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EXHIBIT 10
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
DATED AS OF AUGUST 25, 2000
AMONG
PHYCOR, INC.,
AS BORROWER,
THE BANKS NAMED HEREIN,
AS BANKS,
AND
CITICORP USA, INC.,
AS ADMINISTRATIVE AGENT AND SOLE BOOK RUNNER
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms .................................. 1
SECTION 1.02. Computation of Time Periods ............................ 22
SECTION 1.03. Accounting Terms ....................................... 22
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances ........................................... 22
SECTION 2.02. Fees ................................................... 25
SECTION 2.03. Reduction of the Commitments/Increase of Supplemental
Revolving Loan Commitment .............................. 26
SECTION 2.04. Existing Revolving Note Obligations and Series A Note
Obligations ............................................ 26
SECTION 2.05. Repayment/Cash Collateralization ....................... 27
SECTION 2.06. Interest ............................................... 28
SECTION 2.07. Interest Rate Determination and Protection ............. 28
SECTION 2.08. Voluntary and Automatic Conversion of Revolving Advances 28
SECTION 2.09. Prepayments ............................................ 29
SECTION 2.10. Increased Costs ........................................ 30
SECTION 2.11. Illegality ............................................. 31
SECTION 2.12. Payments and Computations .............................. 31
SECTION 2.13. Taxes .................................................. 32
SECTION 2.14. Sharing of Payments, Etc ............................... 33
SECTION 2.15. Evidence of Debt/Register .............................. 34
SECTION 2.16. Use of Proceeds ........................................ 34
SECTION 2.17. Outstanding Advances and Letters of Credit and Fees .... 34
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
SECTION 3.01. Letters of Credit ...................................... 34
SECTION 3.02. Issuing the Supplemental Letters of Credit ............. 35
SECTION 3.03. Reimbursement Obligations .............................. 37
SECTION 3.04. Participations Purchased by the Banks .................. 37
SECTION 3.05. Letter of Credit Fees .................................. 38
SECTION 3.06. Indemnification: Nature of the Issuing Bank's Duties ... 38
SECTION 3.07. Increased Costs ........................................ 39
SECTION 3.08. Uniform Customs and Practice ........................... 40
SECTION 3.09 Collateral Account ..................................... 40
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to Any Borrowing and Letter of Credit 41
SECTION 4.02. Conditions Precedent to the Effectiveness of this Amendment 42
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Borrower ......... 44
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. Affirmative Covenants .................................. 48
SECTION 6.02. Negative Covenants ..................................... 52
SECTION 6.03. Financial Covenants .................................... 57
SECTION 6.04. Reporting Requirements ................................. 57
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default ...................................... 61
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action ............................... 64
SECTION 8.02. Agent's Reliance, Etc .................................. 64
SECTION 8.03. CUSA and Affiliates .................................... 64
SECTION 8.04. Bank Credit Decision ................................... 65
SECTION 8.05. Indemnification ........................................ 65
SECTION 8.06. Successor Agent/Issuing Bank ........................... 65
SECTION 8.07. Documentation Agent and Sole Book Runner ............... 66
SECTION 8.08. Release of Collateral .................................. 66
SECTION 8.09. Release of Guarantor ................................... 66
SECTION 8.10. Actions in Respect of Amended and Restated
Intercreditor Agreement ................................ 67
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, etc. ....................................... 67
SECTION 9.02. Notices, Etc ........................................... 67
SECTION 9.03. No Waiver: Remedies .................................... 67
SECTION 9.04. Costs, Expenses and Taxes .............................. 68
SECTION 9.05. Right of Set-off ....................................... 68
SECTION 9.06. Indemnification ........................................ 69
SECTION 9.07. Binding Effect ......................................... 69
SECTION 9.08. Assignments and Participations ......................... 70
SECTION 9.09. Headings ............................................... 72
SECTION 9.10. Confidentiality ........................................ 72
SECTION 9.11. Severability of Provisions ............................. 72
SECTION 9.12. Independence of Provisions ............................. 72
SECTION 9.13. Consent to Jurisdiction ................................ 72
SECTION 9.14. GOVERNING LAW .......................................... 73
SECTION 9.15. WAIVER OF JURY TRIAL ................................... 73
SECTION 9.16. Execution in Counterparts .............................. 73
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FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
August 25, 2000 (this "Agreement"), among PHYCOR, INC., a Tennessee corporation
(the "Borrower"), the banks (the "Banks") listed on the signature pages hereof
and from time to time parties hereto, CITIBANK, N.A. ("Citibank"), as an Issuing
Bank hereunder and CITICORP USA, INC. ("CUSA") as the Swing Line Bank hereunder
and as administrative agent (the "Agent") for the Banks and the Issuing Banks
and Bank of America, N.A., as documentation agent (the "Documentation Agent").
PRELIMINARY STATEMENTS
(1) The Borrower has requested that the Third Amended and
Restated Revolving Credit Agreement, dated as of January 28, 2000, as amended by
Amendment No. 1 and Consent thereto dated as of June 30, 2000 among the
Borrower, the banks named therein, Bank of America, N.A., as documentation
agent, and Citibank, as an issuing bank thereunder and as agent (the "Existing
Credit Agreement"), be further amended as provided herein.
(2) The amendments to the Existing Credit Agreement will, among
other things, provide that the outstanding principal amount of advances
thereunder, the total liabilities for letters of credit issued thereunder and
the outstanding principal amount of Series A Notes (as hereinafter defined) as
of the date hereof will be combined into a term obligation hereunder and repaid
(or terminated) pursuant to a payment schedule ending no later than June 30,
2001 (which payment schedule requires earlier payments than in the Existing
Credit Agreement) and that the remaining aggregate revolving commitment
thereunder will be reduced to $10,000,000 (with a possibility to be increased to
$15,000,000), except to the extent that such term obligations are repaid as
provided herein in which event such remaining aggregate revolving commitment
could increase an additional $25,000,000 but in any event such remaining
aggregate revolving commitment will be less than the unused commitment under the
Existing Credit Agreement.
(3) The Majority Banks have agreed to amend the Existing Credit
Agreement on the terms set forth in this Agreement, with such amendment to take
the form of this "Fourth Amended and Restated Revolving Credit Agreement".
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Accounts" means all present and future rights of the Borrower
or any Subsidiary of the Borrower to payment for goods (including
medications) sold or leased or for services rendered pursuant to any
Service Agreement (except those evidenced by instruments or chattel
paper), whether now existing or hereafter arising and wherever arising
and whether or not earned by performance (including, without
limitation, accounts receivable purchased by the Borrower or any of its
Subsidiaries from any physician group which has entered into a Service
Agreement with the Borrower or such Subsidiary).
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"Administrative Details Reply Form" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the
Agent, submitted by such Bank to the Agent (with a copy to the
Borrower) and duly completed by such Bank.
"Advance" means a Revolving Advance or a Swing Line Advance.
In the case of Revolving Advances, "Advance" also refers to a Base Rate
Advance or Eurodollar Rate Advance (each of which shall be a "Type" of
Revolving Advance).
"Affiliate" means, with respect to any Person, any other entity
that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
Person.
"Agent" has the meaning specified in the recital of parties to
this Agreement.
"Amended and Restated Intercreditor Agreement" means the Amended
and Restated Intercreditor and Collateral Agency Agreement dated as of
the date hereof, among the Agent, the Banks from time to time party to
hedge agreements with the Borrower, and CUSA, as Collateral Agent, as
amended from time to time.
"Anticipated Sales Proceeds" shall mean as of the Closing Date
in respect of each asset listed on the Anticipated Sales Proceeds
Certificate delivered on or before the Closing Date to the Banks, the
respective amount listed opposite such asset on such Certificate and
thereafter in respect of each such asset (except for those assets on
such Certificate for which Anticipated Sales Proceeds are not to be
adjusted) will be calculated on the last Business Day of each month
based upon the reported book value (such reported book values being
recorded consistent with the Borrower's past practices) for tangible
assets on the Borrower's balance sheet for such asset (i) less the cash
on the internal balance sheet of such asset that represents
intercompany accounts receivable, (ii) less total liabilities,
excluding intercompany debt and deferred income taxes, on the internal
balance sheets of such asset and (iii) adjusted for the applicable
premium or reserve as provided in such Certificate, provided, however,
if (A) any such asset is the subject of a binding agreement of sale or
letter of intent related to a sale, the initial cash proceeds, if any,
set forth in such agreement or letter of intent shall be deemed the
Anticipated Sale Proceeds for such asset or (B) the Borrower reports
that the amount of Anticipated Sales Proceeds for any such asset will
decrease pursuant to Section 6.04(l)(v), such revised reported amount
shall be deemed the Anticipated Sales Proceeds for such asset.
"Anticipated Sales Proceeds Certificate" means the certificate
delivered pursuant to Section 6.04(l)(v).
"Applicable Base Rate Margin" means 2.00% as to Revolving Loan
Advances and Existing Debt Obligations and 5.50% as to Supplemental
Revolving Loan Advances; provided, however, that the Applicable Base
Rate Margin as to Supplemental Revolving Loan Advances shall be 2.00%
after the Supplemental Revolving Loan Commitment is increased to
$15,000,000 as provided in Section 2.03(c) or after the principal
amount of all Existing Debt Obligations, not including the Revolving
Loan Borrowings, have been paid in full.
"Applicable Eurodollar Rate Margin" means 3.50% as to Revolving
Loan Advances and Existing Debt Obligations and 7.00% as to
Supplemental Revolving Loan Advances; provided, however, that the
Applicable Eurodollar Rate Margin as to Supplemental Revolving Loan
Advances shall be 3.50% after the Supplemental Revolving Loan
Commitment is increased to $15,000,000 upon satisfaction of the
conditions set forth in Section 2.03(c) or after the principal
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amount of all Existing Debt Obligations, not including the Revolving
Loan borrowings, have been paid in full.
"Applicable Facility Fee Rate" means 1.00% per annum.
"Applicable Lending Office" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of a Base Rate Advance
and such Bank's Eurodollar Lending Office in the case of a Eurodollar
Rate Advance.
"Applicable Letter of Credit Fee Rate" means 3.50% per annum
as to Existing Letters of Credit and Replacement Supplemental Letters
of Credit and 7% as to Supplemental Letters of Credit (except
Replacement Supplemental Letters of Credit); provided, however, that
the Applicable Letter of Credit Fee Rate as to Supplemental Letters of
Credit shall be 3.50% after the Supplemental Revolving Loan Commitment
is increased to $15,000,000 upon satisfaction of the conditions set
forth in Section 2.03(c) or after the principal amount of all Existing
Debt Obligations, not including the Revolving Loan Borrwings have been
paid in full.
"Asset Sale" means (a) the sale by the Borrower or any of its
Subsidiaries to any other Person of (i) any of the stock of any of the
Borrower's Subsidiaries or (ii) any other assets (whether tangible or
intangible) of the Borrower or any of its Subsidiaries (other than any
assets to the extent that the aggregate value of such assets sold in
any single transaction or related series of transactions during any
fiscal year is less than $250,000), including, without limitation, any
interest in a Service Agreement, and (b) any Net Proceeds received in
respect of assets retained by the Borrower as part of the liquidation,
winddown or sale of any Facility or other asset or pursuant to the
modification or termination of an existing Service Agreement, other
than Restructuring Management Fees.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an assigning Bank and an Eligible Assignee, and
accepted by the Agent, in accordance with Section 9.08 and in
substantially the form of Exhibit C.
"Banks" means the banks listed on the signature pages hereof
and, after the date hereof, includes each Eligible Assignee that has
entered into an Assignment and Acceptance which has been accepted by
the Agent.
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate; or
(b) 1/2 of one percent per annum above the latest three-week
moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
being determined weekly on each Monday (or, if any such day is
not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on
the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or terminated,
on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized
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standing selected by Citibank in either case adjusted to the
nearest 1/16 of one percent or, if there is no nearest 1/16 of
one percent, to the next higher 1/16 of one percent; or
(c) the Federal Funds Rate plus 1/2 of one percent.
"Base Rate Advance" means a Revolving Advance or Existing Debt
Obligation which bears interest as provided in Section 2.06(a).
"Benz Litigation" means the case pending in the United States
District Court for the Central District of California by William R.
Benz against Prem Reddy, Prime Care International, Inc., and others.
"Borrower Security Agreement" means the Borrower Pledge and
Security Agreement dated as of January 28, 2000, from the Borrower to
the Collateral Agent for the ratable benefit of the Secured Parties, as
amended from time to time.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances on which dealings
in dollar deposits are carried on in the London interbank market.
"Capital Expenditures" means, with respect to any Person for
any period, the aggregate of all expenditures paid or accrued by such
Person during such period that, in accordance with generally accepted
accounting principles, should be included in or reflected by the
property, plant or equipment or similar fixed asset account reflected
in the balance sheet of such Person.
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee, which lease
should, in accordance with generally accepted accounting principles, be
required to be accounted for as a capital lease on the balance sheet of
such Person.
"Cash Collateral Account" has the meaning specified therefor in
Section 3.09.
"Cash Equivalents" means any of the following types of
investments, to the extent owned by the Borrower or any of its
Subsidiaries free and clear of all Liens:
(a) readily marketable obligations issued or directly
and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof having
maturities of not more than 360 days from the date of
acquisition thereof; provided that the full faith and credit
of the United States of America is pledged in support thereof;
(b) time deposits with, or insured certificates of
deposit or bankers' acceptances of, any commercial bank that
(i) (A) is a Bank or (B) is organized under the laws of the
United States of America, any state thereof or the District of
Columbia, or is the principal banking subsidiary of a bank
holding company organized under the laws of the United States
of America, any state thereof or the District of Columbia, and
is a member of the Federal Reserve System, (ii) issues (or the
parent of which issues) commercial paper rated as described
below in clause (c) of this definition and (iii) has combined
capital and surplus of at least $1,000,000,000, in each case
with a maturity of not more than one year from the date of
acquisition thereof;
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(c) commercial paper issued by any Person organized
under the laws of any state of the United States of America
and rated at least "Prime-1" (or the then equivalent grade) by
Moody's or at least "A-1" (or the then equivalent grade) by
S&P, in each case with a maturity of not more than 180 days
from the date of acquisition thereof;
(d) investments, classified in accordance with GAAP
as current assets of the Borrower or any of its Subsidiaries,
in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are
administered by financial institutions that have the highest
rating obtainable from either Moody's or S&P, and the
portfolios of which are limited solely to Investments of the
character and quality described in clauses (a), (b) and (c) of
this definition;
(e) general obligations issued or directly and fully
guaranteed or otherwise supported by the full taxation
authority of any state of the United States of America or any
municipal corporation or other agency or instrumentality
thereof and rated at the highest rating obtainable therefor
from either Moody's or S&P, in each case with a maturity of
not more than one year from the date of acquisition thereof;
and
(f) general obligations of any state of the United
States of America or any municipal corporation or other agency
or instrumentality thereof which, based on the escrow
therefor, are rated as described above in clause (e) of this
definition and which have been irrevocably called for
redemption and advance refunded through the deposit in escrow
of (i) readily marketable obligations solely of the type
described above in clause (a) of this definition or (ii) other
debt securities which are (A) not callable at the option of
the issuer thereof prior to their stated maturity, (B)
irrevocably pledged solely in support of the payment of all
principal of and interest on such general obligations and (C)
in an aggregate principal amount and with such stated rates of
interest as shall be sufficient to pay in full all principal
of and interest and premiums, if any, on such general
obligations as the same become due and payable (as verified by
independent public accountants of recognized standing), in
each case with a maturity of not more than one year from the
date of acquisition thereof.
"Cash Flow Expenditures\Receipts" means the sum of (i) Net
Income (whether positive or negative), less (ii) Capital Expenditures,
plus (iii) depreciation and amortization expense, plus (iv) income tax
expense, plus (v) interest expense, plus (vi) any monthly decrease in,
or minus any monthly increase in, working capital, excluding the
changes in items related to (iv) and (v).
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.
9601 et seq.), and any regulations promulgated thereunder.
"Change of Control" means the occurrence, after the date of
this Agreement, of (i) any Person or two or more Persons (in either
case, exclusive of any Warburg Pincus Entity) acting in concert
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended), directly or indirectly, of securities of the
Borrower (or other securities convertible into such securities)
representing 50% or more of the combined voting power of all securities
of the Borrower entitled to vote in the election of directors; or (ii)
during any period of up to 24 consecutive months, commencing before or
after the date of this Agreement, individuals who at the beginning of
such 24-month period were directors of the Borrower ceasing for any
reason to constitute a majority of the Board of Directors of the
Borrower unless the Persons replacing such individuals were
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nominated by the Board of Directors of the Borrower; or (iii) any
Person or two or more Persons (in either case, exclusive of any
Warburg Pincus Entity) acting in concert acquiring by contract or
otherwise, or entering into a contract or arrangement that upon
consummation will result in its or their acquisition of, or control
over, securities of the Borrower (or other securities convertible into
such securities) representing 50% or more of the combined voting power
of all securities of the Borrower entitled to vote in the election of
directors.
"Clinic Subsidiaries" means the Subsidiaries listed on
Annex I.
"Closing Date" means the Business Day on which all of the
conditions set forth in Section 4.02 shall have been fulfilled.
"Collateral" means all "Collateral" referred to in the
Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Collateral Agent for the benefit
of the Secured Parties, provided that (i) neither the equity interests
in, nor assets of, any Regulated Subsidiary or Immaterial Subsidiary
shall be part of the Collateral and (ii) the assets of any Subsidiary
in which the direct and indirect ownership interest of the Borrower is
less than 80% shall not be part of the Collateral.
"Collateral Agent" has the meaning specified therefor in the
Amended and Restated Intercreditor Agreement.
"Collateral Documents" means, collectively, the Borrower
Security Agreement, the Subsidiary Security Agreements, the Mortgages
and any other agreement that creates or purports to create a Lien in
favor of the Collateral Agent for the benefit of the Secured Parties.
"Commitment" means, as to any Bank, the amount of its maximum
commitment to make Supplemental Revolving Loan Advances or participate
in Supplemental Letters of Credit set forth opposite such Bank's name
on Annex B, or, if such Bank has entered into one or more Assignments
and Acceptances, the amount thereof set forth for such Bank in the
Register maintained by the Agent pursuant to Section 9.08(c), as such
amount is reduced from time to time pursuant to Section 2.03.
"Commitment Percentage" means, as to any Bank, the percentage
equal to such Bank's Commitment divided by the aggregate Commitments of
all Banks.
"Consolidated" and any derivative thereof each means, with
reference to the accounts or financial reports of any Person, the
consolidated accounts or financial reports of such Person and each
Subsidiary of such Person determined in accordance with generally
accepted accounting principles, including principles of consolidation,
consistent with those applied in the preparation of the Borrower's
December 31, 1999 Consolidated financial statements delivered to the
Banks prior to the date hereof.
"Contingent Obligation" of any Person means, without
duplication, (i) any direct or indirect liability, contingent or
otherwise, of such Person with respect to any obligation of the type
specified in clause (ii) or (iii) below or other obligation of another
Person, including, without limitation, any obligation directly or
indirectly guaranteed, endorsed (other than for collection or deposit
in the ordinary course of business), co-made, discounted or sold with
recourse by such Person, or in respect of which such Person is
otherwise directly or indirectly liable (including, without limitation,
liable through any agreement to purchase, repurchase or otherwise
acquire such obligation or provide or purchase any security therefor,
or to provide funds for the payment
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or discharge of such obligation, or to maintaining any financial
condition of the obligor of such obligation, or to make payment for
any products, materials or supplies or for any transportation, services
or lease (regardless of the non-delivery or non-furnishing thereof),
in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or
that any agreements relating thereto will be complied with, or that
the holders of such obligation will be protected against loss in
respect thereof), (ii) obligations of such Person with respect to
undrawn letters of credit or unpaid bankers' acceptances, bankers'
assurances or guarantees or similar items, and (iii) obligations of
such Person with respect to any interest rate protection, hedge, cap,
collar or similar agreement or any foreign exchange or forward sale
agreement, or any similar agreement, provided, that "contingent
obligations" shall not include customary indemnification obligations
of the Borrower or any of its Subsidiaries arising in connection with
the sale of assets.
"Corporate Cash Flow Expenditures" means the sum of (i) Net
Income (whether positive or negative), (ii) less Capital Expenditures,
plus (iii) depreciation and amortization expense, plus (iv) income tax
expense, plus (v) interest expense, plus (vi) employee severance
payments, plus (vii) Pueblo and Roanoke lease subsidy payments, plus
(viii) professionals' fees of the Agent's advisors, plus (ix) loan fees
in connection with the execution of this Agreement, (x) plus any
monthly decrease in, or minus any monthly increase in, working capital
(excluding the changes in working capital related to items (iv) through
(ix)).
"Current Liabilities" of any Person means, as of any date of
determination, (i) all Debt (excluding any Debt under Operating Leases)
which by its terms is payable on demand or matures within one year from
the date of creation (excluding any Debt renewable or extendible, at
the exclusive option of the debtor, to a date more than one year from
such date or arising under a revolving credit or similar agreement that
unconditionally obligates the lender or lenders to extend credit in
respect thereof during a period of more than one year from such date),
and (ii) all other items (including taxes accrued as estimated) which
in accordance with generally accepted accounting principles should be
included as current liabilities of such Person, in each case, including
all amounts required to be paid or prepaid with respect to any Debt of
such Person within one year from the date of determination.
"Debt" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (but excluding, in the case of
the acquisition of any Facility (or the assets thereof), any Existing
Clinic Acquisition or the acquisition of a Related Business, any
contingent obligation to make payments (other than deferred purchase
price payments) after the closing of such acquisition), (ii) all
obligations of such Person in connection with any agreement to
purchase, redeem, exchange, convert or otherwise acquire for value any
Securities of such Person or any warrants, rights or options to acquire
such Securities, now or hereafter outstanding, (iii) all obligations of
such Person evidenced by bonds, notes, debentures, convertible
debentures or other similar instruments, (iv) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though
the rights and remedies of the seller or lender under such agreement in
the event of default, acceleration, or termination are limited to
repossession or sale of such property), (v) all obligations of such
Person under Capital Leases, (vi) the amount of all Contingent
Obligations, (vii) all Debt referred to in clause (i), (ii), (iii),
(iv), (v) or (vi) above secured by (or for which the holder of such
Debt has an existing right, contingent or otherwise, to be secured by)
any lien, security interest or other charge or encumbrance upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt, (viii) all mandatorily redeemable
preferred stock, valued at the applicable
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redemption price, plus accrued and unpaid dividends payable in respect
of such mandatorily redeemable preferred stock, (ix) if an ERISA Event
shall have occurred with respect to any Plan, the Insufficiency (if
any) of such Plan (or, in the case of a Plan with respect to which an
ERISA Event described in clauses (iii) through (vi) of the definition
of ERISA Event shall have occurred, the liability related thereto),
and (x) net obligations (based on a mark to market valuation on the
date of determination) under any interest rate, currency or other
protection, hedge, cap, collar, swap or similar agreement.
"Deferred Acquisition Consideration" means, in the case of the
acquisition of any Facility (or the assets thereof) or any Related
Business, all deferred cash and non-cash consideration to be paid by
the Borrower or any of its Subsidiaries after the closing of such
acquisition; provided that Deferred Acquisition Consideration shall not
include any contingent payments that may be made by the Borrower or any
of its Subsidiaries after such closing.
"Documentation Agent" means Bank of America, N.A.
"Domestic Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Domestic Lending Office" in its
Administrative Details Reply Form or on the signature page of the
Assignment and Acceptance pursuant to which it became a Bank, or such
other office or Affiliate of such Bank as such Bank may from time to
time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, having a
combined capital and surplus of at least $100,000,000; (ii) a savings
and loan association or savings bank organized under the laws of the
United States or any state thereof; and having a combined capital and
surplus of at least $100,000,000; (iii) a commercial bank organized
under the laws of any other country which is a member of the OECD, or a
political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, provided that such bank
is acting through a branch, agency or Affiliate located in the United
States or managed and controlled by a branch, agency or affiliate
located in the United States; (iv) any Affiliate of any Bank if such
Affiliate has Total Assets in excess of $100,000,000; (v) any insurance
company organized under the laws of the United States or any state
thereof, and having Total Assets in excess of $100,000,000; (vi) any
other commercial financial entity having Total Assets in excess of
$100,000,000; and (vii) any other Person mutually agreed to in writing
by the Borrower and the Agent.
"Environmental Activity" means any past, present or future
storage, holding, existence, release, threatened release, emission,
discharge, generation, processing, abatement, disposition, handling or
transportation of any Hazardous Substance (i) from, under, into or on
any Facility, or (ii) relating to any Facility, or the ownership, use,
operation or occupancy thereof, or any threat of such activity.
