<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-26190
AMERICAN ONCOLOGY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1213501
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16825 NORTHCHASE DRIVE, SUITE 1300
HOUSTON, TEXAS
77060
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(713) 873-2674
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- -----
AS OF NOVEMBER 13, 1996, 27,488,682 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE ISSUED AND OUTSTANDING.
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
FORM 10-Q
SEPTEMBER 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET 3
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 4
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
SIGNATURES 17
</TABLE>
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
AMERICAN ONCOLOGY RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- -----------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents $ 3,988 $ 14,816
Short-term investments 4,083 44,967
Accounts receivable 50,144 31,152
Due from affiliated medical groups 750 1,271
Prepaids and other current assets 7,963 3,575
Income taxes receivable and deferred tax asset 2,437 11
-------- --------
Total current assets 69,365 95,792
Property and equipment, net 15,860 11,157
Management service agreements, net 228,998 164,522
Other assets 1,909 888
-------- --------
$316,132 $272,359
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term notes payable $ 2,796 $ 12,608
Current maturities of long-term indebtedness 4,429 3,157
Accounts payable 15,701 10,249
Due to affiliated medical groups 2,385 1,153
Income taxes payable 4,253
Other accrued liabilities 7,116 4,648
-------- --------
Total current liabilities 32,427 36,068
Deferred income taxes 2,695 921
Long-term indebtedness 56,400 44,190
-------- --------
Total liabilities 91,522 81,179
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding
Common Stock, $.01 par value, 60,000,000 and
40,000,000 shares authorized, 28,360,082
and 27,476,450 shares issued and
outstanding 284 275
Additional paid-in capital 141,276 133,242
Common Stock to be issued, 16,998,666 and
15,261,972 shares 58,595 46,018
Retained earnings 24,455 11,645
-------- --------
Total stockholders' equity 224,610 191,180
-------- --------
$316,132 $272,359
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
-3-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenue $53,701 $25,497 $141,825 $64,741
------- ------- -------- -------
Operating expenses:
Pharmaceuticals and supplies 22,674 8,953 56,671 23,189
Practice compensation and benefits 10,936 5,014 29,000 12,497
Other practice costs 6,114 3,050 16,577 7,577
General and administrative 3,775 2,809 10,355 6,962
Depreciation and amortization 2,420 1,356 6,514 3,239
------- ------- -------- -------
45,919 21,182 119,117 53,464
------- ------- -------- -------
Income from operations 7,782 4,315 22,708 11,277
Other income (expense):
Interest income 222 971 973 1,215
Interest expense (1,064) (513) (3,020) (2,686)
Other income (net) 1,502 1,502
------- ------- -------- -------
Income before income taxes 6,940 6,275 20,661 11,308
Income taxes 2,637 1,621 7,851 3,604
------- ------- -------- -------
Net income $ 4,303 $ 4,654 $ 12,810 $ 7,704
======= ======= ======== =======
Net income per share $0.09 $0.10 $0.27 $0.20
======= ======= ======== =======
Shares used in per share
calculations 47,448 45,630 47,447 37,878
======= ======= ======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
-4-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL COMMON
COMMON STOCK PAID-IN STOCK TO RETAINED
SHARES PAR VALUE CAPITAL BE ISSUED EARNINGS TOTAL
------ --------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,1995 27,476 $275 $133,242 $46,018 $11,645 $191,180
Medical practice transactions-
value of 1,736,694 shares to be
issued 12,577 12,577
Compensation value of non-employee
options to purchase Common Stock 368 368
Exercise of options to purchase
Common Stock 884 9 1,089 1,098
Tax benefit from exercise of
non-qualified stock options 6,577 6,577
Net Income 12,810 12,810
------ ------ ------- ------- -------- --------
Balance at September 30, 1996 28,360 $284 $141,276 $58,595 $24,455 $224,610
====== ==== ========== ========= ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
-5-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE-MONTHS
ENDED SEPTEMBER 30,
1996 1995
------------ ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,810 $ 7,704
Noncash adjustments:
Depreciation and amortization 6,514 3,239
Deferred income taxes 1,764 294
Imputed interest on medical practice transactions 113
Cash provided (used), net of effects of medical
practice transactions, by changes in:
Accounts receivable (14,431) (6,879)
Prepaids and other current assets (3,976) (1,377)
Income taxes receivable 2,203
Other assets (501) (1,362)
Accounts payable 4,047 1,225
Due to/from affiliated medical practices 1,914 1,233
Income taxes payable (2,298)
Other accrued liabilities 1,878 5,222
-------- --------
Net cash provided by operating activities 10,037 9,299
-------- --------
Cash flows from investing activities:
Net sales (purchases) of short-term investments 40,884 (44,000)
Acquisition of property and equipment (5,766) (2,349)
Net payments in medical practice transactions (39,574) (43,350)
-------- --------
Net cash used by investing activities (4,456) (89,699)
-------- --------
Cash flows from financing activities:
Proceeds from bank indebtedness 35,000
Repayment of bank indebtedness (35,000)
Repayment of other indebtedness (17,226) (8,672)
Debt financing costs (281) (411)
Collection of stockholder notes 100
Net proceeds from issuance of Common Stock 1,098 111,001
-------- --------
Net cash (used) provided by financing activities (16,409) 102,018
-------- --------
Increase (decrease) in cash and equivalents (10,828) 21,618
Cash and equivalents:
Beginning of period 14,816 3,349
-------- --------
End of period $ 3,988 $ 24,967
======== ========
Interest paid $ 2,497 $ 1,878
Taxes paid 6,210 79
Noncash transactions:
Tax benefit from exercise of non-qualified stock
options 6,577
Value of Common Stock to be issued in medical practice
transactions 12,577 25,016
Debt issued in medical practice transactions 19,885 14,001
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
-6-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Form 10-Q and Rule 10.01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited condensed
consolidated financial statements contained in this report reflect all
adjustments, which are normal and recurring in nature, considered necessary for
a fair presentation of the financial position and the results of operations for
the interim periods presented. To conform to the presentation for the three
months ended September 30, 1996, certain expenses were reclassified in the
condensed consolidated statement of operations for the nine months ended
September 30, 1996. This reclassification had no effect on net income for any
period. The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, as well as disclosures on contingent assets
and liabilities. Because of inherent uncertainties in this process, actual
future results could differ from those expected at the reporting date. These
unaudited condensed consolidated financial statements, footnote disclosures and
other information should be read in conjunction with the financial statements
and the notes thereto included in the Company's Form 10K filed with the
Securities and Exchange Commission on March 25, 1996.
NOTE 2 - MEDICAL SERVICE REVENUE
Medical service revenue for services to patients by the medical groups
affiliated with the Company is recorded when services are rendered based on
established or negotiated charges reduced by contractual adjustments and
allowances for doubtful accounts. Differences between estimated contractual
adjustments and final settlements are reported in the period when final
settlements are determined. Medical service revenue of the affiliated medical
groups is reduced by the contractual amounts retained by the medical groups to
arrive at the Company's revenue.
The following presents the amounts included in the determination of the
Company's revenue (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ---
<S> <C> <C> <C> <C>
Medical service revenue $70,417 $33,146 $186,319 $84,630
Amounts retained by medical
practices 16,716 7,649 44,494 19,889
------- ------- -------- -------
Revenue $53,701 $25,497 $141,825 $64,741
======= ======= ======== =======
Management service agreements
at end of period 31 14 31 14
</TABLE>
-7-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - MEDICAL PRACTICE TRANSACTIONS
During the first nine months of 1995 and 1996, the Company, through wholly-owned
subsidiaries, acquired certain non-medical assets of, and entered into long-term
management service agreements with, seven and nine medical oncology practices,
respectively. The transactions have been accounted for as asset purchases. The
following presents the aggregate consideration required to complete those
transactions (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Cash and transaction costs $ 9,598 $ 7,541 $39,574 $43,350
Liabilities assumed 857 1,030 2,656 6,338
Issuance of short-term and
subordinated notes 8,807 3,866 19,885 14,001
Common Stock to be issued 5,949 3,120 12,577 25,016
------- ------- ------- -------
$25,211 $15,557 $74,692 $88,705
======= ======= ======= =======
</TABLE>
In conjunction with the medical practice transactions occurring in the first
nine months of 1996, the Company is contingently obligated to pay up to an
additional $2,570,000 in future years, depending on the achievement of certain
financial objectives. Such liability, if any, will be recorded in the period in
which the outcome of the contingency becomes known. Any payment made will be
allocated to the long-term management services agreements entered into and will
not immediately be charged to expense.
The Company has committed to issue shares of Common Stock pursuant to completed
acquisition transactions as follows: 112,428 in 1996; 2,570,074 in 1997;
2,962,436 in 1998; 5,134,762 in 1999; 4,842,680 in 2000 and 1,376,286 in 2001
through 2003. Although such shares are not yet issued or outstanding, such
shares are considered as outstanding for per share calculations.
The accompanying unaudited condensed consolidated financial statements include
the results of operations derived from the management service agreements from
their respective effective dates. The following unaudited pro forma information
presents the results of operations assuming all 1995 and 1996 transactions were
consummated on January 1, 1995. Such pro forma information is based on the
historical financial information of the medical practices and does not include
operational or other changes which might have been effected pursuant to the
Company's management of the nonmedical aspects of such practices.
The pro forma information presented below is for illustrative information only
and is not necessarily indicative of results which would have been achieved or
results which may be achieved in the future (in thousands except share amounts):
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
-------------- ---------------
<S> <C> <C>
Revenue $159,964 $131,276
Net income 14,373 10,163
Net income per share 0.29 0.25
</TABLE>
NOTE 4 - OTHER INCOME
In September 1995 the Company recorded a benefit of $2,090,600 in connection
with life insurance proceeds resulting from the untimely death of a physician
shareholder in an affiliated medical practice. In addition, other income
reflects a charge of $589,000 consisting of abandoned leasehold improvements and
noncancelable rents as a result of the consolidation and relocation of
administrative facilities.
-8-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5- CAPITALIZATION
As part of entering into long-term management agreements with medical practices
described in Note 3, the Company has nonforfeitable commitments to issue shares
of Common Stock at specified future dates for no further consideration. Common
Stock to be issued is shown as a separate component in stockholders' equity and
the amounts, upon issuance of the shares, will be reclassified to par value and
additional paid-in capital.
During the first nine months of 1996, options to purchase 341,800 shares of
Common Stock at $7.21 to $24.18 per share were granted under the Company's
various stock option plans, of which 150,000 were granted to executive officers
and directors. During the first nine months of 1996, options to purchase
883,632 shares of Common Stock at $1.34 to $6.13 per share were exercised, of
which 848,132 were exercised by executive officers and directors. During the
first nine months of 1996, options to purchase 117,200 shares of Common Stock
were canceled. At September 30, 1996, there were options to purchase 5,126,518
shares of Common Stock outstanding under the Company's various stock option
plans at exercise prices of $1.34 to $24.18 per share.
Effective May 9, 1996, the Company's stockholders approved an increase in the
number of shares of Common Stock authorized to be issued to 60,000,000 shares.
On May 16, 1996, the Board of Directors of the Company declared a two-for-one
stock split of the Company's Common Stock which was paid on June 10, 1996 to
stockholders of record on May 31, 1996. All references herein to the number of
shares and per share amounts have been adjusted to reflect the effect of the
split.
On August 13, 1996, the Board of Directors of the Company authorized the
repurchase of 3,000,000 shares of Common Stock from time to time in public or
private transactions. Through November 13, 1996, 879,400 shares have been
repurchased by the Company. Such shares will be held as treasury stock.
NOTE 6- INDEBTEDNESS
<TABLE>
<CAPTION>
Indebtedness consists of the following (in thousands):
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Promissory notes to physicians $58,189 $44,443
Other 2,640 2,904
------- -------
60,829 47,347
Less current maturities (4,429) (3,157)
------- -------
$56,400 $44,190
======= =======
</TABLE>
The Company has a loan agreement and revolving credit facility (Credit Facility)
with First Union National Bank of North Carolina (First Union) individually and
as Agent for the Lenders, which was amended as of October 30, 1996, to increase
the amount available for borrowing thereunder to $150 million. Proceeds of
loans may be used to finance medical group transactions, for working capital and
for general corporate purposes. At September 30, 1996, the Company had no
outstanding balance under the Credit Facility.
The Company has a $5,000,000 Master Lease Agreement to provide equipment
financing for use in operations. At September 30, 1996, the Company had no
outstanding balance under the Master Lease Agreement.
-9-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7- EARNINGS PER SHARE
The computation of earnings per share is based on the weighted average number of
Common Stock and Common Stock equivalent shares outstanding during the periods
in accordance with the requirements of the Securities and Exchange Commission
(SEC). All options to purchase Common Stock, shares issued and commitments to
issue Common Stock at specified future dates, which were issued or granted
within one year prior to the initial SEC filing at prices less than the initial
public offering price, are assumed to have been outstanding Common Stock
equivalents under the treasury stock method for each of the periods presented up
to the effective date of the initial public offering. Fully diluted earnings
per share has not been presented because it does not differ materially from the
primary per share computations.
The table summarizes the determination of shares used in per share calculations
(in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------- -------- --------- -------
<S> <C> <C> <C> <C>
Outstanding at end of period:
Common Stock 28,360 27,476 28,360 27,476
Common Stock to be issued 16,999 14,252 16,999 14,252
------ ------ ------ ------
45,359 41,728 45,359 41,728
Effect of weighting and assumed share
equivalents for grants and issuances at
less than the weighted average price 2,089 3,902 2,088 (3,850)
------ ------ ------ ------
Shares used in per share calculations 47,448 45,630 47,447 37,878
====== ====== ====== ======
</TABLE>
NOTE 8 - SUBSEQUENT MEDICAL PRACTICE TRANSACTIONS
In October and November 1996, the Company completed the acquisition of the
nonmedical assets and entered into long-term management agreements with four
additional medical practices. Total consideration consisted of cash of $6.2
million, short-term notes of $1.5 million, promissory notes aggregating $4.2
million, and 576,556 shares of Common Stock to be delivered at specific future
dates as follows: 109,557 in 1999, 109,557 in 2000, 357,442 in 2001 through
2003.
-10-
<PAGE>
ITEM 2. AMERICAN ONCOLOGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
American Oncology Resources, Inc. (the "Company") enters into management
agreements with, and purchases the nonmedical assets of, oncology medical
practices. Under the terms of the management agreements, the Company provides
comprehensive management services to its affiliated oncology practices,
including operational and administrative services, and furnishes personnel,
facilities, supplies and equipment. These practices provide a broad range of
medical services to cancer patients, integrating the specialties of medical
oncology, hematology and radiation oncology. The Company's revenue consists of
management fees and includes all medical practice operating costs for which the
Company is contractually responsible.
In recent years, there has been a trend among oncologists to form larger group
practices that provide a broad range of services to cancer patients in
outpatient settings, rather than in hospitals or other inpatient settings. The
Company believes that the coordinated delivery of comprehensive cancer care in
an outpatient setting offers high quality care that is more cost-effective than
traditional approaches and is increasingly preferred by patients, payors and
physicians. The Company believes that many of these larger oncology practices
recognize the need for outside managerial, financial and business expertise to
more efficiently manage the increasingly complex, burdensome and time-consuming
nonmedical aspects of their practices and that such practices will increasingly
elect to enter into management relationships with entities such as the Company.
The Company's objective is to be the leading national physician practice
management company providing comprehensive services to an integrated network of
affiliated oncology practices. The Company intends to achieve this objective by
(i) focusing exclusively on oncology, (ii) affiliating with leading oncology
practices throughout the United States, (iii) expanding each affiliated oncology
group's presence in its market, (iv) assisting affiliated oncology practices in
offering coordinated, comprehensive cancer care and (v) negotiating and
expanding managed care relationships. Based on the Company's success in
expanding its business to date, the Company believes that it has effective
strategies for achieving its objective of becoming the leading national oncology
practice management company.
FORWARD LOOKING STATEMENTS
The statements contained in this report, in addition to historical information,
are forward looking statements based on the Company's current expectations, and
actual results may vary materially. The Company's business and financial
results are subject to various risks and uncertainties, including the Company's
continued ability to enter into affiliations with new physician practices and to
successfully integrate such practices, the results of operations of groups
currently affiliated with the Company, competition, reductions in third party
reimbursement for services rendered by physician groups affiliated with the
Company, health care regulation and other risks generally affecting the health
care industry. These forward looking statements are provided as a framework for
the Company's results of operations. The Company does not intend to provide
updated information other than as otherwise required by applicable law.
RESULTS OF OPERATIONS
Since the Company's incorporation in October 1992, it has grown rapidly from
managing six affiliated physicians in one state to 215 affiliated physicians and
31 oncology practices in fifteen states as of September 30, 1996. For the first
nine months of 1995, four of the Company's affiliated physician groups each
contributed more than 10% of the Company's revenue. For the first nine months of
1996, only one of the Company's affiliated physician groups contributed more
than 10% of the Company's revenue which was 11% of total revenue. For the first
nine months of 1995, the payor mix of the affiliated physician groups' medical
practice revenue, expressed as a percentage, was 27% for Medicare and Medicaid,
51% for managed care and 22% for private insurance and other payors. For the
first nine months of 1996, the payor mix of the affiliated physician groups'
medical practice revenue, expressed as a percentage, was 34% for Medicare and
Medicaid, 45% for managed care and 21% for private insurance and other payors.
As a result of the Company's rapid growth, the
-11-
<PAGE>
ITEM 2. AMERICAN ONCOLOGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company's limited period of affiliation with the physician practices and
the different payor and patient mixes of the practices, the Company does not
believe that the period-to-period comparisons and percentage relationships
within periods are fully meaningful at this time.
The following table sets forth the percentages of revenue represented by certain
items reflected in the Company's Statement of Operations. The information that
follows should be read in conjunction with the Company's unaudited condensed
consolidated financial statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
----- ----- ----- -----
Revenue 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Operating expenses:
Pharmaceuticals and supplies 42.2 35.1 40.0 35.8
Practice compensation and
benefits 20.4 19.7 20.4 19.3
Other practice costs 11.4 12.0 11.7 11.7
General and administrative 7.0 11.0 7.3 10.7
Depreciation and amortization 4.5 5.3 4.6 5.0
Net interest income (expense) (1.6) 1.8 (1.4) (2.3)
Other income 5.9 2.3
----- ----- ----- -----
Income (loss) before income taxes 12.9 24.6 14.6 17.5
Income taxes 4.9 6.4 5.5 5.6
----- ----- ----- -----
Net income (loss) 8.0% 18.2% 9.0% 11.9%
===== ===== ===== =====
</TABLE>
COMPARISON OF THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND THE
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1995
The Company entered into management agreements with seven oncology practices
in the first nine months of 1995 and nine oncology practices in the first nine
months of 1996, the results of which are included in the Company's operating
results from the dates of affiliation. Changes in results of operations from the
third quarter and first nine months of 1995 to the third quarter and first nine
months of 1996 were caused primarily by affiliations with these oncology
practices.
Revenue. Revenue for the third quarter ended September 30, 1996 increased
$28.2 million or 111% over the comparable prior year period. Revenue for the
nine months ended September 30, 1996 increased $77.1 million or 119% over the
comparable prior year period. Of these increases for the third quarter and
nine months ended September 30, 1996, $20.1 million and $46.1 million,
respectively, was attributable to the addition of seventeen affiliated oncology
practices after September 30, 1995. The remaining increase in revenue of $8.1
million for the third quarter and $31.0 million for the first nine months period
was attributable to increases in medical practice revenue of the physician
practices affiliated with the Company prior to September 30, 1995. Same
practice revenue for physician practices affiliated with the Company prior to
September 30, 1995 increased 25% and 21% for the third quarter and nine months
ended September 30, 1996, respectively, over the like prior year periods of
operations. This growth in practice revenue resulted from the recruitment of
new physicians, expansion of services, increases in patient volume and, to a
lesser extent, price adjustments for certain physician services.
Pharmaceuticals and Supplies. Pharmaceuticals and supplies, which include
drugs, medications and other supplies used by the affiliated physician
practices, for the third quarter ended September 30, 1996 increased $13.7
million or 153% over the comparable prior year period. Pharmaceuticals and
supplies for the nine months ended September 30, 1996 increased $33.5 million or
144% over the comparable prior year period. Of these increases for the third
quarter and nine months ended September 30, 1996, $8.6 million and $18.6
million, respectively, was attributable to the addition of seventeen affiliated
oncology practices after September 30, 1995. The remaining increase is
principally the result of the expansion of services and increase in patient
volume of
-12-
<PAGE>
ITEM 2. AMERICAN ONCOLOGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
practices affiliated with the Company prior to September 30, 1995. As a
percentage of revenue, pharmaceuticals and supplies increased from 35.8% in the
first nine months of 1995 to 40.0% in the first nine months of 1996. This
increase was primarily due to a shift in the revenue mix to a higher percentage
of drug revenue which has direct associated pharmaceutical costs. In addition,
the increase was due to lower reimbursement rates caused by a shift in payor
mix, higher discounts to payors and practice integration factors including
delays in implementation of financial policies and procedures as well as
discipline in payor contract administration due to the Company's rapid growth.
Management expects that third-party payors will continue to negotiate medical
services, pharmaceuticals (including chemotherapy drugs) and other supplies,
with the goal of lowering reimbursement and utilization rates, and that such
lower reimbursement and utilization rates as well as shifts in revenue mix may
continue to reduce the Company's margins with respect to such items.
Practice Compensation and Benefits. Practice compensation and benefits, which
include the salaries, wages and benefits of the employees of the affiliated
physician practices (excluding affiliated oncologists) and the employees of the
Company who are located at the affiliated physician practice sites, for the
third quarter ended September 30, 1996 increased $5.9 million or 118% over the
comparable prior year period. Practice compensation and benefits for the nine
months ended September 30, 1996 increased $16.5 million or 132% over the
comparable prior year period. Of these increases for the third quarter and nine
months ended September 30, 1996, $4.1 million and $9.6 million, respectively,
was attributable to the addition of seventeen affiliated oncology practices
after September 30, 1995. As a percentage of revenue, practice compensation and
benefits increased from 19.3% in the first nine months of 1995 to 20.4% in the
first nine months of 1996. Decreases in practice compensation and benefit
costs relative to patient volumes from economies of scale were offset by lower
reimbursement rates caused by a shift in payor mix, higher discounts to payors
and practice integration factors resulting from the Company's rapid growth.
Other Practice Costs. Other practice costs, which consist of rent, utilities,
repairs and maintenance, insurance and other direct practice costs, for the
third quarter ended September 30, 1996 increased $3.1 million or 100% over the
comparable prior year period. Other practice costs for the nine months ended
September 30, 1996 increased $9.0 million or 119% over the comparable prior year
period. Of these increases for the third quarter and nine months ended
September 30, 1996, $2.1 million and $5.1 million, respectively, was
attributable to the addition of seventeen affiliated oncology practices after
September 30, 1995. As a percentage of revenue, other practice costs remained
unchanged at 11.7% in the first nine months of 1995 as compared to the same
period in 1996.
General and Administrative. General corporate expenses for the third quarter
ended September 30, 1996 increased $1.0 million or 34% over the comparable prior
year period. General corporate expenses for the nine months ended September 30,
1996 increased $3.4 million or 49% over the comparable prior year period. These
increases were primarily attributable to the addition of personnel and greater
support costs associated with the Company's rapid growth since September 30,
1995. As a percentage of revenue, general and administrative expenses decreased
from 10.7% in the first nine months of 1995 to 7.3% in the first nine months of
1996, primarily as a result of economies of scale.
Depreciation and Amortization. Depreciation and amortization expenses for the
third quarter ended September 30, 1996 increased $1.1 million or 78% over the
comparable prior year period. Depreciation and amortization for the nine months
ended September 30, 1996 increased $3.3 million or 101% over the comparable
prior year period. The third quarter and nine months ended September 30, 1996
increases were primarily the result of amortization of intangible assets
associated with the Company's entering into management agreements with, and
acquiring the nonmedical assets of, seventeen affiliated oncology practices
after September 30, 1995.
Interest. Net interest changed from income of $458,000 for the third quarter
ended September 30, 1995 to expense of $842,000 in the same period of 1996. The
decrease resulted from the Company's expenditure after September 30, 1995 of
remaining proceeds of its June 1995 initial public offering of common stock and
the corresponding decrease in interest revenue therefrom. Net interest expense
for the nine months ended
-13-
<PAGE>
ITEM 2. AMERICAN ONCOLOGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1996 increased $576,000 or 39% over the comparable prior year
period. The increase was primarily attributable to interest expense on debt
issued for seventeen additional medical practice transactions since September
30, 1995. In the future, management expects that net interest expense as a
percentage of revenue will increase slightly due to anticipated debt related to
medical practice transactions and the development of integrated cancer centers.
Income Taxes. For the nine months ended September 30, 1995 and 1996, the
Company recognized a tax provision of $3.6 million and $7.9 million,
respectively, at estimated annual effective rates of 31.9% and 38.0%,
respectively. The Company's composition of revenue by state has significantly
changed as the Company has affiliated with seventeen oncology practices in four
new states since September 30, 1995. The effective annual tax rates represent
management's best estimate of the tax provision based on the existing state
revenue mix.
-14-
<PAGE>
ITEM 2. AMERICAN ONCOLOGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital primarily to obtain management agreements with,
and to purchase the nonmedical assets of, oncology medical practices. From its
incorporation through September 30, 1996, the Company has entered into
management agreements with 31 oncology practices. To fund this rapid growth and
development, the Company has satisfied its transaction and working capital needs
through a recapitalization, private debt and equity financings, borrowings under
the Credit Facility with First Union National Bank of North Carolina, and an
initial public offering in June 1995. To fund its operations, the Company
relies primarily on management fees received from its affiliated physician
practices. Cash derived from operations was $9.7 million for the first nine
months of 1996, an increase of $400,000 over the comparable period of 1995. The
increase is due primarily to the operations of the seventeen oncology practices
affiliated with the Company since September 30, 1995.
On January 31, 1996, the Company entered into the First Amended and Restated
Loan Agreement with First Union National Bank of North Carolina (First Union),
as agent for the Lenders, which provided for a revolving credit facility of up
to $35,000,000 (the Credit Facility). The Credit Facility was subsequently
amended on September 24, 1996 to alter certain of the fees and interest payable
under the Credit Facility in connection with a further amendment thereto which
became effective October 30, 1996. Borrowings under the Credit Facility bear
interest at a rate equal to a rate based on prime rate or the London Interbank
Offer Rate, based on a defined formula. The Credit Facility contains
affirmative and negative covenants, including the maintenance of certain
financial ratios, restrictions on sales, leases or other dispositions of
property, restrictions on other indebtedness and prohibitions on the payment of
dividends. The Company's Management Service Agreements, its equity ownership in
its subsidiaries and all other securities owned by the Company (other than
treasury shares of the Company) are pledged as security under the Credit
Facility. There were no borrowings under the Credit Facility in the first nine
months of 1996, and, as of September 30, 1996, the entire $35 million was
available under the Credit Facility. Effective October 30, 1996, the Credit
Facility was amended to increase the amount available under the Credit Facility
to $150 million. At that time, First Union also syndicated the Credit Facility
to several additional lenders.
At September 30, 1996, the Company had working capital of $36.9 million and
cash equivalents and short-term investments of $8.1 million. The Company also
had $32.4 million of current liabilities, including approximately $2.8 million
of short-term notes payable and $4.4 million of long-term indebtedness maturing
before September 30, 1997. The Company currently expects that its principal use
of funds in the near future will be in connection with anticipated transactions
with affiliated physician groups, the repurchase of shares of Common Stock, the
purchase of medical equipment and the acquisition of real estate for the
development of integrated cancer centers. The Company expects that the existing
cash and investment balances, cash generated from operations, amounts available
under the Credit Facility will be adequate to satisfy the Company's cash
requirements for the next 12 months.
-15-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
AMERICAN ONCOLOGY RESOURCES, INC.
(a) Exhibits
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation, as amended
3.2 By-Laws, as amended
10.1 First Amendment to Amended and Restated Loan Agreement by and among
American Oncology Resources, Inc., the lenders (as defined therein) and First
Union National Bank of North Carolina, individually and as Agent for the
Lenders, dated as of September 24, 1996
10.2 Second Amended and Restated Loan Agreement by and among First
Union National Bank of North Carolina, as Agent, various Lenders and American
Oncology Resources, Inc., as Borrower, dated as of October 30, 1996
11 Statement Re - Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the quarter ended
September 30, 1996.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 13, 1996 AMERICAN ONCOLOGY RESOURCES, INC.
By: /s/ R. DALE ROSS
-----------------------------------
R. Dale Ross, Chairman of the Board
and Chief Executive Officer
By: /s/ L. FRED POUNDS
---------------------------------------------
L. Fred Pounds, Vice President of Finance and
Chief Financial Officer
-17-
<PAGE>
AMERICAN ONCOLOGY RESOURCES, INC.
EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
3.1 Articles of Incorporation, as amended (filed as Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996 and incorporated herein by reference)
3.2 By-Laws, as amended (filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference)
10.1 First Amendment to Amended and Restated Loan Agreement by and
among American Oncology Resources, Inc., the lenders (as defined
therein) and First Union National Bank of North Carolina,
individually and as Agent for the Lenders, dated as of September
24, 1996
10.2 Second Amended and Restated Loan Agreement by and among First
Union National Bank of North Carolina, as Agent, various Lenders
and American Oncology Resources, Inc., as Borrower, dated as of
October 30, 1996
11 Statement Re - Computation of Per Share Earnings
27 Financial Data Schedule
-18-
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO
FIRST AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT, dated as
of September 24, 1996 (this "Amendment"), is made and entered into by and
between
AMERICAN ONCOLOGY RESOURCES, INC., a Delaware corporation with its
principal offices in Houston, Texas (the "Borrower");
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association
with its principal offices in Charlotte, North Carolina ("First Union"), and the
other financial institutions that hereafter become parties to the Loan Agreement
as hereinafter defined (collectively, the "Lenders"); and
FIRST UNION, as Agent for the Lenders to the extent described in ARTICLE IX
of the Loan Agreement (in such capacity, the "Agent").
RECITALS
A. The Borrower, Lenders, and the Agent are parties to a Loan Agreement,
dated as of December 5, 1994, as amended by (i) a First Amendment to Loan
Agreement, dated as of March 23, 1995 and (ii) a First Amended and Restated Loan
Agreement, dated as of January 31, 1996 (such agreement, as amended and
restated, being referred to as the "Loan Agreement"), pursuant to which the
Lenders have made a revolving credit facility (including a letter of credit
subfacility) and term loan facility available to the Borrower in the principal
amount of $35,000,000. Capitalized terms not otherwise defined herein shall
have the meanings as defined in the Loan Agreement.
B. The Borrower, and the Agent have executed a Commitment Letter, dated
July 26, 1996, pursuant to which the parties have stated their intent to enter
into a new reducing revolving credit facility in the principal amount of
$150,000,000 (the "New Facility") to replace and expand the credit facilities
under the Loan Agreement.
C. For the period from the date of this Amendment to the closing of the
New Facility, the parties desire to amend the Loan Agreement in order to change
certain interest and fee provisions therein. To effect such amendment, the
Borrower, the Lenders, and the Agent have entered into this Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders, and the
Agent hereby agree as follows:
<PAGE>
ARTICLE I
AMENDMENT
The Loan Agreement is hereby amended as follows:
1.1. Amendment of Defined Terms. SECTION 1.1 of the Loan Agreement is
amended by deleting therefrom definitions of the term "Applicable Margin" and
replacing it with the following definition:
"Applicable Margin" shall mean, at any time with respect to any Loan,
the applicable percentage points as determined under the following matrix
with reference to the ratio of Consolidated Debt to Annualized EBITDA
calculated as provided below:
<TABLE>
<CAPTION>
Ratio of Consolidated Applicable Margin Applicable Margin
Debt to Annualized EBITDA (LIBOR Rate) (Base Rate)
- ----------------------------------- ------------------ ------------------
<S> <C> <C>
Greater than 3.00 to 1.0 1.50% 0.25%
Greater than 2.25 to 1.0 but less 1.25% 0.00%
than or equal to 3.00 to 1.0
Greater than 1.50 to 1.0 but less 1.00% 0.00%
than or equal to 2.25 to 1.0
Greater than 1.00 to 1.0 but less 0.75% 0.00%
than or equal to 1.50 to 1.0
Less than or equal to 1.00 to 1.0 0.50% 0.00%
</TABLE>
From the date of this Amendment until the fifth (5th) day after
delivery of the financial statements pursuant to SECTION 5-1(B) below for
the fiscal quarter ending September 30,1996, the Applicable Margin shall be
set based on the financial statements pursuant to SECTION 5.1(B) below for
the fiscal quarter ended June 30, 1996 and, thereafter, reset from time to
time in accordance with the above matrix on the fifteenth (15th) day after
delivery by the Borrower in accordance with SECTIONS 5.1(B) and (C) of
financial statements together with a Compliance Certificate (reflecting the
computation of the ratio of Consolidated Debt to Annualized EBITDA as of
the last day of the preceding fiscal quarter or fiscal year, as
appropriate).
1.2. Commitment Fee. SECTION 2.7 of the Loan Agreement is amended by
deleting such section in its entirety and replacing it with the following
section:
2.7 Fees. The Borrower agrees to pay the Agent, for the ratable benefit of
each Lender, a commitment fee per annum determined pursuant to the following
table, for the period from the date of this Amendment to the closing of the New
Facility.
