AS OF THE DATE FIRST ABOVE WRITTEN ARE ON THE FOLLOWING
SIGNATURE PAGES.
The Borrower hereby joins in this Agreement for purposes of evidencing
its consent to, and agreement to perform, the provisions of Section 19(b).
COASTAL PHYSICIAN GROUP, INC.
By: _______________________________
Title: ____________________________
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Agent
By: _________________________________
Title: ______________________________
Subsidiaries Security Agreement
Coastal Physician Group, Inc.
First Union National Bank of North Carolina, as Agent
(signatures continued)
<PAGE>