"Environmental Laws" means any and all laws, statutes,
ordinances, rules, regulations, judgments, orders, decrees, permits,
licenses, or other governmental restrictions or requirements relating
to the environment, any Hazardous Substance or any Environmental
Activity in effect in any and all jurisdictions in which the Borrower
or any of its Subsidiaries is or from time to time may be doing
business, or where any of the Facilities are from time to time located,
including, without limitation, CERCLA and RCRA.
"Equity-Like Instrument" means any debt instrument issued by
the Borrower which shall have no requirements for cash payments of any
nature at any time so long as any Advances
<PAGE> 12
9
remain unpaid or any Letter of Credit is outstanding or any Bank shall
have a Commitment hereunder and contain subordination terms no less
favorable to the Banks than the subordination terms contained in the
Indenture, dated as of February 15, 1996, in respect of the Borrower's
4.5% Convertible Subordinated Debentures due 2003.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title
IV of ERISA is a member of the Borrower's controlled group, or under
common control with the Borrower, within the meaning of Section 414 of
the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated pursuant thereto and the rulings issued
thereunder.
"ERISA Event" means (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, unless the 30-day notice
requirement with respect thereto has been waived by the PBGC; (ii) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA); (iii) the cessation of operations at a facility in
the circumstances described in Section 4062(e) of ERISA; (iv) the
withdrawal by the Borrower or an ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by
the Borrower or any ERISA Affiliate to make a material payment to a
Plan required under Section 302(f)(1) of ERISA; (vi) the adoption of an
amendment to a Plan requiring the provision of initial or additional
security to such Plan, pursuant to Section 307 of ERISA; or (vii) the
institution by the PBGC of proceedings to terminate a Plan, pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition
which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Bank,
the office of such Bank specified as its "Eurodollar Lending Office" in
its Administrative Details Reply Form or on the signature page of the
Assignment and Acceptance pursuant to which it became a Bank (or, if no
such office is specified, its Domestic Lending Office), or such other
office of such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) at which deposits in U.S. dollars appear on page
3750 (or any successor page thereto) of the Dow Jones Telerate Screen
two Business Days before the first day of such Interest Period and for
a term comparable to such Interest Period or, if such rate does not so
appear on the Dow Jones Telerate Screen on any date of determination,
on the Reuters Screen LIBO Page two Business Days before the first day
of such Interest Period and for a term comparable to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period; provided, however, that if
the Reuters Screen LIBO Page is being used to determine the Eurodollar
Rate at any date of determination and more than one rate is specified
thereon as the London interbank offered rate for deposits in U.S.
dollars, the applicable rate shall
<PAGE> 13
10
be the arithmetic mean (rounded upward, if necessary, to the nearest
whole multiple of 1/100 of 1% per annum) of all such rates.
"Eurodollar Rate Advance" means a Revolving Advance or
Existing Debt Obligation which bears interest as provided in Section
2.06(b).
"Eurodollar Rate Reserve Percentage" of any Bank for any
Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any
such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Bank with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities having a
term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 7.01.
"Existing Clinic Acquisitions" means the acquisition of an
additional Facility or single-specialty clinic, or the assets thereof,
by the Borrower or a Subsidiary of the Borrower which already owns and
operates one or more Facilities, or the addition of physicians to such
Facilities, which acquisition or addition will supplement the
operations of the existing Facilities.
"Existing Letter of Credit" means any standby letter of credit
which was Issued pursuant to Article III of the Existing Credit
Agreement.
"Existing Letter of Credit Liabilities" means, as of any date
of determination, all then existing liabilities of the Borrower to the
Issuing Banks in respect of the Existing Letters of Credit issued prior
to July 10, 2000 for its account, whether such liability is contingent
or fixed, and shall, in each case, consist of the sum of (i) the
aggregate maximum amount then available to be drawn under such Existing
Letters of Credit (the determination of such maximum amount to assume
compliance with all conditions for drawing) and (ii) the aggregate
amount which has then been paid by, and not been reimbursed to, the
Issuing Banks under the Existing Letters of Credit, and, as to each
Bank, the respective amount thereof set forth in Annex C opposite such
Bank's name.
"Existing Debt Obligations" means the sum of the Series A Note
Obligations and the Existing Revolving Note Obligations as of any date
of determination.
"Existing Obligations" means the sum of the Series A Note
Obligations, the Existing Revolving Note Obligations and the Existing
Letter of Credit Liabilities, in each case as of the Closing Date.
"Existing Revolving Note Obligations" means the aggregate
outstanding principal amount of advances as of July 10, 2000 under the
Existing Credit Agreement and, as to each Bank, the respective amount
thereof set forth on Annex C opposite such Bank's name.
"Facility" means any multi-specialty medical clinic (including
any satellite locations and all real, personal and mixed property
relating to any such clinic) and related businesses certain of the
assets of which are now owned or leased and operated or hereafter owned
or leased and
<PAGE> 14
11
operated by the Borrower or any existing or future Subsidiary of the
Borrower or, in the case of an acquisition, that such a Subsidiary
intends to acquire.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Guarantors" means the Subsidiaries listed on Schedule II
hereto and each other Subsidiary that from time to time may enter into
a Guaranty pursuant hereto; provided that Immaterial Subsidiaries shall
not be required to be Guarantors; and provided further that Regulated
Subsidiaries shall not be Guarantors and provided further that
Subsidiaries in which the direct and indirect ownership interest of the
Borrower is less than 80% shall not be required to be Guarantors.
"Guaranty" means the Guaranty dated as of July 1, 1997 made by
each of the Loan Parties, whether as initial party thereto or by
execution of a supplement thereto (other than the Borrower) in favor of
the Agent, as amended, supplemented, restated or otherwise modified
from time to time.
"Hazardous Substance" means (i) any hazardous substance and
toxic substance as such terms are presently deemed or used in ss.
101(14) of CERCLA (42 U.S.C. ss. 9601(14)), in 33 U.S.C. ss. 1251 et
seq. (Clean Water Act), or 15 U.S.C. ss. 2601 et seq. (Toxic Substances
Control Act), (ii) any additional substances or materials which are now
or hereafter hazardous or toxic substances under any applicable laws,
and (iii) as of any date of determination, any additional substances or
materials which are hereafter incorporated in or added to the
definition or use of "hazardous substance" or "toxic substance" for
purposes of CERCLA or any other applicable law.
"IBNR" means, in respect of an IPA, such IPA's incurred but
not reported claims liability.
"Immaterial Subsidiary" means a Subsidiary of the Borrower
that, on a Consolidated basis with its Subsidiaries, as of the end of
its most recent fiscal quarter prior to the date of determination has
assets with a book value of less than $1,000,000 or revenues for the
twelve-month period as of the end of such quarter of less than
$1,000,000, provided that, if as of the end of any fiscal quarter the
Immaterial Subsidiaries shall have, in the aggregate, assets with a
book value of more than $5,000,000 or revenues for the twelve-month
period as of the end of such quarter of more than $5,000,000, the
Borrower shall promptly, by written notice to the Agent, designate one
or more of such Subsidiaries not to be Immaterial Subsidiaries so that
Immaterial Subsidiaries do not exceed either of such amounts, and the
Subsidiaries so designated shall thereupon cease to be Immaterial
Subsidiaries.
"Indemnitee" or "Indemnitees" has the meaning set forth in
Section 9.06.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Intercompany Creditor" means PhyCor of Nashville, Inc., a
Tennessee corporation and wholly owned Subsidiary of the Borrower.
<PAGE> 15
12
"Intercompany Debt" means any and all indebtedness from time
to time owed (i) to the Borrower by any of its Subsidiaries, (ii) to
the Intercompany Creditor by any other Subsidiary of the Borrower, or
(iii) to any Subsidiary of the Borrower by the Borrower, including any
investments by the Borrower in any of its Subsidiaries to the extent
such investments are made in the form of loans or advances by the
Borrower to such Subsidiary. All Intercompany Debt shall be payable on
demand.
"Intercompany Subordination Agreement" means the Intercompany
Subordination Agreement dated as of July 1, 1997 among the Borrower and
each of its Subsidiaries, other than Regulated Subsidiaries and,
subject to Section 6.01(j), Immaterial Subsidiaries, as the same may be
amended, supplemented or otherwise modified from time to time.
"Interest Expense" of any Person means the aggregate amount of
interest paid, accrued or scheduled to be paid or accrued in respect of
any Debt (including the interest portion of rentals under Capital
Leases) and all but the principal component of payments in respect of
conditional sales, equipment trust or other title retention agreements
paid, accrued or scheduled to be paid or accrued by such Person, in
each case determined in accordance with generally accepted accounting
principles.
"Interest Period" means, for each Eurodollar Rate Advance or
the Existing Debt Obligations, the one-month period commencing on the
Closing Date, the date of such Advance or, the date of the Conversion
of any Advance into such Type of Advance, as applicable, and,
thereafter, each subsequent one-month period commencing on the last day
of the immediately preceding Interest Period; provided, however, that:
(i) no Interest Period may end after the Termination
Date or any respective scheduled payment date referred to in
Section 2.05, as applicable; and
(ii) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day; provided, in the case of any
Interest Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding
Business Day;
"IPA" means an independent practice association.
"IPA Support L/C" means a Letter of Credit that is issued to
provide credit support for designated obligations of an independent
practice association for the benefit of a health maintenance
organization or insurer and in form and substance satisfactory to the
Agent and the Issuing Bank.
"Issue" means, with respect to any Letter of Credit, either to
issue, or to extend the expiry of, or to renew, or to increase the
amount of, such Letter of Credit, and the term "Issued" or "Issuance"
shall have corresponding meanings.
"Issuing Bank" means (i) Citibank or any Affiliate of Citibank
that may from time to time Issue Letters of Credit for the account of
the Borrower and (ii) any other Bank that agrees in writing to act as
an Issuing Bank hereunder with the written consent of the Borrower, the
Majority Banks and the Agent.
<PAGE> 16
13
"Lease" means any lease, rental contract, occupancy agreement,
license or other arrangement pursuant to which any Person occupies or
has the right to occupy all or any part of the Real Property.
"Lease Expense" of any Person means all payments made by such
Person under Operating Leases.
"Letter of Credit" means any Existing Letter of Credit issued
pursuant to the Existing Credit Agreement and any Supplemental Letter
of Credit issued pursuant to Article III hereof.
"Letter of Credit Liability" means, as of any date of
determination, all Existing Letter of Credit Liabilities and
Supplemental Letter of Credit Liabilities.
"Lien" means any assignment, chattel mortgage, pledge or other
security interest or any mortgage, deed of trust or other lien, or
other charge or encumbrance, upon property or rights (including
after-acquired property or rights), or any preferential arrangement
with respect to property or rights (including after-acquired property
or rights) which has the practical effect of constituting a security
interest or lien.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Subordination Agreements, the Intercompany Subordination
Agreement, the Collateral Documents, the Amended and Restated
Intercreditor Agreement and all other documents delivered by the Loan
Parties in connection with this Agreement, in each case as amended,
supplemented, restated or otherwise modified from time to time.
"Loan Party" means, individually, the Borrower and each
Guarantor; and "Loan Parties" means the Borrower and the Guarantors,
collectively.
"Majority Banks" means, at any time, if this Agreement has
been approved by 100% of the Banks, Banks holding more than 50% of the
then aggregate unpaid principal amount of the Existing Debt Obligations
and the Revolving Advances and of the contingent obligations of the
Letter of Credit Liabilities, and if this Agreement has been approved
by less than 100% of the Banks, Banks holding more than 50% of the then
aggregate unpaid principal amount of the Existing Revolving Note
Obligations and the Supplemental Revolving Loan Advances and of the
contingent obligations of the Letter of Credit Liabilities.
"Mortgages" means, collectively, trust deeds and mortgages in
form and substance satisfactory to the Agent covering certain
properties of the Company and its Subsidiaries, in each case as amended
from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for
employees of the Borrower or an ERISA Affiliate and at least one Person
other than the Borrower and its ERISA Affiliates or (ii) was so
<PAGE> 17
14
maintained and in respect of which the Borrower or any ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"NAMM" means North American Medical Management, Inc., a
Tennessee corporation.
"NAMM Subsidiaries" means the Subsidiaries listed on Annex H.
"Net Cash Proceeds" means, as to any (i) sale, lease,
collection or other disposition (including without limitation a sale,
lease, collection or other disposition in connection with a liquidation
or winddown of any Person or the assets of any Person) of or with
respect to the assets of the Borrower and its Subsidiaries, including
any Related Business thereof, or (ii) termination, sale or modification
of a Service Agreement by the Borrower or any Subsidiary of the
Borrower to any Person other than the Borrower or any Subsidiary of the
Borrower, or (iii) sale or issuance of any Securities, any securities
convertible into or exchangeable for Securities, or any warrants,
rights or options to acquire Securities of the Borrower or any
Equity-Like Instruments to any Person other than the Borrower or any
Subsidiary of the Borrower (other than such sale or issuance pursuant
to the Borrower's employee stock purchase plans or employee and
director stock option plans and other than the issuance of Securities
as consideration for the acquisition of any Facility (or the assets
thereof), or the issuance of any Subordinated Debt, whether convertible
into or exchangeable for Securities, an amount equal to (i) the Net
Proceeds (when received) and non-cash consideration paid or delivered
by such Person, including without limitation notes receivable, interest
on notes receivable, break-up fees, separation payment and management
fees in connection with the termination, sale or modification of a
Service Agreement and any assets retained including notes and account
receivables (ii) any Net Proceeds (when received) and non-cash
consideration received from or with respect to any assets retained by
the Borrower including notes and accounts receivable (but not including
(i) any Debt of the Borrower or its Subsidiaries assumed by such Person
in connection with such sale, lease or other disposition, (ii) any Debt
of the Borrower or its Subsidiaries owed to such Person which is offset
against the Total Consideration of such Facility or Related Business
(iii) any Debt of such Person owed to the Borrower or any of its
Subsidiaries in connection with any such sale, lease or other
disposition or (iv) Restructuring Management Fees paid in connection
with the restructuring of a Service Agreement), minus (iii) the sum of
(A) in the case of a Facility, the unpaid principal balance on the date
of such sale or other disposition of any Debt secured by a Lien on such
Facility that may be accelerated as a result of such sale or secured by
Liens not prohibited by the terms of this Agreement and affecting only
such Facility, in each case which is required to be repaid, and is
actually repaid, by the Borrower or any of its existing or future
Subsidiaries on the date of such sale or other disposition, (B) any tax
paid or payable within 21 months of the disposition by the Borrower or
any of its existing or future Subsidiaries in connection with or as a
consequence of such sale or other disposition (excluding any such tax
for which the Borrower or any of its existing or future Subsidiaries
seller is reimbursed by such Person to the extent not otherwise
included in the determination of Net Cash Proceeds), and (C) the amount
of any reserve (other than in respect of inventory) required to be
retained in connection with such sale or other disposition under
generally accepted accounting principles (excluding any reserve in
respect of any amounts not payable within 180 days), provided that the
unused amount of such reserve at the termination of such reserve in
accordance with generally accepted accounting principles shall be
deemed Net Cash Proceeds in the amount of such unused amount.
"Net Income" of any Person, for any period, means the net
income of such Person for such period, determined in accordance with
generally accepted accounting principles, excluding:
(i) the proceeds of any life insurance policy;
<PAGE> 18
15
(ii) any earnings (or losses), prior to the date of
acquisition, of any other Person acquired in any manner;
(iii) in the case of a successor to such Person by
consolidation or merger or a transferee of its assets, any
earnings (or losses) of the successor or transferee
corporation prior to the consolidation, merger or transfer of
assets; and
(iv) any deferred credit (or debit) (or amortization
of a deferred credit) arising from the acquisition of any
Person.
"Net Proceeds" means gross cash proceeds less actual costs of
collection, in the case of proceeds received from the collection of
notes and accounts receivable, and gross cash proceeds less normal,
customary and reasonable out-of pocket costs directly incurred in the
sale, disposition or liquidation of assets, in the case of proceeds
received from the sale, disposition or liquidation of assets.
"Note" means a Revolving Note or a Term Note, as the case may
be, and "Notes" means such promissory notes collectively.
"OECD" means the Organization for Economic Cooperation and
Development or any successor.
"Operating Lease" means any lease of real, personal or mixed
property which is not a Capital Lease.
"Other Taxes" has the meaning set forth in Section 2.13(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor.
"Permitted Lien" means:
(i) Any Liens (other than Liens securing Debt, taxes,
assessments or governmental charges or levies, obligations
under ERISA or the Environmental Laws, or other obligations)
affecting any of the Real Property that do not materially
adversely affect the use of such Real Property;
(ii) Liens for taxes, assessments or governmental
charges or levies to the extent not past due or to the extent
contested, in good faith, by appropriate proceedings and for
which adequate reserves have been established;
(iii) Liens imposed by law, such as materialmen's,
mechanic's, carrier's, workman's, and repairman's Liens and
other similar Liens arising in the ordinary course of business
that relate to obligations that are not overdue for a period
of more than 30 days or that are being contested in good
faith, by appropriate proceedings and for which adequate
reserves have been established;
(iv) pledges or deposits in the ordinary course of
business to secure nondelinquent obligations under workman's
compensation or unemployment laws or similar legislation or to
secure the performance of leases or contracts entered into in
the
<PAGE> 19
16
ordinary course of business or of public or nondelinquent
statutory obligations, bids, or appeal bonds;
v) Liens upon or in any property acquired or held by
the Borrower or any of its Subsidiaries (other than the
Intercompany Creditor) to secure the purchase price or
construction costs (and, to the extent financed, sales and
excise taxes, delivery and installation costs and other
related expenses) of such property or to secure indebtedness
incurred solely for the purpose of financing or refinancing
the acquisition or construction of any such property to be
subject to such Liens, or Liens existing on any such property
at the time of acquisition, or extensions, renewals or
replacements of any of the foregoing for the same or a lesser
amount, provided that such Lien is established within thirty
days of the acquisition of said property or expenditure of
said construction costs, and provided further that no such
Lien shall extend to or cover any property other than the
property being acquired and no such extension, renewal or
replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed or
replaced, and provided further that the incurrence of any Debt
secured by the Liens permitted by this clause (v) shall not
exceed in the aggregate $2,500,000;
(vi) zoning restrictions, easements, licenses,
landlord's liens or restrictions on the use of real property
owned or leased by the Borrower or any of its Subsidiaries,
which do not materially impair the use of such property in the
operation of the business of the Borrower or any of its
Subsidiaries or the value of such property for the purpose of
such business;
(vii) Liens on the property or assets of any Subsidiary
in favor of the Borrower or a Subsidiary, provided that the
holder and grantor of such Lien have each entered into the
Intercompany Subordination Agreement;
(viii) Liens listed on Schedule V;
(ix) Liens not described in subclauses (i) through
(viii) above that are not on the Collateral, that exist on the
Closing Date and that relate to liabilities that are not in
excess of $1,000,000 in the aggregate;
(x) Liens arising in connection with Capitalized Leases
or purchases or financing of personal property permitted under
Section 6.02(c)(ix); provided that no such Lien shall extend
to or cover any assets other than the assets subject to such
Capitalized Leases or such personal property, as the case may
be;
(xi) Liens arising in connection with any Collateral
Document;
(xii) Liens existing on the date hereof on any fixtures
which have been incurred in the ordinary course of business;
and
(xiii) Liens existing on the date hereof on property
of Arnett Health Plans, Inc., First Physician Care of Palm
Beach, Inc., First Physician Care of South Florida, Inc.,
Morgan Health Group, Inc., North American Medical
Management-Indiana, LLC, North American Medical
Management-Arizona, Inc., North American Medical
Management-Northern New Jersey, Inc., North American Medical
Management-New York, Inc., North American Medical
Management-Southern California, Inc., PMC of Michigan, Inc.,
<PAGE> 20
17
PhyCor Medical Management Company of Colorado, Inc., PhyCor of
Colombia, Inc., or FHS, Inc., which in each case have been
incurred in the ordinary course of business
"Person" means a individual partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency or instrumentality
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Process Agent" has the meaning set forth in Section 9.13(a).
"RCRA" means the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. ss. 6901 et seq.), and any regulations
promulgated thereunder.
"Real Property" means the real property of the Borrower and
its Subsidiaries located in the United States described in Schedule I
hereto, consisting of real property or any interest in real property,
including a leasehold interest or an option to purchase, and all
buildings, structures and improvements now or hereafter located on all
or any portion of said real property, provided, that, notwithstanding
the foregoing, only leasehold interests of the Borrower and its
Subsidiaries which relate to the main clinic of any Facility or for
which the Borrower or any of its Subsidiaries incurs Lease Expense
equal to or in excess of $100,000 per year shall be described in
Schedule I.
"Register" has the meaning specified in Section 9.08(c).
"Regulated Subsidiaries" means the Subsidiaries listed in
Schedule XIV hereto.
"Related Business" means (i) a business that principally
operates (A) one or more IPAs and related management companies
providing information and operating systems, actuarial and financial
analysis, medical management and provider contract services to the IPAs
or (B) one or more management service organizations (each a "MSO")
providing IPAs with practice management services, including billing,
staffing and financial management services, or (ii) a business related
to the operation of a Facility, IPA or MSO or the operation of the
business of the Borrower or any of its Subsidiaries as conducted as of
the date hereof, the acquisition or operation of which would not result
in a material change in the nature of the Borrower's business as of the
date hereof. A Related Business shall also include all real, personal
and mixed property relating thereto.
"Replacement Supplemental Letters of Credit" means any standby
letter of credit in form satisfactory to the Issuing Bank therefor,
which is at any time Issued by such Issuing Bank pursuant to Article
III thereof in replacement of an Existing Letter of Credit and with a
stated amount not more than such Existing Letter of Credit and for the
same purpose as such Existing Letter of Credit, in each case as
amended, supplemented or otherwise modified from time to time.
"Restricted Payment" of any Person, means any dividend payment
or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of Securities of
such Person, or any purchase, redemption or other acquisition for value
of any shares of any class of Securities of such Person, or any
warrants, rights or options to acquire any such Securities, or the
entry by such Person or any of its Subsidiaries into hedge agreements
in respect of any class of Securities of such Person now or hereafter
outstanding; provided, however, that any dividend payment or other
distribution payable in common stock of such Person shall not be
considered a Restricted Payment.
<PAGE> 21
18
"Restructuring Management Fees" means fees applicable to the
restructuring of a Service Agreement, provided such fees reasonably
relate to the fair value of the services that are to be performed under
the Service Agreement subsequent to the restructuring.
"Revolving Advance" means a Revolving Loan Advance or a
Supplemental Revolving Loan Advance pursuant to Section 2.01.
"Revolving Borrowing" means a Revolving Loan Borrowing or a
Supplemental Revolving Loan Borrowing.
"Revolving Loan Advance" means an Advance made pursuant to
Section 2.01(a).
"Revolving Loan Borrowing" means a borrowing consisting of
simultaneous Revolving Loan Advances by the Banks.
"Revolving Loan Commitment" shall initially be $0 and shall
increase to the extent that the Existing Obligations have been repaid
or cash collateralized from funds (other than mandatory prepayments as
provided in Section 2.09(f)), but in no event in excess of $25,000,000
in the aggregate and as to any Bank, in excess of the amount set forth
on Annex A opposite such Bank's name.
"Revolving Loan Commitment Percentage" means, as to any Bank,
the percentage equal to such Bank's maximum commitment to make
Revolving Loan Advances as set forth on Annex A or, if such Bank has
entered into one or more Assignments and Acceptances, the amount
thereof set forth for such Bank in the Register maintained by the Agent
pursuant to Section 9.08(c), as such amount is reduced from time to
time pursuant to Section 2.03, divided by the aggregate of such maximum
commitments of all Banks.
"Revolving Note" means a promissory note of the Borrower
payable to the order of a Bank, in substantially the form of Exhibit
A-1, evidencing the aggregate indebtedness of the Borrower to such Bank
resulting from the Revolving Loan Advances made by such Bank, or in
substantially the form of Exhibit A-2 evidencing the aggregate
indebtedness of the Borrower to such Bank resulting from Supplemental
Revolving Loan Advances made by such Bank, and "Revolving Notes" means
such promissory notes collectively.
"Secured Parties" means the "Secured Parties" as defined in
the Security Agreements.
"Securities" means shares of capital stock of a corporation
(or similar property right in the case of partnerships, limited
liability companies and trusts).
"Security Agreements" means, collectively, the Borrower
Security Agreement and the Subsidiary Security Agreements.
"Senior Debt" means all Debt outstanding pursuant to this
Agreement and any other Debt of the Borrower and its Subsidiaries not
expressly subordinated on terms satisfactory to the Majority Banks to
the Debt outstanding under this Agreement.