2
<PAGE>
<TABLE>
<S> <C>
Ratio of Consolidated
Debt to Annualized EBITDA Commitment Fee
- -------------------------- --------------
Greater than 2.25 to 1.0 .375%
Less than or equal to 2.25 to 1.0 .20%
</TABLE>
The commitment fee shall be applied to the average daily Total
Unutilized Commitment, payable in arrears on the last Business Day of each
fiscal quarter, commencing with the fiscal quarter ending September 30,
1996, and calculated on the basis of actual days elapsed over a year of 360
days. From the date of this Amendment until the fifth (5th) day after
delivery of the financial statements pursuant to SECTION 5.1(B) below for
the fiscal quarter ending September 30,1996, such commitment fee shall be
set based on the financial statements pursuant to SECTION 5.1(B) below for
the fiscal quarter ended June 30, 1996 and, thereafter, reset from time to
time in accordance with the above matrix on the fifteenth (15th) day after
delivery by the Borrower in accordance with SECTIONS 5.1(B) and (C) of
financial statements together with a Compliance Certificate (reflecting the
computation of the ratio of Consolidated Debt to Annualized EBITDA as of
the last day of the preceding fiscal quarter or fiscal year, as
appropriate).
1.3. Termination of Amendment. This Amendment shall terminate and be of no
further force and effect upon the expiration or termination of the Commitment
Letter for any reason other than the closing of the New Facility. From and
including the date of any termination of this Amendment, the Loan Agreement
shall continue in force and effect as if this Amendment had not been entered
into by the parties.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
2.1. Compliance with Loan Agreement. The Borrower is in compliance with
all terms and provisions set forth in the Loan Agreement to be observed or
performed, except where the Borrower's failure to comply has been waived in
writing by the Lenders.
2.2. Representations in Loan Agreement. The representations and warranties
of the Borrower set forth in the Loan Agreement, except for those relating to a
specific date other than the date hereof, are true and correct in all material
respects on and as of the date hereof as if made on and as of the date hereof.
2.3. No Event of Default. No Event of Default nor any event that upon
notice, lapse of time or both would become an Event of Default is continuing
other than those, if any, waived in writing by the Lenders.
3
<PAGE>
2.4. Continuing Security Interests. All Loans and advances by the Lenders
to the Borrower under the Loan Agreement, as amended hereby, and the Notes will
continue to be secured by the Agent's security interest in all of the Collateral
granted under the Loan Agreement or other Loan Documents, and nothing herein
will affect the validity, perfection or enforceability of such security
interests.
ARTICLE III
EFFECTIVE DATE
This Amendment shall be effective upon its execution by the Borrower, the
Agent and the Lenders.
ARTICLE IV
MODIFICATION OF LOAN DOCUMENTS
The other Loan Documents are amended as follows:
Any individual or collective reference in any of the Loan Documents to the
Loan Agreement shall mean the Loan Agreement as amended hereby and as further
amended from time to time.
ARTICLE V
GENERAL
5.1. Full Force and Effect. As expressly amended hereby, the Loan
Agreement shall continue in full force and effect in accordance with the
provisions thereof, and no change or modification in any of the terms thereof
except as specifically set forth herein has been effected. As used in the Loan
Agreement, "hereinafter," "hereto," "hereof," and words of similar import shall,
unless the context otherwise requires, mean the Loan Agreement as amended by
this Amendment.
5.2. Applicable Law. This Amendment shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of North
Carolina.
5.3. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
5.4. Fees, Expenses and Indemnity. The Borrower agrees to pay all out-of-
pocket expenses incurred by the Agent in connection with the preparation,
execution and delivery of
4
<PAGE>
this Amendment, including, without limitation, all reasonable attorneys' fees.
The provisions of SECTION 10.7 of the Loan Agreement shall apply fully to this
Amendment.
5.5. Further Assurance. The Borrower shall execute and deliver to the
Lenders such documents, certificates and opinions as the Lender may reasonably
request to effect the amendment contemplated by this Amendment.
5.6. Headings. The headings of this Amendment are for the purposes of
reference only and shall not affect the construction of this Amendment.
5.7. Valid Amendment. The parties acknowledge that this Amendment complies
in all respects with SECTION 10.8 of the Loan Agreement, which sets forth the
requirements for amendments thereto.
IN WITNESS WHEREOF, the Borrower, the Lenders, and the Agent have executed
this Amendment as of the date hereof.
AMERICAN ONCOLOGY RESOURCES, INC.
By:/s/ L. Fred Pounds
------------------
L. Fred Pounds, Chief Financial Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:/s/ Ann M. Dodd
---------------
Ann M. Dodd, Senior Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT
By:/s/ Ann M. Dodd
---------------
Ann M. Dodd, Senior Vice President
5
<PAGE>
EXHIBIT 10.2
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
AS AGENT
VARIOUS LENDERS
AND
AMERICAN ONCOLOGY RESOURCES, INC.
AS BORROWER
$150,000,000 REVOLVING CREDIT FACILITY
OCTOBER 30, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS.................................................................. -1-
ARTICLE I
DEFINITIONS
1.1. Defined Terms.................................................. -2-
1.2. Accounting Terms............................................... -19-
1.3. Singular/Plural................................................ -19-
1.4. Other Terms.................................................... -19-
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. The Loans...................................................... -19-
2.2. Borrowings..................................................... -20-
2.3. Notes.......................................................... -21-
2.4. Termination and Reduction of Commitments....................... -22-
2.5. Payments; Voluntary, Mandatory................................. -22-
2.6. Interest....................................................... -23-
2.7. Fees........................................................... -24-
2.8. Interest Periods............................................... -25-
2.9. Conversions and Continuations.................................. -25-
2.10. Method of Payments; Computations............................... -26-
2.11. Increased Costs, Change in Circumstance.s, etc................. -28-
2.12. Taxes.......................................................... -30-
2.13. Compensation................................................... -31-
2.14. Use of Proceeds................................................ -32-
2.15. Recovery of Payments........................................... -32-
2.16. Pro Rata Borrowings............................................ -33-
2.17. Substitution of Lender......................................... -33-
2.18. Letters of Credit.............................................. -33-
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Conditions of Initial Borrowing................................ -39-
3.2. Conditions of All Borrowings................................... -42-
3.3. Waiver of Conditions Precedent................................. -43-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
-i-
<PAGE>
4.1. Corporate Organization and Power.............................. -43-
4.2. Litigation; Government Regulation............................. -43-
4.3. Taxes......................................................... -43-
4.4. Enforceability of Loan Documents; Compliance with Other
Instruments................................................... -44-
4.5. Governmental Authorization.................................... -44-
4.6. Event of Default.............................................. -44-
4.7. Margin Securities............................................. -45-
4.8. Full Disclosure............................................... -45-
4.9. Principal Places of Business.................................. -45-
4.10. ERISA; Employee Benefits...................................... -45-
4.11. Subsidiaries.................................................. -46-
4.12. Financial Statements.......................................... -47-
4.13. Title to Assets............................................... -47-
4.14. Solvency...................................................... -47-
4.15. Use of Proceeds............................................... -47-
4.16. Assets for Conduct of Business................................ -47-
4.17. Compliance with Laws.......................................... -47-
4.18. Environmental Matters......................................... -47-
4.19. First Priority................................................ -48-
4.20. Contracts; Labor Disputes..................................... -48-
4.21. Insurance..................................................... -48-
4.22. Reimbursement from Third Party Payors......................... -48-
4.23. Fraud and Abuse............................................... -48-
4.24. Single Business Enterprise.................................... -49-
4.25. Continuing Security Interest.................................. -49-
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. Financial and Business Information about the Borrower......... -50-
5.2. Notice of Certain Events...................................... -52-
5.3. Corporate Existence and Maintenance of Properties............. -52-
5.4. Payment of Debt............................................... -53-
5.5. Maintenance of Insurance...................................... -53-
5.6. Maintenance of Books and Records; Inspection.................. -53-
5.7. COBRA......................................................... -53-
5.8. Payment of Taxes.............................................. -54-
5.9. Compliance with Laws.......................................... -54-
5.10. Name Change................................................... -54-
5.11. Creation or Acquisition of New Subsidiaries................... -54-
5.12. Recoveries in Bankruptcy Proceedings.......................... -55-
5.13. Solvency of Subsidiaries...................................... -55-
5.14. Certain Physician Transactions................................ -55-
ARTICLE VI
NEGATIVE COVENANTS
6.1. Merger, Consolidation......................................... -56-
-ii-
<PAGE>
6.2. Physician Transactions........................................ -56-
6.3. Debt.......................................................... -57-
6.4. Contingent Obligations........................................ -57-
6.5. Liens and Encumbrances........................................ -58-
6.6. Disposition of Assets......................................... -58-
6.7. Transactions with Related Persons............................. -58-
6.8. Restricted Investments; Loans................................. -59-
6.9. Restricted Payments........................................... -59-
6.10. Capital Expenditures.......................................... -59-
6.11. Consolidated Net Worth........................................ -59-
6.12. EBITDA to Interest Expense.................................... -60-
6.13. Annualized EBITDAR to Debt Service Ratio...................... -60-
6.14. Consolidated Debt to Annualized EBITDA........................ -60-
6.15. Consolidated Debt to Consolidated Total
Capital....................................................... -60-
6.16. Sale and Leaseback............................................ -60-
6.17. New Business.................................................. -60-
6.18. Subsidiaries or Partnerships.................................. -60-
6.19. Transactions Affecting the Collateral......................... -60-
6.20. Hazardous Wastes.............................................. -60-
6.21. Fiscal Year................................................... -61-
6.22. Amendments; Prepayments of Subordinated Debt or Permitted
Subordinated Debt, etc........................................ -61-
6.23. Fraud and Abuse............................................... -61-
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default............................................. -62-
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies: Termination of Commitments, Acceleration, etc....... -64-
8.2. Right of Setoff............................................... -65-
8.3. Rights and Remedies Cumulative; Non-Waiver; etc............... -65-
ARTICLE IX
THE AGENT
9.1. Appointment................................................... -66-
9.2. Nature of Duties.............................................. -66-
9.3. Exculpatory Provisions........................................ -66-
9.4. Reliance by Agent............................................. -66-
9.5. Non-Reliance on Agent and Other Lenders....................... -67-
9.6. Notice of Default............................................. -67-
9.7. Indemnification............................................... -68-
9.8. The Agent in its Individual Capacity.......................... -68-
9.9. Successor Agent............................................... -68-
-iii-
<PAGE>
9.10. Collateral Matters............................................ -69-
9.11. Applicable Parties............................................ -69-
ARTICLE X
MISCELLANEOUS
10.1. Survival...................................................... -69-
10.2. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.. -70-
10.3. Arbitration; Preservation and Limitation of Remedies.......... -70-
10.4. Notice........................................................ -71-
10.5. Assignments, Participations................................... -72-
10.6. Fees and Expenses............................................. -75-
10.7. Indemnification............................................... -75-
10.8. Amendments, Waivers, etc...................................... -76-
10.9. Rights and Remedies Cumulative, Non-Waiver, etc............... -76-
10.10. Binding Effect, Assignment.................................... -77-
10.11. Severability.................................................. -77-
10.12. Entire Agreement.............................................. -77-
10.13. Interpretation................................................ -77-
10.14. Counterparts, Effectiveness................................... -77-
10.15. Conflict of Terms............................................. -78-
10.16. Injunctive Relief............................................. -78-
10.17. Confidentiality............................................... -78-
10.18. Post-Closing Matters.......................................... -78-
EXHIBITS
Exhibit A - Form of Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion/Continuation
Exhibit B-3 - Form of Letter of Credit Request
Exhibit C - Form of Guaranty Agreement
Exhibit D-1 - Form of Security Agreement
Exhibit D-2 - Form of Guarantors' Security Agreement
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1(a) Existing Liens
Schedule 1.1(b) Example of Permitted Subordinated Debt Instrument
Schedule 4.1 Corporate Organization
Schedule 4.2 Litigation; Government Regulation
Schedule 4.3 Taxes
Schedule 4.4 Defaults
-iv-
<PAGE>
Schedule 4.9 Principal Places of Business
Schedule 4.10 ERISA Matters
Schedule 4.11 Subsidiaries
Schedule 4.13 Exceptions to Title to Assets
Schedule 4.21 Insurance
Schedule 6.8 Investments; Loans
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of the 30th day of
October, 1996 (the "Loan Agreement" or "Agreement"), is made among AMERICAN
ONCOLOGY RESOURCES, INC., a Delaware corporation (the "Borrower") with its
principal offices in Houston, Texas, the banks and other financial institutions
from time to time parties hereto (each, a "Lender," and collectively, the
"Lenders"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent (the
"Agent").
RECITALS
A. The Borrower, certain Lenders, and the Agent are parties to a Loan
Agreement, dated as of December 5, 1994, as amended by (i) a First Amendment to
Loan Agreement, dated as of March 23, 1995, (ii) a First Amended and Restated
Loan Agreement, dated as of January 31, 1996 and (iii) a First Amendment to
First Amended and Restated Loan Agreement, dated as of September 24, 1996 (such
agreement, as heretofore amended and restated, the "Original Agreement"),
pursuant to which the Lenders have made a revolving credit facility (including a
letter of credit subfacility) and term loan facility available to the Borrower
in the principal amount of $35,000,000.
B. In order to establish a new reducing revolving line of credit facility
in the principal amount of $150,000,000 to replace the credit facilities under
the Original Agreement and into which the existing revolving credit and term
loans will be converted and to make certain other changes as more fully set
forth herein, the Borrower, the Lenders, and the Agent have agreed to amend and
restate the Original Agreement by entering into this Loan Agreement.
C. The Subsidiaries of the Borrower have jointly and severally guaranteed
all of the obligations of the Borrower under the Original Agreement and the loan
documents relating thereto. Such Subsidiaries have consented to this Loan
Agreement, and their guarantees shall relate to the Obligations (defined below)
of the Borrower hereunder and under the other Loan Documents (defined below).
D. The parties acknowledge that this Loan Agreement and each of the other
Loan Documents have been negotiated and delivered in Charlotte, North Carolina.
E. The Lenders are willing to make the Loans described herein based on the
terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Loan Agreement, in addition to the
terms defined elsewhere in this Loan Agreement, the following terms shall have
the meanings set forth below:
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer of the Borrower
and in form and substance satisfactory to the Agent, listing any one or more
accounts to which the Borrower may from time to time request the Agent to
forward the proceeds of any Loans made hereunder.
"Adjusted Base Rate" shall mean, at any time with respect to any Loan,
a rate per annum equal to the Base Rate plus the Applicable Margin for Base Rate
Loans, each as in effect at such time.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any
Loan, a rate per annum equal to the LIBOR Rate plus the Applicable Margin for
LIBOR Loans, each as in effect at such time.
"Affiliate" shall mean, as to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean First Union, in its capacity as appointed in
ARTICLE IX hereof, and its permitted successors and assigns.
"Agreement" or "this Agreement" or "Loan Agreement" shall mean this
Loan Agreement and any amendments, modifications and supplements hereto, any
replacements, renewals, extensions and restatements hereof, and any substitutes
herefor, in whole or in part and all Schedules and Exhibits hereto, and shall
refer to this Agreement as the same may be in effect at the time such reference
becomes operative.
"Annualized EBITDA" shall mean, with respect to the Borrower and its
Subsidiaries, on a consolidated basis, as of the last day of any fiscal quarter,
the product of (a) EBITDA for the two consecutive fiscal quarters ending on such
date, multiplied by (b) two (2).
"Annualized EBITDAR" shall mean, with respect to the Borrower and its
Subsidiaries, on a consolidated basis, as of the last day of any fiscal quarter,
the product of (a) the sum of (i) EBITDA for the two consecutive fiscal quarters
ending on such date, plus (ii) Lease Expense for the two consecutive fiscal
quarters ending on such date, multiplied by (b) two (2).
"Applicable Margin" shall mean, at any time with respect to any Loan,
the applicable percentage points as determined under the following matrix with
reference to the ratio of Consolidated Debt to Annualized EBITDA calculated as
provided below:
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Ratio of Consolidated Applicable Margin Applicable Margin
Debt to Annualized EBITDA (LIBOR Rate) (Base Rate)
- --------------------------- ------------------------- ------------------
Greater than 3.00 to 1.0 1.50% 0.25%
Greater than 2.25 to 1.0
but less than or equal
to 3.00 to 1.0 1.25% 0.00%
Greater than 1.50 to 1.0
but less than or equal
to 2.25 to 1.0 1.00% 0.00%
Greater than 1.00 to 1.0
but less than or equal
to 1.50 to 1.0 0.75% 0.00%
Less than or equal to
1.00 to 1.0 0.50% 0.00%
From the Closing Date until the fifth (5th) day after delivery of the
September 30, 1996 financial statements pursuant to SECTION 5.1(B) below, the
Applicable Margin shall be 1.00% for LIBOR Loans and 0.00% for Base Rate Loans.
The Applicable Margin shall be reset from time to time in accordance with the
above matrix on the fifth (5th) day after delivery by the Borrower in accordance
with SECTIONS 5.1(B) and (C) of financial statements together with a Compliance
Certificate (reflecting the computation of the ratio of Consolidated Debt to
Annualized EBITDA as of the last day of the preceding fiscal quarter or fiscal
year, as appropriate).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement entered into between a Lender and an Eligible Assignee, and accepted
by the Agent, in substantially the form of EXHIBIT F.
"Assignment Restrictions" shall mean, with respect to any contracts or
agreements assigned to the Agent, on behalf of the Lenders, as Collateral by the
Borrower or any Subsidiary, any restriction or prohibition on assignment that
has not been waived or consented to by the Person for whose benefit such
restriction or prohibition exists with respect to which the Agent has waived the
requirement of such waiver or consent.
"Authorized Officer" shall mean any officer of the Borrower authorized by
resolution of the board of directors of the Borrower to take the action
specified herein with respect to such officer and whose signature and incumbency
shall have been certified to the Agent by the secretary or an assistant
secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. (S) 101 et seq., as amended, and any
successor statute or statute having substantially the same function.
"Base Rate" shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by First Union in Charlotte, North
Carolina, to be its prime or base rate (which may not
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necessarily be its best lending rate), as adjusted to conform to changes as of
the opening of business on the date of any such change in such prime or base
rate, or (ii) one-half percentage point (0.5%) per annum in excess of the
Federal Funds Rate, as adjusted to conform to changes as of the opening of
business on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted Base Rate.
"Bloodborne Pathogens Standard" shall mean the Final Standard for
Occupational Exposure to Bloodborne Pathogens promulgated by OSHA at 56 Federal
Register 64004 et seq. (December 6, 1991) and codified at 29 C.F.R. (S)
1910.1030, or any similar regulation promulgated by any Governmental Authority.
"Borrower" shall mean American Oncology Resources, Inc., a Delaware
corporation, and its successors and assigns.
"Borrowing" shall mean the incurrence by the Borrower on a given date
(including as a result of conversions of outstanding Loans pursuant to SECTION
2.9) of one or more Loans of a single Type and, in the case of LIBOR Loans, as
to which a single Interest Period is in effect.
"Borrowing Date" shall have the meaning assigned to such term in SECTION
2.2(A).
"Business Day" shall mean (i) any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina
or, in respect of any determination relevant to a Loan, New York City are
required by law to be closed and (ii) in respect of any determination relevant
to a LIBOR Loan, any such day that is also a day on which tradings are conducted
in the London interbank Eurodollar market.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Expenditures" shall mean the aggregate amount of all expenditures
and liabilities (including, without limitation, Capital Lease Obligations) made
and incurred in respect of the acquisition by the Borrower or any Subsidiary of
Capital Assets.
"Capital Lease" shall mean any lease of any property that would, in
accordance with Generally Accepted Accounting Principles, be required to be
classified and accounted for as a capital lease on the balance sheet of the
lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder that would, in accordance
with Generally Accepted Accounting Principles, appear on a balance sheet as a
liability of such lessee in respect of such Capital Lease, net of any government
grant applicable to such Capital Lease.
"Cash Collateral Account" shall have the meaning given to such term in
SECTION 2.18(J).
"Cash Investments" shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith
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and credit of the United States of America, in each case maturing within one
year from the date of acquisition thereof; (ii) marketable direct obligations
issued by any state of the United States of America or any political subdivision
of any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's Ratings Services or
Moody's Investors Service, Inc.; (iii) marketable commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc.; (iv) demand deposits, time deposits and
certificates of deposit maturing within one (1) year from the date of issuance
thereof and issued by a bank or trust company organized under the laws of the
United States of America or any state thereof and having a long term debt rating
by Standard & Poor's Ratings Services of A or higher and (v) any mutual fund
that invests solely in any of the items described in clauses (i), (ii), (iii)
and (iv) of this paragraph.
"Change of Control" shall mean the occurrence of any one or more of the
following: (i) the Borrower shall merge or consolidate with or into another
corporation with the effect that the Persons who were the shareholders of the
Borrower immediately prior to the effective time of such merger or consolidation
hold less than 51% of the combined voting power of the outstanding securities of
the surviving corporation of such merger or the corporation resulting from such
consolidation ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors, or (ii)
any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act), other than the Welsh, Carson, Anderson and Stowe group or any of its
affiliates, shall, directly or indirectly, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, have
become, after the Closing Date, the "beneficial owner" (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Borrower representing
49% or more of the combined voting power of the then outstanding securities of
the Borrower ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors.
"Closing" shall mean the closing of the initial transactions contemplated by
this Agreement.
"Closing Date" shall mean the date upon which the Closing takes place.
"Collateral" shall mean all right, title and interest of the Borrower and
each Guarantor in (i) its Management Services Agreements and the proceeds
thereof, (ii) the Securities (as defined in the Security Agreements) owned by
such Borrower or Guarantor and the proceeds thereof, and (iii) all other
property and interests in property that shall, from time to time, be
collaterally assigned to secure the Obligations or the obligations of any
Guarantor under the Guaranty Agreement, in each case whether now owned or
existing or hereafter acquired or arising and whether in the possession or
control of the Borrower, any Guarantor or the Agent, for the benefit of the
Lenders, or any Lender.
"Commitment" shall mean, with respect to any Lender at any time, the amount
set forth opposite such Lender's name on its signature page hereto under the
caption "Commitment" or, if such Lender has entered into one or more Assignment
and Acceptances, the amount set forth for such Lender at such time in the
Register maintained by the Agent pursuant to SECTION 10.5(B) as such Lender's
"Commitment," as such amount may be reduced at or prior to such time pursuant to
the terms hereof.
"Compliance Certificate" shall mean a fully completed certificate in the
form of EXHIBIT E.
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"Consolidated Debt" shall mean, at any time, the aggregate (without
duplication) of all Debt of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis.
"Consolidated Net Income" shall mean, for any period, the net income (or
loss) of the Borrower and its Subsidiaries, on a consolidated basis and
excluding intercompany items, for such period, determined in accordance with
Generally Accepted Accounting Principles, but excluding as income: (a) gains on
the sale, conversion or other disposition of Capital Assets, (b) gains on the
acquisition, retirement, sale or other disposition of Stock of the Borrower or
any Subsidiary, (c) gains on the collection of life insurance proceeds, (d) any
write-up of any asset, and (e) any other gain or credit of an extraordinary
nature.
"Consolidated Net Revenue" shall mean, for any period, the revenues of the
Borrower and its Subsidiaries, on a consolidated basis and excluding
intercompany items, for such period, determined in accordance with Generally
Accepted Accounting Principles, but excluding as revenue: (a) the sale or other
disposition of Capital Assets, (b) the sale or other disposition of Stock of the
Borrower or any Subsidiary, (c) the collection of life insurance proceeds, (d)
any write-up of any asset, and (e) any other source of revenue of an
extraordinary nature.
"Consolidated Net Worth" shall mean, as of the last day of any fiscal
quarter, the net worth of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Consolidated Total Capital" shall mean, with respect to the Borrower and
its Subsidiaries, at any time, the sum of Consolidated Net Worth and
Consolidated Debt.
"Contingent Obligation" shall mean, with respect to any Person, any direct
or indirect liability of such Person with respect to any Debt, lease, dividend,
guaranty, letter of credit or other obligation (the "primary obligation") of
another Person (the "primary obligor"), whether or not contingent, (a) to
purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor in respect
thereof to make payment of such primary obligation or (d) otherwise to assure or
hold harmless the owner of any such primary obligation against loss or failure
or inability to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Covenant Compliance Worksheet" shall mean a fully completed certificate in
the form of Attachment A to EXHIBIT E.
"Debt" shall mean, with respect to any Person, without duplication, (i) all
indebtedness of such Person for money borrowed, (ii) all reimbursement
obligations of such Person with respect to surety bonds, letters of credit and
bankers' acceptances (in each case, whether or not matured), (iii) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (iv) all
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obligations of such Person to pay the deferred purchase price of property or
services (including seller subordinated notes, contingent or otherwise), other
than trade payables, (v) 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 are limited to repossession
or sale of such property), (vi) all Capital Lease Obligations of such Person,
(vii) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any capital stock or other equity
securities that, by their stated terms (or by the terms of any equity securities
issuable upon conversion thereof or in exchange therefor), or upon the
occurrence of any event, mature or are mandatorily redeemable, or are redeemable
at the option of the holder thereof, in whole or in part, (viii) all
indebtedness referred to in clauses (i) through (vii) above to the extent
secured by any lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been assumed
by such Person or is nonrecourse to the credit of such Person and (x) any
Contingent Obligation of such Person.
"Debt Service" shall mean, with respect to the Borrower and its Subsidiaries
on a consolidated basis as of the last day of any fiscal quarter, the sum of (a)
Fixed Charges for the two consecutive fiscal quarters ending on such date
multiplied by two (2) plus (b) current maturities (due within twelve months) of
all Debt (provided that the amount outstanding under the Facility shall not be
considered a current maturity of Debt solely by reason of the Maturity Date
falling within such twelve month period).
"Default" shall mean any event that, with the passage of time or giving of
notice, or both, would constitute an Event of Default.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDA" shall mean, for any period, an amount equal to, without
duplication, the sum of (a) net income (determined in accordance with Generally
Accepted Accounting Principles) earned in such period, plus (b) to the extent
net income has been reduced thereby, the sum of (i) depreciation and
amortization expense, plus (ii) Interest Expense, plus (iii) federal and state
income taxes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified Plan
(as defined in SECTION 4.10(C)); (b) a withdrawal by any Borrower Affiliate from
a Qualified Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a
complete or partial withdrawal by any Borrower Affiliate from a Multiemployer
Plan; (d) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Qualified Plan or Multiemployer
Plan; (g) the imposition of any liability under Title IV of ERISA, other than
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon any Borrower Affiliate; (h) an application for a
funding waiver or an extension of any amortization period pursuant to Section
412 of the Internal Revenue Code with respect to any Qualified Plan; (i) any
Borrower Affiliate engages in or otherwise becomes liable for a non-exempt
prohibited transaction; or
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(j) a violation of the applicable requirements of Section 404 or 405 of ERISA or
the exclusive benefit rule under Section 401(a) of the Internal Revenue Code by
any fiduciary with respect to any Qualified Plan for which any Borrower
Affiliate may be directly or indirectly liable.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in excess
of $5,000,000,000, (ii) a commercial bank organized under the laws of any other
country that is a member of the OECD or a political subdivision of any such
country and having total assets in excess of $5,000,000,000, provided that such
bank is acting through a branch or agency located in the United States, in the
country under the laws of which it is organized or in another country that is
also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual fund, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $500,000,000, (v) any Affiliate of an existing Lender
or (vi) any other Person (other than an Affiliate of the Borrower) approved by
the Agent and the Borrower, which approval shall not be unreasonably withheld;
provided, however, that in no event shall the withholding of approval by the
Borrower under this definition or SECTION 10.5 be considered unreasonable if (i)
the Borrower has had prior dealings with such Person which the Borrower regards
as unfavorable or (ii) such Person provides banking or other financial services
to any of the Borrower's competitors.
"Employee Plan" shall mean any "employee benefit plan" within the meaning of
Section 3(3) of ERISA maintained by the Borrower or any Subsidiary.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any Subsidiary solely in the ordinary course of its business
and not in response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereinafter, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to health or the
environment.
"Environmental Laws" shall mean any and all applicable laws, subsequent
enactments, amendments and modifications, including, without limitation,
federal, state and local laws, statutes, ordinances, rules, regulations,
permits, licenses, approvals, interpretations and orders of courts or
Governmental Authorities, relating to the protection of the environment (and
related human health issues), including, but not limited to, requirements
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Substances. Environmental Laws
include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. (S) 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.) ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
et seq.), the Safe Drinking Water Act (42 U.S.C. (S) 300, et seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40
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C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act (29 U.S.C.
(S) 651 et seq.) ("OSHA"), as such laws have been amended or supplemented and
any analogous federal, state or local, statutes and the rules and regulations
promulgated thereunder.
"Event of Default" shall have the meaning specified in ARTICLE VII hereof.
"Facility" shall mean the reducing revolving line of credit facility
established by the Lenders under SECTION 2.1(A).
"Federal Funds Rate" shall mean, for any day, the interest rate per annum
equal to the weighted average of the rates of 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 Richmond, or
if such rate is not so published on the relevant Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three federal funds brokers of recognized standing selected by the Agent.
"Fee Letter" shall mean the letter from First Union to the Borrower, dated
July 26, 1996, relating to the underwriting and administrative fees payable by
the Borrower in respect of the transactions contemplated by this Agreement, as
amended, modified or supplemented from time to time.
"Financials" or "Financial Statements" shall mean the audited consolidated
financial statements of the Borrower and its Subsidiaries for the fiscal years
ended December 31, 1994 and December 31, 1995; the unaudited consolidated
interim financial statements of the Borrower and its Subsidiaries for the six
months ended June 30, 1996; and all other financial statements of the Borrower
and its Subsidiaries subsequent to December 31, 1995 that have previously been
delivered by the Borrower or any Subsidiary to the Agent or any Lender in
connection with this Agreement, including without limitation interim financial
statements.
"Financing Statements" shall mean financing statements approved for filing
in accordance with the applicable adopted version of the Uniform Commercial Code
and all other titles, documents, and certificates that the Agent may require
from the Borrower or any Guarantor to describe and perfect the security
interests created hereunder or under the other Loan Documents, and all
assignments thereof and amendments thereto, in form and substance satisfactory
to the Agent.
"First Union" shall mean First Union National Bank of North Carolina, a
national banking association, and its successors and assigns.
"Fixed Charges" shall mean at any time, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any fiscal quarter,
without duplication, the sum of Interest Expense and Lease Expense for such
fiscal quarter.
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles, as recognized by the American Institute of Certified
Public Accountants, consistently applied and maintained on a consistent basis
for the Borrower and its Subsidiaries on a consolidated basis throughout the
period indicated and consistent with the financial practice of the Borrower and
its Subsidiaries after the date hereof.
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"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantors" shall mean AOR, Inc., AOR Management Company of Indiana, Inc.,
AOR Holding Company of Indiana, Inc., AOR Management Company of Oregon, Inc.,
AOR Management Company of Oklahoma, Inc., AOR Management Company of
Pennsylvania, Inc., AOR Management Company of Missouri, Inc., AOR Management
Company of Arizona, Inc., AOR Management Company of South Carolina, Inc., AOR
Management Company of Virginia, Inc., AOR Management Company of North Carolina,
Inc., AOR Management Company of New York, Inc., AOR Management Company of
Florida, Inc., AOR Management Company of Nevada, Inc., AOR Management Company of
Texas, Inc., AOR Real Estate, Inc., AORT Holding Company, Inc., RMCC Cancer
Center, Inc. (each of the foregoing a Delaware corporation and a direct or
indirect wholly-owned Subsidiary of the Borrower), AOR of Texas Management
Limited Partnership and AOR of Indiana Management Partnership, their successors
and assigns, each future direct and indirect Subsidiary and any other Person
that guarantees the Obligations of the Borrower and the obligations of the other
Guarantors under the Guaranty Agreement.
"Guarantors' Security Agreement" shall mean the Second Amended and Restated
Guarantors' Security Agreement, substantially in the form of EXHIBIT D-2,
together with any amendments, modifications and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"Guaranty Agreement" shall mean the First Amended and Restated Guaranty
Agreement substantially in the form of EXHIBIT C, together with accessions
thereto at various dates thereafter, and all other similar guaranty agreements
and accessions executed and delivered from time to time by any Guarantor or
future Guarantor in form and substance satisfactory to the Lenders, together
with any amendments, modifications, supplements and accessions thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"HCFA" shall mean the United States Health Care Financing Administration and
any successor agency.
"Hazardous Substances" means any substances or materials (i) that are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, including, without
limitation, underground or above ground storage tanks; (ii) that are toxic,
explosive, corrosive, flammable, infectious, radioactive, mutagenic or otherwise
hazardous and that, in each case, are or become regulated under any
Environmental Law by any Governmental Authority; or (iii) the presence of which
requires investigation or remediation under any Environmental Law.
"IRS" shall mean the Internal Revenue Service and any successor thereto.
"Indemnified Costs" shall have the meaning assigned to such term in SECTION
10.7.
"Indemnified Person" shall have the meaning assigned to such term in SECTION
10.7.
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"Interest Expense" shall mean, for any period, total interest expense of the
Borrower and its Subsidiaries on a consolidated basis for such period
(including, without limitation, capitalized interest expense and interest
expense attributable to Capital Lease Obligations), determined in accordance
with Generally Accepted Accounting Principles.
"Interest Period" shall have the meaning set forth in SECTION 2.8 hereof.
"Interest Rate Protection Agreements" shall mean all interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate insurance or other hedging arrangements and all other similar
agreements or arrangements designed to protect against fluctuations in interest
rates.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Issuing Bank" shall mean First Union in its capacity as issuer of Letters
of Credit, and its successors or assigns in such capacity.
"L/C Participant" shall have the meaning assigned to such term in SECTION
2.18(C) hereof.
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at such
time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each LIBOR Loan comprising part of
the same Borrowing for any Interest Period, an interest rate per annum equal to
(i) the rate of interest appearing on Telerate Page 3750 (or any successor page)
or (ii) if no such rate is available, the rate of interest determined by the
Agent to be the rate or the arithmetic mean of rates (rounded upward, if
necessary, to the nearest 1/16 of one percentage point) at which Dollar deposits
in immediately available funds are offered by First Union to first-tier banks in
the London interbank Eurodollar market, in each case under (i) and (ii) above at
approximately 11:00 a.m., London time, two (2) Business Days prior to the first
day of such Interest Period for a period substantially equal to such Interest
Period and in an amount substantially equal to the amount of Agent's LIBOR Loan
in its capacity as a Lender comprising part of such Borrowing.
"Lease Expense" shall mean, for any period, all amounts paid, payable or
accrued during such period by the Borrower and its Subsidiaries on a
consolidated basis with respect to all leases of real and personal property,
excluding intercompany items.
"Lender" shall mean each financial institution signatory hereto and each
other financial institution that becomes a "Lender" hereto pursuant to SECTION
10.5, and their permitted successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the branch or
branches (or Affiliates) from which any of such Lender's Loans are made or
maintained.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i) the
aggregate Stated Amount of all outstanding Letters of Credit at such time and
(ii) the aggregate amount of all Reimbursement Obligations at such time
(exclusive of Reimbursement Obligations that are repaid with the proceeds of,
and simultaneously with the incurrence of, Loans).
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"Letter of Credit Request" shall have the meaning assigned to such term in
SECTION 2.18(B) hereof.
"Letters of Credit" shall have the meaning set forth in SECTION 2.18(A)
hereof.
"Loan" or "Loans" shall have the meaning assigned to such term in SECTION
2.1(A).
"Loan Documents" shall mean and collectively refer to this Agreement, the
Notes, the Security Agreements, the Guaranty Agreement, the Financing
Statements, Interest Rate Protection Agreements (if any) with any Lenders
relating to the Notes, and any and all agreements, instruments and documents,
including, without limitation, notes, guaranties, mortgages, deeds to secure
debt, deeds of trust, chattel mortgages, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, trust account agreements
and all other written matters, whether heretofore, now or hereafter, executed by
or on behalf of the Borrower or any Subsidiary and delivered to the Agent or any
Lender, with respect to this Agreement or with respect to the transactions
contemplated by this Agreement, and in each case, together with any amendments,
modifications and supplements thereto, any replacements, renewals, extensions
and restatements thereof, and any substitutes therefor, in whole or in part.
"Management Services Agreements" shall mean the management services
agreements of Borrower and its Subsidiaries, whether now existing or hereafter
acquired or arising, together with any and all extensions, modifications,
amendments, renewals, substitutions or replacements thereof.
"Margin Stock" shall have the meaning given to such term in Regulation U or
Regulation G.
"Material Adverse Effect" or "Material Adverse Change" shall mean, in the
good faith and reasonable opinion of the Required Lenders, a material adverse
effect upon, or a material adverse change in, any of (a) the financial
condition, operations, business or properties of the Borrower and its
Subsidiaries, taken as a whole; or (b) the ability of the Borrower and its
Subsidiaries, taken as a whole, to perform under the Loan Documents.
"Maturity Date" shall mean October 30, 2001.
"Medicaid Certification" shall mean, with respect to any health care
facility, certification by HCFA or another Governmental Authority, or any Person
under contract with HCFA, that such health care facility is in compliance with
all conditions of participation set forth in the Medicaid Regulations, except
where the failure to so comply would not have a Material Adverse Effect.
"Medicaid Provider Agreement" shall mean an agreement entered into between
any Person administering the Medicaid program and a health care facility under
which the health care facility agrees to provide services for Medicaid patients
in accordance with the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" shall mean, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act, 42 USC (S)(S) 1396
et seq., or elsewhere) affecting the medical assistance program established by
Title XIX of the Social Security Act, and any statutes succeeding thereto; (ii)
all applicable provisions of all federal rules, regulations, manuals having the
force of law and orders of all Governmental Authorities promulgated pursuant to
or in connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
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Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (i) above; (iii) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (iii) above,
in each case as may be amended, supplemented or otherwise modified from time to
time.
"Medicare Certification" shall mean, with respect to any health care
facility, certification by HCFA or any other Governmental Authority, or any
Person under contract with HCFA, that such health care facility is in compliance
with all the conditions of participation set forth in the Medicare Regulations,
except where the failure to so comply would not have a Material Adverse Effect.
"Medicare Provider Agreement" shall mean an agreement entered into between
any Person administering the Medicare program and a health care facility under
which the health care facility agrees to provide services for Medicare patients
in accordance with the terms of the agreement and Medicare Regulations.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC (S)(S) 1396
et seq., or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals having the force of law and orders and administrative,
reimbursement and other guidelines having the force of law of all Governmental
Authorities (including without limitation, Health and Human Services ("HHS"),
HCFA, the Office of the Inspector General for HHS, or any Person succeeding to
the functions of any of the foregoing) promulgated pursuant to or in connection
with any of the foregoing having the force of law, in each case as may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan" shall mean any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which any Borrower or any Subsidiary is
required to make contributions.
"Notes" shall mean the promissory notes of the Borrower in substantially the
form of EXHIBIT A, together with any amendments, modifications and supplements
thereto and restatements thereof.
"Notice of Borrowing" shall have the meaning assigned to such term in
SECTION 2.2(A).
"Notice of Conversion/Continuation" shall have the meaning assigned to such
term in SECTION 2.9(B).
"OECD" shall mean the Organization for Economic Cooperation and Development
and any successor thereto.
"OSHA" shall mean the Occupational Safety and Health Act, as amended from
time to time, and all rules and regulations from time to time promulgated
thereunder.
"Obligations" shall mean (i) the Loans and Reimbursement Obligations and all
other loans, advances, indebtedness, liabilities, obligations, covenants and
duties owing, arising, due or payable from
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the Borrower to the Agent or any Lender or Issuing Bank of any kind or nature,
present or future, howsoever evidenced, created, incurred, acquired or owing,
arising under this Agreement, the Notes or the other Loan Documents or in any
other way related to this Agreement, whether direct or indirect (including those
acquired by an Assignment and Acceptance), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired, (ii) all interest (including, to the extent permitted by law, all
post-petition interest), charges, expenses, fees, attorneys' fees and any other
sums payable by the Borrower to the Agent or any Lender under this Agreement or
any of the other Loan Documents, and (iii) all obligations to any Lender
pursuant to any Interest Rate Protection Agreement (if any) in respect of the
Notes.
"Participant" shall mean any Person, now or at any time hereafter,
participating with any Lender in the Loans pursuant to this Agreement, and its
permitted successors and assigns.
"Partnership Interests" shall mean all ownership or profit-sharing interests
(howsoever designated) in any general or limited partnership, limited liability
company or other non-corporate company or entity and all agreements, instruments
and documents convertible, in whole or in part, into any one or more or all of
the foregoing.
"Pension Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA maintained by the Borrower or any Subsidiary
(other than any Multiemployer Plan that is subject to the provisions of Title IV
of ERISA).
"Percentage" shall mean, with respect to any Lender at any time, a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Lender at such time and the denominator of which is the Total Commitment at such
time; provided that if the Percentage of any Lender is to be determined after
the Commitments have been terminated, then such Percentage shall be determined
immediately prior (and without giving effect) to such termination.
"Permitted Liens" shall mean any of the following liens, restrictions or
encumbrances securing any liability or indebtedness of the Borrower or any
Subsidiary on, or otherwise affecting, any of the Borrower's or such
Subsidiary's property, real or personal, whether now owned or hereafter
acquired:
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) Liens imposed by mandatory provisions of law of carriers, warehousemen,
mechanics, repairmen and materialmen and other like liens required by provisions
of law and incurred in the ordinary course of business for sums not yet due and
payable (or with respect to any obligation not greater than $50,000, not more
than sixty (60) days past the date of service) or that are being contested in
good faith and with due diligence by appropriate proceedings;
(c) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or liens arising from good faith deposits in connection
with letters of credit, bids, tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary course of
business, or to secure obligations on surety or appeal bonds provided that all
such liens in the aggregate have no Material Adverse Effect;
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(d) Liens for current taxes, assessments or other governmental charges that
are not delinquent or remain payable without any penalty or that are being
contested in good faith and with due diligence by appropriate proceedings,
provided that all such liens in the aggregate have no Material Adverse Effect
and, if reasonably requested by the Agent, the Borrower or such Subsidiary has
established reserves reasonably satisfactory to the Agent with respect thereto;
(e) Liens upon property leased under a Capital Lease and placed upon such
property at the time of, or within ten (10) days after, the commencement of the
lease thereof to secure the lease payments under such Capital Lease, provided
that any such lien (i) shall not encumber any other property of the Borrower or
any Subsidiary and (ii) shall not exceed the total of such lease payments;
(f) Liens set forth on SCHEDULE 1.1(A) attached hereto, provided that such
liens are not renewed, extended or increased;
(g) Purchase money liens (x) incurred in the purchase of equipment permitted
under SECTION 6.10 hereof, provided that any such lien (i) attaches to such
asset concurrently with or within ten (10) days after the acquisition thereof,
(ii) shall not encumber any other property of the Borrower or any Subsidiary and
(iii) shall not exceed the purchase price of such asset or (y) that have been
disclosed to the Agent and the Lenders and assumed in any Permitted Physician
Transaction in accordance with SECTION 5.14 or Physician Transaction approved in
accordance with SECTION 6.2 hereof;
(h) Other liens disclosed to the Agent and Lenders and incurred, assumed or
otherwise acquired in connection with any Permitted Physician Transaction or
permitted in connection with any Physician Transaction approved under SECTION
6.2;
(i) Assignment Restrictions;
(j) Easements, rights of way, zoning restrictions and other similar
encumbrances on real estate that do not materially impair the value of the
property to which they relate;
(k) Any other liens or encumbrances as the Required Lenders may approve in
writing from time to time; and
(l) Liens on Margin Stock, to the extent the value thereof exceeds 25% of
the value of the total assets of the Borrower and its Subsidiaries (including
Margin Stock).
"Permitted Physician Transaction" shall mean a Physician Transaction that,
upon satisfaction of all of the following conditions, may be consummated without
the consent of the Agent or the Lenders: (A) the assets acquired, or the
business of the Person whose stock is acquired, shall be of an oncology,
hematology or radiation oncology physician practice; (B) those Physician
Transactions that are structured as asset acquisitions shall be for an entire
business, division, facility, operation or product line of such Person,
excluding medical assets not acquired by the Borrower or Subsidiary; (C) those
Physician Transactions that are structured as stock acquisitions shall be
effected through a purchase of 100% of the capital stock of such Person by the
Borrower or through a merger between such Person and the Borrower or a direct
wholly-owned Subsidiary of the Borrower, as the case may be, so that after
giving effect to such merger 100% of the capital stock of the surviving
corporation of such merger is owned by the Borrower or a direct wholly-owned
Subsidiary of the Borrower; (D) the Transaction Amount for such Physician
Transaction shall not exceed $15,000,000; and (E) in the fiscal year of such
Physician
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Transaction, the aggregate Transaction Amount for all Permitted Physician
Transactions in such year shall not exceed $50,000,000 (provided that for the
period from the Closing Date through December 31, 1996 the aggregate Transaction
Amount for all Permitted Physician Transactions in such period shall not exceed
$30,000,000). Notwithstanding anything to the contrary contained in the
immediately preceding sentence, a Physician Transaction shall be a Permitted
Physician Transaction only if, in addition to the foregoing, all requirements of
SECTIONS 5.11 (if any new Subsidiaries are acquired or created in connection
with such Physician Transaction) and 5.14 are met with respect thereto.
"Permitted Subordinated Debt" shall mean any Debt of the Borrower or any
Subsidiary incurred in respect of a Permitted Physician Transaction and
evidenced by a written instrument. The terms and conditions of any Permitted
Subordinated Debt shall be substantially similar to those shown on SCHEDULE
1.1(B), including, without limitation, (i) an express statement of subordination
to the payment and performance of the Obligations, (ii) an interest rate not
exceeding the greater of 7% per annum and three percentage points per annum over
the Base Rate (other than upon a default), (iii) a term for repayment that
provides for no more than 20% of the total original principal amount of such
Permitted Subordinated Debt to be repaid in any fiscal year, (iv) a final
maturity of such Permitted Subordinated Debt not less than five (5) years from
the date of the Permitted Physician Transaction and (v) a payment blockage on
such Permitted Subordinated Debt in the event of a payment default on any senior
debt or an event of default allowing senior creditors to accelerate such senior
debt (provided that such payment blockage may expire if the senior debt has not
been accelerated within at least ninety (90) days from the commencement of such
blockage).
"Person" shall mean a corporation, an association, a joint venture, a
partnership, an organization, a business, an individual, a trust or a government
or political subdivision thereof or any government agency or any other legal
entity.
"Physician Transaction" shall mean any bona fide transaction or series of
related transactions, consummated after the date hereof, by which the Borrower
or any Subsidiary (i) acquires all or part of the assets, or a going business or
division, of any Person, whether through purchase of assets or securities,
merger or otherwise, (ii) directly or indirectly acquires control of any Person
or (iii) acquires the right to manage the non-medical aspects of the business of
any Person. For the purpose of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management and non-medical policies, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the above, "control"
shall not include, and shall not be implied to include, the power to direct any
physician's practice of medicine or the power to interfere in any
physician/patient relationship.
"Practice" shall have the meaning assigned to such term in SECTION
5.14(C)(I).
"Pro Rata Share" of any amount shall mean, with respect to any Lender at any
time, the product of (i) such amount, multiplied by (ii) such Lender's
Percentage at such time.
"Prohibited Transaction" shall mean any transaction described in (i) Section
406 of ERISA that is not exempt by reason of Section 408 of ERISA or (ii)
Section 4975(c) of the Internal Revenue Code that is not exempt by reason of
Section 4975(c) or 4975(d).
"Regulations D, G, T, U and X" shall mean Regulations D, G, T, U and X,
respectively, of the Federal Reserve Board and any successor regulations.
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"Reimbursement Obligations" shall have the meaning set forth in SECTION
2.18(D) hereof.
"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA (other than an event for which notice is waived under the ERISA
regulations).
"Required Lenders" shall mean, at any time, the Lenders owning or holding
66-2/3% or more of the then aggregate principal amount of the Loans then
outstanding; or, if no Loans are then outstanding, the Lenders with 66-2/3% or
more of the aggregate of all Commitments at such time.
"Requirement of Law" means, as to any Person, the charter, articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any statute, law, treaty, rule, regulation, order,
decree, writ, injunction or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any Lender for any
Interest Period, the reserve percentage (expressed as a decimal) applicable two
(2) Business Days before the first day of such Interest Period in effect on such
day, as provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body), for determining the reserve requirement
(including, without limitation, basic, supplemental, marginal and emergency
reserves) applicable to such Lender under Regulation D with respect to
"Eurocurrency liabilities" within the meaning of Regulation D, or under any
similar or successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding.
"Security Agreement" shall mean the Second Amended and Restated Security
Agreement, substantially in the form of EXHIBIT D-1, together with any
amendments, modifications and supplements thereto, any replacements, renewals,
extensions and restatements thereof, and any substitutes therefor, in whole or
in part.
"Security Agreements" shall mean the Security Agreement and the Guarantors'
Security Agreement.
"Solvent" shall mean, as to any Person on any particular date, that such
Person (i) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage, (ii) is able to
pay its debts as they mature, (iii) owns property having a fair saleable value
greater than the amount required to pay its probable liability on existing debts
as they mature (including known reasonable contingencies and contingencies that
should be included in notes of the Financial Statements pursuant to Generally
Accepted Accounting Principles), and (iv) does not intend to, and does not
believe that it will, incur debts or probable liabilities beyond its ability to
pay such debts or liabilities as they mature.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stock" shall mean all shares, interests, rights to purchase, options,
participations or other equivalents of or interests in (howsoever designated)
the equity of any Person, whether voting or non-voting, including, without
limitation, common stock, warrants, preferred stock, convertible debentures
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and all agreements, instruments and documents convertible, in whole or in part,
into any one or more or all of the foregoing.
"Subordinated Debt" shall mean any Debt of the Borrower or any Subsidiary to
the extent such Debt is expressly subordinated and made junior to the payment
and performance of the Obligations and evidenced as such by a written instrument
the terms and conditions (including, without limitation, subordination
provisions) of which are satisfactory in form and substance to the Required
Lenders and are approved in writing by the Agent in accordance with SECTION 6.2
or 6.3 hereof.
"Subsidiary" shall mean any corporation of which more than fifty percent
(50%) of the outstanding Stock having ordinary voting power to elect a majority
of the board of directors, or other entity of which more than fifty percent
(50%) of the Partnership Interest or voting power, is at the time, directly or
indirectly, owned by any Person or one or more of its Subsidiaries (irrespective
of whether, at the time, the ownership interests or Stock of any other class or
classes of such entity or corporation shall have or might have voting power by
reason of the happening of any contingency). When used without reference to a
parent, the term "Subsidiary" shall be deemed to refer to a Subsidiary of the
Borrower.
"Syndication Completion Date" shall have the meaning assigned to such term
in SECTION 2.1(C).
"Taxes" shall have the meaning assigned to such term in SECTION 2.12(A).
"Termination Date" shall mean the Maturity Date, or such earlier date of
termination of the Total Commitment in accordance with SECTION 2.4 or SECTION
8.1.
"Total Commitment" shall mean, at any time, the sum of the Commitments of
each Lender at such time.
"Total Unutilized Commitment" shall mean, at any time, the sum of the
Unutilized Commitments of each Lender at such time.
"Transaction Amount" shall mean, with respect to any Physician Transaction,
the sum (without duplication) of the following, in each case determined in
accordance with Generally Accepted Accounting Principles: (i) the aggregate
original principal amount of all Loans the proceeds of which are utilized to
finance such Physician Transaction, in part or in whole, (ii) the amount of cash
paid by the Borrower and its Subsidiaries in connection with such Physician
Transaction, (iii) the fair market value of all capital stock or other ownership
interests of the Borrower or any Subsidiary issued or given (or to be issued or
given in the future) to the seller in connection with such Physician
Transaction, (iv) the outstanding principal amount of all Debt incurred, assumed
or acquired in connection with such Physician Transaction, (v) all additional
purchase price amounts in the form of notes and other contingent obligations, as
recorded or disclosed on the financial statements (including the notes to such
statements) of the Borrower and its Subsidiaries, (vi) all amounts paid in
consideration of parties' entering into covenants not to compete and consulting
agreements in connection with such Physician Transaction and (vii) the aggregate
fair market value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Physician Transaction.
"Type" shall have the meaning assigned to such term in SECTION 2.1(B).
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"Uniform Commercial Code" shall mean the Uniform Commercial Code of the
State of North Carolina, as amended from time to time, unless in any particular
instance the Uniform Commercial Code of another state is applicable, in which
case it shall mean the Uniform Commercial Code of such state.
"Unutilized Commitment" shall mean, with respect to any Lender at any time,
such Lender's Commitment at such time less (i) the aggregate principal amount of
all Loans made by such Lender that are outstanding at such time and (ii) such
Lender's Pro Rata Share of Letter of Credit Outstandings.
1.2. Accounting Terms. Any accounting terms used in this Agreement that are
not specifically defined shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles; provided, however,
that, in the event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the
Borrower's certified public accountants, to the extent that such changes would
modify or could modify such accounting terms (including accounting terms
otherwise defined in this Agreement) or the interpretation or computation
thereof, such changes shall be followed in defining such accounting terms only
from and after the date this Agreement shall have been amended to the extent
necessary to reflect any such changes in the financial covenants and other terms
and conditions of this Agreement.
1.3. Singular/Plural. Unless the context otherwise requires, words in the
singular include the plural and words in the plural include the singular.
1.4. Other Terms. All other terms contained in this Agreement shall, when
the context so indicates, have the meanings provided for by the Uniform
Commercial Code of the State of North Carolina to the extent the same are used
or defined therein.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. The Loans.
(a) Each Lender severally agrees, subject to and on the terms and conditions
of this Agreement, to make Loans (each, a "Loan" and collectively, the "Loans")
to the Borrower, from time to time on any Business Day during the period from
the date hereof to but not including the Termination Date, provided that (i) the
aggregate principal amount of Loans at any time outstanding for any Lender shall
not exceed the difference between (A) such Lender's Commitment at such time less
(B) such Lender's Pro Rata Share of the Letter of Credit Outstandings at such
time (exclusive of Reimbursement Obligations that are repaid with the proceeds
of, and simultaneously with the incurrence of, Loans); (ii) no Borrowing shall
be made if, immediately after giving effect thereto, the sum of (x) the
aggregate principal amount of Loans outstanding at such time plus (y) the
aggregate Letter of Credit Outstandings at such time (exclusive of Reimbursement
Obligations that are repaid with the proceeds of, and simultaneously with the
incurrence of Loans) would exceed the Total Commitment; and (iii) no Borrowing
shall be required of any Lender if, immediately after giving effect thereto, a
Default or Event of Default would exist. Subject to and on the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow Loans.
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(b) The Loans shall, at the option of the Borrower and subject to the terms
and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans (each
such type of Loan, a "Type"), provided that all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type.
(c) Notwithstanding any other provision of this Agreement, no LIBOR Loans
having an Interest Period of longer than one month may be borrowed at any time
prior to the earlier of the 30th day after the Closing Date and the date upon
which the Agent determines in its sole discretion, and notifies the Borrower,
that the primary syndication of the credit facility provided for hereunder has
been completed (the earlier of such dates, the "Syndication Completion Date").
2.2. Borrowings.
(a) Whenever the Borrower desires to make a Borrowing hereunder (other than
continuations or conversions of outstanding Loans pursuant to SECTION 2.9 or any
Borrowing pursuant to SECTION 2.18), the Borrower will give the Agent written
notice (by telecopier or otherwise), prior to 11:00 a.m., Charlotte time, at
least three (3) Business Days prior to each Borrowing to be comprised of LIBOR
Loans and at least one (1) Business Day prior to each Borrowing to be comprised
of Base Rate Loans. Each such notice (each, a "Notice of Borrowing") shall be
irrevocable, shall be given in the form of EXHIBIT B-1 and shall be
appropriately completed to specify (i) the aggregate principal amount and Type
of the Loans to be made pursuant to such Borrowing (and, in the case of a
Borrowing of LIBOR Loans, the initial Interest Period to be applicable thereto)
and (ii) the requested date of the Borrowing (the "Borrowing Date"), which shall
be a Business Day. Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing hereunder (y) in the
case of Borrowings comprised of Base Rate Loans, shall not be less than
$2,000,000 and, if greater, shall be in an integral multiple of
$500,000 in excess thereof and (z) in the case of Borrowings comprised
of LIBOR Loans, shall not be less than $3,000,000 and, if greater,
shall be in an integral multiple of $1,000,000 in excess thereof;
(ii) if the Borrower shall have failed to designate the Type of Loans
comprising a Borrowing, the Borrower shall be deemed to have requested
a Borrowing comprised of Base Rate Loans;
(iii) if the Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans, then
the Borrower shall be deemed to have selected an Interest Period with a
duration of one month; and
(iv) LIBOR Loans under the Facility may not be outstanding under more than
seven (7) separate Interest Periods at any one time.
(b) Upon its receipt of a Notice of Borrowing, the Agent will promptly
notify each Lender of the proposed Borrowing, of such Lender's Pro Rata Share
thereof and of the other matters specified in the Notice of Borrowing. Each
such Lender will make the amount of its Pro Rata Share of such Borrowing
available to the Agent at its office referred to in SECTION 10.4, for the
account of the Borrower, in Dollars and in immediately available funds, prior to
2:00 p.m., Charlotte time, on the Borrowing Date. To the extent the relevant
Lenders have made such amounts available to the Agent as
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provided hereinabove, the Agent will make the aggregate of such amounts
available to the Borrower in accordance with subsection (C) below and in like
funds as received by the Agent, as soon as practicable prior to 3:30 p.m.,
Charlotte time, on the Borrowing Date.
(c) The Borrower hereby authorizes the Agent to disburse the proceeds of
each Borrowing in accordance with the terms of any written instructions from any
of the Authorized Officers, provided that the Agent shall not be obligated under
any circumstances to forward amounts to any account not listed in an Account
Designation Letter. The Borrower may at any time deliver to the Agent an
Account Designation Letter listing any additional accounts or deleting any
accounts listed in a previous Account Designation Letter.
(d) Unless the Agent has received, prior to 12:00 noon, Charlotte time, on
any Borrowing Date, written notice from a Lender that such Lender will not make
available to the Agent its Pro Rata Share of the relevant Borrowing, the Agent
may assume that such Lender has made its Pro Rata Share of such Borrowing
available to the Agent on such Borrowing Date in accordance with subsection (B)
above, and the Agent may, in reliance upon such assumption, make a corresponding
amount available to the Borrower on such Borrowing Date. If and to the extent
that such Lender shall not have made such Pro Rata Share available to the Agent,
and the Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, (i) if recovered from such Lender, at the Federal Funds Rate, and (ii) if
recovered from the Borrower, at the rate of interest applicable to Loans
comprising such Borrowing, as determined under SECTION 2.6. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) The failure of any Lender to make any Loan required to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation
hereunder to make its Loan on the respective Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender as part of any Borrowing.
(f) Each Lender may, at its option, make and maintain any Loan at, to or for
the account of any of its Lending Offices, provided that any exercise of such
option shall not increase or otherwise adversely affect the obligation of the
Borrower to compensate or otherwise make additional payments to such Lender or
to repay such Loan to or for the account of such Lender in accordance with the
terms of this Agreement.
(g) Any borrowings outstanding under the Original Agreement shall not be
continued as Loans under this Agreement and shall be repaid, together with all
interest and fees accrued thereon, on or prior to the Closing Date.
2.3. Notes.
(a) The Loans made by each Lender shall be evidenced by a Note appropriately
completed in substantially the form of EXHIBIT A. The Note issued to each
Lender shall (i) be executed by the Borrower, (ii) be payable to the order of
such Lender, (iii) be dated as of the date hereof (or, in the case of Notes
issued pursuant to an Assignment and Acceptance, as of the effective date
thereof), (iv) be in a stated principal amount equal to such Lender's
Commitment, (v) bear interest in accordance with the
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provisions of SECTION 2.6, as the same may be applicable to the Loans made by
such Lender from time to time, and (vi) be entitled to all of the benefits of
this Agreement and the other Loan Documents and subject to the provisions hereof
and thereof.
(b) Each Lender will record on its internal records the amount of each Loan
made by it and each payment received by it in respect thereof and will, in the
event of any transfer of any of its Notes, either endorse on the reverse side
thereof the outstanding principal amount of the Loans evidenced thereby as of
the date of transfer or provide such information on Annex I to the Assignment
and Acceptance relating to such transfer; provided, however, that the failure of
any Lender to make any such recordation or provide any such information, or any
error in such recordation or information, shall not affect the Borrower's
obligations in respect of such Loans.
2.4. Termination and Reduction of Commitments.
(a) The Commitments shall be automatically and permanently terminated on the
Maturity Date unless sooner terminated pursuant to subsection (B) or (C) below
or SECTION 8.1.
(b) On each date set forth below, the Total Commitment shall automatically
be permanently reduced by the amount set forth below opposite such date):
Amount of Reduction in
Date Aggregate Commitments
-------- ------------------------
October 30, 1999 $37,500,000
October 30, 2000 37,500,000
October 30, 2001 75,000,000
(c) At any time and from time to time, upon at least five (5) Business Days'
prior written notice to the Agent, the Borrower may terminate in whole or reduce
in part the Total Unutilized Commitment, provided that any such partial
reduction shall be in an aggregate amount of not less than $5,000,000 or
integral multiples thereof. The amount of any termination or reduction made
under this subsection (C) may not thereafter be reinstated.
(d) The Total Commitment shall automatically be permanently reduced by the
amount of the proceeds of sales to physicians as described in SECTION 6.6 (III).
(e) Each reduction of the Total Unutilized Commitment under this Section
shall be applied ratably to the Commitments of the Lenders according to their
respective Percentages. After any such reduction, the fee provided for in
SECTION 2.7 shall be calculated with respect to the reduced Commitments. Each
reduction of the Total Unutilized Commitment under subsections (C) and (D) of
this Section shall be applied to reduce the scheduled reduction amounts in
subsection (B) in chronological order.
2.5. Payments; Voluntary, Mandatory.
(a) The Borrower shall have the right from time to time to prepay the Loans,
in whole or in part, without premium or penalty, upon written notice to the
Agent prior to 11:00 a.m., Charlotte time, at least three (3) Business Days'
prior to each intended prepayment of LIBOR Loans and at least one (1)
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Business Day prior to each intended prepayment of Base Rate Loans, provided that
(i) each partial prepayment shall be in an aggregate principal amount of no less
than $2,000,000 and, if greater, in an integral multiple of $500,000 in excess
thereof, (ii) no partial prepayment of LIBOR Loans made pursuant to any single
Borrowing shall reduce the outstanding principal amount of the remaining LIBOR
Loans under such Borrowing to less than $3,000,000 or to any greater amount not
an integral multiple of $1,000,000 in excess thereof, and (iii) unless made
together with all amounts required under SECTION 2.13 to be paid as a
consequence of such prepayment, a prepayment of a LIBOR Loan may be made only on
the last day of the Interest Period applicable thereto. Each such notice shall
specify (y) the proposed date of such prepayment and (z) the aggregate principal
amount and the Types of the Loans to be prepaid (and, in the case of LIBOR
Loans, the specific Borrowing or Borrowings pursuant to which made) and shall be
irrevocable and shall bind the Borrower to make such prepayment on the terms
specified therein. Amounts prepaid pursuant to this subsection (A) may be
reborrowed, subject to the terms and conditions of this Agreement.
(b) In the event that the aggregate principal amount of the Loans
outstanding plus Letter of Credit Outstandings on any date exceeds the Total
Commitment as of such date (after giving effect to any termination or reduction
thereof as of such date), the Borrower will repay the principal amount of the
Loans on such date in the amount of such excess; provided that, to the extent
such excess amount is greater than the aggregate principal amount of Loans
outstanding immediately prior to the application of such prepayment, the amount
so prepaid shall be retained by the Agent and held in the Cash Collateral
Account as collateral for the Letter of Credit Outstandings, as more
particularly described in SECTION 2.18(J), and thereupon such cash shall be
deemed to reduce the aggregate Letter of Credit Outstandings by an equivalent
amount. Such payment shall be accompanied by all amounts required under SECTION
2.13 if applied to a LIBOR Loan and such payment is not made on the last day of
the Interest Period applicable thereto.
(c) The Borrower shall repay the Notes in full on the Termination Date.
2.6. Interest.
(a) The Borrower will pay interest in respect of the unpaid principal amount
of each Loan, from the date of Borrowing thereof until such principal amount
shall be paid in full, (i) at the Adjusted Base Rate, as in effect from time to
time during such periods as such Loan is a Base Rate Loan, and (ii) at the
Adjusted LIBOR Rate, as in effect from time to time during such periods as such
Loan is a LIBOR Loan.
(b) Upon the occurrence and during the continuance of an Event of Default
under SECTION 7.1(A), (I) or (J), and (at the election of the Required Lenders)
upon the occurrence and during the continuance of any other Event of Default,
all outstanding principal amounts of the Loans and, to the greatest extent
permitted by law, all interest accrued on the Loans and all other fees and
amounts not paid when due hereunder, shall bear interest at a rate per annum
equal to the interest rate applicable from time to time thereafter to such Loans
(whether the Adjusted Base Rate or the Adjusted LIBOR Rate) plus 2% (or, in the
case of fees and other amounts, at the Adjusted Base Rate plus 2%), and, in each
case, such default interest shall be payable on demand. To the greatest extent
permitted by law, interest shall continue to accrue after the filing by or
against the Borrower of any petition seeking any relief in bankruptcy or under
any law pertaining to insolvency or debtor relief.
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(c) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, in arrears on the last Business Day of each
fiscal quarter, beginning with the last Business Day of the fiscal quarter
ending December 31, 1996; (ii) in respect of each LIBOR Loan, in arrears on the
last Business Day of the Interest Period applicable thereto (subject to the
provisions of clause (iv) in SECTION 2.8) and for any Interest Period longer
than three (3) months, in arrears also on the first Business Day occurring
ninety (90) days after the first day of such Interest Period; and (iii) in
respect of any Loan, on the date of any repayment at maturity (whether pursuant
to acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Loan Document shall
be deemed to establish or require the payment of interest to any Lender at a
rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrower and the Lenders upon
determining the interest rate for each Borrowing after its receipt of the
relevant Notice of Borrowing or Notice of Conversion/Continuation; provided,
however, that the failure of the Agent to provide the Borrower or the Lenders
with any such notice shall neither affect any obligations of the Borrower or the
Lenders hereunder nor result in any liability on the part of the Agent to the
Borrower or any Lender. Each such determination (including each determination
of the Reserve Requirement in connection with a Borrowing of LIBOR Loans) shall,
absent manifest error, be final and conclusive and binding on all parties
hereto.