"Series A Note Obligations" means the aggregate principal
amount outstanding of the Series 2-A and Series 4-A Notes (each as
defined in the "Operative Documents" as defined in Appendix A to the
Synthetic Lease Agreement) and, as to each Bank which is a holder
thereof,
<PAGE> 22
19
the respective amount thereof as of the Closing Date set forth on
Annex C opposite such Bank's name.
"Service Agreement" means any of (i) the Service Agreements
listed on Schedule III and (ii) any similar agreement entered into by
the Borrower or any existing or future Subsidiary of the Borrower or
related professional association or corporation after the Closing Date,
in each case as any of such agreements may from time to time be
amended, restated, supplemented or otherwise modified.
"Single-Employer Plan" means a single-employer plan, as
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for
employees of the Borrower or an ERISA Affiliate and no Person other
than the Borrower and its ERISA Affiliates or (ii) was so maintained
and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated.
"Subordinated Debt" means any Debt of the Borrower that (a) is
subordinated to the Debt of the Borrower under this Agreement and the
Notes on terms and conditions satisfactory to the Majority Banks, (b)
has no scheduled amortization prior to any scheduled amortization of
any Subordinated Debt existing on the Closing Date, (c) with respect to
which the Agent and the Majority Banks shall in their sole discretion
have approved in writing prior to the issuance thereof the terms and
conditions relating to the issuance thereof, including the terms of any
indenture executed in connection therewith, and (d) except for the
subordinated debt contemplated by Section 2.03(c), the proceeds of
which are used to prepay Advances and reduce Commitments as provided in
Sections 2.03 and 2.09, provided, however, that for the purposes of
Section 2.09 hereof, Equity-Like Instruments shall not be deemed to be
Subordinated Debt.
"Subordination Agreement" means a duly executed subordination
agreement in substantially the form of Exhibit D, as amended,
supplemented or otherwise modified from time to time.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, trust or other
Person of which more than 50% of the outstanding Securities having
ordinary voting power to elect a majority of the board of directors of
such corporation (or similar governing body or Person with respect to
partnerships, limited liability companies and trusts) (irrespective of
whether or not at the time Securities of any other class or classes of
such Person shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such
Person, or one or more other Subsidiaries of such Person, or by one or
more other Subsidiaries of such Person.
"Subsidiary Security Agreements" means, collectively, the
Subsidiary Security Agreement dated as of January 28, 2000, and the
Subsidiary Pledge and Security Agreement dated as of January 28, 2000,
in each case, from the Guarantors party thereto to the Collateral Agent
for the ratable benefit of the Secured Parties, as amended from time to
time.
"Supplemental Letter of Credit" means any standby letter of
credit in form satisfactory to the Issuing Bank therefor, which is at
any time Issued by such Issuing Bank pursuant to Article III hereof or
which was issued after July 10, 2000 pursuant to Article III of the
Existing Credit Agreement, in each case as amended, supplemented or
otherwise modified from time to time.
"Supplemental Letter of Credit Liabilities" means, as of any
date of determination, all then existing liabilities of the Borrower to
the Issuing Banks in respect of the Supplemental
<PAGE> 23
20
Letters of Credit Issued for its account, whether such liability is
contingent or fixed, and shall, in each case, consist of the sum (i)
the aggregate maximum amount then available to be drawn under such
Supplemental Letters of Credit (the determination of such maximum
amount to assume compliance with all conditions for drawing) and
(ii) the aggregate amount which has then been paid by, and not been
reimbursed to, the Issuing Banks under such Supplemental Letters of
Credit.
"Supplemental Revolving Loan Advance" means any Advance made
pursuant to Section 2.01(b) or any advance made under the Existing
Credit Agreement after July 10, 2000 and prior to the Closing Date.
"Supplemental Revolving Loan Borrowing" means a borrowing
consisting of simultaneous Supplemental Revolving Loan Advances by the
Banks.
"Supplemental Revolving Loan Commitment" shall be $10,000,000
initially and $15,000,000 (i) after the increase therein as provided in
Section 2.03(c), or (ii) as agreed to by the Majority Banks, and means,
as to any Bank, the maximum amount set forth in Annex B opposite such
Bank's name.
"Swing Line Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(b)(2) or (b) any Bank pursuant to
Section 2.01(b)(4).
"Swing Line Bank" means Citicorp USA, Inc.
"Swing Line Facility" has the meaning specified in Section
2.01(b).
"Synthetic Lease Agreement" means the Amended and Restated
Participation Agreement dated as of September 29, 1999, among the
Borrower, certain of its Subsidiaries, as lessees, Citicorp Del-Lease,
Inc., as lessor, the financial institutions named therein as
noteholders and equity investors, State Street Bank and Trust Company,
as collateral agent, and Citicorp USA, Inc., as agent, as amended from
time to time.
"Taxes" has the meaning set forth in Section 2.13(a).
"Termination Date" means June 30, 2001 if this Agreement has
been approved by 100% of the Banks or September 30, 2002, if this
Agreement has been approved by less than 100% of the Banks, or in each
case the earlier date of termination in whole of the Commitments
pursuant to Section 2.03 or 7.01.
"Term Note" means a promissory note of the Borrower payable to
the order of a Bank, in substantially the form of Exhibit A-3,
evidencing the aggregate indebtedness of the Borrower to such Bank in
respect of the Series A Obligations, the Existing Letter of Credit
Liabilities and Existing Revolving Note Obligations, and "Term Notes"
means such promissory notes collectively.
"Total Assets" of any Person, as of the date of determination,
means all property, whether real, personal, tangible, intangible or
otherwise, which, in accordance with generally accepted accounting
principles, should be included in determining total assets as shown on
the assets portion of a balance sheet of such Person.
<PAGE> 24
21
"Total Consideration" means, with respect to the acquisition
of any Facility (or the assets thereof) or Related Business, whether or
not such acquisition is accomplished by Securities purchase or asset
purchase or by merger, the sum of (i) all cash and non-cash
consideration (including, without limitation, assumed liabilities and
equity consideration) paid by the Borrower or any of its Subsidiaries
at the closing of such transaction, and (ii) all Deferred Acquisition
Consideration; provided that Total Consideration shall not include any
contingent payments that may be made by the Borrower or any of its
Subsidiaries after such closing.
"Total Unused Commitments" means the sum of Unused Revolving
Loan Commitments and Unused Supplemental Revolving Loan Commitments.
"UCP" has the meaning set forth in Section 3.08.
"Unused Revolving Loan Commitment" means, with respect to any
Bank at any time, (a) such Bank's Revolving Loan Commitment Percentage
of the Revolving Loan Commitment at such time (as such Supplemental
Revolving Loan Commitment may be reduced pursuant to Section 2.03(b) or
on account of an Assignment and Acceptance entered into by such Bank)
minus (b) the aggregate principal amount of all Revolving Loan Advances
made by such Bank outstanding at such time.
"Unused Supplemental Revolving Loan Commitment" means, with
respect to any Bank at any time, (a) such Bank's Commitment Percentage
of the Supplemental Revolving Loan Commitment at such time (as such
Supplemental Revolving Loan Commitment may be reduced pursuant to
Section 2.03(b) or increased pursuant to Section 2.03(c) or, as
provided in the definition thereof, on account of an Assignment and
Acceptance entered into by such Bank) minus (b) the aggregate principal
amount of all Supplemental Revolving Loan Advances made by such Bank
outstanding at such time.
"Warburg Pincus Entity" means Warburg Pincus Equity Partners,
L.P. or any Affiliate thereof.
"Welfare Plan" means a welfare plan, as defined in Section
3(l) of ERISA, which section covers plans, funds and programs providing
(among other things) medical, surgical, or hospital care or benefits,
or benefits in the event of sickness, accident, disability, death or
unemployment, together with plans which provide workmen's compensation,
unemployment compensation or disability insurance benefits.
"Withdrawal Liability" has the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
"Zero Coupon Convertible Subordinated Notes" means the Series
A Zero Coupon Convertible Subordinated Notes issued by the Borrower for
aggregate gross proceeds received by the Borrower of not less than
$100,000,000, which shall have no requirement for cash payments at any
time that any Advances remain unpaid or any Letter of Credit is
outstanding or any Bank shall have a Commitment hereunder.
<PAGE> 25
22
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement, in the computation
of a period of time from a specified date to a later specified date, unless
otherwise stated, the word "from" or "commencing" means "from and including" and
the word "to" or "until" means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with United States generally accepted
accounting principles consistent with those applied in the preparation of the
Borrower's December 31, 1998 Consolidated financial statements delivered to the
Banks prior to the date hereof.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES. (a) Revolving Loan Advances
(1) Each Bank severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Loan Advances to the Borrower from time
to time on any Business Day during the period from the Closing Date until the
Termination Date, in an amount for each such Advance not to exceed such Bank's
Unused Revolving Loan Commitment on such Business Day; provided, however, that
such Bank shall not be obligated to make such Revolving Loan Advance if, after
giving effect to such Revolving Loan Advance and the other Revolving Loan
Advances to be made by the other Banks as part of the same Revolving Loan
Borrowing, the then outstanding aggregate principal amount of all Revolving Loan
Advances shall exceed the aggregate Revolving Loan Commitments of the Banks.
Each Revolving Loan Borrowing shall be in an aggregate amount of $[2,000,000] or
an integral multiple of $[1,000,000] in excess thereof, and shall consist of
Revolving Loan Advances made on the same day by the Banks ratably according to
their respective Unused Revolving Loan Commitments. Within the limits of each
Bank's Unused Revolving Loan Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(a), prepay pursuant to Section
2.09(a) and reborrow under this Section 2.01(a).
(2) Each Revolving Loan Borrowing shall be made on notice, given
not later than 11:00 A.M. (New York City time) (i) on the third Business Day
prior to the date of the proposed Borrowing, in the case of Eurodollar Rate
Advances, or (ii) on the date of the proposed Borrowing, in the case of Base
Rate Advances, by the Borrower to the Agent, which shall give each Bank prompt
notice thereof by telecopier. Each such notice of a Borrowing (a "Notice of
Revolving Loan Borrowing") shall be by telecopier, confirmed immediately in
writing, in substantially the form of Exhibit B-1 hereto, specifying therein (i)
the requested date of such Borrowing, (ii) the requested Type of Advances
comprising such Borrowing, and (iii) the requested aggregate amount of such
Borrowing. Each Bank shall, before 12:00 noon (New York City time) on the date
of such Borrowing, make available for the account of its Applicable Lending
Office to the Agent at its address referred to in Section 9.02, in same day
funds, such Bank's ratable portion of such Revolving Loan Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article IV, the Agent will make such funds available to the
Borrower at the Agent's aforesaid address. Anything in this subsection above to
the contrary notwithstanding, the Borrower may not select Eurodollar Rate
Advances for any Revolving Loan Borrowing if the obligation of the Banks to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.10.
(3) Each Notice of Revolving Loan Borrowing shall be irrevocable
and binding on the Borrower. In the case of any Revolving Loan Borrowing which
the related Notice of
<PAGE> 26
23
Revolving Loan Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Bank against any loss (including
loss of anticipated profits), cost or expense incurred by such Bank as a result
of any failure to fulfill on or before the date specified in such Notice
of Revolving Loan Borrowing for such Borrowing the applicable conditions set
forth in Article IV, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund the Advance to be made by such Bank as part of
such Borrowing when such Advance, as a result of such failure, is not made on
such date.
(4) Unless the Agent shall have received notice from a Bank prior
to the date of any Revolving Loan Borrowing that such Bank will not make
available to the Agent such Bank's ratable portion of such Borrowing, the Agent
may assume that such Bank has made such portion available to the Agent on the
date of such Borrowing in accordance with the provisions above and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Advance as part of
such Borrowing for purposes of this Agreement. To the extent that any Bank makes
a payment of principal or interest to the Agent pursuant to this subsection (4),
the Borrower shall not be obligated to make such payment.
(5) The failure of any Bank to make the Revolving Loan Advance to
be made by it as part of any Revolving Loan Borrowing shall not relieve any
other Bank of its obligation, if any, hereunder to make its Revolving Loan
Advance on the date of such Borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Revolving Loan Advance to be made by such
other Bank on the date of any Revolving Loan Borrowing.
(b) Supplemental Revolving Loan Advances
(1) Each Bank severally agrees, on the terms and conditions hereinafter
set forth, to make Supplemental Revolving Loan Advances to the Borrower from
time to time on any Business Day during the period from the Closing Date until
the Termination Date, in an amount for each such Advance not to exceed such
Bank's Unused Supplemental Revolving Loan Commitment on such Business Day less
such Bank's Commitment Percentage on such Business Day of the sum of the Swing
Line Advances then outstanding and the Supplemental Letter of Credit Liability
(exclusive of any liability relating to a Replacement Supplemental Letter of
Credit); provided, however, that such Bank shall not be obligated to make such
Supplemental Revolving Loan Advance if, after giving effect to such Supplemental
Revolving Loan Advance and the other Supplemental Revolving Loan Advances to be
made by the other Banks as part of the same Supplemental Revolving Loan
Borrowing, the then outstanding aggregate principal amount of all Supplemental
Revolving Loan Advances and Swing Line Advances plus the Supplemental Letter of
Credit Liability (exclusive of any liability relating to a Replacement
Supplemental Letter of Credit) shall exceed the aggregate Supplemental Revolving
Loan Commitments of the Banks. Each Supplemental Revolving Loan Borrowing shall
be in an aggregate amount of $[2,000,000] or an integral multiple of
$[1,000,000] in excess thereof, and shall consist of Supplemental Revolving Loan
Advances made on the same day by the Banks ratably according to their respective
Unused Supplemental Revolving Loan Commitments. Within the limits of each Bank's
Unused Supplemental Revolving Loan Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(b)(1), prepay pursuant to Section
2.09(a) and reborrow under this Section 2.01(b)(1).
<PAGE> 27
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(2) The Borrower may request the Swing Line Bank to make, and the
Swing Line Bank shall make, on the terms and conditions hereinafter set forth,
Swing Line Advances to the Borrower from time to time on any Business Day during
the period from the date hereof until the Termination Date in an aggregate
amount not to exceed at any time outstanding $10,000,000, but in no event in
excess of the aggregate Unused Supplemental Revolving Loan Commitment less the
aggregate amount of outstanding Swing Line Advances and the Supplemental Letter
of Credit Liability (exclusive of any liability relating to a Replacement
Supplemental Letter of Credit) (the "Swing Line Facility"). No Swing Line
Advance shall be used for the purpose of funding the payment of principal of any
other Swing Line Advance. Each Swing Line Advance shall be in an amount as may
be agreed by the Borrower and the Swing Line Bank and shall bear interest as may
be agreed between the Borrower and the Swing Line Bank, provided that in no
event shall any Swing Line Advance bear interest at a rate lower than the
interest rate applicable to the Supplemental Revolving Advances. Within the
limits of the Swing Line Facility, the Borrower may borrow under this Section
2.01(b)(2), prepay pursuant to Section 2.09(a) and reborrow under this Section
2.01(b)(2).
(3) Each Supplemental Revolving Loan Borrowing shall be made on
notice, given not later than 11:00 A.M. (New York City time) (i) on the third
Business Day prior to the date of such proposed Borrowing, in the case of
Eurodollar Rate Advances, or (ii) on the date of such proposed Borrowing, in the
case of Base Rate Advances, by the Borrower to the Agent, which shall give each
Bank prompt notice thereof by telecopier. Each such notice of Borrowing (a
"Notice of Supplemental Revolving Loan Borrowing") shall be by telecopier,
confirmed immediately in writing, in substantially the form of Exhibit B-2
hereto, specifying therein (i) the requested date of such Borrowing, (ii) the
requested Type of Advances comprising such Borrowing, and (iii) the requested
aggregate amount of such Borrowing. Each Bank shall, before 12:00 noon (New York
City time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Agent at its address referred to in Section
9.02, in same day funds, such Bank's ratable portion of such Supplemental
Revolving Loan Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article IV, the Agent will
make such funds available to the Borrower at the Agent's aforesaid address.
Anything in this subsection above to the contrary notwithstanding, the Borrower
may not select Eurodollar Rate Advances for any Supplemental Revolving Loan
Borrowing if the obligation of the Banks to make Eurodollar Rate Advances shall
then be suspended pursuant to Section 2.10.
(4) Each Swing Line Advance shall be made on notice, given not
later than 2:00 P.M. (New York City time) on the date of the proposed Swing Line
Advance, by the Borrower to the Swing Line Bank and the Agent. Each Notice of
Swing Line Advance shall be by telephone, confirmed immediately in writing or
telecopier, specifying therein the requested (i) date of such Borrowing and (ii)
amount of such Borrowing. Each Swing Line Advance shall be due and payable on
the earlier of the date of demand by the Swing Line Bank in respect of such
Swing Line Advance and the Termination Date. Each such Notice of Swing Line
Advance shall be irrevocable and binding on the Borrower. Upon fulfillment of
the applicable conditions set forth in Article IV, the Swing Line Bank will make
the amount thereof available in accordance with the instructions of the
Borrower, in same day funds. On the last Business Day of each week (a "Swing
Line Allocation Date"), each other Bank shall purchase from the Swing Line Bank
and the Swing Line Bank shall sell and assign to each such other Bank, such
other Bank's Commitment Percentage of each outstanding Swing Line Advance as of
the close of business on the Business Day immediately preceding each Swing Line
Allocation Date, by making available for the account of its Applicable Lending
Office to the Agent for the account of the Swing Line Bank in same day funds, an
amount equal to the portion of the outstanding principal amount of such Swing
Line Advance to be purchased by such Bank. The Borrower hereby agrees to each
such sale and assignment. The Swing Line Bank shall notify the Agent and each
other Bank on the Business Day immediately preceding each Swing Line Allocation
Date of the outstanding principal amount of Swing Line Advances
<PAGE> 28
25
to be purchased as provided herein. Each Bank agrees to purchase its Commitment
Percentage of an outstanding Swing Line Advance on the Business Day following
receipt of each such notice from the Swing Line Bank. Upon any such assignment
by the Swing Line Bank to any other Bank of a portion of a Swing Line Advance,
the Swing Line Bank represents and warrants to such other Bank that the Swing
Line Bank is the legal and beneficial owner of such interest being assigned by
it and such assignment is free and clear of any claim or adverse interest of any
kind, but makes no other representation or warranty and assumes no
responsibility with respect to the Swing Line Advance, the Loan Documents or any
Loan Party. If and to the extent that any Bank shall not have so made the
respective amount of such Swing Line Advance available to the Agent, such Bank
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing Line Bank
until the date such amount is paid to the Agent, at the Federal Funds Rate. If
such Bank shall pay to the Agent such amount for the account of the Swing Line
Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Advance made by such Bank on such Business Day for
purposes of this Agreement, and the outstanding principal amount of the Swing
Line Advance made by the Swing Line Bank shall be reduced by such amount on such
Business Day.
(5) Each Notice of Supplemental Revolving Loan Borrowing and
Notice of Swing Line Advance shall be irrevocable and binding on the Borrower.
In the case of any Supplemental Revolving Loan Borrowing which the related
Notice of Supplemental Revolving Loan Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each Bank against any
loss (including loss of anticipated profits), cost or expense incurred by such
Bank as a result of any failure to fulfill on or before the date specified in
such Notice of Supplemental Revolving Loan Borrowing for such Borrowing the
applicable conditions set forth in Article IV, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Bank to fund the Advance to be made
by such Bank as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.
(6) Unless the Agent shall have received notice from a Bank prior
to the date of any Supplemental Revolving Loan Borrowing that such Bank will not
make available to the Agent such Bank's ratable portion of such Borrowing, the
Agent may assume that such Bank has made such portion available to the Agent on
the date of such Borrowing in accordance with the provisions above and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Advance as part of
such Borrowing for purposes of this Agreement. To the extent that any Bank makes
a payment of principal or interest to the Agent pursuant to this subsection (6),
the Borrower shall not be obligated to make such payment.
(7) The failure of any Bank to make the Advance to be made by it
as part of any Supplemental Revolving Loan Borrowing shall not relieve any other
Bank of its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but no Bank shall be responsible for the failure of any other
Bank to make the Advance to be made by such other Bank on the date of any
Supplemental Revolving Loan Borrowing.
SECTION 2.02. FEES. (a) Facility Fees. The Borrower agrees to pay to the Agent,
for the ratable account of each of the Banks, a facility fee on the sum of the
average daily Existing Letter of Credit Liabilities, the average daily principal
amount of the unpaid obligations hereunder of the Borrower
<PAGE> 29
26
to such Bank, the average daily Unused Revolving Loan Commitment and the average
daily Unused Supplemental Revolving Loan Commitment from the date hereof until
the Termination Date at the Applicable Facility Fee Rate from time to time in
effect, payable quarterly in arrears on the last day of each March, June,
September and December, commencing September 30, 2000, and on the Termination
Date.
(b) Agency and Arrangement Fees. The Borrower agrees to pay to
the Agent, for its own account, the agency fee and the arrangement fee, in such
amounts and on such dates as are specified in the letter agreement dated as of
August 25, 2000, between the Borrower and the Agent.
SECTION 2.03. REDUCTION OF THE COMMITMENTS/INCREASE OF SUPPLEMENTAL REVOLVING
LOAN COMMITMENT. (a) Optional. The Borrower shall have the right, upon at least
three Business Days' notice to the Agent, permanently to terminate in whole or
reduce ratably in part the Total Unused Commitments; provided that (a) each
partial reduction shall be in the aggregate amount of $1,000,000 or an integral
$500,000 multiple in excess thereof, (b) each reduction shall be made ratably
among the Banks in accordance with their Total Unused Commitments, (c) no
reduction may reduce the aggregate Supplemental Revolving Loan Commitments of
the Banks below the aggregate amount of the then outstanding Supplemental Letter
of Credit Liability or if the aggregate Revolving Loan Commitments of the Banks
are at any time in excess of the aggregate amount of the then outstanding
Existing Letter of Credit Liability, thereafter reduce such aggregate Revolving
Loan Commitments below such aggregate amount of the Existing Letter of Credit
Liability and (d) each partial reduction shall be applied first to the
Supplemental Revolving Loan Commitment until it is reduced to $0 and thereafter
applied to the Revolving Loan Commitment.
(b) Mandatory. In connection with an Asset Sale or issuance of
equity or Debt or receipt of proceeds of any property or assets pledged under
the Collateral Documents pursuant to which the Borrower must prepay Revolving
Advances pursuant to Section 2.09(b), (c), (d) or (e), respectively, or a
prepayment under Section 2.05(c) any amount so prepaid which is applied to
either a Revolving Loan Advance or Supplemental Revolving Loan Advance shall
permanently terminate in whole or reduce ratably in part the Revolving Loan
Commitment or Supplemental Revolving Loan Commitment, respectively; provided
that (a) each reduction shall be made ratably among the Banks in accordance with
their Total Unused Commitments and (b) no reduction may reduce the aggregate
Supplemental Revolving Commitments of the Banks below the aggregate amount of
the then outstanding Supplemental Letter of Credit Liability or if the aggregate
Revolving Loan Commitments of the Banks are at any time in excess of the
aggregate amount of the then outstanding Existing Letter of Credit Liability,
thereafter reduce such aggregate Revolving Loan Commitments below such aggregate
amount of the Existing Letter of Credit Liability.
(c) Increase of Supplemental Revolving Loan Commitment. If on
or before September 30, 2000 the Borrower receives not less than $15,000,000
from the proceeds of a subordinated debt or equity financing from a financial
institution and on terms, in each case acceptable to the Majority Banks, the
aggregate Supplemental Revolving Loan Commitment shall increase to $15,000,000
upon ten days' notice from the Borrower to the Agent.
SECTION 2.04. EXISTING REVOLVING NOTE OBLIGATIONS AND SERIES A NOTE OBLIGATIONS.
On the Closing Date, PhyCor of Pueblo, Inc. and PhyCor of Ruston, LLC will
transfer, or cause to be transferred, to the Borrower the real property covered
by the Synthetic Lease Agreement, and the Borrower will assume the Series A Note
Obligations as its hereunder (and in
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replacement of the contingent obligations of the Borrower pursuant to its
existing guaranty thereof) and all Existing Revolving Note Obligations shall
become a term obligation of the Borrower hereunder, and such obligations in each
case on and after the Closing Date shall bear interest as provided herein and
payable at such times and otherwise on such terms as are provided herein.
Interest on Series A Note Obligations accrued to the Closing Date shall be
payable on the last day of the applicable interest period therefor and interest
on the Existing Revolving Note Obligations accrued to the Closing Date shall be
payable on the last day of the then applicable interest period therefor, and
interest from the Closing Date on all such obligations shall be determined by
the Eurodollar Rate as provided for herein and shall be initially payable on
each such obligation at the end of each such respective interest period
therefor. All such obligations on the last day of the latest ending of such
interest periods to be deemed to be a single Eurodollar Rate Advance (with
interest on any such obligation to be determined by the Base Rate from the last
interest payment date therefor to such day and to be payable on such day).
Thereafter, the aggregate principal amount of the Existing Revolving Note
Obligations and the Series A Obligations will continue to be treated as a single
Advance for all purposes relating to interest rate determination, conversion and
payment, and lender protection for increased costs, illegality and taxes as
provided herein, except that to the extent the interest thereon is based on the
Eurodollar Rate, each Interest Period therefor shall end on a scheduled payment
date as provided in Section 2.05(c).
SECTION 2.05. REPAYMENT/CASH COLLATERALIZATION. (a) The Borrower shall repay on
the Termination Date the aggregate principal amount of the Revolving Advances of
each Bank outstanding on the Termination Date, together with accrued interest
thereon.
(b) The Borrower shall repay to the Agent for the account of
the Swing Line Bank the outstanding principal amount of each Swing Line Advance
made by the Swing Line Bank on the earlier of the date demanded by the Swing
Line Bank in respect of such Swing Line Advance and the Termination Date.
(c) The Borrower shall (i) repay in full the aggregate
principal amount of the Existing Debt Obligations, (ii) cash collateralize in
full the aggregate Letter of Credit Liabilities (as provided in Section 3.09)
and (iii) repay in full the outstanding Revolving Advances in a total of ten
installments as provided in Annex E, with the payment on each respective date in
such Annex to be in an amount so that the sum (after giving effect to such
payment on such date) of the aggregate unpaid principal amount of Existing Debt
Obligations, the aggregate Letter of Credit Liabilities and the aggregate unpaid
principal amount of Revolving Advances is not greater than the respective amount
set forth opposite such date in such Annex, except to the extent the amount or
date of any such installment is amended or waived with the written consent of
the Majority Banks. All mandatory prepayments shall be applied first to repay
the Existing Debt Obligations, second to repay the Revolving Loan Advances,
third to repay the Supplemental Revolving Loan Advances, fourth to cash
collateralize the Existing Letter of Credit Liabilities and fifth to cash
collateralize the Supplemental Letter of Credit Liabilities. The Borrower shall
make each installment on the respective date to the Agent for payment of the
applicable obligation for the respective account of the Banks or for deposit
into the Cash Collateral Account, as the case may be.
Notwithstanding the foregoing payment schedule, the consent of
all Banks shall be required to permit the sum of the Existing Revolving Note
Obligations, the Existing Letter of Credit Liabilities, the outstanding
Revolving Loan Advances and the outstanding Supplemental Loan Advances to exceed
$230,000,000 after December 31, 2001, $200,000,000 after June 30, 2002 or $0
after September 30, 2002.
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SECTION 2.06. INTEREST. The Borrower shall pay interest on the unpaid principal
amount of each Revolving Advance made by each Bank and the Existing Debt
Obligations, from the Closing Date or the date of a Revolving Advance,
respectively, until such principal amount shall be paid in full, at the
following rates per annum:
(a) Base Rate Advances. During such periods as the interest on such
Advance or Existing Debt Obligation is determined by the Base Rate, a rate
per annum equal at all times to the sum of (i) the Base Rate in effect
from time to time plus (ii) the Applicable Base Rate Margin then in
effect, payable monthly in arrears on the last day of each calendar month
during such periods and on the date such Base Rate Advance shall be
converted or paid in full. Notwithstanding the foregoing, during the
continuance of an Event of Default, the principal amount of each Base Rate
Advance shall bear interest, to the fullest extent permitted by law, from
the date on which such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to 4% per annum
above the Base Rate, plus the Applicable Base Rate Margin, in effect from
time to time.
(b) Eurodollar Rate Advances. During such periods as the interest on
such Advance or Existing Debt Obligation is determined by the Eurodollar
Rate, a rate per annum equal at all times during each such period for such
Advance or Existing Debt Obligation to the sum of (i) the Eurodollar Rate
for such period plus (ii) the Applicable Eurodollar Rate Margin in effect
on the first day of such period, payable on the last day of such period.
Notwithstanding the foregoing, during the continuance of an Event of
Default, the principal amount of each Eurodollar Rate Advance shall bear
interest, to the fullest extent permitted by law, from the date on which
such amount is due until such amount is paid in full, payable on demand,
at a rate per annum equal at all times to 4% per annum above the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin until the end
of the period applicable to such Eurodollar Rate Advance, at which time
the rate per annum shall become 4% per annum above the Base Rate, plus the
Applicable Base Rate Margin in each case as in effect from time to time.
SECTION 2.07. INTEREST RATE DETERMINATION AND PROTECTION. (a) The Agent shall
give prompt notice to the Borrower and the Banks of the applicable interest rate
under Section 2.06(a) or (b).
(b) If, with respect to any obligation hereunder on which interest
accrues at the Eurodollar Rate, the Majority Banks notify the Agent that the
Eurodollar Rate for the respective Interest Period will not adequately reflect
the cost to such Majority Banks of making, funding or maintaining such
obligation for such Interest Period, the Agent shall forthwith so notify the
Borrower and the Banks, whereupon:
(i) the interest rate on each such obligation will automatically, on
the last day of the then applicable Interest Period therefor, begin to be
determined by the Base Rate, and
(ii) interest on all such obligations will be determined by the Base
Rate until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist.
SECTION 2.08. VOLUNTARY AND AUTOMATIC CONVERSION OF REVOLVING ADVANCES. (a) The
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the second Business Day prior to the date
thereof and subject
<PAGE> 32
29
to the provisions of Sections 2.06 and 2.10, convert all Revolving Advances of
one Type comprising the same Borrowing into Revolving Advances of another Type
or convert the basis on which interest accrues on the Existing Debt Obligations
hereunder; provided, however, that any conversion of any Eurodollar Rate
Advances into Base Rate Advances shall be made on, and only on, the last day of
an Interest Period for such Eurodollar Rate Advances. Each such notice of
conversion shall, within the restrictions specified above, specify (i) the date
of such conversion and (ii) the Advances or Existing Debt Obligations to be
converted.
(b) On the date on which the unpaid aggregate principal amount of
Eurodollar Rate Advances shall be reduced, by payment or prepayment or
otherwise, to less than $2,000,000, such Eurodollar Rate Advances shall
automatically convert into Base Rate Advances, and on and after such date the
Borrower may not convert such Base Rate Advances to Eurodollar Rate Advances
until such time as the aggregate principal amount of Base Rate Advances equals
or exceeds $2,000,000.
(c) Upon the occurrence and during the continuance of any Event
of Default, (i) each Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, convert into a Base Rate Advance
and (ii) the obligation of the Banks to make, or to convert Advances into,
Eurodollar Rate Advances or to accrue interest on any obligations hereunder
based on the Eurodollar Rate shall be suspended.
SECTION 2.09. PREPAYMENTS. (a) Voluntary Prepayments. The Borrower may, upon at
least (i) in the case of Eurodollar Rate Advances, two Business Days' and (ii)
in the case of Base Rate Advances, the same Business Day's notice to the Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given, the Borrower shall, prepay the outstanding principal
amounts of the Advances comprising part of the same Revolving Loan Borrowing,
the same Supplemental Revolving Loan Borrowings, the Existing Revolving Note
Obligations or the Series A Note Obligations in whole or ratably in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and, in the case of Eurodollar Rate Advances, any amounts payable
under Section 9.04(b); provided, however, that each partial prepayment shall be
in an aggregate principal amount not less than $1,000,000 or any integral
multiple of $500,000 in excess thereof, provided, further, that any partial
prepayment shall first be applied to the ratable prepayment of the Supplemental
Revolving Loan Borrowings until such obligations are paid in full, then applied
to the Revolving Loan Obligations until such obligations are paid in full, then
applied to the Existing Debt Obligations until such obligations are paid in full
, then applied to cash collateralize Existing Letter of Credit Liabilities, and
then applied to cash collateralize Supplemental Letter of Credit Liabilities.
(b) Asset Sales Mandatory Prepayments. Upon an Asset Sale by the
Borrower or any Subsidiary of the Borrower all Net Cash Proceeds of such Asset
Sale shall be delivered directly to the Agent by the purchaser of the Assets
upon closing of the Asset Sale, and (y) any deferred cash proceeds of such Asset
Sale shall be delivered directly to the Agent (at which time the same shall
become Net Cash Proceeds), provided, however, that Net Proceeds from retained
assets shall be delivered to the Agent no later than 15 Business Days after the
end of each month, and in each case, such Net Cash Proceeds shall be applied in
accordance with Section 2.09(f). The Agent shall not be required to release any
of its liens on the Assets sold as provided for in Section 8.08 herein until it
receives the Net Cash Proceeds of the respective Asset Sale as provided for in
this Section 2.09(b) or unless otherwise satisfactory provisions are contained
in the respective escrow instructions for the payment of Net Cash Proceeds to
the Agent.
(c) Equity Issuance Mandatory Prepayments. Upon the sale or
issuance by the Borrower of any capital stock (or other equity or ownership or
profit interest) or any warrants, rights or options to acquire any capital stock
(or other equity or ownership or profit interest) or any Equity-Like
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30
Instruments (except equity contemplated by Section 2.03(c)), then 100% of the
Net Cash Proceeds of such sale or issuance shall be delivered directly to the
Agent, and any such Net Cash Proceeds shall be applied in accordance with
Section 2.09(f).
(d) Subordinated Debt Issuance Mandatory Prepayments. Upon the
sale or issuance by the Borrower of any Subordinated Debt (except Subordinated
Debt contemplated by Section 2.03(c)), then 100% of the Net Cash Proceeds of
such sale or issuance shall be delivered as soon as practicable, but not later
than three Business Days after receipt, to the Agent, and any such Net Cash
Proceeds shall be applied in accordance with Section 2.09(f).
(e) Note Proceeds Mandatory Prepayments. Each Loan Party shall
deliver to the Agent upon receipt all payments in excess of $1,000,000 received
by such Loan Party in respect of assets or property pledged under the Collateral
Documents (whether principal, interest or otherwise), and no later than 15
Business Days after the end of each month shall deliver all other payments
received by such Loan Party in respect of such assets or property, together with
a statement detailing the payor of such note and amount paid on each such note
during such month and a listing of any such notes in default including the
amount in default and the payor thereof, and any such payments shall be applied
in accordance with Section 2.09(f).
(f) Application of Prepayments. Mandatory prepayments pursuant
to Sections 2.09(b) through (e) shall be applied among each Bank according to
its ratable interest in the Existing Debt Obligations, the Letter of Credit
Liabilities, the Revolving Loan Borrowings and the Supplemental Revolving Loan
Borrowings and each such prepayment received by each Bank, or for the benefit of
each Bank (in the case of Letter of Credit Liabilities), shall be: first applied
to the payment of the outstanding Existing Debt Obligations owed to it, together
with accrued interest to the date of such payment on the principal amount repaid
and any amounts payable pursuant to Section 9.04(b) in respect thereof; second,
applied to the payment of the outstanding Revolving Loan Advances owed to it,
together with accrued interest to the date of such payment on the principal
amount repaid and any amounts payable pursuant to Section 9.04(b) in respect
thereof, third, delivered to the Agent to be held as cash collateral in the Cash
Collateral Account to be applied to any of its Existing Letter of Credit
Liabilities; fourth, applied to the payment of the outstanding Supplemental
Revolving Loan Advances owed to it, together with accrued interest to the date
of such payment on the principal amount repaid and any amounts payable pursuant
to Section 9.04(b) in respect thereof; and fifth, delivered to the Agent to be
held as cash collateral in the Cash Collateral Account to be applied to any of
its Supplemental Letter of Credit Liabilities;
SECTION 2.10. INCREASED COSTS. (a) If, due to either (i) the introduction of or
any change (other than any change by way of imposition or increase of reserve
requirements, in the case of Eurodollar Rate Advances, included in the
Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Bank of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances, then the Borrower shall
from time to time, upon demand by such Bank (with a copy of such demand to the
Agent), pay to the Agent for the account of such Bank additional amounts
sufficient to compensate such Bank for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Borrower and the Agent by
such Bank, shall be conclusive and binding for all purposes, absent manifest
error.
(b) If any Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital (or the rate of return on capital) required or
expected to be maintained by such Bank or any corporation controlling such Bank
and that the amount of
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31
such capital is increased (or such rate of return is reduced) by or based upon
the existence of such Bank's commitment, or offer or agreement, to lend
hereunder and other commitments, or offers or agreements, of this type, then,
upon notice by such Bank (with a copy of such notice to the Agent), the Borrower
shall immediately pay to the Agent for the account of such Bank, from time to
time as specified by such Bank, additional amounts sufficient to compensate such
Bank or such corporation in the light of such circumstances, to the extent that
such Bank reasonably determines such increase in capital (or reduction in rate
of return) to be allocable to the existence of such Bank's commitment, or offer
or agreement, to lend hereunder. Such notice as to such amounts submitted and
delivered to the Borrower and the Agent by such Bank shall set forth in summary
fashion the basis of such allocation and shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.11. ILLEGALITY. Notwithstanding any other provision of this Agreement,
if any Bank shall notify the Agent that the introduction of or any change in or
in the interpretation of any law or regulation makes it unlawful or any central
bank or other governmental authority asserts that it is unlawful, for any Bank
or its Eurodollar Lending Office to perform its obligations or agreements
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder: (a) the obligation of the Banks to make, or to convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Banks that the circumstances causing such suspension
no longer exist and (b) the Borrower shall forthwith prepay in full all
Eurodollar Rate Advances of all Banks then outstanding, together with interest
accrued thereon and any costs payable pursuant to Section 9.04(b), unless the
Borrower, within five Business Days of notice from the Agent, converts all
Eurodollar Rate Advances of all Banks then outstanding into Base Rate Advances
in accordance with Section 2.08.
SECTION 2.12. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment hereunder and under the Notes not later than 11:00 A.M. (New York City
time) on the day when due free and clear of any taxes, offset or other charge in
United States dollars to the Agent at its address referred to in Section 9.02 in
same day funds. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest or fees ratably (other
than payments to the Swing Line Bank or in respect of the Series A Obligations
or amounts payable pursuant to Section 2.10, 2.11, 2.13, or 9.04, which will be
paid to the respective Bank) to the Banks for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Bank to such Bank for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 9.08(d),
from and after the effective date specified in such Assignment and Acceptance,
the Agent shall make all payments hereunder in respect of the interest assigned
thereby to the Bank assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Bank, if and to the
extent payment owed to such Bank is not made when due hereunder or under the
Note held by such Bank, to charge from time to time against any or all of the
Borrower's accounts with such Bank any amount so due.
(c) All computations of interest (other than interest on Base
Rate Advances) and of fees shall be made on the basis of a year of 360 days, and
all computations of interest on Base Rate Advances shall be made on the basis of
a year of 365 or 366 days (as the case may be), in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest or fees are payable. Each determination by
the Agent of an interest rate or fee hereunder shall be conclusive and binding
for all purposes, absent manifest error.
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(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or facility fee, as
the case may be; provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder in respect
of any payment obligations of the Borrower that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date and the Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent the Borrower shall
not have so made such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
(f) Notwithstanding any provision in this Agreement or any other
Loan Document to the contrary, all payments received by the Agent under the
other Loan Documents, the application of which are not provided for in such Loan
Documents, may be then or at any time thereafter be applied in whole or in part
by the Agent for the ratable benefit of the Banks, against all or part of the
Advances or other obligations of the Borrower hereunder or under the other Loan
Documents, in such order and manner as the Agent shall elect.
SECTION 2.13. TAXES. (a) Any and all payments by the Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.12, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
such Bank or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Bank or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) such Bank or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
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(c) The Borrower will indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.13) paid by such Bank or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date such
Bank or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Agent, at its address referred to in Section 9.02,
the original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.
(f) Prior to the Closing Date, in the case of each Bank party
hereto on the date hereof, on the date of the effectiveness of the Assignment
and Acceptance pursuant to which it became a Bank in the case of each other
Bank, and within 30 days following the first day of each calendar year or if
otherwise requested from time to time by the Borrower or the Agent, each Bank
organized under the laws of a jurisdiction outside the United States shall
provide the Agent and the Borrower with two counterparts of each of the forms
prescribed by the Internal Revenue Service (Form 1001 or 4224, or successor
form(s), as the case may be, or another appropriate form) of the United States
certifying as to such Bank's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to be made to such
Bank under any Loan Document. Unless the Borrower and the Agent have received
such forms or other documents satisfactory to them indicating that payments
under any Loan Document are not subject to United States withholding tax, the
Borrower or the Agent (if not withheld by the Borrower) shall withhold taxes
from such payments at the applicable statutory rate, without any obligation to
"gross-up" or make such Bank or the Agent whole under Section 2.13(a); provided,
however, that the Borrower shall have the obligation to make such Bank or the
Agent whole and to "gross-up" under Section 2.13(a), if the failure to so
deliver such forms or make such statements (other than the forms and statements
required to be delivered on or made prior to the date of the initial Borrowing,
on the date of the Assignment and Acceptance pursuant to which an Eligible
Assignee became a Bank) is the result of the occurrence of an event (including,
without limitation, any change in treaty, law or regulation) which (alone or in
conjunction with other events) renders such forms inapplicable, that would
prevent such Bank or the Agent from making the statements contemplated by such
forms or which removes or reduces an exemption (whether partial or complete)
from withholding tax previously available to such Bank or the Agent. Each Bank
(and the Agent, if applicable) will promptly notify the Borrower of the
occurrence (when known to it) of an event contemplated by the foregoing proviso.
SECTION 2.14. SHARING OF PAYMENTS, ETC. If any Bank shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any obligations of the Borrower hereunder (other
than pursuant to Section 2.10, 2.11, 2.13 or 9.04) in excess of its ratable
share of payments on account of such obligations obtained by all the Banks, such
Bank shall forthwith purchase from the other Banks such participations in such
obligations made by them as shall be necessary to cause such purchasing Bank to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and such Bank
shall repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share (according
to the proportion of (i) the amount of such Bank's required repayment to
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(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 2.14 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.15. EVIDENCE OF DEBT/REGISTER. (a) The Debt of the Borrower resulting
from the Supplemental Revolving Loan Advances (including, without limitation,
the Swing Line Advances) and the Revolving Loan Advances shall be evidenced by
the Revolving Notes, delivered to the Banks pursuant to Article IV, and the
remaining principal amount thereof shall be recorded by the Banks, and, prior to
any transfer, endorsed on the grids thereto in accordance with the terms of the
Revolving Notes. The Debt of the Borrower resulting from the Existing Debt
Obligations shall be evidenced by the Term Notes, delivered to the Banks
pursuant to Article IV. The Agent shall also maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness of the
Borrower under this Agreement and the amounts of principal and interest payable
and paid to each Bank from time to time under this Agreement.
(b) The Register maintained by the Agent pursuant to Section
9.08(c) shall include a control account, and a subsidiary account for each Bank,
in which accounts (taken together) shall be recorded: (i) the date and amount of
each Borrowing, the Commitment to which such Borrowing relates, the Type of
Advance comprising such Borrowing and the Interest Period applicable thereto (if
any) from time to time, as well as the interest payable in respect of the
Existing Debt Obligations (ii) the terms of each Assignment and Acceptance
delivered to and accepted by it, (iii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Bank, and
(iv) the amount of any sum received by the Agent from the Borrower hereunder and
each Bank's share thereof.
SECTION 2.16. USE OF PROCEEDS. The proceeds of the Advances shall be used by the
Borrower for general corporate purposes.
SECTION 2.17. OUTSTANDING ADVANCES AND LETTERS OF CREDIT AND FEES. All
outstanding advances made under the Existing Credit Agreement after July 10,
2000 shall be deemed Supplemental Revolving Loan Advances as if borrowed on the
Closing Date of this Agreement and on or after the Closing Date shall bear
interest as provided herein and payable at such times and otherwise on such
terms as are provided herein. In addition, all letter of credit fees and
facility fees accrued under the Existing Credit Agreement as of the Closing Date
shall be payable on the initial payment date for facility fees in accordance
with Section 2.02(a) and for letter of credit fees in accordance with Section
3.05, respectively.
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
SECTION 3.01. LETTERS OF CREDIT. Each Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to Issue for the account of the Borrower, one
or more Supplemental Letters of Credit (denominated in United States dollars)
from time to time during the period from the Closing Date until the date which
occurs 30 days before the Termination Date in an aggregate undrawn amount not to
exceed at any time $5,000,000 (exclusive of the undrawn amount of all
Replacement Supplemental
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35
Letters of Credit), provided, however, that each such Letter of Credit shall be
Issued on a sight basis only and shall provide that the Issuing Bank therefor
has the right to cancel such Letter of Credit upon 30 days' notice to the
respective beneficiary; provided further no Issuing Bank shall be obligated or
permitted to Issue or renew any Supplemental Letter of Credit if:
(i) after giving effect to the Issuance or renewal of
such Supplemental Letter of Credit, the then outstanding aggregate
amount of the Supplemental Letter of Credit Liability (exclusive of any
liability relating to all Replacement Supplemental Letters of Credit)
and all Supplemental Revolving Loan Advances (including any Swing Line
Advances) shall exceed the aggregate amount of the Supplemental
Revolving Loan Commitments of the Banks; or
(ii) the Agent or the Majority Banks shall have notified
such Issuing Bank and the Borrower, that no further Supplemental
Letters of Credit are to be Issued or renewed by such Issuing Bank due
to failure to meet any of the applicable conditions set forth in
Article IV, and such notice has not expired or been withdrawn by the
Majority Banks.
Within the limits of the obligations of each Issuing Bank set forth above, the
Borrower may request an Issuing Bank to Issue one or more Supplemental Letters
of Credit, reimburse such Issuing Bank for payments made thereunder pursuant to
Section 3.03(a), and request any Issuing Bank to Issue one or more additional
Supplemental Letters of Credit under this Section 3.01.
SECTION 3.02. ISSUING THE SUPPLEMENTAL LETTERS OF CREDIT. (a) General Terms.
Each Supplemental Letter of Credit shall be Issued on at least five Business
Days' notice from the Borrower to the Issuing Bank specifying the date, amount,
expiry, and beneficiary thereof, accompanied by such application and agreement
for letter of credit and other documents as the Issuing Bank may specify to the
Borrower, each in form and substance satisfactory to the Issuing Bank. On the
date specified by the Borrower in such notice and upon fulfillment of the
applicable conditions set forth in Section 3.01 and Article IV, the Issuing Bank
shall Issue such Supplemental Letter of Credit in the form specified in such
notice and such application and agreement for letter of credit and shall
promptly notify the Agent thereof. In the event and to the extent that any
provision of an application and agreement for a Supplemental Letter of Credit
shall conflict with this Agreement, the provisions of this Agreement shall
govern.
(b) Terms for IPA Support L/Cs. In addition to any applicable
conditions provided for in subsection (a) above, as a condition to the issuance
of each IPA Support L/C in respect of the obligations of an IPA not controlled
by the Borrower, the following statements shall be true with respect to such IPA
Support L/C (and the delivery to the Issuing Bank of the request for the
issuance of such IPA Support L/C shall constitute a representation and warranty
by the Borrower that the following statements are true as of the date of such
request):
(i) NAMM has entered into a Management Services Agreement ("MSA") with
each IPA subject of such Letter of Credit and such MSA is in full force and
effect.