2.7. Fees.
(a) The Borrower agrees to pay the Agent, for the ratable benefit of each
Lender, a commitment fee per annum determined pursuant to the following table,
for the period from the Closing Date to the Termination Date.
Ratio of Consolidated
Debt to Annualized EBITDA Commitment Fee
------------------------- --------------
Greater than 2.25 to 1.0 .375%
Less than or equal to
2.25 to 1.0 .20%
The commitment fee shall be applied to the average daily Total Unutilized
Commitment, payable in arrears on the last Business Day of each fiscal quarter,
commencing with the fiscal quarter ending December 31, 1996, and calculated on
the basis of actual days elapsed over a year of 360 days. From
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the Closing Date until the fifth (5th) day after delivery of the September 30,
1996 financial statements pursuant to SECTION 5.1(B) below, the commitment fee
shall be .20% per annum. The commitment fee shall be reset from time to time in
accordance with the above matrix on the fifth (5th) day after delivery by the
Borrower in accordance with SECTIONS 5.1(B) and (C) of financial statements
together with a Compliance Certificate (reflecting the computation of the ratio
of Consolidated Debt to Annualized EBITDA as of the last day of the preceding
fiscal quarter or fiscal year, as appropriate).
(b) The Borrower agrees to pay to the Agent, for its own account, (i) on the
date hereof, the underwriting fee described in paragraph (i) of the Fee Letter
to the extent not theretofore paid to the Agent and (ii) the annual
administrative fee described in paragraph (ii) of the Fee Letter, on the terms,
in the amount and at the times set forth therein.
2.8. Interest Periods. Concurrently with the giving of any Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six month period (subject to availability
for all Lenders); provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at all times have
the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall commence on the
date of the Borrowing of such Loan (including the date of any
continuation of, or conversion into, such LIBOR Loan), and each
successive Interest Period applicable to such LIBOR Loan shall commence
on the day following the day on which the next preceding Interest
Period applicable thereto expires;
(iii) the Borrower may not select any Interest Period that expires after
the Maturity Date;
(iv) if any Interest Period would expire on a day that is not a Business
Day, such Interest Period shall expire on the next succeeding Business
Day unless such next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall expire on the next
preceding Business Day;
(v) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Interest Period would otherwise expire, such Interest Period shall
expire on the last Business Day of such calendar month; and
(vi) if, upon the expiration of any Interest Period applicable to a
Borrowing of LIBOR Loans, the Borrower shall have failed to elect a new
Interest Period to be applicable to such LIBOR Loans, then the Borrower
shall be deemed to have elected to convert such LIBOR Loans into Base
Rate Loans as of the expiration of the then current Interest Period
applicable thereto.
2.9. Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day, to elect (y) to
convert all (or a portion in an amount not less than (A) in the case of Base
Rate Loans, $2,000,000 or, if greater, an
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integral multiple of $500,000 in excess thereof and (B) in the case of LIBOR
Loans, $3,000,000 or, if greater, an integral multiple of $1,000,000 in excess
thereof) of the outstanding principal amount of any Loans of one Type made
pursuant to one or more Borrowings (and, in the case of LIBOR Loans, having the
same Interest Period) into a Borrowing or Borrowings of Loans of the other Type,
or (z) to continue all (or a portion, subject to the restrictions as to amount
set forth in clause (B) of the parenthetical in clause (y) above) of the
outstanding principal amount of any LIBOR Loans made pursuant to one or more
Borrowings (having the same Interest Period) for an additional Interest Period,
provided that (i) except as otherwise provided for in SECTION 2.11(D), LIBOR
Loans may be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto (and, in any event, if a LIBOR Loan is converted into
a Base Rate Loan on any day other than the last day of the Interest Period
applicable thereto, the Borrower will pay, upon such conversion, all amounts
required under SECTION 2.13 to be paid as a consequence thereof), (ii) if any
partial conversion of LIBOR Loans into Base Rate Loans shall have reduced the
outstanding principal amount of the remaining LIBOR Loans made pursuant to a
single Borrowing (and thereby continued) to less than $3,000,000, such remaining
LIBOR Loans shall be converted immediately into Base Rate Loans and may not
thereafter be converted into or continued as LIBOR Loans unless the requirements
of clause (y) above are satisfied, (iii) no conversion of Base Rate Loans into
LIBOR Loans or continuation of LIBOR Loans shall be permitted during the
continuance of an Event of Default and (iv) no conversion or continuation under
this Section shall result in a greater number of separate Interest Periods in
respect of LIBOR Loans than is permitted under SECTION 2.2(A)(IV).
(b) The Borrower shall make each such election by delivering written notice
to the Agent prior to 11:00 a.m., Charlotte time, at least three (3) Business
Days prior to the effective date of any conversion of Base Rate Loans into, or
continuation of, LIBOR Loans and at least one (1) Business Day prior to the
effective date of any conversion of LIBOR Loans into Base Rate Loans. Each such
notice (each, a "Notice of Conversion/Continuation") shall be irrevocable, shall
be given in the form of EXHIBIT B-2 and shall be appropriately completed to
specify (x) the date of such conversion or continuation, (y) in the case of a
conversion into, or a continuation of, LIBOR Loans, the Interest Period to be
applicable thereto and (z) the aggregate amount and Type of the Loans being
converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Agent will promptly notify each Lender having a
Commitment of the proposed conversion or continuation, of such Lender's Pro Rata
Share thereof and of the other matters specified in the Notice of
Conversion/Continuation. In the event that the Borrower shall fail to deliver a
Notice of Conversion/Continuation as provided hereinabove with respect to any
Borrowing of LIBOR Loans, such LIBOR Loans shall automatically be converted to
Base Rate Loans upon the expiration of the then current Interest Period
applicable thereto.
2.10. Method of Payments; Computations.
(a) All payments by the Borrower hereunder and under the Notes shall be made
without setoff, counterclaim or other defense, in Dollars and in immediately
available funds to the Agent, for the account of the Lenders (except as
otherwise provided herein as to payments required to be made to the Agent or
Issuing Bank for its own account or directly to the Lenders) at its office
referred to in SECTION 10.4, prior to 12:00 noon, Charlotte time, on the date
payment is due. Any payment made as required hereinabove, but after 12:00 noon,
Charlotte time, shall be deemed to have been made on the next succeeding
Business Day. If any payment falls due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day (except
that in the case of LIBOR Loans to which the provisions of clause (iv) in
SECTION 2.8 are applicable, such due date shall be the next preceding Business
Day), and such extension of time shall then be included in the computation of
payment of interest, fees or other applicable amounts.
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(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the Agent for the account of such Lenders as follows: (i) if
the payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each such Lender on the same date, by
wire transfer of immediately available funds, such Lender's Pro Rata Share of
such payment, and (ii) if such payment is received after 12:00 noon, Charlotte
time, or in other than immediately available funds, the Agent will make
available to each such Lender its Pro Rata Share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its Pro Rata Share
of such payment with interest thereon at the Federal Funds Rate for each day
from the date such amount was required to be disbursed by the Agent until the
date repaid to such Lender.
(c) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to any Lender hereunder that such payment
will not be made in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date, and the Agent may, in reliance on
such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due to each such Lender. If and to the extent
the Borrower shall not have so made such payment in full to the Agent, and
without limiting the obligation of the Borrower to make such payment in
accordance with the terms hereof, each such Lender shall repay to the Agent
forthwith on demand such amount so distributed to such Lender, together with
interest thereon for each day from the date such amount is so distributed to
such Lender until the date repaid to the Agent, at the Federal Funds Rate.
(d) The Borrower hereby authorizes each Lender, if and to the extent that
any payment owed to such Lender is not made to the Agent or such Lender when due
hereunder or under any Note held by such Lender, to charge from time to time
against any or all of the accounts of the Borrower with such Lender any amount
so due in accordance with SECTION 8.2 hereof (with prompt notice to the Agent
and the Borrower); provided that the failure to give such notice shall not
affect the validity of such debit by such Lender.
(e) With respect to each payment on the Loans hereunder, except as
specifically provided otherwise herein or in any of the other Loan Documents,
the Borrower may designate by written notice to the Agent prior to or
concurrently with such payment the Types of Loans that are to be repaid or
prepaid and, in the case of LIBOR Loans, the specific Borrowing or Borrowings
pursuant to which made, provided that (i) unless made together with all amounts
required under SECTION 2.13 to be paid as a consequence thereof, a prepayment of
a LIBOR Loan may be made only on the last day of the Interest Period applicable
thereto, (ii) if any partial prepayment of LIBOR Loans made pursuant to any
single Borrowing shall reduce the outstanding principal amount of the remaining
LIBOR Loans under such Borrowing to less than $3,000,000, such remaining LIBOR
Loans shall be converted immediately into Base Rate Loans and (iii) each
prepayment of Loans comprising a single Borrowing shall be applied pro rata
among such Loans. In the absence of any such designation by the Borrower, the
Agent shall, subject to the foregoing, make such designation in its sole
discretion.
(f) All computations of interest and fees hereunder (including computations
of the Reserve Requirement) shall be made on the basis of a year consisting of
360 days and the actual number of days (including the first day, but excluding
the last day) elapsed for LIBOR Loans and of 365/366 days and
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the actual number of days (including the first day, but excluding the last day)
elapsed for Base Rate Loans.
2.11. Increased Costs, Change in Circumstances, etc.
(a) If, at any time after the Closing Date and from time to time, the
adoption or modification of any applicable law, rule or regulation, or any
interpretation or administration thereof by any Governmental Authority or
central bank (whether or not having the force of law) charged with the
interpretation, administration or compliance of the Lenders with any of such
requirements, in each case affecting banking institutions generally shall:
(i) subject any Lender to, or increase the net amount of, any tax, impost,
duty, charge or withholding with respect to any amount received or to
be received hereunder in connection with LIBOR Loans (other than taxes
imposed on net income or profits of, or any branch or franchise tax
applicable to, such Lender or a Lending Office of such Lender);
(ii) change the basis of taxation of payments to any Lender in connection
with LIBOR Loans (other than changes in taxes on the net income or
profits of, or any branch or franchise tax applicable to, such Lender
or a Lending Office of such Lender);
(iii) impose, increase or render applicable any reserve (other than the
Reserve Requirement), capital adequacy, special deposit or similar
requirement against assets of, deposits with or for the account of, or
loans, credit or commitments extended by, any Lender or a Lending
Office of such Lender; or
(iv) impose on any Lender or in the London interbank Eurodollar market any
other condition or requirement affecting this Agreement or LIBOR Loans;
and the result of any of the foregoing is to increase the costs to any Lender of
agreeing to make, making, funding or maintaining any LIBOR Loans or to reduce
the yield or rate of return of such Lender on any LIBOR Loans to a level below
that which such Lender could have achieved but for the adoption or modification
of any such requirements, the Borrower will, within fifteen (15) days after
delivery to the Borrower by such Lender of written demand therefor (with a copy
thereof to the Agent), pay to such Lender such additional amounts as shall
compensate such Lender for such increase in costs or reduction in return.
(b) If, at any time after the Closing Date and from time to time, any Lender
shall have determined that the adoption or modification of any applicable
federal, state or local law, rule or regulation regarding such Lender's required
level of capital (including any allocation of capital requirements or
conditions, but excluding federal, state or local income tax liability), or the
implementation of any such requirements previously adopted but not implemented
prior to the Closing Date, or any interpretation or administration thereof by
any Governmental Authority (whether or not having the force of law) charged with
the interpretation, administration or compliance of such Lender with any of such
requirements, in each case affecting banking institutions generally, has or
would have the effect of reducing the rate of return on such Lender's capital as
a consequence of its Commitment or Loans hereunder to a level below that which
such Lender could have achieved but for such adoption, modification,
implementation or interpretation (taking into account such Lender's policies
with respect to capital adequacy), the Borrower will, within fifteen (15) days
after delivery to the Borrower by such
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Lender of written demand therefor (with a copy thereof to the Agent), pay to
such Lender such additional amounts as will compensate such Lender for such
reduction in return.
(c) If, on or prior to the first day of any Interest Period, (i) the Agent
shall have received written notice from any Lender of such Lender's
determination that Dollar deposits in the amount of such Lender's required LIBOR
Loan pursuant to such Borrowing are not generally available in the London
interbank Eurodollar market or that the rate at which such Dollar deposits are
being offered will not adequately and fairly reflect the cost to such Lender of
making or maintaining its LIBOR Loan during such Interest Period or (ii) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period, the Agent will
forthwith so notify the Borrower and the Lenders, whereupon the obligation of
(y) in the case of clause (i) above, each such affected Lender, and (z) in the
case of clause (ii) above, all Lenders, in each case to make, to convert Base
Rate Loans into, or to continue, LIBOR Loans shall be suspended (including
pursuant to the Borrowing to which such Interest Period applies), and any Notice
of Borrowing or Notice of Conversion/Continuation given at any time thereafter
with respect to LIBOR Loans shall be deemed to be a request for Base Rate Loans
(but in the case of clause (i) above, only to the extent of such affected
Lender's Pro Rata Share thereof) until the Agent or the affected Lender, as the
case may be, shall have determined that the circumstances giving rise to such
suspension no longer exist.
(d) Notwithstanding any other provision in this Agreement, if, at any time
after the Closing Date and from time to time, any Lender shall have determined
that the adoption or modification of any applicable law, rule or regulation, or
any interpretation or administration thereof by any Governmental Authority or
central bank (whether or not having the force of law) charged with the
interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of making it unlawful for such Lender
to honor its obligation to make LIBOR Loans or to continue to make or maintain
LIBOR Loans, such Lender will forthwith so notify the Agent and the Borrower,
whereupon (i) each of such Lender's outstanding LIBOR Loans shall automatically,
on the expiration date of the respective Interest Period applicable thereto or,
to the extent any such LIBOR Loan may not lawfully be maintained as a LIBOR Loan
until such expiration date, upon such notice, be converted into a Base Rate Loan
and (ii) the obligation of such Lender to make, to convert Base Rate Loans into,
or to continue, LIBOR Loans shall be suspended, and any Notice of Borrowing or
Notice of Conversion/Continuation given at any time thereafter with respect to
LIBOR Loans shall, as to such Lender, be deemed to be a request for Base Rate
Loans, until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist.
(e) Determinations by the Agent or any Lender for purposes of this Section
of any increased costs, reduction in return, market contingencies, illegality or
any other matter shall, absent manifest error, be conclusive, provided that such
determinations are made reasonably and in good faith. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of this Section
with respect to such Lender, it will, if requested by the Borrower and to the
extent permitted by law, endeavor in good faith to designate another Lending
Office for its LIBOR Loans, but only if such designation would make it lawful
for such Lender to continue to make or maintain LIBOR Loans hereunder; provided
that such designation is made on such terms that such Lender, in its good faith
determination, suffers no increased cost or economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of this Section.
(f) Each demand for payment under this Section shall be preceded by a notice
to the Borrower of such anticipated demand, which notice shall specify in
reasonable detail the basis for such demand and
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the calculation of the amount requested hereunder, but the failure to provide
such advance notice shall not relieve the Borrower of any of its obligations
hereunder. No failure by the Agent or any Lender to demand payment of any
amounts payable under this Section shall constitute a waiver of its right to
demand payment of any additional amounts arising at any subsequent time.
Nothing in this Section shall be construed or so operate as to require the
Borrower to pay any interest, fees, costs or charges in excess of that permitted
by applicable law.
2.12. Taxes.
(a) Any and all payments by the Borrower hereunder or under any Note shall
be made, in accordance with the terms hereof and thereof, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
(other than taxes imposed on the net income or profit of, or any branch or
franchise tax applicable to, the Agent or any Lender) (y) by the jurisdiction
under the laws of which the Agent or such Lender, as the case may be, is
organized or any political subdivision thereof and (z) in the case of each
Lender, by the jurisdiction in which any Lending Office of such Lender is
located or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to the Agent or any Lender, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), the Agent or such
Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower will make such
deductions and (iii) the Borrower will pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) The Borrower will indemnify the Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Agent or such
Lender, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. This indemnification shall be made within
thirty (30) days from the date the Agent or any Lender, as the case may be,
makes written demand therefor. Within thirty (30) days after the date of any
payment of Taxes pursuant to this Section, the Borrower will furnish to the
Agent or the relevant Lender, as the case may be, the original or a certified
copy of a receipt evidencing payment thereof.
(c) If any Lender is a "foreign corporation, partnership or trust" within
the meaning of the Code, and such Lender claims exemption from United States
withholding tax under Section 1441 or 1442 of the Code, such Lender will deliver
to the Agent and the Borrower:
(i) if such Lender claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms 1001
and W-8 before the payment of any interest in the first calendar year,
and before the payment of any interest in each third succeeding
calendar year, during which interest may be paid to such Lender under
this Agreement;
(ii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before
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the payment of any interest is due in the first taxable year of such
Lender, and in each succeeding taxable year of such Lender, during
which interest may be paid to such Lender under this Agreement, and IRS
Form W-9; and
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Each such Lender will promptly notify the Agent and the Borrower of any
changes in circumstances that would modify or render invalid any claimed
exemption or reduction.
(d) If any Lender is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Lender an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required under subsection (C)
above are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax. For purposes of this
Section, a distribution hereunder by the Agent to or for the account of any
Lender shall be deemed a payment by the Borrower.
(e) If at any time the Borrower requests any Lender to deliver any forms or
other documentation pursuant to subsection (C) above, then the Borrower shall,
upon demand of such Lender, reimburse such Lender for any reasonable costs or
expenses incurred by such Lender in the preparation or delivery of such forms or
other documentation.
(f) Each Lender agrees that, upon the occurrence of any event giving rise to
the Borrower's obligation to make any payments or incur any other expenses in
respect of any Taxes under this SECTION 2.12 with respect to such Lender, it
will, if requested by the Borrower and to the extent permitted by law, endeavor
in good faith to designate another Lending Office for its Loans, but only if
such designation would relieve the Borrower from or lessen the amount of any
further such payments or expenses; provided that such designation is made on
such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage.
2.13. Compensation.
(a) The Borrower will compensate each Lender, upon its written request
(which request shall set forth the basis for requesting such compensation and
shall be copied to the Agent), for all losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Lender to fund its LIBOR Loans) that such Lender may sustain (i) if for any
reason (other than a default by such Lender or the Agent or, with respect to any
Borrowing, a change in law described in SECTION 2.11 or any Taxes payable as
described in SECTION 2.12 or additional costs under SECTION 2.13(B), in each
such case arising during the three (3) Business Days after a Notice of Borrowing
and of which the Borrower did not have knowledge at the time the Borrower
submitted such Notice of Borrowing; provided further that the Lenders shall not
be required to extend such Borrowing as a LIBOR Loan if such extension would
create undue hardship for such Lender) a Borrowing of, or conversion of or into,
LIBOR Loans does not occur on a date specified therefor in a Notice of Borrowing
or Notice of Conversion/Continuation, (ii) if any repayment, prepayment or
conversion of any of its LIBOR Loans occurs on a date other than the last day of
an Interest Period applicable thereto (other than a conversion of a LIBOR Loan
pursuant to SECTIONS 2.11(C) or (D)), (iii) if any prepayment of any of its
LIBOR Loans is not made on any date specified in
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a notice of prepayment given by the Borrower or (iv) as a consequence of any
other failure by the Borrower to make any payments with respect to LIBOR Loans
when due hereunder, including as a consequence of acceleration of the maturity
of such Loans pursuant to SECTION 8.1. In addition, the Borrower will pay to
the Agent, for its own account, an administrative fee of $1,000 concurrently
with any payments made in respect of any single occurrence pursuant to this
Section. Calculation of all amounts payable to a Lender under this Section
shall be made as though such Lender had actually funded its relevant LIBOR Loan
through the purchase of a Eurodollar deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of such LIBOR Loan, having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar deposit from an offshore Lending Office of such Lender to a Lending
Office of such Lender in the United States; provided, however, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this Section.
(b) Each Lender may require the Borrower to pay, contemporaneously with each
payment of interest on LIBOR Rate Borrowings, additional interest on the related
LIBOR Loan of such Lender at a rate per annum equal to the excess of (i) (A) the
applicable LIBOR Rate divided by (B) one minus the Reserve Requirement for such
Lender over (ii) the rate specified in clause (i)(A). Any Lender electing to
require payment of such additional interest (x) shall so notify the Borrower and
the Agent, in which case such additional interest on the LIBOR Loans of such
Lender shall be payable to such Lender with respect to each Interest Period
commencing at least four (4) Business Days after the giving of such notice and
(y) shall notify the Borrower at least five (5) Business Days prior to each date
on which interest is payable on the LIBOR Loans of the amount then due it under
this subparagraph (b); provided that, if the original notice from such Lender
indicates that such additional interest shall continue to be due on each LIBOR
Loan until such Lender withdraws its notice, then no further notice shall be
due.
2.14. Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower and its Subsidiaries (i) to finance Physician Transactions made
pursuant to SECTION 5.14 or SECTION 6.2 hereof, together with legal and
accounting fees and other transaction costs incurred in connection therewith,
(ii) to pay certain fees and expenses in connection with this Facility, and
(iii) to provide working capital for the Borrower's and its Subsidiaries'
general business purposes, including the development of radiation and medical
oncology facilities and the acquisition and construction of properties in
connection therewith.
2.15. Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes a payment or
payments to or for the account of the Agent or the Lenders, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, or otherwise at law or equity, then, to the extent of such payment
or repayment, the Obligation intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received.
(b) If any amounts distributed by the Agent to a Lender are subsequently
returned or repaid by the Agent to the Borrower or its representative or
successor in interest, whether by court order or by settlement approved by the
Lender in question, such Lender will, promptly upon receipt of notice thereof
from the Agent, pay the Agent such amount. If any such amounts are recovered by
the Agent from the Borrower or its representative or successor in interest, the
Agent shall redistribute such amounts to the Lenders on the same basis as such
amounts were originally distributed.
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2.16. Pro Rata Borrowings.
(a) All Borrowings, continuations and conversions of Loans shall be made by
the Lenders pro rata on the basis of their respective Percentages, as
appropriate from time to time, rounded to the nearest penny.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, enforcement of any
right under the Loan Documents, or otherwise) applicable to the payment of any
of the Obligations that exceeds its Pro Rata Share of payments on account of
such Obligations then or therewith obtained by all the Lenders to which such
payments are required to have been made, such Lender shall forthwith purchase
from the other Lenders such participations in such Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each such other Lender shall be rescinded and each
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to the provisions of this Section may, to the fullest extent permitted
by law, exercise any and all rights of payment (including, without limitation,
setoff, banker's lien or counterclaim) with respect to such participation as
fully as if such participant were a direct creditor of the Borrower in the
amount of such participation.
2.17. Substitution of Lender. If (i) the obligation of any Lender to make
LIBOR Loans has been suspended pursuant to SECTION 2.11 or (ii) any Lender has
demanded compensation under SECTION 2.11 or SECTION 2.13(B), or if any Lender
has notified the Borrower to make any payments under SECTION 2.12, the Borrower
shall have the right, with the assistance of the Agent, to seek a substitute
bank or banks (which may be one or more of the Lenders), each of which must be
an Eligible Assignee, acceptable to the Borrower and the Agent, to purchase the
Note and assume the Commitment of such Lender in accordance with SECTION 10.5
hereof by executing an Assignment and Acceptance.
2.18. Letters of Credit.
(a) Issuance. Subject to and upon the terms and conditions herein set
forth, so long as no Default or Event of Default has occurred and is continuing,
the Issuing Bank will, at any time and from time to time on and after the
Closing Date and prior to the earlier of (i) the seventh day prior to the
Maturity Date and (ii) the Termination Date, upon request by the Borrower in
accordance with the provisions of SECTION 2.18(B), issue for the account of the
Borrower one or more irrevocable standby letters of credit denominated in
Dollars and in a form customarily used or otherwise reasonably approved by the
Issuing Bank (together with all amendments, modifications and supplements
thereto, substitutions therefor and renewals and restatements thereof,
collectively, the "Letters of Credit"). The Stated Amount of each Letter of
Credit shall not be less than such amount as may be acceptable to the Issuing
Bank but in all events any amount greater than or equal to $5,000 shall be
deemed acceptable. Notwithstanding the foregoing:
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(i) No Letter of Credit shall be issued the Stated Amount upon issuance of
which (i) when added to all other Letter of Credit Outstandings at such
time, would exceed $5,000,000 or (ii) when added to all other Letter of
Credit Outstandings at such time and the aggregate principal amount of
all Loans then outstanding, would exceed the Total Commitment at such
time;
(ii) No Letter of Credit shall be issued that by its terms expires later
than the seventh day prior to the Maturity Date or, in any event, more
than one (1) year after its date of issuance (subject to renewal as
provided below) or ; provided, however, that a Letter of Credit may, if
requested by the Borrower, provide by its terms, and on terms
acceptable to the Issuing Bank, for renewal for successive periods of
one year or less (but not beyond the seventh day prior to the Maturity
Date), unless and until the Issuing Bank shall have delivered a notice
of nonrenewal to the beneficiary of such Letter of Credit; and
(iii) The Issuing Bank shall be under no obligation to issue any Letter of
Credit if, at the time of such proposed issuance, (A) any order,
judgment or decree of any Governmental Authority or arbitrator shall
purport by its terms to enjoin or restrain the Issuing Bank from
issuing such Letter of Credit, or any Requirement of Law applicable to
the Issuing Bank or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which the Issuing Bank is not otherwise
compensated) not in effect on the Closing Date, or any unreimbursed
loss, cost or expense that was not applicable or in effect as of the
Closing Date and that the Issuing Bank reasonably deems material to it,
or (B) the Issuing Bank shall have actual knowledge, or shall have
received notice from any Lender, prior to the issuance of such Letter
of Credit that one or more of the conditions specified in ARTICLE III
are not then satisfied or that the issuance of such Letter of Credit
would violate the provisions of subsection (I) above.
(b) Notices. Whenever the Borrower desires the issuance of a Letter of
Credit, the Borrower will notify the Issuing Bank (with copies to the Agent) in
writing, by 11:00 a.m., Charlotte, North Carolina local time, at least three (3)
Business Days (or such shorter period as is acceptable to the Issuing Bank in
any given case) prior to the requested date of issuance thereof. Each such
request (each, a "Letter of Credit Request") shall be irrevocable, shall be
given in the form of EXHIBIT B-3 and shall be appropriately completed to specify
(i) the proposed date of issuance (which shall be a Business Day), (ii) the
proposed Stated Amount and expiry date of the Letter of Credit, and (iii) the
name and address of the proposed beneficiary or beneficiaries of the Letter of
Credit. The Borrower will also complete any application procedures and
documents required by the Issuing Bank in connection with the issuance of any
Letter of Credit; provided, however, that the terms of this Agreement shall
govern in the event that there is any inconsistency between the terms of such
application and any of the terms and conditions hereof and, without limiting the
generality of the foregoing, no provision in any letter of credit application or
agreement shall give the Issuing Bank, the Agent or any Lender any rights that
are in addition to or greater than the rights such Person would otherwise have
under this Agreement. The Agent will, promptly upon its receipt thereof, notify
each Lender of the Letter of Credit Request. Upon its issuance of any Letter of
Credit, the Issuing Bank will promptly notify each Lender of such issuance and
the amount of its participation therein under SECTION 2.18(C).
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(c) Participations. Immediately upon the issuance of any Letter of Credit,
the Issuing Bank shall be deemed to have sold and transferred to each Lender,
and each Lender (each, in such capacity, an "L/C Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, pro
rata to the extent of its Percentage at such time, in such Letter of Credit,
each drawing made thereunder, and the obligations of the Borrower under this
Agreement with respect thereto and any security therefor (including the
Collateral) or guaranty pertaining thereto; provided, however, that the fees and
other charges relating to Letters of Credit described in SECTIONS 2.18(L)(II)
and 2.18(L)(III) shall be payable directly to the Issuing Bank as provided
therein, and the L/C Participants shall have no right to receive any portion
thereof. Upon any change in the Commitments of any of the Lenders pursuant to
SECTION 10.5, with respect to all outstanding Letters of Credit and
Reimbursement Obligations there shall be an automatic adjustment to the
participations pursuant to this Section to reflect the new Percentages of the
assigning Lender and the Eligible Assignee.
(d) Reimbursement. The Borrower hereby agrees to reimburse the Issuing Bank
for any drawing made under any Letter of Credit and, subject to SECTION 2.18(E),
shall make payment to the Agent, for the account of the Issuing Bank, in
immediately available funds, for any payment made by the Issuing Bank under any
Letter of Credit (each such amount so paid until reimbursed (including by a loan
under SECTION 2.18(E)), together with interest thereon payable as provided
hereinbelow, a "Reimbursement Obligation") immediately after, and in any event
within one (1) Business Day after its receipt of notice of, such payment,
together with interest on the amount so paid by the Issuing Bank, to the extent
not reimbursed prior to 1:00 p.m., Charlotte time, on the date of such payment
or disbursement, for the period from the date of the respective payment to the
date the Reimbursement Obligation created thereby is satisfied, at the Adjusted
Base Rate as in effect from time to time during such period, such interest also
to be payable on demand. The Issuing Bank will provide the Agent and the
Borrower with prompt notice of any payment or disbursement made under any Letter
of Credit, although the failure to give, or any delay in giving, any such notice
shall not release, diminish or otherwise affect the Borrower's obligations under
this Section or any other provision of this Agreement. The Agent will promptly
pay to the Issuing Bank any such amounts received by it under this Section.
(e) Payment by Loans. In the event that the Issuing Bank makes any payment
under any Letter of Credit and the Borrower shall not have timely satisfied in
full its Reimbursement Obligation to the Issuing Bank pursuant to SECTION
2.18(D), and to the extent that any amounts then held in the Cash Collateral
Account established pursuant to SECTION 2.18(J) shall be insufficient to satisfy
such Reimbursement Obligation in full, the Issuing Bank will promptly notify the
Agent, and the Agent will promptly notify each L/C Participant, of such failure.
If the Agent gives such notice prior to 11:00 a.m., Charlotte, North Carolina
local time, on any Business Day to any L/C Participant, such L/C Participant
will make available to the Agent, for the account of the Issuing Bank, its Pro
Rata Share (based on its Percentage) of the amount of such payment on such
Business Day in immediately available funds. If the Agent gives such notice
after 11:00 a.m., Charlotte, North Carolina local time, on any Business Day to
any such L/C Participant, such L/C Participant shall make its Pro Rata Share of
such amount available to the Agent on the next succeeding Business Day. If and
to the extent such L/C Participant shall not have so made its Pro Rata Share of
the amount of such payment available to the Agent, such L/C Participant agrees
to pay to the Agent, for the account of the Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Agent at the Federal Funds Rate. The
failure of any L/C Participant to make available to the Agent its Pro Rata Share
of any payment under any Letter of Credit shall not relieve any other L/C
Participant of its obligation hereunder to make available to the Agent its Pro
Rata Share of any payment
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under any Letter of Credit on the date required, as specified above, but no L/C
Participant shall be responsible for the failure of any other L/C Participant to
make available to the Agent such other L/C Participant's Pro Rata Share of any
such payment. Each such payment by an L/C Participant under this SECTION
2.18(E) of its Pro Rata Share of an amount paid by the Issuing Bank shall
constitute a Loan by such Lender (the Borrower being deemed to have given a
timely Notice of Borrowing therefor) and shall be treated as such for all
purposes of this Agreement; provided that for purposes of determining the Total
Unutilized Commitment immediately prior to giving effect to the application of
the proceeds of such Loans, the Reimbursement Obligation being satisfied thereby
shall be deemed not to be outstanding at such time.
(f) Payment to L/C Participant's. Whenever the Issuing Bank receives a
payment in respect of a Reimbursement Obligation as to which the Agent has
received, for the account of the Issuing Bank, any payments from the L/C
Participants pursuant to SECTION 2.18(E), the Issuing Bank will promptly pay to
the Agent, and the Agent will promptly pay to each L/C Participant that has paid
its Pro Rata Share thereof, in immediately available funds, an amount equal to
such L/C Participant's ratable share (based on the proportionate amount funded
by such L/C Participant to the aggregate amount funded by all L/C Participants)
of such Reimbursement Obligation.
(g) Obligations Absolute. The Reimbursement Obligations of the Borrower,
and the obligations of the L/C Participants to make payments to the Agent, for
the account of the Issuing Bank, with respect to Letters of Credit, shall be
irrevocable, shall remain in effect until the Issuing Bank shall have no further
obligations to make any payments or disbursements under any circumstances with
respect to any Letter of Credit, and, shall not be subject to counterclaim,
setoff or other defense or any other qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances; provided, that the making of such reimbursement payments shall
not affect the rights of the Borrower or the L/C Participants to seek damages or
other remedies arising from any breach of the Issuing Bank's standard of care as
set forth in the final paragraph of this subsection (G):
(i) Any lack of validity or enforceability of this Agreement, any of the
other Loan Documents or any documents or instruments relating to any
Letter of Credit;
(ii) Any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations in respect of any Letter of
Credit or any other amendment, modification or waiver of or any consent
to departure from any Letter of Credit or any documents or instruments
relating thereto, in each case whether or not the Borrower has notice
or knowledge thereof;
(iii) The existence of any claim, setoff, defense or other right that the
Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, the Issuing Bank,
any Lender or other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated hereby or any
unrelated transactions (including any underlying transaction between
the Borrower and the beneficiary named in any such Letter of Credit);
(iv) Any draft, certificate or any other document presented under the Letter
of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue
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or inaccurate in any respect, any errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, telecopier
or otherwise, or any errors in translation or in interpretation of
technical terms;
(v) Any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit, any
nonapplication or misapplication by the beneficiary or any transferee
of the proceeds of such drawing or any other act or omission of such
beneficiary or transferee in connection with such Letter of Credit;
(vi) The exchange, release, surrender or impairment of any Collateral or
other security for the Obligations;
(vii) The occurrence of any Default or Event of Default; or
(viii) Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
None of the foregoing shall impair, prevent or otherwise affect any of the
rights and powers granted to the Issuing Bank hereunder. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in accordance with the Uniform Commercial Code
and the Uniform Customs and Practice for Documentary Credits (1993 Revision), to
the extent applicable, and in the absence of fraud, gross negligence or willful
misconduct, shall be binding upon Borrower and each L/C Participant and shall
not create or result in any liability of the Issuing Bank to the Borrower or any
L/C Participant. It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a Letter of Credit resulted from
the Issuing Bank's gross negligence or willful misconduct, (i) the Issuing
Bank's acceptance of documents that appear on their face to comply with the
terms of such Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, (ii) the
Issuing Bank's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including the
amount of any draft presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect (so long as such document appears on its face
to comply with the terms of such Letter of Credit), and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (iii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be deemed not to constitute gross
negligence or willful misconduct of the Issuing Bank.
(h) Increased Costs. If at any time after the Closing Date the Issuing Bank
or any L/C Participant determines that the introduction of or any change in any
applicable law, rule, regulation, order, guideline or request or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by the Issuing
Bank or any L/C Participant with any request or directive after the Closing Date
by any such authority (whether or not having the force of law) shall either (i)
impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against Letters of Credit issued by the Issuing Bank or
participated in by any L/C Participant or (ii) impose on the Issuing Bank or any
L/C Participant any other
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conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to the
Issuing Bank or L/C Participant of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Issuing Bank or such L/C Participant hereunder or reduce the rate of return
on its capital with respect to Letters of Credit, then the Borrower will, within
fifteen (15) days after delivery to the Borrower by the Issuing Bank or such L/C
Participant of written demand therefor (with a copy thereof to the Agent), pay
to the Issuing Bank or such L/C Participant such additional amounts as shall
compensate the Issuing Bank or such L/C Participant for such increase in costs
or reduction in return. A certificate submitted to the Borrower by the Issuing
Bank or such L/C Participant, as the case may be (a copy of which certificate
shall be sent by the Issuing Bank or such L/C Participant to the Agent), setting
forth a reasonably detailed calculation of such additional amount and the basis
for the determination of such additional amount or amounts necessary to
compensate the Issuing Bank or such L/C Participant as aforesaid, shall be
presumptively correct.
(i) INTENTIONALLY OMITTED.
(j) Cash Collateral Account. At any time and from time to time (i) during
the continuance of an Event of Default, the Agent, at the direction, or with the
consent, of the Required Lenders, may require the Borrower to deliver to the
Agent such additional amount of cash as is equal to the aggregate Stated Amount
of all Letters of Credit at any time outstanding (whether or not any beneficiary
under any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) and (ii) in the event of a prepayment under SECTION 2.5(B), the
Agent will retain such amount as may then be required to be retained under the
proviso in SECTION 2.5(B), such amounts in each case under clauses (i) and (ii)
above to be held by the Agent in a cash collateral account (the "Cash Collateral
Account") as security for, and for application to, the Borrower's Reimbursement
Obligations as and when the same shall arise. The Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest on the investment of such amounts in Cash
Equivalents, which investments shall be made at the direction of the Borrower
(unless a Default or Event of Default shall have occurred and be continuing, in
which case the determination as to which investments shall be made shall be at
the option and in the discretion of the Agent; provided that the Agent shall
have no liability with respect thereto), amounts in the Cash Collateral Account
shall not bear interest. Interest and profits, if any, on such investments
shall accumulate in such account. In the event of a drawing, and subsequent
payment by the Issuing Bank, under any Letter of Credit at any time during which
any amounts are held in the Cash Collateral Account, the Agent will deliver to
the Issuing Bank an amount equal to the Reimbursement Obligation created as a
result of such payment (or, if the amounts so held are less than such
Reimbursement Obligation, all of such amounts) to reimburse the Issuing Bank
therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Bank for all of its obligations thereunder shall be held by the Agent (i) in the
case of funds held pursuant to clause (i) above during the continuance of an
Event of Default, for the benefit of the Borrower, to be applied against the
Obligations then or as they become due and payable in such order as the Agent
may direct and (ii) in the event funds held pursuant to clause (ii) above, where
the Borrower is required to provide cash collateral pursuant to SECTION 2.5(B),
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower on demand, provided that after giving effect to such return (i) the sum
of (y) the aggregate principal amount of all Loans outstanding at such time and
(z) the aggregate Letter of Credit Outstandings at such time would not exceed
the Total Commitment at such time and (ii) no Default or Event of Default shall
have occurred and be continuing at such time. If the Borrower is required to
provide cash collateral as a result of an Event of Default,
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such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within two (2) Business Days after all Events of Default have been
cured or waived.
(k) Effectiveness. Notwithstanding any termination of the Commitments or
repayment of the Loans, or both, the obligations of the Borrower under this
SECTION 2.18 shall remain in full force and effect until the Issuing Bank and
the L/C Participants shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
(l) Fees. In connection with the Letters of Credit, the Borrower agrees to
pay:
(i) To the Agent, for the account of each Lender, a letter of credit fee in
respect of each Letter of Credit for the period from the date of its
issuance to the date of its termination, at a rate per annum equal to
the Applicable Margin for LIBOR Loans in effect from time to time
during such period on the daily average Stated Amount thereof, payable
in arrears (x) on the last Business Day of each fiscal quarter,
beginning with the last Business Day of the fiscal quarter ending
December 31, 1996, and (y) on the later of the Termination Date and the
date of termination of the last outstanding Letter of Credit, in each
case calculated on the basis of actual days elapsed over a year of 360
days;
(ii) To the Issuing Bank, for its own account, a facing fee in respect of
each Letter of Credit for the period from the date of its issuance to
the date of its termination, at the rate of 0.125% per annum on the
daily average Stated Amount thereof, payable in arrears (i) on the last
Business Day of each fiscal quarter, beginning with the last Business
Day of the fiscal quarter ending December 31, 1996, and (ii) on the
later of the Termination Date and the date of termination of the last
outstanding Letter of Credit; and
(iii) To the Issuing Bank, for its own account, such reasonable
commissions, issuance fees, transfer fees and other fees and charges
incurred in connection with the issuance and administration of each
Letter of Credit as are customarily charged from time to time by the
Issuing Bank for the performance of such services in connection with
similar letters of credit, or as may be otherwise agreed to by the
Issuing Bank, but without duplication of amounts payable under
subsection (II) above.
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Conditions of Initial Borrowing. The obligation of each Lender to make
Loans in connection with the initial Borrowing hereunder, and the obligation of
the Issuing Bank to issue Letters of Credit hereunder, is subject to the
satisfaction of the following conditions precedent:
(a) The Agent shall have received the following, each dated as of the
Closing Date (unless otherwise specified) and, except for the Notes and the
certificates and instruments required to be delivered under the Security
Agreements, in sufficient copies for each Lender:
(i) counterparts hereof signed by each of the parties hereto;
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(ii) a Note for the account of each Lender that is a party hereto as of the
Closing Date, in the amount of such Lender's Commitment and duly
completed and executed by the Borrower;
(iii) the Guaranty, duly completed and executed by the Guarantors;
(iv) the Security Agreements, duly completed and executed by the Borrower
and the Subsidiaries owning any property of the type covered thereby,
together with all certificates evidencing the capital stock being
pledged thereunder and undated stock powers for each such certificate,
duly executed in blank, and any promissory notes being pledged
thereunder, duly endorsed in blank;
(v) an acknowledgement copy, or other evidence satisfactory to the Agent,
of the proper filing or recording of each document (including Financing
Statements) required by law or reasonably requested by the Agent to be
filed or recorded in each jurisdiction in which the filing or recording
is so required or requested in order to create in favor of the Agent,
for the benefit of the Lenders, a valid, legal and perfected first
priority security interest in or lien on the Collateral that is the
subject of the Security Agreements, subject only to Permitted Liens;
(vi) a certificate, signed by the chief executive officer or chief financial
officer of the Borrower, in form and substance satisfactory to the
Agent, certifying that (A) all representations and warranties of the
Borrower contained in this Agreement and the other Loan Documents are
true and correct as of the Closing Date, both immediately before and
after giving effect to any Loans to be made on the Closing Date
hereunder and the application of the proceeds thereof, (B) no Default
or Event of Default has occurred and is continuing, both immediately
before and after giving effect to any Loans to be made on the Closing
Date hereunder and the application of the proceeds thereof, (C) both
immediately before and after giving effect to the consummation of the
transactions contemplated by this Agreement, no Material Adverse Change
has occurred since December 31, 1995, and there exists no event,
condition or state of facts related to the business of the Borrower and
its Subsidiaries that could reasonably be expected to result in a
Material Adverse Change and (D) the Borrower has satisfied each of the
conditions set forth in this Section applicable to the Borrower and its
Subsidiaries;
(vii) a certificate of the secretary or an assistant secretary of each of
the Borrower and its Subsidiaries, in form and substance satisfactory
to the Agent, certifying (A) that attached thereto is a true and
complete copy of the articles or certificate of incorporation and all
amendments thereto of the Borrower or such Subsidiary, as the case may
be, certified as of a recent date by the Secretary of State (or
comparable Governmental Authority) of its jurisdiction of organization,
and that the same has not been amended since the date of such
certification, (B) that attached thereto is a true and complete copy of
the bylaws of the Borrower or such Subsidiary, as the case may be, as
then in effect and as in effect at all times from the date on which the
resolutions referred to in clause (C) below were adopted to and
including the date of such certificate, and (C) that attached thereto
is a true and complete copy of resolutions adopted by the board of
directors of the Borrower or such Subsidiary, as the case may be,
authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, and as to the incumbency and
genuineness of the signature of each officer of the Borrower or such
Subsidiary executing any of such
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Loan Documents, and attaching all such copies of the documents
described above; provided, that non-corporate Subsidiaries shall
provide comparable documentation as appropriate and reasonably
satisfactory to the Agent.
(viii) certificates as of a recent date of (A) the good standing of each of
the Borrower and its Subsidiaries under the laws of its jurisdiction of
organization, from the Secretary of State (or comparable Governmental
Authority) of such jurisdiction, (B) the qualification of each of the
Borrower and its Subsidiaries to conduct business as foreign
corporations in the states where each is qualified to conduct business
and, (C) where reasonably available from the department of revenue or
other appropriate Governmental Authority, that the Borrower and each
Subsidiary has filed all required tax returns and owes no delinquent
taxes; provided, that non-corporate Subsidiaries shall provide
comparable certificates to the extent available and such other
documentation reasonably requested by the Agent.
(ix) the favorable opinion of Mayor, Day, Caldwell & Keeton, L.L.P., counsel
to the Borrower, addressed to the Agent and the Lenders, in form and
substance satisfactory to the Agent and each Lender;
(x) the results of a search of all filings made against the Borrower and
each Guarantor that is a party to the Guarantors' Security Agreement
under the Uniform Commercial Code as in effect in any state and/or
county in which any assets of the Borrower or such Guarantor are
located, indicating that the Collateral is free and clear of any liens
or encumbrances except for Permitted Liens; and
(xi) certificates, and copies of policies, of insurance, in form and
substance satisfactory to the Agent, upon the Collateral and the
business of the Borrower and each Guarantor.
(b) All legal matters, documentation and corporate or other proceedings
incident to the transactions contemplated hereby shall be reasonably acceptable
to the Agent; all approvals, permits and consents of any Governmental
Authorities or other Persons required in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall have been obtained (without the imposition of conditions that are
not reasonably acceptable to the Agent), and all related filings, if any, shall
have been made, and all such approvals, permits, consents and filings shall be
in full force and effect and the Agent shall have received such copies thereof
as it shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority having
jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or that is otherwise related to or arises out
of, this Agreement or the consummation of the transactions contemplated hereby,
or that, in the opinion of the Agent, would otherwise be reasonably likely to
have a Material Adverse Effect.
(c) Since December 31, 1995, both immediately before and after giving effect
to the consummation of the transactions contemplated by this Agreement, there
shall not have occurred any Material Adverse Change or any event, condition or
state of facts relating to the business of the Borrower and its Subsidiaries
that could reasonably be expected to result in a Material Adverse Change, other
than as specifically contemplated by this Agreement and the other Loan
Documents.
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(d) The Borrower shall have paid (i) to First Union, the unpaid balance of
the fees described in paragraph (i) of the Fee Letter, (ii) to the Agent, the
initial payment of the annual administrative fee described in paragraph (ii) of
the Fee Letter, and (iii) all other fees and expenses of the Agent and the
Lenders for which the Borrower has received an invoice required hereunder or
under any other Loan Document to be paid on or prior to the Closing Date
(including fees and expenses of counsel) in connection with this Agreement and
the transactions contemplated hereby.
(e) The Agent shall have received an Account Designation Letter, together
with written instructions from an Authorized Officer of the Borrower, including
wire transfer information, directing the payment of the proceeds of the initial
Loans to be made hereunder.
(f) The Lenders shall have received the Financial Statements from the
Borrower, in form and substance satisfactory to the Lenders.
(g) All taxes, fees and other charges in connection with the execution,
delivery, recording, filing and registration of any of the Loan Documents shall
have been paid by the Borrower.
(h) The Agent and each Lender shall have received such other documents,
certificates, and instruments as the Agent or any Lender shall have reasonably
requested.
3.2. Conditions of All Borrowings. The obligation of the Lenders to make
any Loans hereunder, including the initial Loans, and the obligation of the
Issuing Bank to issue any Letters of Credit hereunder, is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date or date of issuance:
(a) The Agent shall have received a Notice of Borrowing, if required, in
accordance with SECTION 2.2(A) or a Letter of Credit Request in accordance with
SECTION 2.18(B), as applicable;
(b) Each of the representations and warranties made by the Borrower
contained in ARTICLE IV shall be true and correct on and as of such Borrowing
Date for new Borrowings (other than conversions with no new funds advanced),
with the same effect as if made on and as of the Borrowing Date, except to the
extent the facts upon which such representation and warranty are based may be
changed as a result of transactions permitted or contemplated hereby or such
representation or warranty relates solely to a prior date and except for new
Subsidiaries for whom the representations and warranties shall apply only as of
the date of representation;
(c) No Default or Event of Default shall have occurred and be continuing on
such date, both immediately before and after giving effect to the Loans to be
made or Letter of Credit to be issued on such date; and
(d) The security interests in the Collateral previously pledged to the
Agent, for the benefit of the Lenders, pursuant to the Loan Documents shall
remain in full force and effect.
Each giving of a Notice of Borrowing or a Letter of Credit Request, and the
consummation of each Borrowing or issuance of a Letter of Credit, shall be
deemed to constitute a representation by the Borrower that the statements
contained in subsections (B) and (C) above are true, both as of the date of such
notice or request and as of the relevant Borrowing Date or date of issuance.
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3.3. Waiver of Conditions Precedent. If any Lender makes any Loan
hereunder, prior to the fulfillment of any of the conditions precedent set forth
in this ARTICLE III, the making of such Loan or the issuance of such Letter of
Credit shall constitute only an extension of time for the fulfillment of such
condition and not a waiver thereof, and unless the Required Lenders indicate
otherwise in writing, the Borrower shall thereafter use its best efforts to
fulfill each such condition promptly. No failure by the Borrower to fulfill any
such condition precedent shall constitute a Default or an Event of Default
hereunder, except to the extent any such failure is continuing after the
expiration of any period within which such condition is specifically required to
be fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Loan Agreement and extend
the credit contemplated hereby, the Borrower makes the following warranties and
representations to the Agent and each Lender:
4.1. Corporate Organization and Power. The Borrower and each Subsidiary (a)
is a corporation duly organized, validly existing and in good standing or other
legal entity duly organized and validly existing under the laws of the
jurisdiction set forth opposite its name on SCHEDULE 4.1; (b) is qualified to do
business and is in good standing in every other jurisdiction where the nature of
its business or the ownership of its properties requires it to be so qualified
and where the failure to be so qualified would have a Material Adverse Effect,
which jurisdictions are set forth on SCHEDULE 4.1; (c) except as set forth on
SCHEDULE 4.1, has no Subsidiaries or Affiliates (other than its officers,
directors and shareholders and other than the physician groups not owned by the
Borrower or a Subsidiary to which the Borrower or its Subsidiaries provide
management services) and is not a partner or joint venturer in any partnerships
or joint ventures; (d) has the power (corporate or otherwise) to own and give a
lien on and security interest in its respective Collateral and to engage in the
transactions contemplated hereby; and (e) has the full power (corporate or
otherwise), authority and legal right to execute and deliver this Agreement and
the other Loan Documents to which it is a party and to perform and observe the
terms and provisions thereof. Neither the Borrower nor any of its Subsidiaries
has, during the preceding five (5) years, been known as or used any other
corporate, fictitious or trade names in the United States other than as set
forth on SCHEDULE 4.1.
4.2. Litigation; Government Regulation. Except as set forth in SCHEDULE
4.2, (a) there are no judgments, injunctions or similar orders or decrees and no
actions, suits, investigations or proceedings pending (pursuant to which the
Borrower or any Subsidiary has been served) or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary or its
business that is reasonably likely to have a Material Adverse Effect, or that
question the validity of this Agreement or any of the Loan Documents, at law or
in equity before any court, arbitrator or Governmental Authority, and (b)
neither the Borrower nor any Subsidiary is in violation of or in default under
any Requirement of Law where such violation could reasonably be expected to have
a Material Adverse Effect.
4.3. Taxes. Except as set forth in SCHEDULE 4.3, neither the Borrower nor
any Subsidiary is delinquent in the payment of any taxes that have been levied
or assessed by any Governmental Authority against it or its assets. Except as
set forth in SCHEDULE 4.3, the Borrower and each Subsidiary (a) has timely filed
all tax returns that are required by law to be filed prior to the date hereof,
and has paid all
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taxes shown on said returns and all other assessments or fees levied upon it or
upon its properties to the extent that such taxes, assessments or fees have
become due, and if not due, such taxes have been adequately provided for and
sufficient reserves therefor established on its books of account, and (b) is
current with respect to payment of all federal and state withholding taxes,
social security taxes and other payroll taxes.
4.4. Enforceability of Loan Documents; Compliance with Other Instruments.
Each of the Loan Documents to which the Borrower or any Guarantor is a party, as
the case may be, has been duly authorized by all necessary corporate action on
the part of the Borrower or such Guarantor, has been validly executed and
delivered by the Borrower or such Guarantor and is the legal, valid and binding
obligation of the Borrower or such Guarantor, enforceable against the Borrower
or such Guarantor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditor's rights generally or by general
principles of equity. Except as set forth in SCHEDULE 4.4, neither the Borrower
nor any Subsidiary is in default with respect to any indenture, loan agreement,
mortgage, lease, deed or similar agreement related to the borrowing of monies to
which it is a party or by which it, or any of its property, is bound except
where such default would not have a Material Adverse Effect. Neither the
execution, delivery or performance of the Loan Documents by the Borrower and the
Guarantors, nor compliance by the Borrower and the Guarantors therewith: (a)
conflicts or will conflict with or results or will result in any breach of, or
constitutes or will constitute with the passage of time or the giving of notice
or both, a default under, (i) any Requirement of Law or (ii) any written or oral
agreement or instrument to which the Borrower or any Guarantor is a party or by
which it, or any of its property, is bound, except where such conflict, breach
or default would not have a Material Adverse Effect, or (b) results or will
result in the creation or imposition of any lien, charge or encumbrance upon the
properties of the Borrower or any Subsidiary pursuant to any such agreement or
instrument, except for Permitted Liens.
4.5. Governmental Authorization. No authorization, consent or approval of,
notice to, or declaration or filing with, any Governmental Authority is required
for the valid execution, delivery and performance by the Borrower or any
Guarantor of the Loan Documents to which it is a party or the consummation by
the Borrower or any Guarantor of the transactions contemplated thereby, except
for the filing of Financing Statements. The Borrower and each Subsidiary has,
and is in good standing with respect to, all material licenses, approvals,
permits, certificates, inspections, consents and franchises of Governmental
Authorities and other Persons necessary to continue to conduct its business as
heretofore conducted and to own or lease and operate its respective properties
as now owned or leased by it, except where the failure to be in good standing
would not have a Material Adverse Effect. Without limitation of the foregoing,
the Borrower and each Subsidiary has, to the extent applicable, (i) obtained (or
been duly assigned) all required certificates of need or determinations of need,
as required by the relevant state Governmental Authority, for the acquisition,
construction, expansion of, investment in or operation of its businesses as
currently operated; (ii) obtained and maintains in good standing all required
licenses, except where the failure to do so would not have a Material Adverse
Effect; and (iii) to the extent prudent and customary in the industry in which
the Borrower or such Subsidiary is engaged, obtained and maintains accreditation
from all generally recognized accrediting agencies for the Borrower and its
Subsidiaries. No Medicaid Certification or Medicare Certification is required
for the operation of the business) of the Borrower or any Guarantor and neither
the Borrower nor any Guarantor is required to have entered into Medicare
Provider Agreement or Medicaid Provider Agreement for the operation of its
business).
4.6. Event of Default. No Default or Event of Default has occurred and is
continuing.
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4.7. Margin Securities. No proceeds of the Loans will be used, directly or
indirectly, to purchase or carry any Margin Stock (except for purchases by the
Borrower of outstanding shares of its capital stock permitted by SECTION 6.9 and
except for any Cash Investments), to extend credit for such purpose or for any
other purpose that would violate or be inconsistent with Regulations G, T, U or
X. No more than 25% of the value, reasonably determined, of either (i) the
total assets of the Borrower and its Subsidiaries or (ii) those of the
Borrower's or any Subsidiary's assets that are subject to any restrictions under
this Agreement as to pledge, sale or other disposition, all as contemplated by
section 207.2(f)(2)(i) of Regulation U shall consist at any time of Margin
Stock.
4.8. Full Disclosure. The written estimates, projections and forecasts
provided to the Lenders and the Agent with the syndication materials dated
September 1996 were prepared, at the request of the Agent, on the basis of the
assumption that the Borrower would not consummate any additional Physician
Transactions after December 31, 1997, and on the basis of the good faith
estimate of the Borrower's senior management concerning probable financial
condition and performance based on other assumptions, data, tests or conditions
believed to be reasonable or to represent industry conditions existing at the
time such estimates, projections or forecasts were made. All other written
estimates, projections and forecasts furnished by or on behalf of the Borrower
or any Subsidiary to the Agent or any Lender for purposes of or in connection
with this Agreement, or in connection with any extension of credit hereunder,
were and will be prepared on the basis of the good faith estimate of the
Borrower's senior management concerning probable financial condition and
performance based on assumptions, data, tests or conditions believed to be
reasonable or to represent industry conditions existing at the time such
estimates, projections or forecasts were made. None of (i) the other statements
furnished to the Agent or any Lender by or on behalf of the Borrower or any
Subsidiary in connection with the Loan Documents or (ii) the Loan Documents, as
of the date furnished, contained any untrue statement of a material fact or, to
the Borrower's knowledge, omitted to state a material fact necessary to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading. To the Borrower's knowledge, there is no
fact related to the business of the Borrower and its Subsidiaries that the
Borrower has not disclosed to the Agent or the Lenders that may reasonably be
expected to result in a Material Adverse Effect.
4.9. Principal Places of Business. SCHEDULE 4.9 lists the chief executive
office and principal place of business, as provided in the Uniform Commercial
Code, of the Borrower and each Subsidiary as of the Closing Date.
4.10. ERISA; Employee Benefits.
(a) SCHEDULE 4.10 (i) lists, as of the Closing Date, all material Employee
Plans and Pension Plans ("Plans") maintained or sponsored by the Borrower and
its Subsidiaries or to which the Borrower or any Subsidiary is obligated to
contribute and (ii) separately identifies all Qualified Plans (as defined below)
and all Multiemployer Plans.
(b) Each such Plan is in compliance in all material respects (or may be
brought into compliance without a Material Adverse Effect) with the applicable
provisions of ERISA, the Internal Revenue Code and other federal or state law,
including all requirements under the Internal Revenue Code or ERISA for filing
reports (which are true and correct in all material respects as of the date
filed), and benefits have been paid in accordance with the provisions of each
such Plan.
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(c) The form of each Plan intended to be qualified under Section 401 of the
Internal Revenue Code ("Qualified Plan") in the opinion of Borrower qualifies
under Section 401 of the Internal Revenue Code, and any trust or trusts created
thereunder are, in the opinion of the Borrower, exempt from tax under the
provisions of Section 501 of the Internal Revenue Code, and to the knowledge of
the Borrower nothing has occurred that would cause the loss of such
qualification or tax-exempt status.
(d) There is no outstanding liability under Title IV of ERISA with respect
to any Qualified Plan maintained or sponsored by the Borrower and its
Subsidiaries (as to which the Borrower or any Subsidiary is or may be liable),
nor to the knowledge of the Borrower with respect to any Plan to which the
Borrower or any Subsidiary (wherein the Borrower or any Subsidiary is or may be
liable) contributes or is obligated to contribute.
(e) None of the Qualified Plans subject to Title IV of ERISA has any
unfunded benefit liability, as defined in Section 4001(a)(18) of ERISA (as to
which the Borrower or any Subsidiary is or may be liable).
(f) No Plan maintained or sponsored by the Borrower or any Subsidiary
provides medical or other welfare benefits or extends coverage relating to such
benefits beyond the date of a participant's termination of employment with the
Borrower or such Subsidiary, except to the extent required by Section 4980B of
the Internal Revenue Code and at the sole expense of the participant or the
beneficiary of the participant to the fullest extent permissible under such
Section of the Internal Revenue Code. The Borrower and its Subsidiaries have
complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Internal Revenue Code.
(g) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by the Borrower and its Subsidiaries
or to the knowledge of the Borrower, to which the Borrower or any Subsidiaries
is obligated to contribute.
(h) As of the Closing Date, there are no pending or, to the knowledge of the
Borrower, threatened claims, actions or lawsuits, other than routine claims for
benefits in the usual and ordinary course, asserted or instituted against (i)
any Plan maintained or sponsored by the Borrower and its Subsidiaries or their
assets, or (ii) any fiduciary with respect to any Plan for which the Borrower or
any Subsidiary may be directly or indirectly liable, through indemnification
obligations or otherwise.
(i) Neither the Borrower nor any Subsidiary has incurred or, to the
knowledge of the Borrower, reasonably expects to incur (i) any liability (and no
event has occurred that, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan or (ii) any liability under Title IV of ERISA (other
than premiums due and not delinquent under Section 4007 of ERISA) with respect
to a Plan.
(j) Neither the Borrower nor any Subsidiary has engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Internal Revenue Code or Section 406 of ERISA) in connection with any
Plan maintained or sponsored by the Borrower that has a Material Adverse Effect.
4.11. Subsidiaries. SCHEDULE 4.11 contains a complete and accurate list of
the Subsidiaries of the Borrower as of the Closing Date, showing, as to each
Subsidiary, the number of shares of each class of capital stock or the amount
and type of other equity interests authorized and outstanding, if applicable.
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Except as expressly set forth on SCHEDULE 1.1(A) as an encumbrance on stock or
equity interest, all of such issued and outstanding shares of capital stock or
other equity interests of all of the Borrower's Subsidiaries have been duly
authorized and validly issued, are, in the case of Subsidiaries that are
corporations, fully paid and nonassessable and are owned by the Borrower, free
and clear of any liens, charges, encumbrances, security interests, claims or
restrictions of any nature whatsoever, except for liens in favor of the Agent,
for the benefit of the Lenders, granted under the Loan Documents, except for
Permitted Liens, and there are no other equity securities of any Subsidiary
issued and outstanding or reserved for any purpose.
4.12. Financial Statements. The Financial Statements delivered to the
Lenders have been prepared by the Borrower and its Subsidiaries and, in the case
of the annual Financial Statements, audited in accordance with Generally
Accepted Accounting Principles by Price Waterhouse LLP, independent certified
public accountants, contain no material misstatement or omission and fairly
present the financial position, assets and liabilities of the Borrower and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of the Borrower and its Subsidiaries for the
respective periods then ended. Except for the transactions contemplated by the
Loan Documents, since the date of the most recent audited Financial Statements
there has been no Material Adverse Change.
4.13. Title to Assets. Except as set forth on SCHEDULE 4.13, (a) the
Borrower and each Subsidiary holds interests as lessee under leases in full
force and effect with respect to all leased real and personal property used in
connection with its business, and has good and indefeasible title to the
Collateral and the other assets owned by it that are reflected in the most
recent Financial Statements, in each case free and clear of all liens, claims,
security interests and encumbrances except Permitted Liens; and (b) no financing
statement that names the Borrower or any Subsidiary as debtor has been filed and
is still in effect or has been authorized to be filed, other than Financing
Statements evidencing Permitted Liens.
4.14. Solvency. The Borrower and each Subsidiary (i) is Solvent, and (ii)
after giving effect to the transactions contemplated hereby, will be Solvent.
4.15. Use of Proceeds. The Borrower's use of the proceeds of any Loans
made by the Lenders to the Borrower pursuant to this Agreement are and will be
legal and proper corporate uses, duly authorized by the Board of Directors of
the Borrower, and such uses are and will be consistent in all material respects
with all applicable laws and statutes, as in effect from time to time.
4.16. Assets for Conduct of Business. The Borrower and each Subsidiary
possess adequate assets, licenses and trade names to continue to conduct its
business as heretofore conducted without any material conflict with the rights
of other Persons.
4.17. Compliance with Laws. The Borrower and each Subsidiary have duly
complied with, and their business operations and leaseholds are in compliance in
all material respects with, all Requirements of Law other than those failures to
comply which would not have a Material Adverse Effect.
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4.18. Environmental Matters. Except where failure to comply with the
following provisions of this SECTION 4.18 would not have a Material Adverse
Effect:
(a) All activities and operations of the Borrower and its Subsidiaries are
in material compliance with all applicable Environmental Laws.
(b) Neither the Borrower nor any Subsidiary is involved in any suit or
proceeding, or has received any notice from any Governmental Authority, with
respect to a release of Hazardous Substances or has received notice of any
claims against the Borrower or any of its Subsidiaries from any Person relating
to personal injuries from exposure to Hazardous Substances.
(c) The Borrower and each Subsidiary has timely filed all reports required
to be filed, has acquired all necessary certificates, approvals and permits and
has generated and maintained in all material respects all required data,
documentation and records under all applicable Environmental Laws.
(d) To the knowledge of the Borrower, neither the Borrower nor any
Subsidiary has ever sent a Hazardous Substance to a site that, pursuant to any
Environmental Law, (1) has been placed on the "National Priorities List" or
"CERCLIS List" of hazardous waste sites (or any similar state list) or (2) that
is subject to a claim, an administrative order or other request to take
"removal" or "remedial" action (as defined under CERCLA) or to pay for the costs
of cleaning up such a site.
4.19. First Priority. Except for Permitted Liens, when the initial Loans
are made hereunder, this Agreement, together with the other Loan Documents, will
create valid and perfected first priority security interests and liens in and
upon the Collateral covered thereby, in each case enforceable against the
Borrower or a Subsidiary and all other Persons in all relevant jurisdictions and
securing the payment of all Obligations purported to be secured thereby.
4.20. Contracts; Labor Disputes. Neither the Borrower nor any Subsidiary
is a party to any contract or agreement, or subject to any charge, corporate
restriction, judgment, injunction, decree, rule, regulation or order of any
court or other Governmental Authority, that has or could reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is a
party to, and there is not pending or, to the Borrower's knowledge, threatened,
any labor dispute, strikes, lock-out, grievance, work stoppage or walkouts
relating to any labor contract to which the Borrower or any Subsidiary is a
party, in each case, which could reasonably be expected to have a Material
Adverse Effect.
4.21. Insurance. SCHEDULE 4.21 accurately summarizes all insurance
policies or programs of the Borrower and its Subsidiaries in effect as of the
Closing Date, and indicates the insurer's name, policy number, expiration date,
amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
4.22. Reimbursement from Third Party Payors. The accounts receivable for
the physician groups for which the Borrower and its Subsidiaries provide
management services have been and will continue to be adjusted to reflect
reimbursement policies of third party payors such as Medicare, Medicaid, Blue
Cross/Blue Shield, private insurance companies, health maintenance
organizations, preferred provider organizations, alternative delivery systems,
managed care systems and other third party payors. In particular, the accounts
receivable relating to such third party payors do not and shall not exceed
amounts the relevant physician group is entitled to receive under any capitation
arrangement, fee schedule,
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discount formula, cost-based reimbursement or other adjustment or limitation to
the usual charges of such physician group.