(ii) Under the terms of such MSA:
(A) NAMM has the right to approve distributions to the respective
IPA of profits or surplus or similar distributions;
(B) NAMM has the right at any time to present a financial
corrective action plan to the Board of Directors of each IPA (which plan (I) may
require, among other things, restrictions in fee
<PAGE> 39
36
schedules or additional capital contributions by the members/owners of such IPA
and (II) would, if successfully implemented, in the opinion of NAMM eliminate
the need for the beneficiary to draw under such Letter of Credit);
(C) the Board of Directors of such IPA is required to accept
or reject such plan within fifteen days of its receipt by the Board of
Directors, and if such Board of Directors does not so accept such plan, NAMM has
the right to terminate its obligations to such IPA under such MSA, and upon any
such termination, NAMM has the right to delete the obligations of such IPA from
the coverage of such Letter of Credit effective upon the 60th day after receipt
of notice thereof by the beneficiary of such Letter of Credit in accordance with
the agreement between the Borrower and such beneficiary (the "Beneficiary
Agreement");
(D) if such Board of Directors accepts such plan, such Board of
Directors will take all appropriate actions to implement such plan to prevent
any draw under such Letter of Credit;
(E) in the event the beneficiary of such Letter of Credit
draws thereunder in respect of the obligations of an IPA or the Board of
Directors fails to timely implement a corrective action plan according to its
terms after accepting it, NAMM has the right to terminate its obligations to
such IPA under such MSA effective immediately and to delete the obligations of
such IPA from the coverage of such Letter of Credit effective upon the 60th day
after receipt of notice thereof by such beneficiary (and the respective
Beneficiary Agreement will provide for such right);
(F) each such IPA either (I) has caused to be issued a separate
letter of credit to the beneficiary of such Letter of Credit to secure similar
obligations as those covered by such Letter of Credit and maintained in an
amount (subject to draws thereunder) equal to the greater of such IPA's share
(based on the number of capitated lives, per member per month medical expense
and related criteria as in effect on the date hereof) of the IBNR for all IPAs
whose obligations are covered by such Letter of Credit (which IBNR will be
determined on a quarterly basis) and the product of not less than one times the
net capitation amount for any one month for such IPA expected during the first
three months subsequent to such issuance, and which letter of credit shall be
fully drawn by such beneficiary prior to any draws in respect of such
obligations under such Letter of Credit (and the respective Beneficiary
Agreement shall so provide) or (II) granted to such beneficiary a security
interest in a designated bank account of such IPA, to secure similar obligations
as those covered by such Letter of Credit and which account shall be maintained
in an amount equal to the greater of such IPA's share (based on the number of
capitated lives, per member per month medical expense and related criteria as in
effect on the date hereof) of the IBNR for all IPAs whose obligations are
covered by such Letter of Credit (which IBNR will be determined on a quarterly
basis) and the product of not less than one times the net capitation amount for
any one month for such IPA expected during the first three months subsequent to
such issuance, and such beneficiary shall agree in the respective Beneficiary
Agreement that amounts in such bank account shall first be applied to pay such
obligations prior to any draws under such Letter of Credit; and
(G) NAMM has the right at any time upon 180 days' or less
notice to such IPA and the beneficiary of such Letter of Credit to delete the
obligations of such IPA from the coverage of such Letter of Credit.
(c) Transfers of Controlled IPAs. In the event that an IPA
Support L/C is issued in respect of the obligations of an IPA controlled by the
Borrower, the Borrower shall not take any action that would result in such IPA
no longer being controlled by the Borrower unless either (i) the obligations of
such IPA are not subject to the coverage of such Letter of Credit (and the
respective Beneficiary Agreement so provides) or (ii) the foregoing statements
in subsection (b) are true with respect to such IPA prior to any such action by
the Borrower.
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SECTION 3.03. REIMBURSEMENT OBLIGATIONS. (a) Notwithstanding any provisions to
the contrary in any application and agreement for letter of credit applicable to
any Letter of Credit, the Borrower shall:
(i) pay to the Issuing Bank an amount equal to, and in
reimbursement for, each amount which such Issuing Bank pays under any
Letter of Credit on or before the earlier of (A) the time specified
therefor in the application and agreement for letter of credit applicable
to such Letter of Credit or (B) the date which occurs one Business Day
after payment of such amount by such Issuing Bank under such Letter of
Credit; and
(ii) pay to the Issuing Bank interest on any amount remaining
unpaid under clause (i) above from the date on which such Issuing Bank
pays such amount under any Letter of Credit until such amount is
reimbursed in full to such Issuing Bank pursuant to clause (i) above,
payable on demand, at a fluctuating rate per annum equal to the sum of the
Base Rate plus the Applicable Base Rate Margin in effect from time to
time, provided that any such amount which is not reimbursed to such
Issuing Bank within one Business Day after notice thereof by the Issuing
Bank shall thereafter bear interest, until such amount is reimbursed in
full to such Issuing Bank pursuant to clause (i) above, payable on demand,
at the Base Rate in effect from time to time plus 4% per annum.
(b) All amounts to be reimbursed to the Issuing Bank in accordance
with subsection (a) above in respect of Supplemental Letters of Credit or
Existing Letters of Credit may, subject to the limitations set forth in Section
2.01 (exclusive of the minimum borrowing limitations), be paid from the proceeds
of Supplemental Revolving Loan Advances or Revolving Loan Advances,
respectively. The Borrower hereby authorizes the Banks to make pursuant to
Section 2.01 Supplemental Revolving Loan Advances or Revolving Loan Advances,
respectively, which are in the amounts of the reimbursement obligations of the
Borrower set forth in subsection (a) above in respect of Supplemental Letters of
Credit or Existing Letters of Credit, as the case may be, and further authorizes
the Agent (i) to give the Banks, pursuant to Section 2.01(b), a Notice of
Supplemental Revolving Loan Borrowing or Notice of Revolving Loan Borrowings, as
the case may be, with respect to the Supplemental Revolving Loan Borrowing or
Revolving Loan Borrowing, respectively, comprised of such Advances (which shall
be Base Rate Advances) and (ii) to distribute the proceeds of such Advances to
the Issuing Bank to pay such amounts. The Borrower agrees that all such Advances
so made shall be deemed to have been requested by it, and directs that all
proceeds thereof shall be used to pay such reimbursement obligations under
subsection (a) above.
SECTION 3.04. PARTICIPATIONS PURCHASED BY THE BANKS. (a) On the date of Issuance
of each Supplemental Letter of Credit, the Issuing Bank shall be deemed
irrevocably and unconditionally to have sold and transferred to each Bank
without recourse or warranty, and each Bank shall be deemed to have irrevocably
and unconditionally purchased and received from such Issuing Bank, an undivided
interest and participation, to the extent of such Bank's Commitment Percentage,
in effect from time to time, in such Supplemental Letter of Credit and all
Letter of Credit Liability relating to such Supplemental Letter of Credit and
all Loan Documents securing, guaranteeing, supporting, or otherwise benefiting
the payment of such Supplemental Letter of Credit Liability. As to each
Supplemental Letter of Credit Issued or to be Issued by the Issuing Bank, the
Agent will promptly (after it receives notification from the Issuing Bank
pursuant to Section 3.02) notify each Bank of such Supplemental Letter of Credit
and its date of Issue, amount, expiry, and reference number.
(b) In the event that any reimbursement obligation under Section
3.03(a) is not paid when due to the Issuing Bank with respect to any Letter of
Credit, the Issuing Bank shall promptly notify
<PAGE> 41
38
the Agent to that effect, and the Agent shall promptly notify the Banks of the
amount of such reimbursement obligation and each Bank shall immediately pay to
the Issuing Bank, in lawful money of the United States and in same day funds, an
amount equal to such Bank's Commitment Percentage then in effect of the amount
of such unpaid reimbursement obligation with interest at the Federal Funds Rate
for each day after such notification until such amount is paid to the Agent.
(c) Promptly after the Issuing Bank receives a payment on account of
a reimbursement obligation with respect to any Letter of Credit, the Issuing
Bank shall promptly pay to the Agent, and the Agent shall promptly pay to each
Bank which funded its participation therein, in lawful money of the United
States and in the kind of funds so received, an amount equal to such Bank's
ratable share thereof.
(d) Upon the request of any Bank, the Agent shall furnish to such
Bank copies of any Letter of Credit and any application and agreement for letter
of credit and other documents related thereto as may be reasonably requested by
such Bank.
(e) The obligation of each Bank to make payments under Section
3.04(b) above shall be unconditional and irrevocable and shall be made under all
circumstances, including, without limitation, any of the circumstances referred
to in Section 3.06(b).
(f) If any payment received on account of any reimbursement
obligation with respect to a Letter of Credit and distributed to a Bank as a
participant under Section 3.04(c) is thereafter recovered from the Issuing Bank
in connection with any bankruptcy or insolvency proceeding relating to the
Borrower, each Bank which received such distribution shall upon demand by the
Agent, repay to the Issuing Bank such Bank's ratable share of the amount so
recovered together with an amount equal to such Bank's ratable share (according
to the proportion of (i) the amount of such Bank's required repayment to (ii)
the total amount so recovered) of any interest or other amount paid or payable
by such Issuing Bank in respect of the total amount so recovered.
SECTION 3.05. LETTER OF CREDIT FEES. (a) The Borrower hereby agrees to pay
nonrefundable letter of credit fees with respect to each Letter of Credit on the
maximum amount available to be drawn under such Letter of Credit from time to
time after giving effect to scheduled reductions thereof (the determination of
such maximum amount to assume compliance with all conditions for drawing) from
the date of Issuance of such Letter of Credit until the expiry date of such
Letter of Credit, (i) to each Bank (in accordance with its Commitment
Percentage) at a rate equal to the Applicable Letter of Credit Fee Rate in
effect on the date of Issuance thereof and (ii) to the Issuing Bank at a rate
equal to 1/8 of one percent per annum, for the number of months or any fraction
thereof that such Letter of Credit is outstanding, payable in arrears and on the
last day of each March, June, September and December prior to the expiry date of
such Letter of Credit for the number of months or fraction thereof and on the
expiry date of such Letter of Credit.
(b) The Borrower shall pay to the Issuing Bank, for its own account
and on demand, sums equal to standard fees (other than its letter of credit
fee), charges and expenses that such Issuing Bank may impose, pay or incur in
connection with the Issuance, amendment, administration, transfer or
cancellation of any or all Letters of Credit or in connection with any payment
by such Issuing Bank thereunder.
SECTION 3.06. INDEMNIFICATION: NATURE OF THE ISSUING BANK'S DUTIES. (a) The
Borrower agrees to indemnify and save harmless the Agent, each Issuing Bank and
each Bank from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses
<PAGE> 42
39
(including reasonable attorneys' fees) which the Agent, such Issuing Bank or
such Bank may incur or be subject to as a consequence, direct or indirect, of
(i) the Issuance of any Letter of Credit or (ii) any action or proceeding
relating to a court order, injunction, or other process or decree restraining or
seeking to restrain such Issuing Bank from paying any amount under any Letter of
Credit.
(b) The obligations of the Borrower hereunder with respect to
Letters of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms hereof under all circumstances, including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit or Loan Document or any agreement or instrument
relating thereto;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against the
beneficiary, or any transferee, of any Letter of Credit, or any Issuing
Bank, any Bank, or any other Person;
(iii) any draft, certificate, or other document
presented under any 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;
(iv) any lack of validity, effectiveness, or
sufficiency of any instrument transferring or assigning or purporting
to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part;
(v) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit or of the proceeds thereof;
(vi) the release or non-perfection of any collateral;
(vii) any failure of the beneficiary of a Letter of
Credit to strictly comply with the conditions required in order to draw
upon any Letter of Credit;
(viii) any misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit;
(ix) any other circumstances or happening whatsoever,
whether or not similar to the foregoing; or
(x) any exchange, release or non-perfection of any
Collateral or other collateral.
provided that, notwithstanding the foregoing, neither an Issuing Bank nor the
Agent shall be relieved of any liability it may otherwise have as a result of
its gross negligence or willful misconduct.
SECTION 3.07. INCREASED COSTS. (a) Change in Law. If any change in any law or
regulation or in the interpretation thereof by any court or administrative
governmental authority charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by an Issuing Bank or (ii) impose
on such Issuing Bank or any Bank any other condition regarding letters of credit
or, in the case of such Bank, its participation hereunder in Letters of Credit,
and the result of any event referred to in the preceding clause
<PAGE> 43
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(i) or (ii) shall be to increase the cost to such Issuing Bank of Issuing or
maintaining or, in the case of such Bank, having a participation in Letters of
Credit, then, upon demand by such Issuing Bank or such Bank (with a copy to the
Agent), the Borrower shall immediately pay to such Issuing Bank or such Bank
from time to time as specified by such or such Bank (with a copy to the Agent)
additional amounts which shall be to compensate such Issuing Bank or such Bank
for such increased cost. Each certificate as to such increased cost, and amount
thereof, incurred by any Issuing Bank or any Bank as a result of any event
mentioned in clause (i) or (ii) above, submitted by such Issuing Bank or such
Bank to the Borrower and the Agent, shall set out in reasonable detail the
calculation of such amounts and shall be conclusive and binding for all
purposes, absent manifest error.
(b) Capital. If any Issuing Bank or any Bank determines that
compliance with any law or regulation or with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) has or would have the effect of reducing the rate of return on the capital
of any Issuing Bank or such Bank or any corporation controlling such Issuing
Bank or such Bank as a consequence of, or with reference to, such Issuing Bank's
commitment to issue, issuance of, or, with respect to such Bank's commitment, to
participate in, any Letter of Credit hereunder below the rate that such Issuing
Bank, such Bank or such other corporation could have achieved but for compliance
(taking into account the policies of such Issuing Bank, such Bank or corporation
with capital), then the Borrower, shall from time to time, upon demand by such
Issuing Bank or such Bank (with a copy of such demand to the Agent), immediately
pay to such Issuing Bank or such Bank additional amounts sufficient to
compensate such Issuing Bank or other corporation for such reduction. A
certificate as to such amounts, to the Borrower and the Agent by such Issuing
Bank or such Bank, shall be conclusive and binding for all purposes, absent
manifest error. Each Issuing Bank and each Bank agree promptly to notify the
Borrower and the Agent of any circumstances that would Borrower to pay
additional amounts pursuant to this subsection (b), provided that the failure to
give such notice shall not affect the Borrower's obligation to pay such
additional amounts hereunder.
(c) Survival of Obligations. Without prejudice to the survival
of any other obligation of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 3.07 shall survive the
payment in full of the Advances and the Existing Debt Obligations (after the
Termination Date).
SECTION 3.08. UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce ("UCP") shall in all respects be deemed a part of this Article III as
if incorporated herein and shall apply to the Letters of Credit.
SECTION 3.09 COLLATERAL ACCOUNT. (i) On or before the Closing Date, the Borrower
shall establish (and thereafter maintain) a cash collateral account with the
Agent pursuant to a Cash Collateral Agreement over which the Agent shall have
sole dominion and control (the "Cash Collateral Account") upon terms
substantially set forth in such Cash Collateral Agreement. The Agent shall, at
the Borrower's direction and without assuming any risk of loss thereof, invest
the funds in the Cash Collateral Account in Cash Equivalents for the account of
the Borrower. All interest and other investment gains earned on such investments
shall be added to the Cash Collateral Account as additional collateral security
for the prompt and complete payment when due of the obligations and liabilities
of the Borrower under and in respect of the Letters of Credit. If at any time
the Agent determines that any funds held in the Cash Collateral Account are
subject to any right or claim of any Person other than the Agent, any Issuing
Bank or the Banks, which right or claim could reasonably have the effect of
reducing the value of such funds to the Banks and the Issuing Bank, the Borrower
will, forthwith upon receipt of a demand by the Agent, pay to the Agent, as
additional funds to be deposited and held in such Cash Collateral Account, an
amount
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equal to the amount by which the value of such funds to the Banks and the
Issuing Banks has been reduced as determined by the Agent.
(ii) The Borrower hereby grants a security interest in any
amounts from time to time on deposit in the Cash Collateral Account as
collateral security for the prompt and complete payment when due of the
obligations and liabilities of the Borrower under and in respect of the Letters
of Credit.
(iii) The Borrower, the Agent, each Issuing Bank and the Banks
agree that any action taken or omitted to be taken by the Agent in connection
with the Cash Collateral Account, if taken or omitted to be taken in good faith
and with reasonable care, shall be binding upon the Borrower, the Issuing Banks
and the Banks and shall not create any liability on the part of the Agent to the
Borrower, the Issuing Banks or the Banks.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO ANY BORROWING AND LETTER OF CREDIT. The
obligation of each Bank to make an Advance on the occasion of any Revolving
Borrowing, the obligation of each Issuing Bank to Issue any Supplemental Letter
of Credit and the right of the Borrower to request a Swing Line Advance, shall
be subject to the conditions precedent that on the date of such Borrowing or
Issuance (a) the following statements shall be true and the Agent shall have
received a certificate signed by a duly authorized officer of the Borrower,
dated the date of such Borrowing or Issuance, stating that such statements are
true (and each of the giving of the applicable notice of Revolving Borrowing or
the notice of Swing Line Advance and the acceptance by the Borrower of the
proceeds of such Borrowing or the issuance of such Supplemental Letter of Credit
shall constitute a representation and warranty by the Borrower and each Loan
Party (as to each Loan Document to which it is a party) that on the date of such
Borrowing or such Issuance such statements are true):
(i) the representations and warranties contained in
Section 5.01 of this Agreement, in Section 6 of the Guaranty, in each
Collateral Document and in Section 11 of the Intercompany Subordination
Agreement, are true and correct in all material respects on and as
of the date of such Borrowing or Issuance, before and after giving
effect to such Borrowing or Issuance and to the application of the
proceeds therefrom, as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would
result from such Borrowing or such Issuance or from the application
of the proceeds therefrom, that constitutes an Event of Default or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(b) the Agent shall have received such other approvals, opinions or documents as
the Agent may reasonably request.
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SECTION 4.02. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT. This
Agreement shall become effective if, on or before 5:00 p.m. (New York City time)
on August 25, 2000, it shall have been executed by the Borrower, the Agent, the
Issuing Bank and the Majority Banks and the following conditions precedent are
satisfied:
(i) The Agent shall have received the following documents,
each in form and substance satisfactory to the Agent:
(a) If requested by a Bank, a Revolving Note or Term
Note, each duly executed by the Borrower, to the order of such Bank.
(b) A Consent with respect to this Agreement, duly
executed by each Guarantor and by each Loan Party party to the
Intercompany Subordination Agreement, and to the extent (I) any
Subsidiary (other than any Subsidiary which is not required to be a
Guarantor) is not party to the Guaranty, a supplement to the Guaranty
by such Subsidiary, and (II) any Subsidiary (other than any Immaterial
Subsidiary or Regulated Subsidiary) is not party to the Intercompany
Subordination Agreement, an amendment to the Intercompany Subordination
Agreement executed by such Subsidiary.
(c) Certified copies of the (i) resolutions of the Board
of Directors or other governing body of each Loan Party approving
each Loan Document to which it is a party, and of all documents
evidencing other necessary corporate, limited liability company or
partnership action and governmental approvals, if any, with respect
to each such Loan Document, and (ii) all documents evidencing other
corporate, limited liability company or partnership action or
governmental approvals, if any, necessary or, in the reasonable
opinion of the Agent, advisable in connection with the execution,
delivery and performance of each Loan Document.
(d) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true signatures
of the officers of such Loan Party authorized to sign each Loan
Document to which it is a party and the other documents to be delivered
hereunder.
(e) an Amended and Restated Intercreditor Agreement, duly
executed by all parties thereto;
(f) the sum of the outstanding principal amount of the
advances under the Existing Credit Agreement after July 10, 2000 and
the stated amount of letters of credit issued after July 10, 2000
pursuant to the Existing Credit Agreement is not in excess of
$10,000,000;
(g) Mortgages on undeveloped land of the Borrower on
Hillsboro Pike and Burton Hills Boulevard in Nashville, Tennessee,
together with;
(i) evidence that counterparts of such Mortgages have
been duly recorded in all filing or recording offices that the
Collateral Agent may deem necessary or desirable in order to
create a valid subsisting Lien on the property described
therein in favor of the Collateral Agent for the benefit of
the Secured Parties and that all filing and recording taxes
and fees have been paid;
(ii) unless waived by the Agent, fully paid American
Land Title Association Lender's Extended Coverage title
insurance policies in form and substance,
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with endorsements and in amount acceptable to the Collateral
Agent, issued, coinsured and reinsured by title insurers
acceptable to the Collateral Agent, insuring such Mortgages to
be valid subsisting Liens on the property described therein,
free and clear of all defects (including, but not limited to,
mechanics' and materialmen's Liens) and encumbrances,
excepting only liens permitted thereunder, and providing for
such other affirmative insurance (including endorsements for
future advances under the Loan Documents and for mechanics'
and materialmen's Liens) and such coinsurance and direct
access reinsurance as the Collateral Agent may deem necessary
or desirable;
(iii) unless waived by the Agent, American Land Title
Association form surveys, certified to the Collateral Agent
and the issuer of the title insurance policies in subclause
(ii) above, in a manner satisfactory to the Collateral Agent
by a land surveyor duly registered and licensed in the States
in which the property described in such surveys is located and
acceptable to the Collateral Agent, showing all buildings and
other improvements, any off-site improvements, the location of
any easements, parking spaces, rights of way, building
set-back lines and other dimensional regulations and the
absence of encroachments, either by such improvements or on to
such property, and other defects, other than encroachments and
other defects acceptable to the Collateral Agent; and
(iv) evidence that all other action that the Collateral
Agent may deem necessary or desirable in order to create valid
Liens on the property described in such Mortgages has been
taken.
(h) a favorable opinion of Waller Lansden Dortch & Davis,
special counsel for the Borrower and the other Loan Parties,
substantially in the form of Exhibit E;
(i) such other agreements, certificates, consents and
other documents that the Agent or any Bank may reasonably request; and
(j) financial projections prepared by the Borrower in form
satisfactory to the Agent, of balance sheets, income statements and
cash flow statements on a quarterly basis for the period from June 1,
2000 through December 31, 2000.
(ii) (a) The Borrower shall have paid on or before the Closing Date
to the Agent, for the ratable account of each Bank that shall have executed
this Agreement on or before noon (New York City time) on August 24, 2000, with
such execution to be evidenced by the delivery to the Agent of an executed
signature page hereof by such time (the "Consenting Banks), a consent fee of
0.375% of each such Consenting Bank's outstanding principal amount of
Supplemental Revolving Loan Advances, Unused Supplemental Revolving Loan
Commitment, outstanding principal amount of the Existing Debt Obligations and
portion of the Letter of Credit Liabilities, which fee the Agent will distribute
to such Consenting Banks no later than the third Business Day after the Closing
Date and (b) the Borrower shall have paid on or before the Closing Date all fees
payable hereunder (including, without limitation, Section 2.02(b) hereof and all
outstanding fees due to counsel for the Agent and financial advisors to the
Agent).
<PAGE> 47
44
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows: (a) The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified as a foreign corporation and is
in good standing in each jurisdiction as to which the location of its assets or
the nature of its business makes qualification necessary (except where the
failure to so qualify and be in good standing would not have a material adverse
effect on its business, prospects, condition (financial or otherwise) or
operations) and has all power, corporate or otherwise, to conduct its business
and to own, or hold under lease, its assets, and to execute and deliver, and to
perform all of its obligations under, each of the Loan Documents to which it is
or will be a party. Each of the Borrower's Subsidiaries other than Immaterial
Subsidiaries is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization, is duly qualified as a foreign
corporation, limited liability company or partnership and is in good standing in
each jurisdiction as to which the location of its assets or the nature of its
business makes qualification necessary (except where the failure to so qualify
and be in good standing would not have a material adverse effect on its
business, prospects, condition (financial or otherwise) or operations), and has
all power (corporate, limited liability company, partnership or otherwise) to
conduct its business and to own, or hold under lease, its assets, and to execute
and deliver, and to perform all of its obligations under, each of the Loan
Documents to which it is or will be a party.
(b) The execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party are
within such Loan Party's corporate, limited liability company or
partnership powers, have been duly authorized by all necessary
corporate, limited liability company or partnership action, and do not
contravene (i) such Loan Party's certificate or articles of
incorporation, by-laws or other constituent instruments, or (ii) any
law, rule, regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination or award binding on
or affecting such Loan Party or any of its properties, or (iii) any
contractual restriction binding on or affecting such Loan Party or any
of its properties, and do not result in or require the creation of any
Lien upon or with respect to any of its properties (other than Liens
created under the Loan Documents); and no Loan Party is in default in
any material respect under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination, award or restriction.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by any Loan Party of any Loan Document to which it is or
will be a party except for those which have been duly obtained or made
and are in full force and effect.
(d) This Agreement is, and each other Loan Document
to which each Loan Party will be a party when executed and delivered
hereunder will be, the legal, valid and binding obligation of such Loan
Party enforceable against such Loan Party in accordance with its terms.
(e) The Consolidated balance sheets of the Borrower
and its Subsidiaries as at December 31, 1999 and June 30, 2000 and the
related Consolidated statements of operations, stockholders' equity and
cash flow of the Borrower and its Subsidiaries for the fiscal year and
six months, respectively, then ended have been furnished to the Agent.
Such financial statements, and all financial statements hereafter
delivered pursuant to Sections 6.04(b) and (c), fairly
<PAGE> 48
45
present, or will fairly present, the financial condition of the
Borrower and its Subsidiaries as at the dates thereof and the results
of the operations of the Borrower and its Subsidiaries for the periods
then ended or ending, all in accordance with generally accepted
accounting principles consistently applied. Since August 25, 2000,
there has been no material adverse change, in the business, prospects
or condition (financial or otherwise) or in the results of operations
of the Borrower and its Subsidiaries taken as a whole except as
disclosed in filings since such date with the Securities and Exchange
Commission.
(f) Each Loan Party has good title to its portion of
the Collateral, free and clear of all Liens, except for Permitted
Liens. Each Lease or other agreement relating to the Real Property
described in Schedule I operated by each Loan Party is a valid and
subsisting Lease or other agreement and is in full force and effect in
accordance with the terms thereof, and the Borrower or its Subsidiary
is in possession of all such leaseholds and, except as set forth in
Schedule I, no material default by the Borrower or any of its
Subsidiaries exists under any such Lease or other agreement (except in
respect of a real property lease of a hospital by Desert Valley
Hospital, Inc.) and, to the best of the Borrower's knowledge, no lessor
has any accrued right to terminate any such Lease or other agreement on
account of a default by the Borrower or its Subsidiaries.
(g) Each Service Agreement is a valid and subsisting
agreement and is in full force and effect in accordance with the terms
thereof, and no material default by the Borrower or any of its
Subsidiaries exists under any Service Agreement and, to the best of the
Borrower's knowledge, no party to any of the Service Agreements has any
accrued right to terminate any Service Agreement on account of a
default by the Borrower or any of its Subsidiaries, provided that the
Borrower has received notices containing claims of breach from those
parties as set forth on Schedule III, which claims of breach the
Borrower has denied.
(h) Other than as set forth on Schedule VI to the
Existing Credit Agreement, no judgment, order, decree, injunction or
other restraint affecting any Loan Party has been rendered or imposed
by any court, governmental agency or arbitrator, and there is no
pending or, to the best knowledge of the Borrower, threatened action or
proceeding affecting any Loan Party before any court, governmental
agency or arbitrator, which could reasonably be expected to have a
material adverse effect on the business, prospects or condition
(financial or otherwise) or operations of the Borrower and its
Subsidiaries, taken as a whole, or which purports to affect the
legality, validity or enforceability of this Agreement or any other
Loan Document.
(i) Set forth on Schedule II is a complete and
accurate list of all of the Subsidiaries of the Borrower, other than
Immaterial Subsidiaries, as of the date hereof, showing as of such date
(as to each such Subsidiary) the nature of its organization, the
jurisdiction of its organization, the number of shares or the amount of
interests of each class of Securities outstanding on the date hereof,
the direct owner of the outstanding shares or the amount of interests
of each such class owned, and the jurisdictions in which such
Subsidiary is qualified to do business as a foreign entity. There are
no outstanding options, warrants, rights of conversion or purchase, and
similar rights to acquire Securities of any of such Subsidiaries,
except as set forth on Schedule II, and all of the outstanding
Securities of all of such Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Borrower or a
Guarantor free and clear of (i) all Liens except for Liens under the
Collateral Documents and (ii) any restrictions (other than laws, rules
or regulations) on the ability to vote or alienate such Securities.
(j) All information, exhibits and reports furnished
in writing by or on behalf of the Borrower or any of its Subsidiaries
other than Immaterial Subsidiaries and made available
<PAGE> 49
46
to the Agent or any Bank relating to the condition (financial or
otherwise), operations, business or properties of the Borrower or
such Subsidiary, are true, correct and complete and not misleading
in all material respects.
(k) With respect to all business plans and other
forecasts and projections furnished by or on behalf of the Borrower or
any of its Subsidiaries other than Immaterial Subsidiaries and made
available to the Agent or any Bank relating to the financial condition,
operations, business, properties or prospects of the Borrower or such
Subsidiary, to the best of the Borrower's knowledge: (i) all facts
stated as such therein are true and complete in all material respects,
(ii) all facts upon which the forecasts or projections therein
contained are based are true and complete in all material respects, and
(iii) all estimates and assumptions were made in good faith and
believed to be reasonable at the time made.
(l) Schedule IV sets forth, as of the date hereof,
all Debt of the Borrower and its Subsidiaries other than Debt
representing miscellaneous liabilities not in excess of $5,000,000 in
the aggregate and Debt represented by guarantees by the Borrower of
Capital Leases, Operating Leases (and any other obligations under the
Synthetic Lease Facility) or Service Agreements of any Subsidiary of
the Borrower.
(m) Neither the business nor the properties of the
Borrower or any of its Subsidiaries are affected by any strike,
lockout, fire, explosion, earthquake, embargo, act of God or of the
public enemy or other casualty which could reasonably be expected to
have a material adverse effect on the business, prospects, condition
(financial or otherwise) or results of operations of the Borrower and
its Subsidiaries taken as a whole.
(n) Except as provided in Schedule XV, no ERISA Event
has occurred with respect to any Plan or is reasonably expected to
occur with respect to any Plan.
(o) Except as provided in Schedule XV, Schedule B
(Actuarial Information) to the most recently completed annual report
(Form 5500 Series) for each Plan of the Borrower or its Subsidiaries,
copies of which have been or will be filed with the Internal Revenue
Service, is complete and accurate in all material respects and fairly
presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(p) Neither the Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any material Withdrawal
Liability to any Multiemployer Plan.
(q) Neither the Borrower nor any ERISA Affiliate has
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, within
the meaning of Title IV of ERISA.
(r) Neither the Borrower nor any Subsidiary of the
Borrower is, or is required to be, registered under the Investment
Company Act of 1940, as amended.
(s) Each of the Borrower and its Subsidiaries is in
compliance in all material respects with the provisions of all
Environmental Laws. Neither the Borrower nor any of its Subsidiaries
has engaged in any Environmental Activity, to the knowledge of the
Borrower, in material violation of any provision of any applicable
Environmental Laws.
<PAGE> 50
47
(t) Neither the Borrower nor any of its Subsidiaries
has any liability, absolute or contingent, in connection with any
Environmental Activity the satisfaction of which could reasonably be
expected to have a material adverse effect on the business, prospects,
condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries taken as a whole.
(u) The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System). No proceeds of any Advance will be used to
purchase or carry any margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) in violation of applicable
law, including, without limitation, Regulation U issued by the Board of
Governors of the Federal Reserve System.
(v) The Intercompany Creditor (i) is not liable in
respect of any Debt other than Intercompany Debt, (ii) has no other
liabilities or obligations other than contingent obligations that are
not material in amount in respect of operating leases entered into
prior to May 1, 1993, and (iii) has not engaged in any operations, and
has not received any notice of a claim or threatened claim in respect
of any operations or the sale thereof, since May 1, 1993.
(w) All reprogramming required to permit the proper
functioning, in and following the year 2000, of the Borrower's computer
systems and the related equipment and the testing of all such systems
and equipment, as so reprogrammed, will be materially completed in a
timely fashion and will not result in a material adverse effect on the
business, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries taken as whole.
(x) Set forth on Schedule VIII is a complete and
accurate list of all joint ventures, general or limited partnerships or
limited liability companies owned by the Borrower of any of its
Subsidiaries.
(y) Set forth on Schedule XI and Schedule XII is a
complete and accurate list of all notes received by the Borrower or any
of its Subsidiaries in connection with an asset sale and loans to
clinics and independent practice associations, which list sets forth in
respect of each such note and loan, the payor and payee thereof, the
term, the interest rate and the collateral therefor, if any.
(z) Set forth on Schedule VII is a complete and
accurate list of all Letters of Credit outstanding, which list sets
forth in respect of each such Letter of Credit the beneficiary thereto,
the term and the amount.
(aa) Set forth in Schedule XIII is a complete and
accurate list of all indemnification obligations of the Borrower or
its Subsidiaries.
<PAGE> 51
48
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any Note shall remain unpaid,
any Letter of Credit shall remain outstanding, any amount shall remain due
hereunder, or any Bank shall have any Commitment hereunder, the Borrower will,
unless the Majority Banks shall otherwise consent in writing:
(a) Payment of Taxes, Etc. Pay and discharge, and
cause each Subsidiary to pay and discharge, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
or levies imposed upon it or upon its property, and (ii) all lawful
claims which, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Borrower nor any Subsidiary shall
be required to pay or discharge any such tax, assessment, charge or
claim which is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained.
(b) Maintenance of Insurance. Maintain, and cause
each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations (i) in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general
areas in which the Borrower or such Subsidiary operates, and (ii)
reasonably satisfactory to the Agent, and naming the Agent as an
additional insured or as loss payee as the respective interests appear.
(c) Preservation of Corporate Existence, Etc. Except
as is otherwise expressly permitted hereby, preserve and maintain, and
cause each Subsidiary (other than Immaterial Subsidiaries) to preserve
and maintain, its corporate existence, rights (charter and statutory)
and franchises.
(d) Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply, in all material respects, with the
requirements of all applicable laws, rules, regulations and orders,
including, without limitation, all Environmental Laws relating to the
Real Property and the ownership, use, operation and occupancy thereof.
(e) Visitation Rights. At any reasonable time and
from time to time after notice, permit the Agent or any of the Banks or
any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the
properties of, the Borrower and/or any of the Subsidiaries of the
Borrower, and to discuss the affairs, finances and accounts of the
Borrower and any such Subsidiary with any of their officers or
directors and with their independent certified public accountants.
(f) Keeping of Books. Keep, and cause each Subsidiary
of the Borrower to keep, proper books of record and account, in which
full and correct entries shall be made of all financial transactions
and the assets and business of the Borrower and each such Subsidiary in
accordance with generally accepted accounting principles consistently
applied.
(g) Maintenance of Properties, Etc. Maintain and
preserve, and cause each Subsidiary of the Borrower to maintain and
preserve, all of its properties which are used or useful in the conduct
of its business in good working order and condition, ordinary wear and
tear excepted.
<PAGE> 52
49
(h) Compliance with Terms of All Leaseholds. Make all
payments and otherwise perform, and cause each of its Subsidiaries to
make all payments and otherwise perform, all of its material
obligations in respect of all material Leases, and use its best
efforts, and cause each of its Subsidiaries to use its best efforts, to
keep, and to take all action to keep, such Leases in full force and
effect and not allow any such Leases to lapse or be terminated or any
rights to renew such Leases to be forfeited or canceled; provided,
however, that any such Lease may lapse or be terminated or such renewal
rights may be forfeited or canceled if in the reasonable business
judgment of the Borrower or its Subsidiary, as the case may be, it is
in its best economic interests to allow or cause such lapse,
termination, forfeiture or cancellation.
(i) Further Assurances.
(A) If and to the extent requested by the Agent
from time to time, execute and deliver such documents and take
such other action, and cause each of its Subsidiaries to
execute and deliver such documents and take such other action,
as may be necessary or reasonably requested by the Agent, in
order to assure and confirm that all obligations under this
Agreement (including reimbursement obligations in respect of
outstanding Letters of Credit), the Notes or any of the other
Loan Documents are at all times guaranteed on terms
satisfactory to the Agent by Guaranties of each of its present
and future Subsidiaries other than Immaterial Subsidiaries and
Regulated Subsidiaries.
(B) (1) Promptly upon the acquisition by the
Borrower or one of its Subsidiaries of the Securities of any
Subsidiary that is not an Immaterial Subsidiary or a Regulated
Subsidiary or, in the event any Subsidiary of the Borrower
satisfies the standards of "Guarantor" within 30 days
thereafter, the Borrower will cause such Subsidiary to enter
into a Guaranty; and
(2) (x) upon the acquisition by the Borrower or
one of its Subsidiaries of the Securities of any Subsidiary
that is not an Immaterial Subsidiary or a Regulated
Subsidiary, (y) in the event any Subsidiary of the Borrower
ceases to be an Immaterial Subsidiary or satisfies the
standards of the "Guarantor", or (z) upon the acquisition of
any property by any Loan Party, including any interests in
joint ventures or Subsidiaries, or any notes received in
connection with an asset sale or other property, which, in the
judgment of the Agent, shall not already be subject to a
perfected security interest in favor of the Collateral Agent
for the benefit of the Secured Parties and which is intended
to be subject to a Lien under the Collateral Documents, then
the Borrower shall, in each case at the Borrower's sole
expense and within 15 days after such event, (I) deliver all
such property to the Collateral Agent (to the extent that a
security interest therein is perfected by possession) and duly
execute and deliver, and cause each such Subsidiary and each
direct and indirect parent of such Subsidiary (if it has not
already done so) to duly execute and deliver, to the Agent
mortgages, pledges, assignments and other security agreements,
as specified by and in form and substance reasonably
satisfactory to the Agent, securing payment of all the
obligations of the applicable Loan Party, such Subsidiary or
such parent, as the case may be, under the Loan Documents and
constituting Liens on all such properties, (II) take, and
cause such Subsidiary or such parent to take, whatever action
(including, without limitation, the recording of mortgages,
the filing of Uniform Commercial Code financing statements,
the giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the
Agent to vest in the Agent (or in any representative of the
Agent designated by it) valid and subsisting Liens on the
properties purported to be subject to
<PAGE> 53
50
the mortgages, pledges, assignments and security agreements
delivered pursuant to this Section 6.01(j), enforceable
against all third parties in accordance with their terms, and
(III) deliver to the Agent, upon the request of the Agent in
its sole discretion, a signed copy of a favorable opinion of
counsel for the Borrower as to such guaranty, mortgages,
pledges, assignments and security agreements.
(C) Promptly upon the acquisition of the
Securities of any Subsidiary of the Borrower or one of its
Subsidiaries that is not an Immaterial Subsidiary or Regulated
Subsidiary or, in the event any Subsidiary of the Borrower
ceases to be an Immaterial Subsidiary or is owed by the
Borrower more than $100,000 in Intercompany Debt, within 30
days after such Subsidiary ceases to be an Immaterial
Subsidiary or first is owed such amount of Intercompany Debt,
the Borrower will cause such Subsidiary to enter into the
Intercompany Subordination Agreement, provided that Regulated
Subsidiaries shall not enter into the Intercompany
Subordination Agreement.
(D) (i) Maintain and cause each of its
Subsidiaries, other than Regulated Subsidiaries, to maintain
no more than $1,000,000 in the aggregate in all securities
accounts of the Borrower and such Subsidiaries except for
security accounts maintained with the Collateral Agent (or an
affiliate thereof which has entered into an acceptable control
agreement with the Collateral Agent), provided however, that
the Borrower may maintain escrow accounts, trust accounts,
retirement plan accounts, and other similar accounts,
including, without limitation, the accounts listed on Schedule
XVI hereto without regard to such restriction; (ii) use its
reasonable efforts to transfer, and use its reasonable efforts
to cause each of its Subsidiaries, other than the Regulated
Subsidiaries, to transfer substantially all cash received in
their operations as promptly as practicable after receipt
thereof by each bank or other financial institution receiving
or holding deposits for the Borrower or such Subsidiary to a
deposit account maintained with the Agent or an affiliate
thereof; (iii) agrees not to enter into, and agrees to cause
each of its Subsidiaries not enter into, any agreement, other
than the Loan Documents, that would restrict the flow of cash
received in their operations as described in item (ii) above.
(j) Employment of Technology; Disposal of Hazardous
Materials, Etc. (i) Employ, and cause each of its Subsidiaries to
employ, in connection with its use, if any, of the Real Property,
appropriate technology and compliance procedures to maintain compliance
with any applicable Environmental Laws, (ii) obtain and maintain and
cause each of its Subsidiaries to obtain and maintain, any and all
material permits required by applicable Environmental Laws in
connection with its or its Subsidiaries' operations and (iii) dispose
of, and cause each of its Subsidiaries to dispose of, any and all
Hazardous Substances only at facilities and with carriers reasonably
believed to possess valid permits under RCRA, if applicable, and any
applicable state and local Environmental Laws. The Borrower shall use
its best efforts, and cause each of its Subsidiaries to use its best
efforts, to obtain all certificates required by law to be obtained by
the Borrower and its Subsidiaries from all contractors employed by the
Borrower or any of its Subsidiaries in connection with the transport or
disposal of any Hazardous Substances.
(k) Environmental Matters. If the Borrower or any of
its Subsidiaries shall:
(i) receive written notice that any material
violation of any Environmental Laws may have been committed or
is about to be committed by the Borrower or any of its
Subsidiaries;
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51
(ii) receive written notice that any
administrative or judicial complaint or order has been filed
or is about to be filed against the Borrower or any of its
Subsidiaries alleging any material violation of any
Environmental Laws or requiring the Borrower or any of its
Subsidiaries to take any action in connection with the release
or threatened release of Hazardous Substances or solid waste
into the environment; or
(iii) receive written notice from a federal,
state, foreign or local governmental agency or private party
alleging that the Borrower or any of its Subsidiaries is
liable or responsible for costs associated with the response
to cleanup, stabilization or neutralization of any
Environmental Activity;
then it shall provide the Agent with a copy of such notice within five
Business Days of the Borrower's or such Subsidiary's receipt thereof.
Within ten days of the date the Borrower or such Subsidiary shall have
learned of the enactment or promulgation of any Environmental Laws
which may have a material adverse effect on the business, property,
condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries, taken as a whole, the Borrower shall
provide the Agent with notice thereof. The Borrower shall monitor
compliance with Environmental Laws by any and all owners or operators
of the Real Property.
(l) Bank Accounts. Except to the extent prohibited by
law or a contractual provision in effect on the Closing Date, the
Borrower will take all necessary action so that all funds in each bank
account of its Subsidiaries will be transferred at the end of each
Business Day to an account of the Borrower maintained with the Agent,
provided that such funds shall not be required to be transferred on any
Business Day from any account of a Subsidiary in which the total funds
in such account at the end of such Business Day are less than $50,000.
(m) Regulated Subsidiaries. To the extent permitted
by applicable law and deemed by the Borrower to be reasonable in the
ordinary course of business, cause each Regulated Subsidiary to declare
and pay dividends or make similar distributions, in each case in the
maximum amount and on a quarterly basis.
(n) Investments. (A) All loans ("Straub Capital
Loans") pursuant to Section 5.8.1 of the Service Agreement with Straub
Clinic and Hospital, Inc. ("Straub") shall be secured by a first
priority security interest in all of the assets directly or indirectly
acquired by Straub from the proceeds of any such loans, free and clear
of any other Liens; and loans pursuant to Section 5.8.2 of such Service
Agreement ("Straub Working Capital Loans"; collectively, with the
Straub Capital Loans, the "Straub Loans") shall be made pursuant to a
single credit facility providing loan availability for no more than 13
months from the commencement of the term thereof and shall be secured
by a first priority security interest in all of the accounts
receivable, inventory, supplies and other current assets of Straub (the
"Straub Loan Base"), free and clear of any other Liens; and the
aggregate principal amount of all Straub Working Capital Loans may not
exceed at any time outstanding the aggregate book value (less any
reserves applicable thereto) of (x) the Straub Loan Base as of such
time and (y) any current assets acquired by the Borrower in the merger
with Straub Clinic & Hospital, Incorporated and held by the Borrower at
such time, all as determined in accordance with generally accepted
accounting principles; and each Straub Loan shall be evidenced by a
promissory note that shall be subject to the repurchase right of Straub
provided in the Straub Service Agreement and shall be pledged to the
Collateral Agent pursuant to a Security Agreement as promptly as
practical; and
(B) All loans to any Person other than Straub who is
a party to a Service Agreement, other than working capital loans, shall
be secured by a first priority security interest
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52
in all of the assets directly or indirectly acquired by the Borrower
or a Subsidiary from the proceeds of any such loans, free and clear
of any other Liens; and working capital loans to such Person shall
be made providing loan availability for no more than one year from
the commencement of the term thereof and shall be secured by a first
priority security interest in all of the accounts receivable,
inventory, supplies and other current assets of such Person, free
and clear of any other Liens.
(o) Mortgages. Within 5 Business Days after
the Closing Date, the Borrower will deliver, or cause to be
delivered, to the Agent or the Collateral Agen trust deeds and
mortgages in form and substance satisfactory to the Collateral Agent
and covering on two improved parcels located on Farmerville Street
in Ruston, Louisiana and on two improved parcels located in Southern
Colorado Medical Center in Pueblo, Colorado (all such improved
parcels being the "Additional Parcels"), together with;
(1) evidence that counterparts of such
Mortgages have been duly recorded in all filing or recording
offices that the Collateral Agent may deem necessary or
desirable in order to create a valid subsisting Lien on the
property described therein in favor of the Collateral Agent
for the benefit of the Secured Parties and that all filing and
recording taxes and fees have been paid;
(2) unless waived by the Agent, fully paid
American Land Title Association Lender's Extended Coverage
title insurance policies in form and substance, with
endorsements and in amount acceptable to the Collateral Agent,
issued, coinsured and reinsured by title insurers acceptable
to the Collateral Agent, insuring such Mortgages to be valid
subsisting Liens on the property described therein, free and
clear of all defects (including, but not limited to,
mechanics' and materialmen's Liens) and encumbrances,
excepting only liens permitted thereunder, and providing for
such other affirmative insurance (including endorsements for
future advances under the Loan Documents and for mechanics'
and materialmen's Liens) and such coinsurance and direct
access reinsurance as the Collateral Agent may deem necessary
or desirable;
(3) unless waived by the Agent, American
Land Title Association form surveys, certified to the
Collateral Agent and the issuer of the title insurance
policies above, in a manner satisfactory to the Collateral
Agent by a land surveyor duly registered and licensed in the
States in which the property described in such surveys is
located and acceptable to the Collateral Agent, showing all
buildings and other improvements, any off-site improvements,
the location of any easements, parking spaces, rights of way,
building set-back lines and other dimensional regulations and
the absence of encroachments, either by such improvements or
on to such property, and other defects, other than
encroachments and other defects acceptable to the Collateral
Agent; and
(4) evidence that all other action that the
Collateral Agent may deem necessary or desirable in order to
create valid Liens on the property described in such Mortgages
has been taken.
SECTION 6.02. NEGATIVE COVENANTS. So long as any Note shall remain unpaid, any
Letter of Credit shall remain outstanding, any amount shall remain due
hereunder, or any Bank shall have any Commitment hereunder, the Borrower will
not, without the written consent of the Majority Banks:
<PAGE> 56
53
(a) Liens, Etc. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any Lien upon or with respect to any of its properties
of any character (including, without limitation, Accounts), whether now
owned or hereafter acquired, or assign any right to receive income, or
sign or file, or permit any of its Subsidiaries to sign or file, under
the Uniform Commercial Code a financing statement that names the
Borrower or any of its Subsidiaries as debtor or the equivalent or
sign, or permit any of its Subsidiaries to sign, any security agreement
authorizing any secured party thereunder to file any such financing
statement or other document, or assign, or permit any of its
Subsidiaries to assign, any Accounts, excluding, however, from the
operation of the foregoing restrictions the Liens created by or
pursuant to the Loan Documents and Permitted Liens.
(b) Restrictive Covenants. Enter into, or permit any
of its Subsidiaries to enter into, any agreement or instrument (other
than the Loan Documents) (i) which restricts the ability of the
Borrower or any of its Subsidiaries to create or suffer to exist any
Lien upon or with respect to its Securities, whether now or hereafter
issued, or upon or with respect to any of its properties, whether now
owned or leased or hereafter acquired or leased, except in connection
with transactions contemplated by clause (v) of the definition
"Permitted Lien" in which case any such agreement shall be limited to
the property acquired in connection with such transactions and any Lien
granted is limited as provided in said clause (v) or (ii) which
restricts the ability of any Subsidiary of the Borrower to (A) pay
dividends or make other distributions on its Securities or to the
Borrower or any other Subsidiary of the Borrower, (B) make any loan or
advance to the Borrower or any of its Subsidiaries, or (C) create,
incur, assume or suffer to exist, or pay or prepay, any Intercompany
Debt; provided that any such agreement or instrument mandated by any
federal law, rule or regulation or order governing the business of the
Borrower and its Subsidiaries shall not be a violation of this Section
6.02(b)(ii).
(c) Debt. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Debt other than:
(i) Debt under the Loan Documents;
(ii) Debt secured by Liens permitted by clause
(v) of the definition of "Permitted Lien";
(iii) the Debt listed on Schedule IV, provided
that such Debt may be renewed, extended or otherwise modified
on terms no less favorable to the Borrower or its Subsidiaries
or the Banks than the existing terms of such Debt;
(iv) Subordinated Debt including Debt evidenced
by Equity-Like Instruments and Debt contemplated by Section
2.03(c);
(v) any Intercompany Debt or Debt permitted under
the terms of Section 6.02(h) or 6.02(n);
(vi) Contingent Obligations permitted under
Section 6.02(d);
(vii) Debt under any interest rate, currency or
other protection, hedge, cap, collar, swap or similar
agreement entered into by the Borrower with any of the Banks
or their respective Affiliates from time to time; provided
such Bank or Affiliate enters into the Amended and Restated
Intercreditor Agreement; and
<PAGE> 57
54
(viii) Capitalized Leases or other Debt incurred
after the date hereof related to the financing of personal
property of Subsidiaries not being sold not to exceed in the
aggregate $2,500,000 at any time outstanding.