4.23. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any of
their respective stockholders, officers or directors have engaged on behalf of
Borrower or any Subsidiary in any of the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any applications for any benefit or payment under the Medicare or
Medicaid program; (ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment under the Medicare or Medicaid program; (iii)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment under the
Medicare or Medicaid program on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently; (iv) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or in
kind or offering to pay such remuneration (a) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid, or (b) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or ordering of any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid. With respect to this Section, knowledge by an individual
stockholder, director or officer of the Borrower or a Subsidiary of any of the
events described in this Section shall not be imputed to the Borrower or such
Subsidiary unless such knowledge was obtained or learned by the stockholder,
director or officer in his or her official capacity as a stockholder, director
or officer of the Borrower or such Subsidiary. No activity of the Borrower or
any Subsidiary shall be considered to be a breach of this Section, except in the
case of a knowing and willful violation thereof, until the Borrower or such
Subsidiary has received notification, written or oral, by a Governmental
Authority of competent jurisdiction as to any such violation. The provisions of
SUBSECTION (III) hereof shall not require the Borrower or any Subsidiary (unless
otherwise required by law) to disclose to the Agent, Lenders or any other Person
any activity or omission by a third party (including associated physician
groups) unless such activity or omission (x) constitutes willful fraud or abuse,
(y) would reasonably be likely to have a Material Adverse Effect or (z) is not
being corrected, cured or remedied by the Borrower and any other relevant
Persons diligently, in good faith and in the exercise of sound business
judgment.
4.24. Single Business Enterprise. The Borrower and the Guarantors have
historically operated as, and intend to continue operating as, a single business
enterprise. Although separate entities, the Borrower and the Guarantors operate
under a common business plan. Each of the Borrower and the Guarantors will
accordingly benefit from the financing arrangement established by this
Agreement. The Borrower acknowledges that, but for the agreement by each
Guarantor to execute and deliver the Guaranty and Guarantors' Security
Agreement, the Borrower would not have qualified separately for the total amount
of the credit facilities established hereby.
4.25. Continuing Security Interest. All Loans to and other Obligations of
the Borrower under the Loan Agreement and the Notes will continue to be secured
by the Agent's security interest in all of the Collateral granted under the Loan
Documents. Such security interest will relate back to the date of initial
perfection of the security interests under the Loan Documents, and nothing
herein will affect the validity, perfection or enforceability of such security
interests.
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ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and all Letters of Credit and the payment in full of all principal
and interest with respect to the Loans and Letter of Credit Outstandings
together with all other amounts then due and owing hereunder, it will, and will
cause each of its Subsidiaries to comply with the following covenants.
5.1. Financial and Business Information about the Borrower. The Borrower
shall deliver to the Agent and the Lenders:
(a) Within forty-five (45) days after the end of each month, beginning with
the close of the month in which the Closing occurs, the unaudited consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries for the
month then ended and unaudited consolidated and consolidating statements of
income, retained earnings and cash flows for the Borrower and its Subsidiaries
as of the close of the month then ended and that portion of the fiscal year then
ended, prepared on a basis consistent with that of the preceding period and
comparing actual results to the budget and prepared in accordance with Generally
Accepted Accounting Principles (subject to the absence of notes required by
Generally Accepted Accounting Principles and subject to normal and reasonable
year-end audit adjustment), and certified by the Chief Executive Officer or
Chief Financial Officer of the Borrower to fairly present, in all material
respects, the financial condition of the Borrower and its Subsidiaries on a
consolidated basis as of the date thereof or the results of operation of the
Borrower and its Subsidiaries on a consolidated basis for the period covered
thereby;
(b) Within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, beginning with the fiscal
quarter ending September 30, 1996, the unaudited consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the close of such
fiscal quarter and unaudited consolidated and consolidating statements of
income, retained earnings and cash flows for the Borrower and its Subsidiaries
for the fiscal quarter then ended and for that portion of the fiscal year then
ended, all prepared in accordance with Generally Accepted Accounting Principles
(subject to the absence of notes required by Generally Accepted Accounting
Principles and subject to normal and reasonable year-end audit adjustment)
applied on a basis consistent with that of the preceding quarter or containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
quarter, certified by the Chief Executive Officer or Chief Financial Officer of
the Borrower to fairly present, in all material respects, the financial
condition of the Borrower and its Subsidiaries on a consolidated basis as of the
date thereof or the results of operation of the Borrower and its Subsidiaries on
a consolidated basis for the period covered thereby;
(c) Within one hundred (100) days after the close of each fiscal year of the
Borrower, beginning with the fiscal year ending December 31, 1996, an audited
consolidated and unaudited consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal year and audited consolidated and
unaudited consolidating statements of income, retained earnings and cash flows
for the Borrower and its Subsidiaries for the fiscal year then ended, including
the notes to each, prepared by Price Waterhouse or any other independent
certified public accountant reasonably acceptable to the Required Lenders, in
accordance with Generally Accepted Accounting Principles applied on a basis
consistent with that of the preceding year or containing disclosure of the
effect on the financial position
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or results of operation of any change in the application of accounting
principles and practices during the year, and accompanied by a report thereon by
such certified public accountants, containing an opinion that is not qualified
with respect to scope limitations imposed by the Borrower or its Subsidiaries or
with respect to accounting principles followed by the Borrower or its
Subsidiaries not in accordance with Generally Accepted Accounting Principles;
(d) Concurrently with the delivery of the financial statements described in
subsection (C) above, a report from the independent certified public accountant
that in making its audit of the consolidated financial statements of the
Borrower and its Subsidiaries, that nothing came to their attention regarding
any Event of Default, or Default under SECTIONS 6.11 through 6.15 as of December
31 of the fiscal year subject to audit or a statement specifying the nature and
period of existence of any such Default or Event of Default disclosed by their
examination, it being understood that such audit was not performed primarily for
the purpose of obtaining knowledge of noncompliance with this Agreement or the
Loan Documents;
(e) Concurrently with the delivery of the financial statements described in
subsections (B) and (C) above, a Compliance Certificate with respect to the
period covered by the financial statements then being delivered, attaching a
Covenant Compliance Worksheet reflecting the computation of the financial
covenants set forth in ARTICLE VI as of the last day of the period covered by
such financial statements;
(f) As soon as practicable and in any event within thirty (30) days after
the close of each fiscal year of the Borrower, beginning with the current fiscal
year, an annual operating budget and capital budget prepared on a quarterly
basis for the Borrower and its Subsidiaries on a consolidated basis, in form and
detail reasonably acceptable to the Agent;
(g) Promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements that the Borrower or any
Subsidiary shall send or make available generally to its stockholders, (ii) all
regular, periodic and special reports, registration statements and prospectuses
that the Borrower or any Subsidiary shall render to or file with the Securities
and Exchange Commission, the National Association of Securities Dealers or any
national securities exchange, (iii) all material reports and other statements
(other than routine reports prepared in the ordinary course of business that
would not result in any adverse action) that the Borrower or any Subsidiary may
render to or file with any other Governmental Authority, including, without
limitation, HCFA, the Environmental Protection Agency, OSHA and state
environmental and health authorities and agencies, (iv) all press releases and
other statements that the Borrower or any Subsidiary shall make available
generally to the public concerning developments in the business of the Borrower
or any of its Subsidiaries, other than press releases or statements issued in
the ordinary course of business, and (v) all material consulting reports and
other similar business reports that the Borrower or any Subsidiary shall request
of any Person from time to time, other than routine reports received in the
ordinary course of business;
(h) Promptly after review by the Borrower's Board of Directors, but in any
event within thirty (30) days after the Borrower's receipt thereof, copies of
any management letters from certified public accountants;
(i) Concurrently with each delivery of the financial statements described in
subsections (B) and (C) an aging of the accounts receivable of the Borrower and
its Subsidiaries by payor class as of the end of such fiscal quarter; and
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(j) Upon the Agent's or any Lender's request, such other information about
the Collateral or the financial condition and operations of the Borrower and its
Subsidiaries as the Agent or any Lender may from time to time reasonably
request.
5.2. Notice of Certain Events. The Borrower shall promptly, but in no event
later than five (5) Business Days after the Borrower obtains knowledge thereof
(or in the shorter period required by subsection (G) below), give written notice
to the Agent and the Lenders of:
(a) Any litigation or proceeding brought against the Borrower or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect;
(b) Any written notice of a violation received by the Borrower or any
Subsidiary from any Governmental Authority that, if such violation were
established and not promptly corrected, could reasonably be expected to have a
Material Adverse Effect;
(c) Any attachment, judgment, lien, levy or order in excess of $100,000 that
may be placed on, assessed against or threatened against the Borrower or any
Subsidiary or any of the Collateral, except for Permitted Liens;
(d) Any Default or Event of Default;
(e) Any material default or event of default under any agreement or
instrument to which the Borrower or any Subsidiary is a party or by which the
Borrower or any Subsidiary, or any of their respective property, is bound, the
termination of which could reasonably be expected to have a Material Adverse
Effect;
(f) Any other matter that has resulted in a Material Adverse Change;
(g) Any default on any Subordinated Debt or Permitted Subordinated Debt
(notice of which shall be delivered to the Agent and Lenders within one Business
Day following any such default); and
(h) Any default under any Management Services Agreement.
(i) In addition, the Borrower shall give the notice to the Agent required by
Section 4.4(h) of the Security Agreement concerning disputes, waivers, defaults
or terminations of Management Services Agreements and shall cause the
Subsidiaries to give the equivalent notices required by Section 4.4(h) of the
Guarantors' Security Agreement.
5.3. Corporate Existence and Maintenance of Properties. The Borrower shall,
and shall cause each of its Subsidiaries to:
(a) Maintain and preserve in full force and effect (i) its corporate
existence, except as otherwise permitted by SECTION 6.1 and (ii) all material
rights, privileges and franchises;
(b) Conduct its business in an orderly and efficient manner, keep its
properties in good working order and condition (normal wear and tear excepted)
and from time to time make all needed repairs to, renewals of or replacements of
its properties (except to the extent that any of such properties
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are obsolete or are being replaced) so that the efficiency of its business
operations shall be fully maintained and preserved; and
(c) File or cause to be filed in a timely manner all reports, applications,
estimates and licenses required by any Governmental Authority that, if not
timely filed, could reasonably be expected to have a Material Adverse Effect.
5.4. Payment of Debt. The Borrower shall, and shall cause each of its
Subsidiaries to, pay all Debt when due and all other obligations in accordance
with customary trade practices.
5.5. Maintenance of Insurance.
(a) The Borrower shall, and shall cause each of its Subsidiaries to,
maintain and pay for insurance on its properties, assets and business, now owned
or hereafter acquired, against such casualties, risks and contingencies, and in
such types and amounts and with such insurance companies, as shall be reasonably
satisfactory to the Agent and deliver certificates and copies of policies of
such insurance to the Agent, provided, however, that such types and amounts of
insurance in effect at the Closing Date shall continue to be satisfactory for
the business of the Borrower and its Subsidiaries (in existence as of the date
hereof) as currently conducted.
(b) If the Borrower or any Subsidiary fails to obtain and maintain any of
the policies of insurance required to be maintained hereunder or to pay any
premium in whole or in part, then the Agent may, at the Borrower's expense,
without waiving or releasing any obligation or Default by the Borrower
hereunder, procure the same, but shall not be required to do so. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand by the
Borrower to the Lenders and shall be additional Obligations hereunder, secured
by the Collateral.
(c) Upon the reasonable request of the Agent from time to time, the Borrower
shall deliver to the Agent evidence that the insurance required to be maintained
pursuant to this Agreement is in effect.
5.6. Maintenance of Books and Records; Inspection. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain adequate books, accounts and
records, and prepare all financial statements required under this Agreement in
accordance with Generally Accepted Accounting Principles (except as set forth in
SECTION 5.1 and in material compliance with the regulations of any Governmental
Authority having jurisdiction over it. The Borrower shall, upon request, permit
employees or agents of the Agent or any Lender to inspect the properties of the
Borrower and any of its Subsidiaries and to examine or audit the books, records,
working papers and accounts of the Borrower and any Subsidiary and make copies
and memoranda of them, and to discuss the affairs, finances and accounts of the
Borrower and any Subsidiary with its officers and, upon notice to the Borrower,
and (at the Borrower's option) in the presence of the Borrower, with the
independent public accountants of the Borrower or its Subsidiaries (and by this
provision the Borrower and each Subsidiary authorize such accountants to so
discuss the finances and affairs of the Borrower or any Subsidiary), all at such
times and from time to time during business hours as may be reasonably
requested.
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5.7. COBRA. The Employee Plans of the Borrower and its Subsidiaries shall
be operated in such a manner that neither the Borrower nor any Subsidiary will
incur any material tax liability under Section 4980B of the Internal Revenue
Code or any material liability to any qualified beneficiary as defined in
Section 4980B.
5.8. Payment of Taxes. The Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would attach
thereto, and all lawful claims when due that, if unpaid, might become a lien or
charge upon any of its properties; provided, however, that the Borrower or any
Subsidiary may in good faith by appropriate proceedings and with due diligence
contest any such tax, assessment, charge, levy or claim if the Borrower or such
Subsidiary establishes any reserves reasonably requested by the Agent with
respect thereto in accordance with Generally Accepted Accounting Principles.
5.9. Compliance with Laws. The Borrower shall, and shall cause each of its
Subsidiaries to, (i) have all material licenses, permits, certifications,
approvals and authorizations required by Governmental Authorities necessary to
the ownership, occupation or use of its properties or the conduct of its
business, including, without limitation, certificates of need, and maintain the
same at all times in full force and effect for so long as is required, and (ii)
comply with all Requirements of Law in respect of the conduct of its business,
the ownership of its property and the Collateral, including, without limitation,
Titles XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid
Regulations, ERISA, OSHA, Environmental Laws and the Bloodborne Pathogens
Standard, other than those, in the case of each of clauses (i) and (ii), the
failure to have or comply with which would not have a Material Adverse Effect.
5.10. Name Change. The Borrower shall notify the Agent and the Lenders at
least thirty (30) days prior to the effective date of any change of its name or
the name of any Subsidiary, and prior to such effective date the Borrower or
such Subsidiary shall have executed any required amended or new Financing
Statements and other Loan Documents necessary to maintain and continue the
perfected security interest of the Agent in all of its Collateral and shall have
taken such other actions and executed such documents as the Agent shall
reasonably require.
5.11. Creation or Acquisition of New Subsidiaries. The Borrower and its
Subsidiaries may from time to time create or acquire new Subsidiaries, provided
that, at any time promptly upon request by the Agent (and in any event, with
respect to any new Subsidiary that is created or acquired in connection with a
Physician Transaction or that receives proceeds of any Borrowings, prior to or
concurrently with satisfaction of the conditions set forth in clauses (y) and
(z) of clause (i) below or, if earlier, the consummation of such Physician
Transaction), (i) each such new Subsidiary (y) having assets with a gross value
(determined in accordance with Generally Accepted Accounting Principles) in
excess of $100,000, and (z) having commenced the conduct of an active business,
will execute and deliver to the Agent (with sufficient copies for each Lender)
an amendment or supplement to the Guaranty Agreement, Guarantors' Security
Agreement if such Subsidiary owns any property of the type covered thereby and
such other documents to effectuate the foregoing as may be reasonably requested
by the Required Lenders, including without limitation Financing Statements, each
in form and substance satisfactory to the Agent, pursuant to which such new
Subsidiary shall become a party thereto, (ii) the Borrower will execute and
deliver to the Agent (with sufficient copies for each Lender) an amendment or
supplement to the Security Agreement, in form and substance satisfactory to the
Agent, pursuant to which all of the capital stock or other ownership interests
of such new Subsidiary that is directly or indirectly owned by the Borrower
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shall be pledged to the Agent under the Security Agreement, together with the
certificates representing such capital stock or other ownership interests and
stock powers duly executed in blank, and (iii) the Borrower will cause each such
new Subsidiary to execute and deliver, and will cause to be delivered, all
documentation of the type described in SECTIONS 3.1(A)(VII) and (VIII) as such
new Subsidiary would have had to deliver were it a Subsidiary on the Closing
Date.
5.12. Recoveries in Bankruptcy Proceedings. Should any Subsidiary become a
debtor under the Bankruptcy Code, the Agent, on behalf of the Lenders, is
authorized, but not required, to file proofs of claim on the Borrower's behalf
and vote the rights of the Borrower in any plan of reorganization, in each case
with respect to such advances and other amounts owed by any Subsidiary of the
Borrower to the Borrower. The Agent, on behalf of the Lenders, is further
empowered to demand, sue for, collect and receive every payment and distribution
on such Debt owing to the Borrower in such Subsidiary's bankruptcy proceeding.
5.13. Solvency of Subsidiaries. The Borrower shall cause each of its
Subsidiaries to remain Solvent (taking into account rights of contribution).
5.14. Certain Physician Transactions.
(a) Subject to the remaining provisions of this SECTION 5.14 applicable
thereto and the requirements contained in the definition of Permitted Physician
Transaction, as the case may be, the Borrower may from time to time after the
Closing Date effect Physician Transactions approved by the Required Lenders
pursuant to SECTION 6.2 and Permitted Physician Transactions, so long as with
respect to each Physician Transaction, no Default or Event of Default shall have
occurred or be continuing at the time of the consummation of such Physician
Transaction or would exist after giving effect thereto.
(b) At the time of each Physician Transaction involving the creation or
acquisition of a Subsidiary, or the acquisition of capital stock or other equity
interest of any Person, all capital stock or other interest thereof created or
acquired in connection with such Physician Transaction shall be directly or
indirectly owned by the Borrower, and the Borrower and each new Subsidiary shall
have complied with SECTION 5.11.
(c) Not less than five (5) days prior to the consummation of any Permitted
Physician Transaction financed in part or in full by a Borrowing, the Borrower
shall deliver to the Agent and the Lenders the following items, each in form and
substance reasonably satisfactory to the Agent:
(i) a description of the practice whose stock, equity interests or assets
are to be acquired ("Practice");
(ii) a description of the material terms of such Permitted Physician
Transaction known as of such date (including, without limitation, the
purchase price and method and structure of payment), provided that a
description of any additional or changed material terms of such
Permitted Physician Transaction shall be disclosed to the Agent within
five (5) days of such addition or change;
(iii) projected revenue and EBITDA contribution levels with respect to the
Practice to be acquired, prepared on a quarterly basis for the two-year
period following the consummation of such Permitted Physician
Transaction, in reasonable detail;
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(iv) confirmation, supported by reasonably detailed calculations, of
projected covenant compliance over the four quarter period following such
Permitted Physician Transaction after giving effect to the proforma
consolidation of the Practice to be acquired with the Borrower and its
Subsidiaries; and
(v) a description of any Liens to be incurred or assumed in connection with
such Permitted Physician Transaction, which Liens would not be
Permitted Liens without such disclosure.
(d) Within thirty (30) days after the closing of any Permitted Physician
Transaction not financed by a Borrowing and having an Transaction Amount greater
than $2,500,000, the Borrower shall deliver to the Lenders the items listed in
clauses (i), (ii) and (iii) of the above subsection (C).
(e) Within thirty (30) days after the closing of each Physician Transaction,
the Borrower shall deliver to the Agent a copy of the form of each material
Physician Transaction document, including any purchase agreement, master
transaction agreement or Management Services Agreement relating to such
Physician Transaction.
(f) The consummation of each Physician Transaction shall be deemed to be a
representation and warranty by the Borrower that all conditions thereto have
been satisfied, that the same is permitted in accordance with the terms of this
Loan Agreement and that the information submitted by the Borrower pursuant to
subsections (C) and (D) above, as appropriate, is true and correct in all
material respects as of the date submitted, which representation and warranty
shall be deemed to be a representation and warranty for all purposes hereunder.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees that, until the termination of the
Commitments and all Letters of Credit and the payment in full of all principal
and interest with respect to the Loans and all Letter of Credit Outstandings
together with all other amounts then due and owing hereunder, it will not, and
will not permit any of its Subsidiaries to, individually or in the aggregate:
6.1. Merger, Consolidation. Liquidate, wind up or dissolve, or enter into
any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another Person so long as
(x) the Borrower is the surviving corporation, (y) the applicable
conditions of SECTIONS 5.11, 5.14 and 6.2 shall be satisfied and (z)
immediately after giving effect thereto, no Default or Event of Default
would exist; and
(ii) any Subsidiary may merge or consolidate with another Person so long as
(w) the Person surviving such merger or consolidation is the Borrower
or a Guarantor, (y) the applicable conditions of SECTIONS 5.11, 5.14
and 6.2 shall be satisfied and (z) immediately after giving effect
thereto, no Default or Event of Default would exist.
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6.2. Physician Transactions. Make any Physician Transaction, other than a
Permitted Physician Transaction in compliance with SECTION 5.14, without the
prior written consent of the Required Lenders. In connection with any proposed
Physician Transaction that is not a Permitted Physician Transaction, as soon as
practicable prior to the proposed consummation of such Physician Transaction the
Borrower shall deliver to the Agent and each Lender (i) a description of any
proposed Capital Expenditures related to such Physician Transaction, (ii) the
items described in SECTION 5.14(C) if the proposed Physician Transaction is of
an oncology, hematology or radiation oncology physician practice and (iii) such
other information as the Lenders may reasonably request if the proposed
Physician Transaction is for anything other than an oncology, hematology or
radiation oncology physician practice. The Lenders shall use their best
commercially reasonable efforts to respond to a request from the Borrower for
approval of a Physician Transaction (including requests for Capital Expenditures
and Subordinated Debt or Permitted Subordinated Debt) within five (5) Business
Days after receipt of the information required by this Section; provided,
however, the failure to approve or disapprove a Physician Transaction during
such period shall not constitute approval.
6.3. Debt. Create, incur, assume or suffer to exist any Debt other than:
(i) Debt incurred pursuant to this Agreement;
(ii) unsecured Subordinated Debt and Permitted Subordinated Debt;
(iii) accrued expenses, current trade payables and other current
liabilities arising in the ordinary course of business and not incurred
through the borrowing of money;
(iv) unsecured Debt (x) of any Subsidiary to the Borrower (y) of any
Subsidiary to a Subsidiary and (z) of the Borrower to any Subsidiary,
provided that any such Debt under this clause (iv) is incurred in the
ordinary course of business consistent with past practice and is
evidenced by one or more promissory notes pledged to the Agent pursuant
to the Security Agreements;
(v) Contingent Obligations permitted by SECTION 6.4;
(vi) other Consolidated Debt (including, without limitation, Debt secured by
liens described in clauses (E) and (G) of the definition of Permitted
Liens and Capital Lease Obligations) in an aggregate principal amount
at any time outstanding not to exceed $20,000,000 for the Borrower and
its Subsidiaries; and
(vii) Debt of the Borrower under any Interest Rate Protection Agreements
(if any) entered into with one or more Lenders in respect of the Debt
incurred pursuant to this Agreement; provided that the notional amount
of all such agreements at any time shall not exceed the aggregate
amount of the Commitments at such time.
The Lenders shall use their best commercially reasonable efforts to respond
to a request from the Borrower for approval of Subordinated Debt (on terms
acceptable to the Required Lenders in their sole discretion) within five (5)
Business Days after the Agent's and the Lender's receipt of information
regarding the amount and material terms thereof; provided, however, the failure
to approve or disapprove such Subordinated Debt during such period shall not
constitute approval.
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6.4. Contingent Obligations. Create, incur, assume or suffer to exist any
Contingent Obligation other than:
(i) endorsements of instruments or items of payment for deposit or
collection in the ordinary course of business;
(ii) Contingent Obligations incurred pursuant to the Guaranty Agreements;
(iii) guarantees by the Borrower or any Subsidiary of obligations of the
Borrower or any of its Subsidiaries under leases permitted hereunder;
(iv) guarantees by the Borrower or any Subsidiary of any other Debt
permitted under SECTION 6.3; and
(v) guarantees by the Borrower of the obligations of any Subsidiary under
any Management Services Agreement to which such Subsidiary is a party,
provided that such guaranteed obligations are incurred in the ordinary
course of business of the Borrower and are consistent with the
obligations under the Management Services Agreements otherwise entered
into by the Borrower or its Subsidiaries.
6.5. Liens and Encumbrances. Create, assume or suffer to exist any deed of
trust, mortgage or encumbrance, lien (including a lien of attachment, judgment
or execution) or security interest (including the interest of a conditional
seller of goods), securing a charge or obligation, in or on any of its property,
real or personal, whether now owned or hereafter acquired, except for Permitted
Liens.
6.6. Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or property, including, without limitation, the
Collateral, except for (i) sales of inventory in the ordinary course of
business; (ii) the sale or exchange of used equipment, to the extent the
proceeds of such sale are applied towards, or such equipment is exchanged for,
similar replacement equipment or the sale or exchange of obsolete equipment;
(iii) the sale of assets to physicians in accordance with Part II of SCHEDULE
1.1(A); provided that the Total Commitments shall be reduced by the amount of
the proceeds of such sales and such proceeds shall be used to make any repayment
required pursuant to SECTION 2.5(B) to the extent that (a) such sale arises from
the termination of any Management Services Agreement for cause by such
physicians or (b) the aggregate proceeds of sales under this subsection (III)
exceed the aggregate Transaction Amounts of Physician Transactions during any
period of two consecutive fiscal quarters following the Closing Date; (iv) other
dispositions not exceeding $1,000,000 in the aggregate, for the Borrower and its
Subsidiaries, for any fiscal year; (v) any sale, lease, transfer or conveyance
from one Subsidiary to another Subsidiary or to the Borrower or from the
Borrower to any Subsidiary in accordance with SECTION 6.7, provided that, with
respect to this clause (v), (y) immediately after giving effect thereto, no
Default or Event of Default would exist, and (z) with respect to any transfer
from the Borrower or a Guarantor to a Subsidiary that is not a Guarantor, the
Borrower shall notify the Agent and the Lenders thereof and, at the request of
the Required Lenders, shall cause the transferee Subsidiary to comply with the
provisions of SECTION 5.11; and (vi) the sale or other disposition of any Margin
Stock.
6.7. Transactions with Related Persons. Except as otherwise permitted by
SECTIONS 6.1, 6.3, 6.4, 6.6 and 6.8, directly or indirectly make any loan or
advance to, or purchase, assume or guarantee any Debt to or from, any of its
officers, directors, stockholders or Affiliates, or subcontract any
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operations to any Affiliate, or enter into any transaction with any Affiliate,
except (a) in the ordinary course of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and (b) upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a Person not an Affiliate; provided,
that the Borrower or any of its Subsidiaries may (i) provide legal and
accounting services to their officers, directors and employees in the ordinary
course of business and consistent with past practice, (ii) provide
indemnification to their officers, directors and employees to the extent
permitted by applicable law, (iii) pay reasonable and customary fees to
directors, and (iv) provide other corporate management, cash management, back-
office, legal, accounting and consulting services to Affiliates who are not
Subsidiaries, provided, that the aggregate fair market value of such services
pursuant to this subsection (IV) (and not otherwise covered by subsections (I),
(II) OR (III)) shall not exceed $250,000 in any calendar year.
6.8. Restricted Investments; Loans. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any Stock, Debt, evidence of indebtedness or
other obligation or security or any interest whatsoever in any other Person, or
make or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any Person, or make a
commitment or otherwise agree to do any of the foregoing, except for (a)
investments in Cash Investments, (b) loans and advances to employees for
reasonable travel and business expenses in the ordinary course of business, (c)
prepaid expenses incurred in the ordinary course of business, (d) accounts
receivable created in the ordinary course of business (e) investments in
Subsidiaries in existence as of the Closing Date or in new Subsidiaries created
or acquired in compliance with the applicable provisions of SECTIONS 5.11, 5.14,
6.2 and 6.18, (f) investments and loans set forth on SCHEDULE 6.8 attached
hereto, as renewed or extended, and (g) other investments not covered in clauses
(a) through (e) having an aggregate cost to the Borrower and its Subsidiaries
not to exceed $10,000,000 at any time. If any Person would become a Subsidiary
(but not a wholly-owned Subsidiary) of the Borrower or any Subsidiary solely by
reason of an investment made pursuant to SUBSECTION (G) hereof, then such Person
shall not be considered a Subsidiary for purposes of this Agreement or any Loan
document; provided, that if Generally Accepted Accounting Principles require
such Person to be included in the Borrower's consolidated financial statements,
then such Person shall be so included in the financial statements for all
purposes including the calculation of the financial covenants in SECTIONS 6.11
through 6.15.
6.9. Restricted Payments. (a) Declare or pay any dividends upon any of its
Stock (other than dividends paid in Stock and dividends paid to the Borrower or
by a Subsidiary to another Subsidiary), or (b) (in the case of the Borrower)
purchase, redeem, retire or otherwise acquire, directly or indirectly, any
shares of its Stock, or any option, warrant or other right to acquire shares of
its Stock or make any distribution of cash, property or assets other than Stock
among the holders of shares of its Stock; provided, however, that so long as no
Default or Event of Default shall have occurred and be continuing or would occur
after giving effect thereto, the Borrower may expend an aggregate amount up to
$25,000,000 to repurchase shares of its Stock.
6.10. Capital Expenditures. Make any Capital Expenditures (other than in
connection with a Physician Transaction allowed under SECTIONS 5.14 or 6.2
hereof) if, after giving effect to such Capital Expenditures, the aggregate
amount of all such Capital Expenditures made by the Borrower and its
Subsidiaries during any fiscal quarter, beginning with the current fiscal
quarter, shall exceed the amount equal to ten percent (10%) of Consolidated Net
Revenue for such fiscal quarter; provided, however, that in addition to the
foregoing permitted Capital Expenditures, the Borrower and its Subsidiaries may
make additional Capital Expenditures during the term of the Facility in an
aggregate amount up to $36,000,000
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for the development of radiation or medical oncology facilities and the
acquisition and construction of properties in connection therewith.
6.11. Consolidated Net Worth. Permit Consolidated Net Worth at the end of
any fiscal quarter, beginning with the fiscal quarter ending December 31, 1996,
to be less than (i) $200,000,000, increased by 80% of Consolidated Net Income
(if positive) for each fiscal quarter after September 30, 1996, plus (ii) 90% of
the positive amount of all increases in capital stock and additional paid-in
capital from issuances of equity securities or other capital investments.
6.12. EBITDA to Interest Expense. Permit the ratio of EBITDA for the
relevant fiscal quarter to Interest Expense for the relevant fiscal quarter at
the end of any fiscal quarter to be less than 3.5 to 1.0.
6.13. Annualized EBITDAR to Debt Service Ratio. Permit the ratio of
Annualized EBITDAR to Debt Service at the end of any fiscal quarter to be less
than 1.35 to 1.0.
6.14. Consolidated Debt to Annualized EBITDA. Permit the ratio of
Consolidated Debt to Annualized EBITDA as of the end of any fiscal quarter to be
greater than 3.50 to 1.0.
6.15. Consolidated Debt to Consolidated Total Capital. Permit the ratio of
Consolidated Debt to Consolidated Total Capital as of the end of any fiscal
quarter to be greater than 0.55 to 1.0.
6.16. Sale and Leaseback. Enter into any arrangement with any Person
(other than the Borrower or any Subsidiary, provided the provisions of SECTION
6.7 are satisfied) providing for the leasing by the Borrower or any Subsidiary
of any asset that has been sold or transferred by the Borrower or such
Subsidiary to such Person.
6.17. New Business. Engage in any business other than the business in
which the Borrower or such Subsidiary is currently engaged or a business
reasonably related thereto (including without limitation the development of
radiation and medical oncology facilities and the acquisition and construction
of properties in connection therewith) or make any material change in any of its
business objectives, purposes and operations that would be reasonably likely to
materially adversely affect the repayment of the Obligations.
6.18. Subsidiaries or Partnerships. Except as otherwise permitted by
SECTION 6.8, (a) become a partner or joint venturer in any partnership or joint
venture, or (b) create or acquire any new Subsidiary; provided that the Borrower
or any Subsidiary may (i) create or acquire one or more Subsidiaries in
connection with a Permitted Physician Transaction or an approved Physician
Transaction consummated in compliance with SECTION 5.14 or 6.2, respectively, of
this Agreement, and (ii) create a direct or indirect wholly-owned Subsidiary de
novo; provided further that, in any such instance, the created or acquired
Subsidiary complies with the provisions of SECTION 5.11.
6.19. Transactions Affecting the Collateral. Enter into any transaction
that materially adversely affects a material portion of the Collateral.
Notwithstanding the foregoing, the Borrower and its Subsidiaries may sell
certain assets as provided in SECTION 6.6(III) hereof.
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6.20. Hazardous Wastes. Permit any Hazardous Substances the removal of
which is required or the maintenance of which is restricted, prohibited or
penalized by any Governmental Authority, to be unlawfully brought on to any real
property owned or leased by the Borrower or any Subsidiary, or if so brought or
found located thereon, fail to promptly commence and continue removal of such
materials, with proper disposal, in accordance with required cleanup procedures
under applicable Environmental Laws, except where any of the foregoing would not
have a Material Adverse Effect.
6.21. Fiscal Year. Change its fiscal year from a December 31 year end.
6.22. Amendments; Prepayments of Subordinated Debt or Permitted
Subordinated Debt, etc. (a) Amend or modify (or permit the amendment or
modification of) any of the terms or provisions of any Subordinated Debt or
Permitted Subordinated Debt or any agreement related thereto or (b) make any
voluntary or optional payment or prepayment or redemption or acquisition for
value of (including, without limitation, by way of depositing with any trustee
with respect thereto money or securities before due for the purpose of paying
when due), or exchange, any Subordinated Debt or Permitted Subordinated Debt;
provided, that the terms or provisions of any Permitted Subordinated Debt may be
amended or modified if (i) such Permitted Subordinated Debt, as amended or
modified, complies with the conditions set forth in the definition of "Permitted
Subordinated Debt" and (ii) such amendment or modification does not adversely
effect the rights or interests of the Agent or Lenders.