(d) Contingent Obligations. Create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Contingent Obligations except (i) by
reason of endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(ii) Contingent Obligations created pursuant to the Loan Documents,
(iii) guaranties by the Borrower of Capital Leases, Operating Leases or
Service Agreements of any Subsidiary of the Borrower (including
consents by the Borrower to the assignment of such guaranties),
provided that such Capital Leases or Operating Leases are otherwise
permitted hereunder, (iv) Contingent Obligations of the type specified
in clauses (ii) and (iii) of the definition of "Contingent Obligation"
created in the ordinary course of business, (v) guaranties by the
Subsidiaries of the Borrower of the Borrower's obligations under a
Capital Lease or an Operating Lease provided that such Capital Lease or
Operating Lease is otherwise permitted hereunder and only to the extent
of the portion of such Capital Lease or Operating Lease that directly
benefits such Subsidiary, (vi) Contingent Obligations permitted
pursuant to Section 6.02(c) and Contingent Obligations listed on
Schedule IV, and (vii) Contingent Obligations to make recruitment
subsidy advances pursuant to any Service Agreement.
(e) Restricted Payments. Make, or permit any of its
Subsidiaries to make, any Restricted Payment, except that any
Subsidiary can make Restricted Payments to the Borrower in respect of
shares of stock of such Subsidiary owned by the Borrower.
(f) Advances to NAMM Subsidiaries. Make, or permit
any Subsidiary, other than a NAMM Subsidiary, to make, with respect to
any NAMM Subsidiary (A) any loan, advance, payment or investment of any
type or form in excess of the respective amounts set forth under
Advance in Annex F or (B) permit to exist, for NAMM Subsidiaries in
total, negative Cash Flow Expenditures/Receipts in excess of the
respective amounts set forth under Negative Cash Flow
Expenditures/Receipts in Annex F; provided, that (C) for purposes of
this covenant, the stated amount of any Supplemental Letters of Credit
issued for the direct or indirect benefit of any NAMM Subsidiary will
be deemed an investment in the month such Supplemental Letter of Credit
is issued and (D) any cash paid by a NAMM Subsidiary to the Borrower or
any Subsidiary other than a NAMM Subsidiary may be re-advanced to a
NAMM Subsidiary without being subject to this limitation.
(g) Advances to Subsidiaries other than NAMM
Subsidiaries and Clinic Subsidiaries. Make, or permit any Subsidiary to
make any loan, advance, payment or investment of any type or form in
any Subsidiary, other than a NAMM Subsidiary or Clinic Subsidiary, in
excess of $1,600,000 in the aggregate for all such loans, advances,
payments and investments during the term of this Agreement.
(h) Mergers, Etc. Merge or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, or acquire all
or substantially all of the assets of any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower may
consolidate with or merge into the Borrower (only if the Borrower shall
be the continuing or surviving corporation) or (except for the
Intercompany Creditor) with or into one or more other Subsidiaries of
the Borrower that are Guarantors,
<PAGE> 58
55
provided that (A) immediately before and after giving effect to such
consolidation or merger, the parties thereto and the survivor thereof
all are solvent and such survivor, as a result thereof, does not
have a materially greater amount of liabilities (net of assets acquired
in connection therewith) than prior thereto, (B) all Guaranties shall
continue in full force and effect, and (C) no Event of Default, or
event which, with the giving of notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing.
(i) Limitation on Sales of Assets. Sell, lease,
transfer or otherwise dispose of its assets, or permit any of its
Subsidiaries to sell, lease, transfer or otherwise dispose of any asset
listed on the Anticipated Sales Proceeds Certificate delivered on or
prior to the Closing Date, if (i) the Net Cash Proceeds from the sale
of such asset is less than 75% of the Anticipated Sales Proceeds for
such asset as set forth on such Certificate and (ii) such deficiency is
greater than $1,000,000, provided, that at any time the Borrower or any
of its Subsidiaries shall not sell, transfer or otherwise dispose of
less than all of its interest in any of its Subsidiaries; and provided
further that at any time the Borrower or any of its Subsidiaries shall
not sell, transfer or otherwise dispose of assets if in connection with
any such transaction any consideration is received, directly or
indirectly, by any officer or director, or former officer or director
of the Borrower or of any Subsidiary and provided, further, that any
notes received as part of the consideration in a sale or other
disposition of assets permitted hereunder shall be secured by such
assets (to the extent such assets do not secure the financing by the
respective purchaser of such assets) and such notes shall be pledged by
the respective owner thereof to the Collateral Agent.
(j) Transactions with Affiliates. Lend or advance
money to, contract with or engage in any other transactions with, or
permit any Subsidiary of the Borrower to lend or advance money to,
contract with or engage in any other transactions with, Subsidiaries or
Affiliates of the Borrower, except for (i) any such transaction between
or among Loan Parties and (ii) any such transaction occurring in the
ordinary course of their business with Affiliates and in each case on
terms and for consideration which are no less favorable to the Borrower
or such Subsidiary than the terms and consideration which the Borrower
or such Subsidiary would obtain in an arms' length transaction.
(k) Prepayments of Obligations. (i) Prepay, redeem,
defease (whether actually or in substance) or purchase in any manner
(or deposit or set aside funds or securities for the purpose of the
foregoing), or make any payment (other than for scheduled payments of
principal and interest due on the date of payment thereof, if such
payment is permitted to be made pursuant to the terms of the documents
evidencing or governing the applicable Debt or the Zero Coupon
Convertible Subordinated Notes) in respect of, or establish any sinking
fund, reserve or like set-aside of funds or other property for the
redemption, retirement or repayment of, any Debt or the Zero Coupon
Convertible Subordinated Notes, or transfer any property in payment of
or as security for the payment of, or violate the subordination terms
of, any Debt or the Zero Coupon Convertible Subordinated Notes, or
amend, modify or change in any manner less favorable to Borrower or any
of its Subsidiaries or the Banks the terms of any Debt or the Zero
Coupon Convertible Subordinated Notes or any instrument, indenture or
other document evidencing, governing or affecting the terms of any Debt
or the Zero Coupon Convertible Subordinated Notes, or cause or permit
any of its Subsidiaries to do any of the foregoing; provided, however,
that nothing in this Section 6.02(k) shall prohibit (A) any payments of
the Debt under this Agreement in accordance with the terms hereof or
any mandatory scheduled payments of other Debt in accordance with its
respective terms or (B) the conversion of convertible Subordinated Debt
of the Borrower into Securities of the Borrower.
<PAGE> 59
56
(ii) Prior to the increase of the Supplemental
Revolving Loan Commitment as provided in Section 2.03(c),
make, or permit any of its Subsidiaries to make, directly or
indirectly, any payment in respect of any obligation for which
the respective payor is not obligated by law or contract.
(l) Accounting Changes. Change its fiscal year, or
make, or permit any of its Subsidiaries to make, any other significant
change in Consolidated accounting treatment and reporting practices
except as required or permitted by generally accepted accounting
principles or the rules and regulations of the Securities and Exchange
Commission.
(m) Change in Nature of Business. Make, or permit any
of its Subsidiaries to make, any material change in the nature of its
business as conducted as of the date hereof.
(n) Securities. Permit any of its Subsidiaries to
issue or sell any of its Securities or any rights, warrants or options
to acquire any of its Securities, or permit any of its Subsidiaries to
sell or otherwise dispose of any Securities of any of its Subsidiaries,
or permit any of its Subsidiaries to amend its charter, bylaws or other
constituent instruments so as to affect the conversion rights,
payments, privileges or other terms in respect of such Securities or in
any respect that affects any of the foregoing interests of its
respective securityholders.
(o) Welfare Plan Liabilities. Create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist,
any liability with respect to Welfare Plans if, immediately after
giving effect to such liability, the aggregate annualized cost
(including, without limitation, the cost of insurance premiums) with
respect to Welfare Plans and other benefit plans and insurance of the
type described in the definition of "Welfare Plans" contained in
Section 1.01 for which the Borrower and its Subsidiaries are or may
become liable in any fiscal year of the Borrower could have a material
adverse effect on the business, property, prospects, condition
(financial or otherwise) or results of operations of the Borrower and
its Subsidiaries, taken as a whole.
(p) Intercompany Creditor. Permit the Intercompany
Creditor to engage in any business or operations except the receipt and
advancing of Intercompany Debt and the holding of Intercompany Debt or
Securities of other Subsidiaries of the Borrower.
(q) Litigation Settlements. Make, or permit any
Subsidiary to make, any payments in connection with the settlement of
any litigation in excess of $500,000 in the aggregate; except payments
not to exceed the amount set forth in a letter delivered by the
Borrower to, and approved by, the Agent in settlement of the Benz
Litigation and except for payments in connection with the settlement of
litigation regarding termination of Service Agreements.
(r) Corporate Cash Flow Expenditures. Make Corporate
Cash Flow Expenditures in any month in excess of the respective amount
set forth on Annex G opposite such month, provided, however, that in
the event the amount of Corporate Cash Flow Expenditures in any month
is less than the respective amount for such month set forth on Annex G,
such deficiency will be available in the immediately succeeding month.
(s) Termination or Amendment of Service Agreements.
Other than in connection with the sale or liquidation of a Facility,
terminate, or permit any of its Subsidiaries to terminate, any Service
Agreement or amend or otherwise modify any Service Agreement, or permit
any of its Subsidiaries to amend or otherwise modify any Service
Agreement, if, as a result
<PAGE> 60
57
of such amendment or modification, the revenue payable under such
Service Agreement comprised of the respective service fee would be
reduced for any 12-month period more than 25% from that paid in the
12-month period prior to the amendment or modification.
(t) Investments. Except as otherwise specifically permitted
herein, make, or permit any Subsidiary to make, any investment in or
loan to any Person, other than (A) investments of cash in Cash
Equivalents pursuant to section 3.09 and (B) investments of cash in
Cash Equivalents prior to the payment of such cash to the Banks, where
the sole purpose of such investment is to avoid a Eurodollar Rate
breakage fee, provided that such investments in Cash Equivalents are
promptly liquidated at the end of the applicable Interest Period, with
the proceeds of the liquidation immediately paid to the Banks;
provided that, in each of (A) and (B), the Agent holds a perfected
lien in such Cash Equivalents for the benefit of the Banks.
SECTION 6.03. FINANCIAL COVENANTS. So long as any Note shall remain unpaid, any
Letter of Credit shall remain outstanding, any amount shall remain due
hereunder, or any Banks shall have any Commitment hereunder, the Borrower will,
unless the Majority Banks otherwise consent in writing:
(a) Anticipated Sales Proceeds Debt Ratio. Maintain as of
the end of each month a ratio of Anticipated Sales Proceeds in respect
of assets owned by any Loan Party to the sum of the Existing Debt
Obligations, the Letter of Credit Liabilities, and the aggregate
outstanding principal amount of the Revolving Loan Advances and
Supplemental Revolving Loan Advances in excess of the respective ratio
set forth below opposite such month:
<TABLE>
<CAPTION>
Month Loan Coverage Ratio
----- -------------------
<S> <C>
August 2000 1.05
September 2000 1.10
October 2000 1.10
November 2000 1.10
December 2000 1.15
January 2001 1.50
February 2001 1.50
March 2001 1.50
April 2001 1.50
</TABLE>
(b) Capital Expenditures. Not make Capital Expenditures,
including Capital Leases but exclusive of the acquisition of the
Additional Parcels, in an aggregate amount in excess of
$6,500,000 during the term of this Agreement.
SECTION 6.04. REPORTING REQUIREMENTS. So long as any Note shall remain unpaid,
any Letter of Credit shall remain outstanding, or amount shall remain due
hereunder or any Bank shall have any Commitment hereunder, the Borrower will
furnish to the Agent, for distribution to the Banks, in sufficient copies for
each Bank, the following:
<PAGE> 61
58
(a) as soon as available and in any event within 45
days after the end of each fiscal quarter, Consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of
the end of such fiscal quarter and Consolidated and consolidating
statements of operations and cash flow of the Borrower and its
Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such fiscal quarter, certified
by the chief financial officer of the Borrower, together with (for
items (i) through (iii) below, in the case of each of the first three
quarters of each year) (i) a certificate of said officer stating that
no Event of Default has occurred and is continuing or, if an Event of
Default has occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken or proposes to take
with respect thereto, (ii) a schedule in form satisfactory to the Agent
of the computations used by the Borrower in determining compliance with
the covenants contained in Section 6.03 and stating whether the
Borrower is in compliance or default of the covenants contained in
Sections 6.02 and 6.03, (iii) a certificate of said officer or of the
general counsel of the Borrower regarding additions to and deletions
from Schedule I reflecting changes occurring during such fiscal
quarter; (iv) the aggregate amount of all Corporate Cash Flow
Expenditures made during such fiscal quarter; and (v) information as to
any changes in Schedules VII, XI, XII and XIII.
(b) as soon as available and in any event within 95
days after the end of each fiscal year, a copy of the annual audit
report for such year for the Borrower, including therein an audited
Consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such fiscal year and audited Consolidated statements of
operations, stockholders' equity and cash flow of the Borrower and its
Subsidiaries for such fiscal year (i) certified by a nationally
recognized public accounting firm, together with a certificate of such
accounting firm stating that in the course of the regular audit of the
business of the Borrower, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm has
obtained no knowledge that an Event of Default has occurred and is
continuing, or, if in the opinion of such accounting firm, an Event of
Default has occurred and is continuing, a statement as to the nature
thereof, and (ii) accompanied by a copy of the management letter from
such accounting firm accompanying such financial statements;
(c) as soon as possible and in any event within two
days after the occurrence of an Event of Default of which the Borrower
or any Subsidiary has knowledge, a statement of the chief financial
officer of the Borrower setting forth details of such Event of Default
and the action which the Borrower has taken and proposes to take with
respect thereto;
(d) promptly after any change in accounting policies
or reporting practices that could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
operations, business, assets or prospects of the Borrower or of any of
its Subsidiaries or on the rights of the Banks under any of the Loan
Documents, notice and a description in reasonable detail of such
change;
(e) promptly and in any event within ten days after
the Borrower or any ERISA Affiliate knows or has reason to know that
any ERISA Event has occurred, a statement of the chief financial
officer of the Borrower describing such ERISA Event and the action, if
any, that the Borrower or such ERISA Affiliate has taken or proposes to
take with respect thereto;
(f) promptly and in any event within two Business
Days after receipt thereof by the Borrower or any ERISA Affiliate (i)
copies of each notice from the PBGC stating its intention to terminate
any Plan or to have a trustee appointed to administer any Plan and (ii)
copies of each material notice received from the United States
Department of Labor in connection with any ERISA requirements;
<PAGE> 62
59
(g) promptly and in any event within five Business
Days after receipt thereof by the Borrower or any ERISA Affiliate from
the sponsor of a Multiemployer Plan, a copy of each notice received by
the Borrower or any ERISA Affiliate concerning (i) the imposition of
Withdrawal Liability by a Multiemployer Plan, (ii) the determination
that a Multiemployer Plan is, or is expected to be, in reorganization
within the meaning of Title IV of ERISA, (iii) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA or (iv) the
amount of liability incurred, or expected to be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described
in clause (i), (ii) or (iii) above;
(h) promptly and in any event within ten days after
the commencement thereof, notice of all actions, suits and proceedings
before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, affecting the Borrower
or any of its Subsidiaries, of the type described in Section 5.01(h)
and provide a report no later than 20 Business Days after the end of
each month as to all material developments during the preceding month
in all material pending litigation proceedings;
(i) promptly and in any event within ten days after
the sending or filing in final form thereof, copies of all proxy
statements and financial statements that the Borrower or any of its
Subsidiaries sends to its securityholders generally, and copies of all
registration statements (other than those relating to employee stock
plans), without exhibits, all periodic reports on Forms 10-K and 10-Q
and reports on Form 8-K that the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental
authority that may substituted therefor, or any national securities
exchange or with the National Association of Securities Dealers;
(j) promptly after the occurrence thereof, notice of
(A) any event of which Borrower or any Subsidiary is aware which makes
any of the representations contained in Section 5.01 inaccurate in any
respect or (B) the receipt by the Borrower or any Subsidiary of any
notice, order, directive or other communication from a governmental
authority alleging violations of or noncompliance with any
Environmental Law;
(k) such other information respecting the condition
or operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Bank through the Agent may from time to time
reasonably request;
(l) as soon as available and in any event within 30
days after the end of each of the first two calendar month(s) in each
fiscal quarter and as soon as available and in any event within 45 days
after the end of the last month in each fiscal quarter, Consolidated
and Consolidating balance sheets of the Borrower and its Subsidiaries
(separated by NAMM Subsidiaries and Clinic Subsidiaries) as of the end
of such month and Consolidated and Consolidating statements of
operations and cash flow of the Borrower and its Subsidiaries
(separated by NAMM Subsidiaries and Clinic Subsidiaries) for the period
commencing at the end of the previous calendar month and ending with
the end of such calendar month, certified by the chief financial
officer of the Borrower, together with (i) a schedule in form
satisfactory to the Agent of the computations used by the Borrower in
determining compliance with the covenants in Section 6.02 and 6.03,
(ii) a certificate of said officer stating that no Event of Default has
occurred and is continuing or, if an Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action that
the Borrower has taken or proposes to take with respect thereto, (iii)
a report as to Asset Sales completed in the preceding month and as to
projected Asset Sales in each month for the remainder of the respective
fiscal year or the immediately succeeding
<PAGE> 63
60
six-month period, whichever is longer, including the Net Cash Proceeds
expected from each such disposition and an explanation of any changes
in anticipated cash proceeds, notes received, liabilities assumed,
break-up fees, timing of sale and status of negotiations, all in
reasonable detail, and any indemnification obligations issued by any
Loan Party in connection with any such Asset Sale, (iv) a report on
any material variances in the financial performance of the Borrower
for the respective month from that set forth in the July 21, 2000
projections of the Borrower and its Subsidiaries, and (v) a certificate
of the chief financial officer of the Borrower that on the basis of
information then available to such officer, the Anticipated Sales
Proceeds for each asset on the Anticipated Sales Proceeds Certificate
delivered on or prior to the Closing Date to the Banks is at least
90% of the respective amount for such asset listed on such Certificate,
or in the event said officer reasonably believes any such Anticipated
Sales Proceeds will be less than 90% of such amount, the amount of
such Anticipated Sales Proceeds expected on such date.
(m) promptly and in any event within 30 days after
the end of each fiscal year, a business plan (including financial
projections) for the next fiscal year, on a quarterly basis and in form
and substance satisfactory to the Agent;
(n) as soon as practicable but no later than the
tenth Business Day prior to the scheduled closing thereof, the most
recent draft of the indenture or similar document relating to the
Equity-like Instrument to be issued, and within five Business Days
after such closing, a copy of the executed indenture or similar
document;
(o) within 20 Business Days after the end of each
month, a schedule of the top five payors in each NAMM market determined
on the basis of Commercial and Medicare Lives;
(p) within 20 Business Days after the end of each
month, a schedule identifying (i) the equity surplus or equity deficit
by IPA within each NAMM market, (ii) accrued distributions by IPA
within each NAMM market and (iii) Letters of Credit, if any, issued for
each IPA within each NAMM market in each case during such month;
(q) within 20 Business Days after the end of each
month, a report on the status of the ongoing settlement negotiations
with payors in NAMM markets, including, but not limited to, discussions
with Pacificare in Dallas, Texas and with Humana in Houston, Texas.;
(r) within 20 Business Days after the end of each
month, a report summarizing changes during such month in each major
payor contract by NAMM market: each such report to include (i) payor
name, (ii) termination date, (iii) delegation and parameters of
institutional and professional risk for IPA's and NAMM;
(s) promptly after obtaining knowledge of the
enactment or proposed enactment thereof, notice any significant
regulations or other regulatory actions which could materially
adversely impact any IPA or Facility; and
(t) within 20 Business Days after the end of each
month, a schedule, in form and substance satisfactory to the Agent,
demonstrating the Borrower's compliance with Section 6.02(f).
<PAGE> 64
61
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events (each an "Event
of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of
any Advance or Note or any Existing Debt Obligation or any
reimbursement obligation under any Letter of Credit, in each case when
the same becomes due and payable; or the Borrower shall fail to pay any
interest on any Advance, Note or any Existing Debt Obligation or
reimbursement obligation under any Letter of Credit, or any fees or
other amounts payable under any Loan Document, in each case within five
days after the same becomes due and payable; or
(b) any representation or warranty made or deemed by
any Loan Party (or any of its officers) in any Loan Document or
certificate or other writing delivered pursuant thereto shall prove to
have been incorrect in any material respect when made or deemed made;
or
(c) (i) any Loan Party shall fail to perform or
observe any term, covenant or agreement contained in Section 6.01,
Section 6.02 or Section 6.03; or (ii) any Loan Party shall fail to
perform or observe any other term, covenant or agreement contained in
this Agreement or in any other Loan Document on its part to be
performed or observed if such failure shall remain unremedied for ten
days after written notice thereof shall have been given to such Loan
Party by the Agent or any Bank; or
(d) any Loan Party or any of its Subsidiaries shall
fail to pay any principal of or premium or interest on any Debt which
is outstanding in a principal amount of at least $10,000,000 in the
aggregate (but excluding Debt evidenced by the Notes or under Letters
of Credit) of such Loan Party or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment,
redeemed, purchased or defeased, or any offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(e) any Loan Party or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Loan Party or any of its
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a
period of 30 days, or any of the actions
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sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or any Loan Party or
any of its Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or
(f) any proceeding shall be instituted against any
Loan Party or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for
any substantial part of its property, and either such proceeding shall
remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the
entry of an order for relief against it or the appointment of a
receiver, trustee, custodian or other similar official for it or for
any substantial part of its property) shall occur; or
(g) any judgment or order for the payment of money in
excess of $10,000,000 which is not covered by insurance shall be
rendered against any Loan Party or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(h) any non-monetary judgment or order shall be
rendered against the Borrower or any of its Subsidiaries that is
materially adverse to the business, property, prospects, condition
(financial or otherwise) or results of operations of the Borrower and
its Subsidiaries, taken as a whole, and either (i) enforcement
proceedings shall have been commenced by any Person upon such judgment
or order or (ii) there shall be any period of ten consecutive days
during which a stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect; or
(i) any Loan Document after delivery thereof pursuant
to Article IV hereof or otherwise shall, for any reason cease to be
valid and binding on the respective Loan Party or Loan Parties thereto;
or a Loan Party shall so state in writing or shall contest the validity
or enforceability of any material term or provision of any Loan
Document; or
(j) any ERISA Event with respect to a Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrower by the Agent, (i) such ERISA Event shall still exist and (ii)
the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all
other Plans with respect to which an ERISA Event shall have occurred
and then exist (or in the case of a Plan with respect to which an ERISA
Event described in clauses (iii) through (vi) of the definition of
ERISA Event shall have occurred and then exist, the liability related
thereto) is equal to or greater than $5,000,000 for any fiscal year; or
(k) the Borrower or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan in an amount
that, when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Borrower and its ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $5,000,000 for any fiscal year; or
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63
(l) the Borrower or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Tide IV of ERISA, if as a result of such reorganization
or termination the aggregate annual contributions of the Borrower and
its ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the respective
plan year of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an
amount exceeding $5,000,000; or
(m) there shall occur any Change of Control; or
(n) any Collateral Document after delivery thereof
shall for any reason (other than pursuant to the terms thereof) cease
to create a valid and perfected first priority lien on and security
interest in the Collateral purported to be covered thereby;
(o) there has been, in the reasonable judgment of the
Agent or the Majority Banks, any material adverse change occurring
after the Closing Date in the Consolidated condition, financial or
otherwise, operations, properties or prospects of the Borrower and its
Subsidiaries taken as a whole; or
(p) if during any month the aggregate Net Cash Flow
Expenditures/Receipts in respect of Clinic Subsidiaries shall be less
than $0;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Banks, by notice to the Borrower, declare the
obligation of each Bank to make Advances and the obligations of the Issuing Bank
to Issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, (ii) shall at the request, or may with the consent, of the Majority
Banks, by notice to the Borrower, declare the Notes, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
(iii) shall at the request, or may with the consent, of the Majority Banks
demand that the Borrower, and if such demand is made the Borrower shall, pay to
the Agent for the benefit of the Issuing Banks, an amount in immediately
available funds equal to the sum of the then outstanding Existing Letter of
Credit Liability and the then outstanding Letter of Credit Liability which shall
be held by the Agent (or the Issuing Banks) as cash collateral in the Cash
Collateral Account and applied to the reduction of such Letter of Credit
Liability and Existing Letter of Credit Liability as drawings are made on
outstanding Letters of Credit and (iv) shall at the request, or may with the
consent, of the Majority Banks exercise any other remedies provided hereunder or
by law; provided, however, that in the event of an actual or deemed entry of an
order for relief with respect to the Borrower or any of its Subsidiaries under
the Federal Bankruptcy Code, (A) the obligation of each Bank to make Advances
and of the Issuing Banks to Issue Letters of Credit shall automatically be
terminated and (B) the Notes, all such interest and all such amounts (including
the amounts referred to in clause (iii) above) shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
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ARTICLE VIII
THE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Bank, each Issuing Bank and the
Swing Line Bank (if applicable) hereby appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all Banks and all holders of Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to any Loan Document or applicable law.
The Agent agrees to give to each Bank prompt notice of each notice given to it
by the Borrower pursuant to the terms of this Agreement.
SECTION 8.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Agent: (i) may treat the payee of any Note
as the holder thereof, and treat the Bank that purchased or funded a
participation with respect to a Letter of Credit as the holder or owner of the
Debt resulting therefrom, until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and including the agreement
of the assignee or transferee to be bound hereby as it would have been if it had
been an original Bank party hereto, in form satisfactory to the Agent; (ii) may
consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations (whether written or oral) made in or
in connection with any Loan Document; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of any Loan Document on the part of the Borrower or any Subsidiary
of the Borrower or to inspect the property (including the books and records) of
the Borrower or any such Subsidiary; (v) shall not be responsible to any Bank
for (A) the due execution, legality, validity, enforceability, genuineness or
sufficiency of any Loan Document or any other instrument or document furnished
pursuant thereto, (B) the value of any Collateral, or (C) the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (vi) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telecopier) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 8.03. CUSA AND AFFILIATES. With respect to its Commitment, the Advances
made by it, the Notes issued to it and the participations in Letters of Credit
purchased by it, CUSA shall have the same rights and powers under this Agreement
as any other Bank and may exercise the same as though it were not the Agent; and
the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include
CUSA in its individual capacity. CUSA and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower, any of its Subsidiaries and any Person
who may do business with or own securities of the Borrower or
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any such Subsidiary, all as if CUSA were not the Agent and without any duty to
account therefor to the Banks.
SECTION 8.04. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, the Issuing Bank or any other
Bank and based on the financial statements referred to in Section 5.01(e) and
its review of the Loan Documents and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent, any Issuing Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
SECTION 8.05. INDEMNIFICATION. The Banks agree to indemnify the Agent and each
Issuing Bank (in each case, to the extent not reimbursed by the Borrower),
ratably according to the respective principal amounts of the Existing Debt
Obligations and the Revolving Loan Advances then held by each of them (or if no
Existing Debt Obligations and the Revolving Loan Advances are at the time
outstanding ratably according to the respective amounts of their Commitments),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent or any Issuing Bank, as the case may be, in any way relating
to or arising out of this Agreement or any other Loan Document or any Letter of
Credit or any action taken or omitted by the Agent or such Issuing Bank, as the
case may be, under this Agreement or any other Loan Document or any Letter of
Credit, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's or any Issuing
Bank's, as the case may be, gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent and each
Issuing Bank promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent or such Issuing Bank, as
the case may be, in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any Letter of Credit, to the
extent that the Agent or such Issuing Bank, as the case may be, is not
reimbursed for such expenses by the Borrower.
SECTION 8.06. SUCCESSOR AGENT/ISSUING BANK. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower and the Agent and/or
any Issuing Bank may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, in the case of the Agent,
or removal, in the case of any Issuing Bank, the Majority Banks shall have the
right, subject to the approval of the Borrower (which shall not be unreasonably
withheld), to appoint a successor Agent or a successor Issuing Bank, as the case
may be. If no successor Agent or successor Issuing Bank, as the case may be,
shall have been so appointed by the Majority Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent or the retiring
Issuing Bank, then the retiring Agent or the retiring Issuing Bank, as the case
may be, may, on behalf of the Banks, appoint a successor Agent or a successor
Issuing Bank, as the case may be, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Agent or as an Issuing Bank hereunder by a
successor Agent or a successor Issuing Bank, respectively, such successor Agent
or Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent or the retiring
Issuing Bank, as the case may be, and the retiring
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Agent or the retiring Issuing Bank, as the case may be, shall be discharged from
its duties and obligations under this Agreement and the other Loan Documents.
After any retiring Agent's resignation or removal hereunder as Agent, or any
retiring Issuing Bank's removal hereunder as an Issuing Bank, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent or an Issuing Bank, as the case may be,
under this Agreement and the other Loan Documents. Notwithstanding the
foregoing, no Issuing Bank may be removed unless prior to or contemporaneously
with such removal it shall have received an amount, in immediately available
funds, equal to all outstanding Letter of Credit Liability then outstanding and
then owing to such Issuing Bank and shall have been indemnified by the Borrower,
the Banks and such successor Issuing Bank, to the Issuing Bank's satisfaction,
against all such Letter of Credit Liability. The fees referred to in Section
3.05(b) shall continue to inure to such Issuing Bank's benefit, with respect to
each Letter of Credit Issued by it, until such time as all Letter of Credit
Liability in respect of such Letter of Credit has been discharged in full. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, and,
in the case of a successor Agent, upon the execution and filing or recording of
such financing statements, or amendments thereto, and such amendments or
supplements to the Mortgages, and such other instruments or notices, as may be
necessary or desirable, or as the Majority Banks may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Agent shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents.
SECTION 8.07. DOCUMENTATION AGENT AND SOLE BOOK RUNNER The Documentation Agent
and the Sole Book Runner, as such, shall have no duties or obligations
whatsoever with respect to this Agreement, the Notes or any of the other Loan
Documents.
SECTION 8.08. RELEASE OF COLLATERAL. Upon the payment of all Notes and all other
amounts payable under the Loan Documents, the termination of all Letters of
Credit and the termination of all commitments of the Banks hereunder, the Banks
hereby agree that all Collateral is released from the security interest granted
under the respective Collateral Documents, and upon the sale, lease, transfer or
other disposition of any item of Collateral of any Loan Party in accordance with
the terms of the Loan Documents, the Banks hereby agree that such item of
Collateral is released from the security interest granted under the respective
Collateral Document. In connection therewith, the Banks hereby irrevocably
authorize the Agent from time to time to release any such Collateral or to
consent to any such release pursuant to the Amended and Restated Intercreditor
Agreement, as applicable. The Agent will, at the Borrower's expense, execute and
deliver to the respective Loan Party such documents as such Loan Party may
reasonably request to evidence the release of such item of Collateral from the
security interest granted under the Collateral Documents.
SECTION 8.09. RELEASE OF GUARANTOR. Upon the sale of all of the outstanding
shares of capital stock and other equity, ownership and profit interests in any
Guarantor in a transaction which is permitted under Section 6.02(i), then upon
request by the Borrower, the Agent, on behalf of each Bank, shall confirm in
writing that the liability of such Guarantor under the Guaranty is released and
discharged effective when such transaction is consummated and all requirements
hereunder in connection therewith are satisfied, including with respect to the
application of the proceeds of such sale. Such confirmation from the Agent (a)
shall establish conclusively that the liability of such Guarantor under the
Guaranty is released and discharged and (b) may be relied on, without further
inquiry, by the purchaser in such transaction and each of its transferees. Each
Bank hereby irrevocably authorizes the Agent to release any Guarantor from time
to time to the extent provided for herein and to execute any document reasonably
required in connection therewith.
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SECTION 8.10. ACTIONS IN RESPECT OF AMENDED AND RESTATED INTERCREDITOR
AGREEMENT. The Banks hereby consent to the Agent entering into on behalf of the
Banks the Amended and Restated Intercreditor Agreement and continuing to act as
Collateral Agent under such Amended and Restated Intercreditor Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or the Loan Documents, nor consent to
any departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Banks (or consented to
in writing in the case of the Loan Documents), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Banks, do any of following: (a) waive
any of the conditions specified in Article IV, (b) increase the Commitments of
the Banks or subject the Banks to any additional monetary obligations, (c)
reduce the principal of, or interest on, the Revolving Advances or the Revolving
Notes or any fees or other amounts payable hereunder, (d) postpone the date
fixed for the scheduled payment of principal of, or interest on, the Revolving
Advances or the Revolving Notes or any fees or other amounts payable hereunder
or waive any such payment when due, (e) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Revolving Advances or the
Revolving Notes, or the number or percentage of Banks, which shall be required
for the Banks or any of them to take any action hereunder, (f) amend this
Section 9.01, or (g) release all or substantially all of the Collateral (other
than the release of Collateral sold in accordance with the terms of the Loan
Documents); provided further that no amendment, waiver or consent shall, in
writing and signed by the Agent in addition to the Banks required above to take
such action, affect the rights or duties of the Agent under this Agreement or
any Note; and provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Swing Line Bank or the Issuing Bank, as the
case may be, in addition to the Banks required above to take such action, affect
the rights or duties of the Swing Line Bank or the Issuing Bank under this
Agreement.
SECTION 9.02. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telecopier communication) and mailed
(by certified mail, return receipt requested), telecopied or delivered, if to
the Borrower, at its address at 30 Burton Hills Blvd., Suite 400, Nashville, TN
37215, Attention: Mr. Tarpley Jones, telecopier no. (615) 665-7840; if to any
Bank, at its Domestic Lending Office as specified in its Administrative Details
Reply Form; if to the Agent, at its address at 2 Penn's Way, Suite 200,
Newcastle, Delaware 19720, Attention: Ms. Heather Morgan, telecopier no. (302)
894-6120; and if to any Issuing Bank, as specified in its Administrative Details
Reply Form; with a copy, in the cases of notices to the Agent or the Issuing
Bank, to Mr. John Dorans, 599 Lexington Avenue, New York, New York 10043; or, as
to each Person, at such other address or telecopier number as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed (by certified mail, return receipt
requested), telecopied or faxed be effective when deposited in the mails,
telecopied or confirmed received in the case of a telecopy or facsimile,
respectively, except that notices and communications to the Agent pursuant to
Article II or VIII or to any Issuing Bank pursuant to Article III or VIII shall
not be effective until received by the Agent or such Issuing Bank, as the case
may be.
SECTION 9.03. NO WAIVER: REMEDIES. No failure on the part of any Bank, any
Issuing Bank or the Agent to exercise, and no delay in exercising, any right
under any Loan Document shall
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operate as a waiver thereof, nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 9.04. COSTS, EXPENSES AND TAXES. (a) The Borrower agrees to pay the
Agent and each Issuing Bank on demand all reasonable costs and expenses of the
Agent and such Issuing Bank in connection with the preparation, negotiation,
approval, execution, delivery, filing, recording, administration, modification
and amendment of the Loan Documents and the other documents to be delivered
under the Loan Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of special and local counsel for the Agent and such
Issuing Bank with respect thereto and with respect to advising the Agent and
such Issuing Bank as to its rights and responsibilities under the Loan Documents
and the other documents to be delivered hereunder and thereunder and of any
financial advisor to the Agent. The Borrower further agrees to pay on demand (i)
all costs and expenses, if any, of the Agent, each Issuing Bank or any Bank in
connection with the enforcement (whether through negotiations or legal
proceedings, in bankruptcy, reorganization or other insolvency proceedings or
otherwise) of the Loan Documents and the other documents to be delivered under
the Loan Documents, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section
9.04(a), and (ii) all costs and expenses in connection with appraisals,
valuations, audits and search reports, all insurance and title costs, and all
filing and recording fees required hereby or associated with any enforcement of
rights or remedies specified in clause (i).
(b) If any payment of principal of, or conversion of, any
Eurodollar Rate Advance or Existing Debt Obligation is made other than on the
last day of an Interest Period relating to such Advance or Existing Debt
Obligation, as a result of a payment (including, without limitation, any payment
pursuant to Section 2.09) or conversion pursuant to Section 2.08 or 2.11 or
acceleration of the maturity of the Notes pursuant to Section 7.01 or for any
other reason, the Borrower shall, upon demand by any Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank any amounts
required to compensate such Bank for any additional losses (including loss of
anticipated profits), costs or expenses which it may reasonably incur as a
result of such payment or conversion, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Bank to fund or maintain such Advance.
SECTION 9.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 7.01 or
to demand payment of (or cash collateralization of) all then outstanding Letter
of Credit Liability, each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under any Loan Document to such Bank
(including, to the fullest extent permitted by law, obligations indirectly owed
to such Bank by virtue of its purchase of a participation of the Letter of
Credit Liability pursuant to Section 3.04), whether or not such Bank shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Bank agrees promptly to notify the Borrower after any
such set-off and application made by such Bank, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Bank under this Section 9.05 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which such
Bank may have.
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SECTION 9.06. INDEMNIFICATION. The Borrower agrees to defend, protect, indemnify
and hold harmless the Agent, each Bank and each Issuing Bank and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent, each Bank, each Issuing Bank and such Affiliates (each of
the foregoing being an "Indemnitee" and all of the foregoing being collectively
the "Indemnitees") from and against any and all claims, actions, damages,
liabilities, costs and expenses (including, without limitation, all fees and
disbursements of counsel and environmental consultants which may be incurred in
the investigation or defense of any matter) imposed upon, incurred by or
asserted against any Indemnitee by any third party, whether direct, indirect or
consequential and whether based on any federal, state or foreign laws or other
statutes or regulations (including, without limitation, securities laws,
commercial laws and Environmental Laws and regulations), under common law or on
equitable cause, or on contract, tort or otherwise, including, without
limitation, those arising:
(a) by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of any Loan Document,
any commitments relating thereto, or any transaction contemplated by
any Loan Document; or
(b) in connection with any investigation, litigation,
proceeding or other action relating to any Loan Document (whether or
not any Indemnitee is a party thereto); or
(c) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or omitted by
any Person, or any event occurring, in connection therewith, or the
exercise of any rights or remedies thereunder, including, without
limitation, any Environmental Activity or Environmental Law; or
(d) arising out of, related to or in connection with any
acquisition or proposed, acquisition (including, without limitation, by
tender offer, merger or other method) by the Borrower or any of its
Subsidiaries or Affiliates of any Facility (or the assets thereof) or
any Related Businesses or any Existing Clinic Acquisition, whether or
not an Indemnitee is a party thereto;
provided, however, that, notwithstanding the foregoing, the Borrower shall not
be liable to any Indemnitee for any portion of such claims, damages, liabilities
and expenses resulting from such Indemnitee's or such Indemnitee's Affiliate's,
director's, officer's, employee's, attorney's or agent's gross negligence or
willful misconduct. In the event this indemnity is unenforceable as a matter of
law as to a particular matter or consequence referred to herein, it shall be
enforceable to the full extent permitted by law.
This indemnification applies, without limitation, to any act,
omission, event or circumstance existing or occurring on or prior to the date of
payment in full of the Advances, including any Environmental Activity or
Environmental Law, regardless of whether the act, omission, event or
circumstance constituted a violation of any Environmental Law at the time of its
existence or occurrence. The indemnification provisions set forth above shall be
in addition to any liability the Borrower may otherwise have. Without prejudice
to the survival of any other obligation of the Borrower hereunder, the
indemnities and obligations of the Borrower contained in this Section 9.06 shall
survive the payment in full of the Advances.
SECTION 9.07. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower, the Agent and each Issuing Bank and
when the Agent shall have been notified by each Bank that such Bank has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent, each Issuing Bank and each Bank and their respective
successors and
<PAGE> 73
70
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the Banks.
SECTION 9.08. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Bank may assign, with the
prior consent of the Borrower and the Agent (which, in either case, shall not be
unreasonably withheld and in the case of the Borrower shall not be required
during the continuation of an Event of Default), to one or more banks, financial
institutions or other entities all or a portion of its rights and obligations as
a Bank under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its commitments, the Advances hereinafter owing
to it and the Notes held by it and its participation in reimbursement
obligations of the Borrower in respect of Letters of Credit); provided, however,
that (i) each such assignment shall be of the same percentage of all of the
assigning Bank's rights and obligations under the Loan Documents, (ii) the
amount of the commitments, if any, of the assigning Bank being assigned pursuant
to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000, and shall be an integral multiple of $1,000,000 in excess thereof,
or the remaining amount of such Bank's commitments hereunder, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Notes
subject to such assignment and a processing and recordation fee of $3,000;
provided further that each Bank may, without the consent of the Borrower or the
Agent, assign, as collateral or otherwise, any of its rights under this
Agreement and the other Loan Documents (including, without limitation, the right
to payment of principal and interest under the Notes) to any Federal Reserve
Bank, and such assignment of rights to the Federal Reserve Bank shall not be
subject to the conditions and restrictions set forth in items (i) through (iv)
of the immediately foregoing proviso; and provided further that each Bank may,
without the consent of (but with prior written notice to) the Borrower or the
Agent, assign, in whole or in part, any of its rights and obligations under this
Agreement and the other Loan Documents to any of its Affiliates, and such
assignment to Affiliates shall not be subject to the conditions and restrictions
set forth in items (i) through (iv) of the proviso above. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations under the Loan Documents
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder and thereunder and (y) the Bank
assignor thereunder shall, to the extent that rights and obligations under the
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under the
Loan Documents, such Bank shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to (A) any
statements, warranties or representations made in or in connection with any Loan
Document, (B) the due execution, legality, validity, enforceability, genuineness
or sufficiency of any Loan Document or any other instrument or document
furnished pursuant thereto, (C) the value of any Collateral, or (D) the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; (ii) such assigning Bank
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or the performance or observance by
any Loan Party of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (iii) such assignee
confirms that it has received a copy of each of the Loan Documents, together
with copies of the
<PAGE> 74
71
financial statements referred to in Section 5.01(e) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, any Issuing Bank, such
assigning Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement or any other Loan Document;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the Banks
and the Commitment and principal amount of the Advances owing to, each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and an assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Notes, new Notes to the order of such Eligible
Assignee in an aggregate principal amount equal to the principal amount of
Advances owed to it pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained any principal amount of the obligations owed to it
hereunder, new Notes to the order of the assigning Bank in an aggregate
principal amount equal to such principal amount. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance, shall consist of Notes payable to the order of such Eligible
Assignee and, if the assigning Bank has retained ownership of any Advances owed
to it hereunder, the assigning Bank in the appropriate principal amounts, and
shall otherwise be in substantially the forms required by this Agreement.
(e) Each Bank may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under the
Loan Documents (including, without limitation, all or a portion of its
commitments, the Notes held by it and reimbursement obligations of the Borrower
in respect of Letters of Credit); provided, however, that (i) such Bank's
obligations under the Loan Documents (including, without limitation, its
commitments to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the holder of any such Notes
for all purposes of the Loan Documents, and (iv) the Borrower, the Agent, each
Issuing Bank and the other Banks shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under the Loan
Documents; provided further that, to the extent of any such participation
(unless otherwise stated therein and subject to the preceding proviso), the
assignee or purchaser of such participation shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder as it would have
if it were a Bank hereunder; and provided further that each such participation
shall be granted pursuant to an
<PAGE> 75
72
agreement providing that the purchaser thereof shall not have the right to
consent or object to any action by the selling Bank (who shall retain such
right) other than an action which would (i) reduce principal of or interest on
any Advance or fees in which such purchaser has an interest or (ii) postpone any
date fixed for payment of principal of or interest on any such Advance or such
fees.
(f) The Borrower agrees that any Bank purchasing a
participation from another Bank pursuant to Section 2.14 or 9.08(e) may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation.
SECTION 9.09. HEADINGS. Article and Section headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
SECTION 9.10. CONFIDENTIALITY. Neither the Agent nor any Bank shall disclose to
any third party any Confidential Information disclosed to the Agent or such Bank
pursuant to the Loan Documents, except that (i) the Agent or any Bank may
disclose Confidential Information to a third party to the extent compelled by
law, subpoena, civil investigative demand, interrogatory or similar legal
process or by any rule, regulation or request of any regulatory authority having
jurisdiction over the Agent or such Bank, as the case may be, (ii) the Agent or
any Bank may disclose Confidential Information to a potential transferee who is
an Eligible Assignee, provided that such potential transferee agrees to be bound
by the same confidentiality obligations as the Banks under this Section and
(iii) the Agent or any Bank may disclose Confidential Information to its
affiliates or its legal counsel or other agents; provided that prior to any such
disclosure the Agent or such Bank, as the case may be, informs such affiliates,
counsel or agent of the confidential nature of such Confidential Information.
For purposes hereof, "Confidential Information" is written information disclosed
by the Borrower or any of its Subsidiaries to the Agent or any Bank pursuant
hereto that is not information which (x) has become generally available to the
public, other than as a result of disclosure by the Agent or such Bank, (y) was
available on a non-confidential basis prior to its disclosure to the Agent or
such Bank by the Borrower or any of its Subsidiaries, or (z) becomes available
to the Agent or such Bank on a non-confidential basis from a source other than
the Borrower or any of its Subsidiaries. The Agent and the Banks acknowledge
that the Confidential Information may from time to time include material
non-public information relating to the Borrower or its Subsidiaries.
SECTION 9.11. SEVERABILITY OF PROVISIONS. Each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or unenforceable
in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining provisions hereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.12. INDEPENDENCE OF PROVISIONS. All agreements and covenants hereunder
and under the Loan Documents shall be given independent effect such that if a
particular action or condition is prohibited by the terms of any such agreement
or covenant, the fact that such action or condition would be permitted within
the limitations of another agreement or covenant shall not be construed as
allowing such action to be taken or condition to exist.
SECTION 9.13. CONSENT TO JURISDICTION. (a) The Borrower hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City in any action or proceeding arising out of or relating to this
Agreement or any Loan Document, and the Borrower
<PAGE> 76
73
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrower hereby irrevocably appoints CT Corporation System (the
"Process Agent") to serve through December 31, 2002, with an office on the date
hereof at 111 8th Avenue, New York, New York 10011, United States, as its agent
to receive on behalf of the Borrower and its property service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding. Such service may be made by mailing or delivering a copy
of such process to the Borrower in care of the Process Agent at the Process
Agent's above address, and the Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on his behalf. As an
alternative method of service, the Borrower also irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the Borrower at its address specified in Section
9.02. The Borrower agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this section shall affect the right of any Bank,
any Issuing Bank or the Agent to serve legal process in any other manner
permitted by law or affect the right of any Bank, any Issuing Bank or the Agent
to bring any action or proceeding against the Borrower or its property in the
courts of any other jurisdictions.
SECTION 9.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.15. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT, THE ISSUING
BANK AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 9.16. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE> 77
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PHYCOR, INC.
By /s/ Tarpley B. Jones
-----------------------------------
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 78
S-2
CITIBANK, N.A.,
as an Issuing Bank
By /s/ Susan McManigal
----------------------------------------------
Title: Vice President
CITICORP USA, INC.,
as Agent, as Swing Line Bank and as Bank
By /s/ Susan McManigal
----------------------------------------------
Title: Attorney-in-Fact
<PAGE> 79
S-3
BANK OF AMERICA, N.A.
as Documentation Agent and as Bank
By /s/ Lon D. Brown
----------------------------------------------
Title: Managing Director
<PAGE> 80
S-4
SUNTRUST BANK
By /s/ Samuel M. Ballesteros
----------------------------------------------
Title: Director
<PAGE> 81
S-5
BANKERS TRUST COMPANY
By /s/ Barbara Eppolito
----------------------------------------------
Title: Vice President
<PAGE> 82
S-6
BANK OF NOVA SCOTIA, Atlanta Agency
By /s/ W.J. Brown
----------------------------------------------
Title: Vice President
<PAGE> 83
S-7
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ C.H. Heidseick
----------------------------------------------
Title: Senior Vice President
Healthcare Group
<PAGE> 84
S-8
AMSOUTH BANK, successor in interest by merger to,
FIRST AMERICAN NATIONAL BANK
By /s/ Robert L. Hart
----------------------------------------------
Title: Senior Vice President
<PAGE> 85
S-9
BANK ONE, NA (f/k/a THE FIRST NATIONAL BANK OF CHICAGO)
By /s/ Dennis Saletta
----------------------------------------------
Title: First Vice President
<PAGE> 86
S-10
FIRST UNION NATIONAL BANK
By /s/ Elizabeth D. Morris
----------------------------------------------
Title: Director
<PAGE> 87
S-11
FLEET NATIONAL BANK
By /s/ David F. Eusden
----------------------------------------------
Title: Director
<PAGE> 88
S-12
MELLON BANK, N.A.
By /s/ Colleen McCullom
----------------------------------------------
Title: Vice President
<PAGE> 89
S-13
COOPERATIEVE CENTRALE RAIFFEISEN
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By /s/ Ian Reece
----------------------------------------------
Title: Senior Credit Officer
By /s/ James J. Cunningham
----------------------------------------------
Title:
<PAGE> 90
S-14
THE SUMITOMO BANK, LIMITED
By /s/ C. Michael Garrido
----------------------------------------------
Title: Senior Vice President
<PAGE> 91
S-15
TORONTO DOMINION (TEXAS), INC.
By /s/ Carolyn R. Faeth
----------------------------------------------
Title: Vice President
<PAGE> 92
S-16
WACHOVIA BANK
By /s/ Ken Washington
----------------------------------------------
Title: Senior Vice President