6.23. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any of
their respective officers or directors, shall engage on behalf of Borrower or
any Subsidiary in any of the following: (i) knowingly and willfully making or
causing to be made a false statement or representation of a material fact in any
applications for any benefit or payment under Medicare or Medicaid programs;
(ii) knowingly and willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any benefit
or payment under Medicare or Medicaid programs; (iii) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under Medicare or Medicaid programs on
its own behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (a)
in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare or Medicaid, or (b) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing,
leasing or order of any good, facility, service, or item for which payment may
be made in whole or in part by Medicare or Medicaid. With respect to this
Section, knowledge by an individual director or officer of the Borrower or a
Subsidiary of any of the event described in this Section shall not be imputed to
the Borrower or such Subsidiary unless such knowledge was obtained or learned by
the director or officer in his or her official capacity as a director or officer
of the Borrower or such Subsidiary. Neither the Borrower nor any Subsidiary
shall be considered to have breached this Section, except in the case of a
knowing and willful violation thereof, until the Borrower or such Subsidiary has
received notification, written or oral, by a Governmental Authority of competent
jurisdiction as to any such violation. The provisions of SUBSECTION (III)
hereof shall not require the Borrower or any Subsidiary (unless otherwise
required by law) to disclose to the Agent, Lenders or any other Person any
activity or omission by a third party (including associated physician groups)
unless such activity or omission (x) constitutes willful fraud or abuse, (y)
would reasonably be likely to have a Material Adverse Effect or (z) is not being
corrected, cured or remedied by the Borrower and any other relevant Persons
diligently, in good faith and in the exercise of sound business judgment.
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ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) The Borrower fails to pay when due any principal of any Note when the
same becomes due or fails to pay any fees or interest or other Obligations under
this Agreement or any other Loan Document within three (3) days of when due;
(b) The Borrower or any Subsidiary fails or neglects to observe, perform or
comply with any term, provision, condition or covenant contained in SECTIONS
2.14, 5.1, 5.2, 5.3(A)(I) or ARTICLE VI (except, in the case of SECTION 6.5, to
the extent permitted under SECTION 7.1(S) below);
(c) The Borrower or any Subsidiary fails or neglects to observe, perform or
comply with any term, provision, condition or covenant contained herein except
those specified in subsections (A) and (B) above (and except to the extent that
violations of any such provisions or covenants otherwise trigger an Event of
Default under any of the other subparagraphs of this SECTION 7.1), and the same
is not cured to the Required Lenders' satisfaction within thirty (30) Business
Days after the earlier of (i) notice thereof from the Agent or (ii) Borrower or
such Subsidiary acquires knowledge thereof;
(d) If any representation or warranty made in writing by or on behalf of the
Borrower or any Subsidiary in this Agreement, in the other Loan Documents or in
any other agreement now existing or hereafter executed between the Borrower or
any Subsidiary and the Agent or any Lender in connection with any Loan Document,
or in connection with the transactions contemplated hereby or thereby, shall
prove to have been false or misleading in any material respect when made;
(e) The occurrence of any default or event of default on the part of the
Borrower or any Subsidiary (including specifically, but without limitation,
defaults due to nonpayment) under the terms of any agreement, document or
instrument pursuant to which the Borrower or such Subsidiary has incurred any
Debt having an aggregate outstanding principal amount of greater than $250,000
(other than the intercompany loans), which default would permit acceleration of
such Debt;
(f) The termination of any one or more agreements, contracts or instruments
to which a Borrower or any Subsidiary is a party or by which it or any of its
properties are bound, and such termination or aggregate terminations results in
a Material Adverse Effect;
(g) The occurrence of an "Event of Default" under any of the Loan Documents;
(h) The occurrence of any material uninsured damage to or loss, theft or
destruction of the Collateral or other assets of the Borrower or any Subsidiary
that has a Material Adverse Effect;
(i) The Borrower or any of its Subsidiaries shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert
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in a timely and appropriate manner, any petition or case of the type described
in subsection (J) below, (iii) apply for or consent to the appointment of or
taking possession by a custodian, trustee, receiver or similar official for or
of itself or all or a substantial part of its properties or assets, (iv) fail
generally, to pay its debts generally as they become due, or (v) make a general
assignment for the benefit of creditors;
(j) Any involuntary petition or case shall be filed or commenced against the
Borrower or any of its Subsidiaries seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the appointment
of a custodian, trustee, receiver or similar official for it or all or a
substantial part of its properties or any other relief under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, and such petition or case shall continue undismissed and
unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such
proceeding;
(k) (i) The Borrower ceases to be Solvent (taking into account any rights of
contribution), or (ii) the Borrower or any of its Subsidiaries (x) ceases to
conduct its business as now conducted or (y) is enjoined, restrained or in any
way prevented by court order from conducting all or any material part of its
business affairs, except as otherwise specifically permitted under SECTION 6.1
or except where such cessation, injunction, restraint or order would not have a
Material Adverse Effect;
(l) A notice of lien, levy or assessment in excess of $250,000 is filed of
record against any portion of the assets of the Borrower or any Subsidiary by
the United States, or any department, agency or instrumentality thereof, or by
any other Governmental Authority, including, without limitation, the Pension
Benefit Guaranty Corporation, or if any taxes or debts in excess of $250,000
owing at any time or times hereafter to any one of them becomes a lien or
encumbrance (other than a Permitted Lien) upon the Collateral or any other asset
of the Borrower or any Subsidiary, and the same is not dismissed, released,
discharged or stayed pending appeal within thirty (30) days after the same
becomes a lien or encumbrance or, in the case of ad valorem taxes, prior to the
last day when payment may be made without penalty;
(m) The entry of a judgment or the issuance of a warrant of attachment,
execution or similar process against the Borrower or any Subsidiary or any of
their respective assets that are $200,000 or more in excess of proceeds of
insurance which shall not be dismissed, discharged, stayed pending appeal or
bonded within sixty (60) days after entry unless the Borrower or its Subsidiary
is diligently contesting such judgment in good faith by appropriate proceedings
with adequate funded reserves being set aside on its books in accordance with
Generally Accepted Accounting Principles;
(n) The occurrence of any of the following events: (i) the happening of a
Reportable Event that could give rise to liability (that is not waived by the by
the Pension Benefit Guaranty Corporation or by the Required Lenders, or if such
liability can be avoided by any corrective action of the Borrower, such
corrective action is not completed within ninety (90) days after the occurrence
of such Reportable Event) with respect to any Pension Plan; (ii) the termination
of any Pension Plan in a "distress termination" under the provisions of Section
4041 of ERISA; (iii) the appointment of a trustee by an appropriate United
States District Court to administer any Pension Plan; (iv) the institution of
any proceedings by the Pension Benefit Guaranty Corporation to terminate any
Pension Plan or to appoint a trustee to administer any such plan; and (v) the
failure of the Borrower to notify the Lenders promptly upon receipt by the
Borrower of any notice of the institution of any proceeding or any other actions
that may result in the termination of any such plan;
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(o) The Borrower or any Subsidiary, to the extent, if any, presently
participating or required by law to participate, in Medicaid or Medicare
programs shall fail to be eligible for any reason to participate in Medicaid or
Medicare programs or to accept assignments or rights to reimbursement under
Medicaid Regulations or Medicare Regulations and such failure shall have a
Material Adverse Effect and such failure shall also continue beyond the
completion of any appeal process diligently pursued by the Borrower or such
Subsidiary in good faith;
(p) For any reason other than the satisfaction in full of all Obligations
and termination of this Agreement or the release of any relevant Subsidiary from
its Obligations under the Guaranty Agreement in accordance with the terms
thereof, (i) the guaranty given by any Subsidiary of the Borrower under the
Guaranty Agreement shall cease to be in full force and effect at any time or is
declared to be null and void or (ii) any such Subsidiary denies that it has any
further liability under the Guaranty Agreement or gives notice to such effect,
and such denial or notice is not revoked within one Business Day after the
earlier of (A) receipt by the Borrower of notice from the Agent or any Lender of
such denial or notice or (B) the Borrower becomes aware of such denial or notice
being made or given, as the case may be;
(q) For any reason other than the satisfaction in full of all Obligations
and termination of this Agreement, the release of any relevant Subsidiary from
its Obligations under the Guarantors Security Agreement in accordance with the
terms thereof or hereof, or the release of any Collateral under either Security
Agreement in accordance with the terms thereof or hereof, (i) either Security
Agreement shall cease to be in full force and effect at any time or is declared
to be null and void with respect to any material portion of the Collateral, (ii)
the Agent ceases to have a perfected, first priority security interest in any
material portion of the Collateral (subject to Permitted Liens), (iii) the
Borrower denies that it has any further liability under the Security Agreement
or gives notice to such effect or (iv) any Subsidiary denies that it has any
further liability under the Guarantors' Security Agreement or gives notice to
such effect, and such denial or notice is not revoked within one Business Day
after the earlier of (A) receipt by the Borrower of notice from the Agent or any
Lender of such denial or notice or (B) the Borrower becomes aware of such denial
or notice being made or given, as the case may be;
(r) The occurrence of any Material Adverse Change;
(s) Change of Control shall occur; or
(t) The existence of any security interests, liens or other encumbrances in
excess of $250,000 in the aggregate at any time, arising from or relating to any
Physician Transaction or Subsidiary acquired in such Physician Transaction,
other than Permitted Liens.
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies: Termination of Commitments, Acceleration, etc. Upon and at
any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
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(a) Declare the Commitments of each Lender and the Issuing Bank's
obligations to issue Letters of Credit to be terminated, whereupon the same
shall terminate (provided that, upon the occurrence of an Event of Default
pursuant to SECTIONS 7.1(I) or (J), all of the Commitments shall automatically
be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans, all unpaid interest accrued thereon, and all other amounts (excluding
unearned interest) payable under this Agreement, the Notes and the other Loan
Documents to be immediately due and payable, whereupon such outstanding
principal amounts, accrued interest and other such amounts shall become
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate or other notice or legal process of any kind, all of which
are hereby knowingly and expressly waived by the Borrower (provided that, upon
the occurrence of an Event of Default pursuant to SECTIONS 7.1(I) or (J), all of
such outstanding principal amounts, accrued interest and other such amounts
shall automatically become immediately due and payable);
(c) Direct the Borrower to deposit (and the Borrower hereby agrees,
forthwith upon receipt of notice of such direction from the Agent, to deposit)
with the Agent from time to time such additional amount of cash as is equal to
the aggregate Stated Amount of all Letters of Credit then outstanding (whether
or not any beneficiary under any Letter of Credit shall have drawn or be
entitled at such time to draw thereunder), such amount to be held by the Agent
in the Cash Collateral Account as security for the Letter of Credit Outstandings
as described in SECTION 2.18(J); and
(d) Exercise all rights and remedies available to it under this Agreement,
the other Loan Documents and applicable law.
8.2. Right of Setoff. The Agent and each Lender (including, without
limitation, the Issuing Bank and the L/C Participants) may, and are hereby
authorized by the Borrower, at any time and from time to time, to the fullest
extent permitted by applicable law, without advance notice to the Borrower (any
such notice being expressly waived by the Borrower) and irrespective of demand
for payment, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held in other than a fiduciary
account and any other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any or all of the Obligations
now or hereafter existing, which are then due and payable. The Agent agrees to
notify the Borrower after any such setoff or application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
8.3. Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of
the Agent's and the Lenders' rights and remedies set forth in this Agreement is
not intended to be exhaustive, and the exercise by the Agent or any Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder, under the Loan Documents or under any
other agreement between the Borrower or any Subsidiary and the Agent or the
Lenders or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower or any Subsidiary
and the Agent or the Lenders or their agents or
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employees shall be effective to change, modify or discharge any provision of
this Agreement or any of the other Loan Documents or to constitute a waiver of
any Event of Default.
ARTICLE IX
THE AGENT
9.1. Appointment. Each Lender hereby irrevocably appoints and authorizes
First Union to act as Agent hereunder and under the other Loan Documents and to
take such actions as agent on its behalf hereunder and under the other Loan
Documents, and to exercise such powers and to perform such duties, as are
specifically delegated to the Agent by the terms hereof or thereof, together
with such other powers and duties as are reasonably incidental thereto.
9.2. Nature of Duties. The Agent shall have no duties or responsibilities
other than those expressly set forth in this Agreement and the other Loan
Documents. The Agent shall not have, by reason of this Agreement or any other
Loan Document, a fiduciary relationship in respect of any Lender; and nothing in
this Agreement or any other Loan Document, express or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations or liabilities
in respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents or attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact that it selects with reasonable care. The Agent shall be
entitled to consult with legal counsel, independent public accountants and other
experts selected by it with respect to all matters pertaining to this Agreement
and the other Loan Documents and its duties hereunder and thereunder and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts. The Lenders
hereby acknowledge that the Agent shall not be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders (or, where a higher percentage of the
Lenders is expressly required hereunder, such Lenders).
9.3. Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable to any Lender for any action taken or omitted to be taken by it or such
Person under or in connection with the Loan Documents, except for its or such
Person's own gross negligence or willful misconduct, (ii) responsible in any
manner to any Lender for any recitals, statements, information, representations
or warranties herein or in any other Loan Document or in any document,
instrument, certificate, report or other writing delivered in connection
herewith or therewith, for the execution, effectiveness, genuineness, validity,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for the financial condition of the Borrower, its Subsidiaries or any other
Person, or (iii) required to ascertain or make any inquiry concerning the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Loan Document or the existence or possible existence of
any Default or Event of Default, or to inspect the properties, books or records
of the Borrower or any of its Subsidiaries.
9.4. Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem
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and treat each Lender as the owner of its interest hereunder for all purposes
hereof unless and until a written notice of the assignment, negotiation or
transfer thereof shall have been given to the Agent in accordance with the
provisions of this Agreement. The Agent shall be entitled to refrain from
taking or omitting to take any action in connection with this Agreement or any
other Loan Document (i) if such action or omission would, in the reasonable
opinion of the Agent, violate any applicable law or any provision of this
Agreement or any other Loan Document or (ii) unless and until it shall have
received such advice or concurrence of the Required Lenders (or, where a higher
percentage of the Lenders is expressly required hereunder, such Lenders) as it
deems appropriate or it shall first have been indemnified to its satisfaction by
the Lenders against any and all liability and expense (other than liability and
expense arising from its own gross negligence or willful misconduct) that may be
incurred by it by reason of taking, continuing to take or omitting to take any
such action. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent's acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of the Required Lenders (or, where a higher percentage of
the Lenders is expressly required hereunder, such Lenders), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders (including all subsequent Lenders).
9.5. Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action hereunder and under the
other Loan Documents and to make such investigation as it deems necessary to
inform itself as to the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Loan Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.6. Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent will give prompt notice thereof to the Lenders; provided,
however, that if any such notice has also been furnished to the Lenders, the
Agent shall have no obligation to notify the Lenders with respect thereto. The
Agent shall (subject to SECTIONS 9.4 and 10.8) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders; provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
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such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.7. Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrower, and without limiting the obligation of the Borrower to
do so, the Lenders agree (i) to indemnify the Agent and its officers, directors,
employees, agents, attorneys-in-fact and Affiliates, ratably in proportion to
their respective Percentages as used in determining the Required Lenders as of
the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, attorneys' fees and expenses) or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the repayment in full of the Loans and the termination of
the Commitments) be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of this Agreement or any other Loan Document or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing, and (ii) to reimburse the Agent upon
demand, ratably in proportion to their respective Percentages as used in
determining the Required Lenders as of the date of determination, for any
expenses incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, administration, amendment, modification, waiver or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Loan Documents (including, without limitation, reasonable
attorneys' fees and expenses and compensation of agents and employees paid for
services rendered on behalf of the Lenders); provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the gross negligence or willful misconduct of the
party to be indemnified.
9.8. The Agent in its Individual Capacity. With respect to its Commitment,
the Loans made by it, the Letters of Credit issued by it and the Note or Notes
issued to it, the Agent in its individual capacity and not as Agent shall have
the same rights and powers under the Loan Documents as any other Lender and may
exercise the same as though it were not performing the agency duties specified
herein; and the terms "Lenders," "Required Lenders," "holders of Notes" and any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity. The Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower, any of its Subsidiaries
or any of their respective Affiliates as if the Agent were not performing the
agency duties specified herein, and may accept fees and other consideration from
any of them for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
9.9. Successor Agent. The Agent may resign at any time by giving thirty
(30) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation, the Required Lenders will, with the prior written consent
of the Borrower (which consent shall not be unreasonably withheld), appoint from
among the Lenders a successor to the Agent (provided that the Borrower's consent
shall not be required in the event a Default or Event of Default shall have
occurred and be continuing). If no successor to the Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within such thirty-day period, then the retiring Agent may, on behalf of the
Lenders and after consulting with the Lenders and the Borrower, appoint a
successor Agent from among the Lenders. Upon the acceptance of any appointment
as Agent by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations
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hereunder and under the other Loan Documents. After any retiring Agent's
resignation as Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent. If no
successor to the Agent has accepted appointment as Agent by the thirtieth (30th)
day following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Lenders shall
thereafter perform all of the duties of the Agent hereunder and under the other
Loan Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided for hereinabove.
9.10. Collateral Matters.
(a) The Agent is hereby authorized on behalf of the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Security Documents.
(b) The Lenders hereby irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all of
the Obligations, (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition that may be permitted hereunder or
under any other Loan Document or (iii) otherwise pursuant to and in accordance
with the provisions of SECTION 10.8(B) or any applicable Loan Document. Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release Collateral pursuant to this subsection (B).
9.11. Applicable Parties. The provisions of this ARTICLE IX, other than
the provisions of SECTION 9.9, are solely for the benefit of the Agent and the
Lenders, and the Borrower shall not have any rights as a third party beneficiary
or otherwise or any obligations under any of the provisions of this ARTICLE IX,
other than as provided in SECTION 9.9. In performing functions and duties
hereunder and under the other Loan Documents, the Agent shall act solely as the
Agent of the Lenders and does not assume, nor shall be deemed to have assume,
any obligation or relationship of trust or agency with or for the Borrower or
any legal representative, successor and assign of the Borrower.
ARTICLE X
MISCELLANEOUS
10.1. Survival. The representations and warranties made by or on behalf of
the Borrower or any Subsidiary in this Agreement and in each other Loan Document
shall survive the execution and delivery of this Agreement and each such other
Loan Document until the satisfaction of all of Obligations and the termination
of the Commitments. Notwithstanding any other provision herein or anything
provided or implied by law to the contrary, no termination or cancellation
(regardless of cause or procedure) of the Commitments, this Agreement or any of
the other Loan Documents shall in any way affect or impair the rights and
obligations of the parties hereto with respect to any of the provisions of (i)
SECTION 2.15 or (ii) this Agreement and the other Loan Documents relating to
indemnification or payment of costs and expenses, including, without limitation,
all of the provisions of SECTIONS 2.11(A), 2.11(B), 2.12, 2.13, 9.7, 10.3, 10.6
and 10.7, and, in each case, such provisions shall survive any such termination
or cancellation and the making and repayment of the Loans.
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10.2. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND
ACCEPTED IN, AND SHALL BE DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA (WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS
THEREOF); PROVIDED THAT EACH LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT OR, IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICES FOR DOCUMENTARY CREDITS, INTERNATIONAL CHAMBER OF COMMERCE, AS IN
EFFECT FROM TIME TO TIME (THE "UNIFORM CUSTOMS"), AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NORTH CAROLINA
(WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF). THE BORROWER
HEREBY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT WITHIN
MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE
WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
PROCEEDING TO WHICH THE AGENT OR ANY LENDER OR THE BORROWER IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH, ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENT OR ANY LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY SUCH PROCEEDING. THE BORROWER CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS
SET FORTH HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PARTY TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OTHER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. THE
BORROWER, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, AND THE AGENT AND EACH
LENDER, HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
10.3. Arbitration; Preservation and Limitation of Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding (subject to the following limitation),
any dispute, claim or controversy arising out of, connected with or relating to
this Agreement or any other Loan Document ("Disputes") between or among the
Borrower, the Agent and the Lenders, or any of them, shall be resolved by
binding arbitration as
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provided herein; provided, however, that no party may demand arbitration in any
judicial proceeding to which it is a party more than 90 days from the later of
(i) its commencement of such proceeding or (ii) the date it is served with a
complaint, counterclaim or third-party claim in such proceeding. Disputes may
include, without limitation, tort claims, counterclaims, claims brought as class
actions, claims arising from Loan Documents executed in the future, or claims
arising out of or connected with the transactions contemplated by this Agreement
and the other Loan Documents. Arbitration shall be conducted under and governed
by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules")
of the American Arbitration Association (the "AAA"), as in effect from time to
time, and Title 9 of the U.S. Code, as amended. All arbitration hearings shall
be conducted in the city in which the principal office of either the Agent or
the Borrower is located. The expedited procedures set forth in Rule 51 et seq.
of the Arbitration Rules shall be applicable to claims of less than $1,000,000.
All applicable statutes of limitation shall apply to any Dispute. All
arbitrations commenced with respect to any of the Loan Documents shall be
consolidated for hearing before the same panel of arbitrators as prescribed
herein. Any attorney-client privilege or other protection against disclosure of
confidential information, including, without limitation, any protection afforded
the work product of any attorney, that would otherwise be claimed by any party
shall be available to and may be claimed by any such party in any arbitration
proceeding. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this arbitration provision does not
apply to Disputes under or related to Interest Rate Protection Agreements. An
arbitration arising from an Interest Rate Protection Agreement shall not be
consolidated with any other arbitration hereunder without the consent of all
parties to the arbitrations that are proposed to be consolidated.
(b) Notwithstanding the preceding binding arbitration provisions, the
parties hereto agree to preserve, without diminution, certain remedies that any
party hereto may employ or exercise freely, either alone, in conjunction with or
during a Dispute. Any party hereto shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any Collateral by
exercising a power of sale granted pursuant to any of the Loan Documents or
under applicable law other than judicial foreclosure and sale, including a
proceeding to confirm the sale; (ii) all rights of self-help, including peaceful
occupation of real property and collection of rents, setoff, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies, including injunctive relief, sequestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy proceeding; and
(iv) when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
10.4. Notice. All notices and other communications provided for hereunder
or in connection herewith shall be in writing (including telegraphic, telex,
facsimile transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
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If to the Borrower: American Oncology Resources, Inc.
16825 Northchase Drive
Suite 1300
Houston, Texas 77060
Attention: L. Fred Pounds, Chief Financial Officer
Telephone: (713) 873-2674
Telecopier: (713) 873-7762
With copies to: Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Diana M. Hudson
Telephone: (713) 225-7020
Telecopier: (713) 225-7047
If to the Agent: First Union National Bank of North Carolina
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone: (704) 383-0281
Telecopier: (704) 383-0288
with a copy to: Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28246
Attention: Stokely G. Caldwell, Jr.
Telephone: (704) 377-2536
Telecopier: (704) 378-4000
If to any Lender: At the address set forth on its signature page hereto (or
if to any Lender not a party hereto as of the date hereof,
at the address for notices set forth in its Assignment and
Acceptance);
or to such other address as any party may designate for itself by like notice to
all other parties hereto. All such notices and communications shall be deemed
to have been given (i) if mailed as provided above by any method other than
overnight delivery service, on the third Business Day after deposit in the
mails, (ii) telegraphed, telexed, telecopied or cabled, when delivered to the
telegraph company, confirmed by telex answerback, transmitted by telecopier or
delivered to the cable company, respectively, or (iii) if delivered by hand, or
mailed by overnight delivery services upon delivery; provided that notices and
communications to the Agent shall not be effective until received by the Agent.
10.5. Assignments, Participations.
(a) Each Lender may assign to one or more other Eligible Assignees (each, an
"Assignee") all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
outstanding Loans made by it, the Note or Notes held by it and its
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participations in Letters of Credit); provided, however, that (i) so long as
First Union remains the Agent, it will retain a Commitment of ten percent (10%)
of the Total Commitment, up to $15,000,000 at all times (free of participation),
(ii) each such assignment shall be of an equal percentage of such Lender's
rights and obligations (including its Commitment, the outstanding Loans made by
it, the Note or Notes held by it and its participations in Letters of Credit),
(iii) any such assignment (other than an assignment to a Lender or an Affiliate
of a Lender) shall not be made without the prior written consent of the Agent
and the Borrower (to be evidenced by their counterexecution of the relevant
Assignment and Acceptance), which consent shall not be unreasonably withheld,
(iv) except in the case of an assignment to a Lender or an Affiliate of a
Lender, the amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to each such assignment) shall in no event be less
than the lesser of (y) the entire Commitment of such Lender immediately prior to
such assignment or (z) $5,000,000, and (v) the parties to each such assignment
will execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment, and the assigning Lender will pay a nonrefundable processing
fee of $3,000 to the Agent for its own account. Upon such execution, delivery,
acceptance and recording of the Assignment and Acceptance, from and after the
effective date specified therein, which effective date shall be at least five
(5) Business Days after the execution and delivery to the Agent thereof (unless
the Agent shall otherwise agree), (A) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of the assigning Lender hereunder with respect thereto and (B)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, and from
and after such assignment, relinquish its rights (other than rights under the
provisions of this Agreement and the other Loan Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate to the time prior to the effective date of such Assignment and
Acceptance) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Assignment and Acceptance shall, upon the effectiveness thereof, be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of the Agent and the other parties hereto as if set forth at length
herein.
(b) The Agent will maintain at its address for notices referred to herein a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an Assignee and counterexecuted by the Borrower (if
required above), together with any Note or Notes subject to such assignment and
the processing fee referred to in subsection (A) above, the Agent will (i)
accept such Assignment and Acceptance, (ii) on the effective date thereof,
record the information contained therein in the Register and (iii) give notice
thereof to the Borrower and the Lenders. Within five (5) Business Days after
its receipt of such notice, the Borrower, at its own expense, will execute and
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deliver to the Agent in exchange for the surrendered Note or Notes a new Note or
Notes to the order of such Assignee in an aggregate principal amount equal to
the principal amount of the Commitment (or, if the Commitments have been
terminated, the principal amount of the Loans) assumed by it pursuant to such
Assignment and Acceptance and, to the extent the assigning Lender has retained
its Loans and/or Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an aggregate principal amount equal to the principal amount
of the Commitment (or, if the Commitments have been terminated, the principal
amount of the Loans) retained by it hereunder. Such new Note or Notes shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of EXHIBIT A. The Agent will return cancelled
Notes to the Borrower.
(d) Subject to SECTION 10.5(A)(I), Each Lender may, without the consent of
the Borrower, the Agent or any other Lender, sell to one or more other Persons
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business (each, a "Participant") participations in any
portion comprising less than all of its rights and obligations under this
Agreement (including, without limitation, a portion of its Commitment, the
outstanding Loans made by it, the Note or Notes held by it and its
participations in Letters of Credit); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged and such Lender shall
remain solely responsible for the performance of such obligations, (ii) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement, (iii) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
no Lender shall permit any Participant to have any voting rights or any right to
control the vote of such Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other Loan Document
(except as to actions (to the extent such actions affect the rights of such
Participant) that would (x) reduce or forgive the principal amount of, or rate
of interest on, any Loan, or reduce or forgive any fees or other Obligations,
(y) extend any date (including the Maturity Date and any scheduled date for the
mandatory reduction of the Commitments) fixed for the payment of any principal
of or interest on any Loan, any fees or any other Obligations, or (z) increase
any Commitment of any Lender (it being understood that a waiver of any Default
or Event of Default or of any mandatory reduction of the Total Commitment shall
not constitute such an increase), and (iv) no Participant shall have any rights
under this Agreement or any of the other Loan Documents, each Participant's
rights against the granting Lender in respect of any participation to be those
set forth in the participation agreement, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not granted such
participation. Notwithstanding the foregoing, subject to SECTION 2.17 hereof
each Participant shall have the rights of a Lender for purposes of SECTIONS
2.11(A), 2.11(B), 2.12, 2.13 and 9.3, and shall be entitled to the benefits
thereto, to the extent that the Lender granting such participation would be
entitled to such benefits if the participation had not been made, but only by
acts and notices taken by the granting Lender provided that no Participant shall
be entitled to receive any greater amount pursuant to any of such Sections than
the Lender granting such participation would have been entitled to receive in
respect of the amount of the participation made by such Lender to such
Participant had such participation not been made.
(e) Nothing in this Agreement shall be construed to prohibit any Lender from
pledging or assigning all or any portion of its rights and interest hereunder or
under any Note to any Federal Reserve Bank as security for borrowings therefrom;
provided, however, that no such pledge or assignment shall release a Lender from
any of its obligations hereunder.
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<PAGE>
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
Assignee or Participant or proposed Assignee or Participant any information
relating to the Borrower and its Subsidiaries furnished to it by or on behalf of
any other party hereto, provided that such Assignee or Participant or proposed
Assignee or Participant agrees in writing with the Agent and the Borrower to
keep such information confidential to the same extent required of the Lenders
under SECTION 10.17.
10.6. Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, reasonable attorneys' fees, but excluding salaries of the
Agent's regularly employed personnel and overhead incurred or paid by the Agent)
in connection with the preparation, negotiation, execution, delivery and
syndication of this Agreement and the other Loan Documents, and any amendment,
modification or waiver hereof or thereof or consent with respect hereto or
thereto, (ii) to pay upon demand all reasonable out-of-pocket costs and expenses
of the Agent and (upon the occurrence and during the continuance of an Event of
Default) each Lender (including, without limitation, reasonable attorneys' fees,
but excluding salaries of any Lender's or the Agent's regularly employed
personnel and overhead incurred or paid by any Lender or the Agent) in
connection with (y) any refinancing or restructuring of the credit arrangement
provided under this Agreement, whether in the nature of a "work-out," in any
insolvency or bankruptcy proceeding or otherwise and whether or not consummated,
and (z) the enforcement, attempted enforcement or preservation of any rights or
remedies under this Agreement or any of the other Loan Documents, whether in any
action, suit or proceeding (including any bankruptcy or insolvency proceeding)
or otherwise, and (iii) to pay and hold harmless the Agent and each Lender from
and against all liability for any intangibles, documentary, stamp or other
similar taxes, fees and excises, if any, including any interest and penalties,
and any finder's or brokerage fees, commissions and expenses (other than any
fees, commissions or expenses of finders or brokers engaged by the Agent or any
Lender), that may be payable in connection with the transactions contemplated by
this Agreement and the other Loan Documents.
10.7. Indemnification. From and at all times after the date of this
Agreement, and in addition to the costs and expenses payable under SECTION 10.6
and all of the Agent's and the Lenders' other rights and remedies against the
Borrower, the Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their directors, officers, employees, agents and Affiliates
(each, an "Indemnified Person") against any and all claims, losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever, including,
without limitation, reasonable attorneys' fees, costs and expenses
(collectively, "Indemnified Costs") incurred by or asserted against any such
Indemnified Person from and after the date hereof, whether direct or indirect,
as a result of or arising from or in any way relating to any suit, action or
proceeding (including any inquiry or investigation) by any Person, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
under any statute or regulation, including, without limitation, any federal or
state securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or enforcement of this Agreement or the other Loan Documents or any
of the transactions contemplated herein or therein, and including, without
limitation, Environmental Claims and any matters arising from the Borrower's
violation of SECTION 4.7, whether or not such Indemnified Person is a party to
any such action, proceeding or suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Person shall have the
right to be indemnified hereunder for any Indemnified Costs resulting primarily
from the fraud, gross negligence, willful misconduct or violation of law of such
Indemnified Person (as finally determined by a court of competent jurisdiction
or arbitration as provided herein). All of the foregoing losses, damages, costs
and expenses of any Indemnified Person shall be payable by the
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<PAGE>
Borrower, as and when incurred and upon demand, and shall be additional
Obligations hereunder. In the event that the foregoing indemnity is unavailable
or insufficient to hold each Indemnified Person harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Persons in respect of
their losses, claims, damages or liabilities in such proportions as
appropriately reflect the relative benefits received by and fault of the
Borrower and such Indemnified Persons in connection with the matters as to which
such losses, claims, damages or liabilities relate and other equitable
considerations. Neither the Borrower nor any Subsidiary shall be liable to the
Agent or any Lender or any other Indemnified Person for any consequential
damages. Neither the Agent nor any Lender shall be liable to the Borrower or
any Subsidiary or any of their Affiliates for any consequential damages.
10.8. Amendments, Waivers, etc. Except as may be otherwise specifically
set forth in this Agreement or the other Loan Documents, neither this Agreement
nor any other Loan Document nor any provision hereof or thereof may be amended,
modified, waived, discharged or terminated, and no consent to any departure by
the Borrower from any provision hereof or thereof may be given, except in a
writing signed by the Required Lenders; provided, however, that:
(a) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of each Lender holding Obligations directly
affected thereby, (i) reduce the principal amount of, or rate of interest on,
any Loan, or reduce any fees or other monetary Obligations (other than fees
payable to the Agent for its own account) or any monetary obligations of any
Person now or hereafter primarily or contingently liable with respect to the
Obligations or (ii) extend any date fixed for any payment of principal, interest
(other than additional interest payable under SECTION 2.6(B) during the
continuance of an Event of Default), fees (other than fees payable to the Agent
for its own account) or any other monetary Obligations;
(b) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of all Lenders, (i) increase the Commitments
of any Lender (it being understood that a waiver of any Default or Event of
Default or of any mandatory reduction in the Total Commitment shall not
constitute such an increase), (ii) change the definition of "Required Lenders"
or otherwise change the number or percentage of Lenders that shall be required
for the Lenders or any of them to take or approve, or direct the Agent to take,
any action hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to extend, the term of the Facility, (iv) amend any
provision of this Section, (v) release all or substantially all of the
Collateral, (vi) release all or substantially all of the Guarantors from their
obligations under the Guaranty Agreement or (vii) consent to the assignment or
transfer by the Borrower, or by any other Person now or hereafter primarily or
contingently liable with respect to the Obligations, of any of its rights and
obligations under this Agreement or any of the other Loan Documents; and
(c) no provision relating to the rights or obligations of the Agent or
Issuing Bank under this Agreement or any of the other Loan Documents may be
amended, modified or waived without the consent of the Agent or Issuing Bank, as
applicable.
10.9. Rights and Remedies Cumulative, Non-Waiver, etc. The enumeration of
the Agent's and the Lenders' rights and remedies set forth in this Agreement and
the other Loan Documents is not intended to be exhaustive, and the exercise by
the Agent or any Lender of any right or remedy shall not preclude the exercise
of any other rights or remedies, all of which shall be cumulative, and shall be
in addition to any other right or remedy given hereunder, under the other Loan
Documents or under any other agreement between the Borrower and the Lenders, or
any of them (or the Agent on their behalf),
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or that may now or hereafter exist in law or in equity or by suit or otherwise.
No delay or failure to take action on the part of the Agent or any Lender in
exercising any right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or shall be construed to be a waiver of any Event of Default.
No course of dealing between any of the Borrower and the Agent or the Lenders or
their agents or employees shall be effective to change, modify or discharge any
provision of this Agreement or to constitute a waiver of any Event of Default.
No notice to or demand upon the Borrower in any case shall entitle the Borrower
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of the Agent or any Lender to exercise any
right or remedy or take any other or further action in any circumstances without
notice or demand.
10.10. Binding Effect, Assignment. All of the terms of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the Borrower, the Agent and each Lender;
provided, however, that (i) the Borrower may not sell, assign or transfer this
Agreement or any portion hereof or thereof, including, without limitation, any
of its rights, title, interests, remedies, powers and duties hereunder or
thereunder and (ii) any assignees and participants shall have such rights and
obligations with respect to this Agreement and the other Loan Documents as are
provided for in and pursuant to SECTION 10.5.
10.11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.12. Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE AGREEMENT
AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS
AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE SUBJECT
MATTER HEREOF EXCEPT FOR ANY AGENCY FEE LETTER, IF ANY, EXECUTED BY THE AGENT
AND THE BORROWER, THE PROVISIONS OF WHICH FEE LETTER ARE HEREBY INCORPORATED
INTO THIS AGREEMENT BY THIS REFERENCE. THIS AGREEMENT, THE NOTES, THE OTHER
LOAN DOCUMENTS AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
10.13. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders.
10.14. Counterparts, Effectiveness. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all of
which shall together constitute one and the same instrument. This Agreement
shall become effective upon the execution of a counterpart hereof by each of the
parties hereto.
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<PAGE>
10.15. Conflict of Terms. The provisions of the Exhibits and Schedules
hereto and the other Loan Documents are incorporated in this Agreement by this
reference thereto. Except as otherwise provided in this Agreement and except as
otherwise provided in the other Loan Documents, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision of the
other Loan Documents, the provision contained in this Agreement shall control.
10.16. Injunctive Relief. The Borrower recognizes that in the event it
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Agent and the Lenders. The Borrower therefore agrees that the Agent and the
Lenders, if the Agent so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages in any case
where a remedy at law, would prove to be inadequate relief.
10.17. Confidentiality. Each of the Agent, the Issuing Bank and each
Lender agrees to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public confidential information provided
in connection with this Agreement or any other Loan Document and agrees and
undertakes that it shall not use any such information for any purpose or in any
manner other than pursuant to the terms contemplated by this Agreement. Any
Lender may disclose such information (i) at the request of any bank regulatory
authority or in connection with an examination of such Lender by any such
authority, (ii) pursuant to subpoena or other court process, (iii) when required
to do so in accordance with the provisions of any applicable law or regulation,
(iv) at the express direction of any agency of any State of the United States of
America or of any other jurisdiction in which such Lender conducts its business,
(v) to such Lender's independent auditors and other professional advisors that
have a reasonable need or basis for access thereto and (vi) in connection with
any proceeding to enforce its rights hereunder or under any other Loan document
or any other litigation or proceeding related hereto; provided, however, Agent
or such Lender shall instruct such independent auditors or other professional
advisors to keep such information confidential in accordance with the terms of
this SECTION 10.17; provided further, that in the event of any disclosure of
non-public information pursuant to any of clauses (ii), (iii), (iv) and (vi) of
this SECTION 10.17, the Agent or such Lender shall make a good faith attempt, to
the extent practicable, to notify Borrower of any such disclosure of non-public
information at least three (3) Business Days prior to disclosing such
information, and in any event shall notify Borrower of such disclosure as soon
as practicable.
10.18. Post-Closing Matters. The Borrower will, and will cause each of its
Subsidiaries to, cooperate to assist the Agent in the syndication of the
Facilities and the resultant addition of Lenders after the Closing Date.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
AMERICAN ONCOLOGY RESOURCES, INC.
By: /S/ L. Fred Pounds
_________________________________________
L. Fred Pounds, Vice President of Finance
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT
By: Ann M. Dodd
______________________________________
Ann M. Dodd, Senior Vice President
<PAGE>
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /S/ Ann M. Dodd
______________________________________
Ann M. Dodd, Senior Vice President
Commitment: $24,000,000
Address:
First Union National Bank
of North Carolina
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone: (704) 383-0281
Telecopier: (704) 383-0288
Wiring Instructions:
First Union National Bank
of North Carolina
Charlotte, North Carolina
ABA #053000219
Account #: 465906 RC5007
Reference: American Oncology
Resources, Inc.
Attention: Syndication Agency
Services
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By: /S/ Farboud Tavangar
______________________________________
Farboud Tavangar, Vice President
Commitment: $20,000,000
Address:
Credit Lyonnais New York Branch
1301 Av. of the Americas
20th Floor, HEALTHCARE GROUP
New York, NY 10019
Attention: Farboud Tavangar
Telephone: (212) 261-7832
Telecopier: (212) 261-3440
Wiring Instructions:
Credit Lyonnais New York Branch
New York, NY
ABA: 0260-0807-3
Account: 01-88179214000001
Reference: American Oncology Resources, Inc.
Attention: Loan Servicing
<PAGE>
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /S/ Kenneth G. Teusink
______________________________________
Kenneth G. Teusink, Vice President
Commitment: $15,000,000
Address:
Wells Fargo Bank
1000 Louisiana
3rd Floor
Houston, TX 77002
Attention: Kenneth G. Teusink
Telephone: 713/250-1923
Telecopier: 713/250-7031
Wiring Instructions:
Wells Fargo Bank
ABA: 121000248
Account: GL #2712-507201
Reference: American Oncology Resources, Inc.
Attention: Ruth Dionisio
<PAGE>
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By: /S/ David Kelley
______________________________________
David Kelley, Senior Vice President
Commitment: $10,000,000
Address:
The Fuji Bank
One Houston Center
1221 McKinney Street, Suite 4100
Houston, TX 77010
Attention: Richard Menchaca
Telephone: 713/759-7844
Telecopier: 713/650-0048
Wiring Instructions:
Texas Commerce Bank, N.A., Houston, Texas
ABA: 113000609
Account: 0010-197-3098
Beneficiary: The Fuji Bank, Ltd., Houston Agency
Reference: American Oncology Resources, Inc.
Attention: Loan Administrator
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /S/ Ian Reece
____________________________________________
Title: Ian Reece, Vice President and Manager
By: /S/ Angela R. Reilly
_____________________________________________
Title: Angela R. Reilly, Vice President
Commmitment: $22,000,000
Address:
Lending Office:
245 Park Avenue
New York, NY 10167
Attention: Corporate Services Department
Telephone: 212/916-7800
Telecopier: 212/818-0233
Wiring Instructions:
Bank of New York
ABA: 021000018
A/C Rabobank New York
Account: 802-6002533
Reference: American Oncology Resources, Inc.
<PAGE>
ABN AMRO BANK N.V.
By: /S/ Steven Hipsman
______________________________________
Steven Hipsman, Vice President
By: /S/ Larry Kelley
______________________________________
Larry Kelley, Group Vice President
Commitment: $15,000,000
Address:
ABN AMRO BANK N.V.
1 Ravinia Drive, Suite 1200
Atlanta, GA 30346
Attention: Rodney Carson
Telephone: 770/399-7376
Telecopier: 770/399-7397
Wiring Instructions:
Federal Reserve Bank, New York
ABA: 26029530
Account: 651-0-0101974
Favor: ABN AMRO Bank N.V. New York
For Further Credit to: ABN AMRO BANK N.V.
ATLANTA AGENCY ACCT. 651-0-0101974
Reference: American Oncology Resources
<PAGE>
CORESTATES BANK, N.A.
By: /S/ Geoffrey C. Smith
______________________________________
Geoffrey C. Smith, Commercial Officer
Commitment: $22,000,000
Address:
Corestates Bank, N.A.
1339 Chestnut Street
F.C. 1-8-3-22
Philadelphia, PA 19101
Attention: Geoffrey C. Smith
Telephone: 215/786-4363
Telecopier: 215/973-2738
Wiring Instructions:
Corestates Bank, N.A.
Philadelphia, PA
ABA: 031000011
Account: 132-0452
Reference: American Oncology Resources, Inc.
Attention: RC2490
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: /S/ Jerry L. Boyd
______________________________________
Jerry L. Boyd, Vice President
Commitment: $22,000,000
Address:
Texas Commerce Bank National Assoc.
6550 Fannin, Suite 237
Houston, TX 77030
Attention: Jerry L. Boyd
Telephone: 713/795-7344
Telecopier: 713/795-7309
Wiring Instructions:
Texas Commerce Bank, N.A.
ABA: 113000609
Account: G/L #13681-7800
Reference: American Oncology Resources Inc.
Loan Acct. #4004-004-031-7305
<PAGE>
ANNEX I
-------
1. Borrower: American Oncology Resources, Inc.
2. Name and Date of Loan Agreement:
Second Amended and Restated Loan Agreement, dated as of October 30, 1996,
among American Oncology Resources, Inc., the banks and other financial
institutions party thereto from time to time, and First Union National Bank
of North Carolina, as Agent for the Lenders and as the Issuing Bank.
3. Date of Assignment and Acceptance: ________________, 19___.
4. Amounts (as of date of Item 3 above):
<TABLE>
<CAPTION>
Aggregate Amount of Assignor's
for all Assigned Assigned Remaining
Lenders Share /1/ Share Share
--------- ---------- --------- -------------------
<S> <C> <C> <C> <C> <C>
Commitment ________$ ________% ________$ _____$ _____%
Loans ________$ ________% ________$ _____$ _____%
Letter of Credit Outstandings ________$ ________% ________$ _____$ _____%
</TABLE>
5. Effective Date: _________________________________/2/.
6. Addresses for Payments:
Assignor: _________________________________
_________________________________
_________________________________
Attention: _____________________
Telephone: _____________________
Telecopier: _____________________
Reference: _____________________
____________________________
/1/Percentage taken to no more than four decimal places. This percentage shall
be identical with respect to all of the Commitments and Loans of each Assignor
in connection with any single Assignment and Acceptance.
/2/ Must be at least five Business Days from the delivery to the Agent of an
executed copy of this Annex.
<PAGE>
Assignee: _________________________________
_________________________________
_________________________________
Attention: _____________________
Telephone: _____________________
Telecopier: _____________________
Reference: _____________________
7. Addresses for Notices:
Assignor: _________________________________
_________________________________
_________________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ___________________
Assignee: _________________________________
_________________________________
_________________________________
Attention: __________________
Telephone: _________________
Telecopy: __________________
8. Lending Office of Assignee:
_________________________________
_________________________________
_________________________________
Attention: ___________________
Telephone: ___________________
Telecopy: ___________________
<PAGE>
Exhibit A to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as Agent
American Oncology Resources, Inc.,
Borrower
October 30, 1996/$150,000,000
______________________________
[FORM OF]
REVOLVING CREDIT NOTE
$ _______________________ ___________________, 1996
Charlotte, North Carolina
FOR VALUE RECEIVED, AMERICAN ONCOLOGY RESOURCES, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the
order of __________________________________________, (the "Lender"), at the
offices of First Union National Bank of North Carolina (the "Agent") located at
301 South College Street, Charlotte, North Carolina (or at such other place or
places as the Agent may designate), the principal sum of up to
_______________________________ DOLLARS ($__________________), or such lesser
amount as may constitute the unpaid principal amount of the Loans payable to the
Lender, on the dates set forth in and under the terms and conditions of this
Revolving Credit Note (this "Revolving Credit Note") and that certain Second
Amended and Restated Loan Agreement, dated as of October 30, 1996, by and
between the Borrower, the Agent and the Lenders as defined therein (as the same
may be amended, modified, renewed, restated, extended or supplemented from time
to time, the "Loan Agreement"). This Revolving Credit Note is an amendment,
restatement and renewal in full of a First Amended and Restated Revolving
Credit/Term Note, dated January 31, 1996, in the original principal amount of up
to $35,000,000, executed and delivered by the Borrower to First Union National
Bank of North Carolina. Upon execution and delivery of this Revolving Credit
Note, the note amended, restated and renewed hereby shall be marked "Renewed and
reevidenced by a note or a series of promissory notes dated October 30, 1996,
which are substituted herefor in entirety."
This Revolving Credit Note is one of a series of Notes (as defined in the
Loan Agreement) issued to evidence the Loans made from time to time pursuant to
ARTICLE II of the Loan Agreement. All of the terms, conditions and covenants
of the Loan Agreement are expressly made a part of this Revolving Credit Note by
reference in the same manner and with the same effect as if set forth herein at
length, and any holder of this Revolving Credit Note is entitled to the benefits
of and remedies provided in the Loan Agreement and the other Loan Documents.
Capitalized terms not defined herein shall have the meanings given to them in
the Loan Agreement. Reference is made to the Loan Agreement for provisions
relating to the interest rate, maturity, payment, prepayment, acceleration and
other terms of and affecting this Revolving Credit Note.
In the event of an acceleration of the maturity of this Revolving Credit
Note, this Revolving Credit Note, and all other indebtedness of the Borrower to
the Lender under any of the Loan Documents, shall become immediately due and
payable, to the extent permitted by law, without presentation, demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.
In the event this Revolving Credit Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees as
set forth in the Loan Agreement.
<PAGE>
This Revolving Credit Note shall be governed by and construed in accordance
with the internal laws and judicial decisions of the State of North Carolina.
To the extent permitted by law, the Borrower hereby submits to the jurisdiction
and venue of the federal and state courts located in Mecklenburg County, North
Carolina, although the Lender shall not be limited to bringing an action in such
courts.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to be
executed by its duly authorized corporate officers as of the day and year first
above written.
AMERICAN ONCOLOGY RESOURCES, INC.
By:____________________________
R. Dale Ross
Chairman and Chief Executive Officer
ATTEST:
_________________________________
L. Fred Pounds, Assistant Secretary
Tax Identification Number: 84-1213501
<PAGE>
Exhibit B-1 to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as Agent
American Oncology Resources, Inc.,
Borrower
October 30, 1996/$150,000,000
[FORM OF]
NOTICE OF BORROWING
[Date]
First Union National Bank
of North Carolina, as Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, American Oncology Resources, Inc. (the "Borrower"),
refers to the Second Amended and Restated Loan Agreement, dated as of October
30, 1996, among the undersigned as Borrower, the banks and other financial
institutions party thereto from time to time (the "Lenders"), and First Union
National Bank of North Carolina, as Agent for the Lenders and as the Issuing
Bank (as amended, modified or supplemented from time to time, the "Loan
Agreement"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Loan Agreement. Pursuant to SECTION 2.2(A) of the
Loan Agreement, the undersigned hereby gives you, as Agent, irrevocable notice
that the undersigned hereby requests a Borrowing under the Loan Agreement, and
to that end sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by SECTION 2.2(A) of the Loan Agreement:
(i) The Business Day of the Proposed Borrowing is _______________
(the "Borrowing Date")./1/
(ii) The aggregate principal amount of the Proposed Borrowing is
$_______________.
(iii) The Loans comprising the Proposed Borrowing shall be
initially maintained as [Base Rate Loans] [LIBOR Loans].
____________________________
/1/Shall be a Business Day at least one Business Day after the date hereof
(in the case of Base Rate Loans) or at least three Business Days after the date
hereof (in the case of LIBOR Loans).
<PAGE>
[(iv) The initial Interest Period for each Loan made as part of
the Proposed Borrowing shall be [one/two/three/six months].]/2/
The undersigned hereby certifies that the following statements are true on
the date hereof and will be true on the Borrowing Date:
(A) Each of the representations and warranties contained in ARTICLE
IV of the Loan Agreement and in the other Loan Documents is and will be
true and correct on and as of each such date, with the same effect as if
made on and as of each such date, both immediately before and after giving
effect to the Proposed Borrowing (except to the extent facts upon which
such representation and warranty are based may be changed as a result of
transactions permitted or contemplated by the Loan Agreement or such
representation or warranty relates solely to a prior date;
(B) No Default or Event of Default has occurred and is continuing
or would result from the Proposed Borrowing or the application of the
proceeds therefrom; and
(C) After giving effect to the Proposed Borrowing, the sum of the
aggregate principal amount of Loans outstanding and the aggregate Letter of
Credit Outstandings will not exceed the Total Commitment.
Very truly yours,
AMERICAN ONCOLOGY RESOURCES, INC.
By: ______________________________
Title: ___________________________
_____________________
/2/To be included for a Proposed Borrowing comprised of LIBOR Loans.
LIBOR Loans of six-month Interest Period are subject to availability to all
Lenders.
-2-
<PAGE>
Exhibit B-2 to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as Agent
American Oncology Resources, Inc.,
Borrower
October 30, 1996/$150,000,000
[FORM OF]
NOTICE OF CONVERSION/CONTINUATION
[Date]
First Union National Bank
of North Carolina, as Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, American Oncology Resources, Inc. (the "Borrower"),
refers to the Second Amended and Restated Loan Agreement, dated as of October
30, 1996, among the undersigned as Borrower, the banks and other financial
institutions party thereto from time to time (the "Lenders"), and First Union
National Bank of North Carolina, as Agent for the Lenders and as the Issuing
Bank (as amended, modified or supplemented from time to time, the "Loan
Agreement"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Loan Agreement. Pursuant to SECTION 2.9(B) of the
Loan Agreement, the undersigned hereby gives you, as Agent, irrevocable notice
that the undersigned hereby requests a [conversion] [continuation] of Loans
under the Loan Agreement, and to that end sets forth below the information
relating to such [conversion] [continuation] (the "Proposed [Conversion]
[Continuation]") as required by SECTION 2.9(B) of the Loan Agreement:
(i) The Business Day of the Proposed [Conversion] [Continuation] is
_______________./1/
(ii) The Proposed [Conversion] [Continuation] involves
$____________ in aggregate principal amount of Loans made pursuant to a
Borrowing on ____________.
(iii) The Loans referred to in clause (ii) above are presently
maintained as [Base Rate] [LIBOR] Loans and are proposed hereby to be
[converted into Base Rate/LIBOR Loans] [continued as LIBOR Loans].
______________________
/1/Shall be a Business Day at least one Business Day after the date
hereof (in the case of any conversion of LIBOR Loans into Base Rate Loans) or at
least three Business Days after the date hereof (in the case of any conversion
of Base Rate Loans into, or continuation of, LIBOR Loans), and additionally, in
the case of any conversion of LIBOR Loans into Base Rate Loans, or continuation
of LIBOR Loans, shall be the last day of the Interest Period applicable thereto.
<PAGE>
[(iv) The initial Interest Period for each Loan being [converted
into] [continued as] a LIBOR Loan as part of the Proposed [Conversion]
[Continuation] shall be [one/two/three/six months].]/2/
The undersigned hereby certifies that the following statements are true on
the date hereof and will be true on the effective date of the Proposed
[Conversion] [Continuation]:
No Default or Event of Default shall have occurred and be
continuing on the Borrowing Date or after giving effect to the
Proposed [Conversion] [Continuation].
Very truly yours,
AMERICAN ONCOLOGY RESOURCES, INC.
By: ______________________________
Title: ___________________________
______________________
/2/To be included in the case of any conversion of Base Rate Loans into,
or continuation of, LIBOR Loans. LIBOR Loans of six-month Interest Period are
subject to availability to all Lenders.
-2-
<PAGE>
Exhibit B-3 to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as Agent
American Oncology Resources, Inc.,
Borrower
October 30, 1996/$150,000,000
[FORM OF]
LETTER OF CREDIT NOTICE
[Date]
First Union National Bank of
North Carolina, as Issuing Lender
Specialized Industries/Healthcare
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Martin Richards
First Union National Bank of
North Carolina, as Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
The undersigned, American Oncology Resources, Inc. (the "Borrower"),
refers to the Second Amended and Restated Loan Agreement, dated as of October
30, 1996, among the undersigned as Borrower, the banks and other financial
institutions party thereto from time to time (the "Lenders"), and First Union
National Bank of North Carolina, as Agent for the Lenders and as the Issuing
Bank (as amended, modified or supplemented from time to time, the "Loan
Agreement"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Loan Agreement. Pursuant to SECTION 2.18(B) of
the Loan Agreement, the undersigned hereby gives you, as Issuing Bank,
irrevocable notice that the Borrower requests the issuance of a Letter of Credit
for its account under the Loan Agreement, and to that end sets forth below the
information relating to such Letter of Credit (the "Proposed Letter of Credit")
as required by SECTION 2.18(B) of the Loan Agreement:
(i) The Business Day on which the Proposed Letter of Credit is
requested to be issued is _______________./1/
(ii) The Stated Amount of the Proposed Letter of Credit is
$____________.
(iii) The expiry date of the Proposed Letter of Credit is
______________.
______________________
/1/Shall be at least three Business Days (or such shorter period as is
acceptable to the Issuing Bank in any given case) after the date hereof.
<PAGE>
(iv) The name and address of [the] [each] beneficiary of the
Proposed Letter of Credit is __________________________________.
The undersigned agrees to complete all application procedures and documents
reasonably required by you in connection with the Proposed Letter of Credit.
The undersigned hereby certifies that the following statements are true on
the date hereof and will be true on the date of issuance of the Proposed Letter
of Credit:
(A) Each of the representations and warranties contained in ARTICLE
IV of the Loan Agreement and in the other Loan Documents is and will be
true and correct on and as of each such date, with the same effect as if
made on and as of each such date, both immediately before and after giving
effect to the issuance of the Proposed Letter of Credit, except to the
extent facts upon which such representation and warranty are based may be
changed as a result of transactions permitted or contemplated by the Loan
Agreement or such representation or warranty relates solely to a prior
date;
(B) No Default or Event of Default has occurred and is continuing
or would result from the issuance of the Proposed Letter of Credit; and
(C) After giving effect to the issuance of the Proposed Letter of
Credit, the sum of the aggregate principal amount of Loans outstanding and
the aggregate Letter of Credit Outstandings will not exceed the Total
Commitment.
Very truly yours,
AMERICAN ONCOLOGY RESOURCES, INC.
By: ________________________________
Title: _____________________________
-2-
<PAGE>
Exhibit C to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.,
Borrower
October 30,
1996/$150,000,000
_________________________
FIRST AMENDED AND RESTATED GUARANTY AGREEMENT
THIS FIRST AMENDED AND RESTATED GUARANTY AGREEMENT, dated as of the
30th day of October, 1996 (this "Guaranty"), is made by each of the undersigned
Subsidiaries of AMERICAN ONCOLOGY RESOURCES, (the "Borrower") and each other
Subsidiary of the Borrower that, after the date hereof, executes an instrument
of accession hereto substantially in the form of Exhibit 1 (a "Guarantor
Accession"; the undersigned and such other Subsidiaries of the Borrower,
collectively, the "Guarantors"), in favor of the Guaranteed Parties (as
hereinafter defined).
RECITALS
A. Reference is made to the Second Amended and Restated Loan
Agreement, dated as of October 30, 1996 (as amended, modified or supplemented
from time to time, the "Loan Agreement"), among the Borrower, certain banks and
other financial institutions (collectively, the "Lenders"), and First Union
National Bank of North Carolina, as agent for the Lenders (in such capacity, the
"Agent") and as the issuer of Letters of Credit (in such capacity, the "Issuing
Bank") (the Lenders, the Issuing Bank, and the Agent, collectively, the
"Guaranteed Parties"). Unless otherwise defined herein, capitalized terms used
herein without definition shall have the meanings given to them in the Loan
Agreement.
B. Each of the Guarantors is a Subsidiary of the Borrower and has
benefitted and will benefit directly or indirectly from the transactions
contemplated in the Loan Agreement.
C. The Lenders have requested, as a condition among others to
entering into the Loan Agreement and making Loans from time to time to the
Borrower thereunder, that each Guarantor guarantee the payment of all of the
Obligations, and grant to the Agent, for the benefit of the Lenders, a perfected
security interest in the assets set forth in the Second Amended and Restated
Guarantors' Security Agreement, of even date herewith (the "Guarantors' Security
Agreement"), to secure such guarantee obligation.
D. Without this Guaranty, the Lenders would be unwilling to enter into
the Loan Agreement and make Loans to the Borrower thereunder.
E. Because of the direct benefit to the Guarantors of the Lenders
making the Loans to the Borrower, each of the Guarantors has agreed to guarantee
the payment of the Obligations on the terms set forth herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the
<PAGE>
Guaranteed Parties to enter into the Loan Agreement and to induce the Lenders
and the Issuing Bank to extend credit to the Borrower thereunder from time to
time, each Guarantor hereby agrees as follows:
1. GUARANTY.
(a) Each Guarantor hereby irrevocably, absolutely and unconditionally, and
jointly and severally:
(i) guarantees to the Guaranteed Parties the full and prompt
payment, at any time and from time to time as and when due (whether at the
stated maturity, by acceleration or otherwise), of all of the Obligations
of the Borrower, including, without limitation, (y) all principal of and
interest on the Loans, all Reimbursement Obligations in respect of the
Letters of Credit, and all fees, expenses, indemnities and other amounts
payable by the Borrower under the Loan Agreement or any other Loan Document
(including, to the greatest extent permitted by law, interest accruing
after the filing of a petition or commencement of a case by or with respect
to the Borrower seeking relief under any Insolvency Laws (as hereinafter
defined), regardless of whether a claim for any such interest is allowed
against the Borrower in any such proceeding), and (z) all Obligations that,
but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due (all liabilities and obligations
described in this clause (i), collectively, the "Guaranteed Obligations");
and
(ii) agrees to pay upon demand all reasonable out-of-pocket costs
and expenses of any Guaranteed Party (including, without limitation,
reasonable attorneys' fees, but excluding salaries of any Guaranteed
Party's regularly employed personnel and overhead incurred or paid by any
Guaranteed Party) incurred or paid by (y) the Agent in connection with any
amendment, modification, waiver or consent hereof or pursuant hereto and
(z) the Agent and, upon the occurrence and during the continuation of an
Event of Default, any other Guaranteed Party in connection with any suit,
action or proceeding to enforce or protect any rights of such Guaranteed
Party hereunder, including costs and expenses for which such Guaranteed
Party is entitled to reimbursement under or pursuant to the Loan Agreement
or any other Loan Document (all liabilities and obligations described in
this clause (ii), collectively, the "Other Obligations"; and the Other
Obligations, together with the Guaranteed Obligations, the "Total
Obligations").
(b) Notwithstanding the provisions of subsection (a) above and
notwithstanding any other provisions contained herein or in any other Loan
Document:
(i) no provision of this Guaranty shall require or permit the
collection from any Guarantor of interest in excess of the maximum rate or
amount that such Guarantor may be required or permitted to pay pursuant to
applicable law; and
(ii) the liability of each Guarantor under this Guaranty as of any
date shall be limited to a maximum aggregate amount (the "Maximum
Guaranteed Amount") equal to the greatest amount that would not render such
Guarantor's obligations under this Guaranty subject to avoidance, discharge
or reduction as of such date as a fraudulent transfer or conveyance under
applicable federal and state laws pertaining to bankruptcy, reorganization,
arrangement, moratorium, readjustment of debts, dissolution, liquidation or
other debtor relief, specifically including, without limitation, the
Bankruptcy Code and any fraudulent transfer and fraudulent conveyance laws
(collectively, "Insolvency Laws"), in each instance after giving effect to
all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under applicable
-2-
<PAGE>
Insolvency Laws (specifically excluding, however, any liabilities of such
Guarantor in respect of intercompany indebtedness to the Borrower or any of
its Affiliates to the extent that such indebtedness would be discharged in
an amount equal to the amount paid by such Guarantor hereunder, and after
giving effect as assets to the value (as determined under applicable
Insolvency Laws) of any rights to subrogation, contribution, reimbursement,
indemnity or similar rights of such Guarantor pursuant to (y) applicable
law or (z) any agreement (including this Guaranty) providing for an
equitable allocation among such Guarantor and other Affiliates of the
Borrower of obligations arising under guaranties by such parties).
(c) The Guarantors desire to allocate among themselves, in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly,
in the event any payment or distribution is made hereunder on any date by a
Guarantor (a "Funding Guarantor") that exceeds its Fair Share (as hereinafter
defined) as of such date, that Funding Guarantor shall be entitled to a
contribution from each of the other Guarantors in the amount of such other
Guarantor's Fair Share Shortfall (as hereinafter defined) as of such date, with
the result that all such contributions will cause each Guarantor's Aggregate
Payments (as hereinafter defined) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Guaranteed Amount
(as hereinafter defined) with respect to such Guarantor to (y) the aggregate of
the Adjusted Maximum Guaranteed Amounts with respect to all Guarantors,
multiplied by (ii) the aggregate amount paid or distributed on or before such
date by all Funding Guarantors hereunder in respect of the obligations
guarantied. "Fair Share Shortfall" means, with respect to a Guarantor as of any
date of determination, the excess, if any, of the Fair Share of such Guarantor
over the Aggregate Payments of such Guarantor. "Adjusted Maximum Guaranteed
Amount" means, with respect to a Guarantor as of any date of determination, the
Maximum Guaranteed Amount of such Guarantor, determined in accordance with the
provisions of subsection (b) above; provided that, solely for purposes of
calculating the "Adjusted Maximum Guaranteed Amount" with respect to any
Guarantor for purposes of this subsection (c), any assets or liabilities arising
by virtue of any rights to subrogation, reimbursement or indemnity or any rights
to or obligations of contribution hereunder shall not be considered as assets or
liabilities of such Guarantor. "Aggregate Payments" means, with respect to a
Guarantor as of any date of determination, the aggregate amount of all payments
and distributions made on or before such date by such Guarantor in respect of
this Guaranty (including, without limitation, in respect of this subsection
(c)). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. Each Funding Guarantor's right of contribution under this
subsection (c) shall be subject to the provisions of SECTION 2. The allocation
among Guarantors of their obligations as set forth in this subsection (c) shall
not be construed in any way to limit the liability of any Guarantor hereunder to
the Guaranteed Parties.
(d) The guaranty of each Guarantor set forth in this Section is a guaranty
of payment as a primary obligor, and not a guaranty of collection. Each
Guarantor hereby acknowledges and agrees that the Guaranteed Obligations, at any
time and from time to time, may exceed the Maximum Guaranteed Amount of such
Guarantor and of any other Guarantor and may exceed the aggregate of the Maximum
Guaranteed Amounts of all Guarantors, in each case without discharging,
releasing, limiting, deferring, reducing or otherwise affecting the obligations
of any Guarantor hereunder to any extent, except as specifically provided
otherwise in this Section, or impairing or otherwise affecting the rights,
powers and remedies of any Guaranteed Party hereunder or under any other Loan
Document.
2. SUBORDINATION. All indebtedness and other obligations, whether now or
hereafter existing, of the Borrower or any other Subsidiary of the Borrower to
any Guarantor, including, without
-3-
<PAGE>
limitation, any such indebtedness in any proceeding under the Bankruptcy Code
and any intercompany receivables, together with any interest thereon (including,
to the greatest extent permitted by law, interest accruing after the filing of a
petition or commencement of a case by or with respect to such Borrower or
Subsidiary seeking relief under any Insolvency Laws, regardless of whether a
claim for any such interest is allowed against such Borrower or Subsidiary in
any such proceeding), and all rights of indemnity, contribution or reimbursement
of any Guarantor against any other Guarantor or any other Person directly or
indirectly liable for any Guaranteed Obligations arising as a result of any
payment made under or in connection with this Guaranty or the performance or
enforcement hereof, whether such rights arise by contract, statute, common law
or otherwise (including rights of contribution as set forth in SECTION 1(C)),
shall be, and hereby are, deferred and subordinated to the indefeasible payment
in full of the Total Obligations. After the occurrence and during the
continuance of (i) an Event of Default under Section 7.1(a), (i) or (j) of the
Loan Agreement, unless directed to do so by the Agent, no Guarantor shall, at
any time collect, realize upon or receive any payment or distribution with
respect to any intercompany notes or other intercompany obligations owed
directly or indirectly to such Guarantor, or seek or endeavor to do the same,
and all such rights to collect, realize upon and receive any such payment or
distribution shall vest solely in the Agent at all times after the occurrence
and during the continuance of such an Event of Default and (ii) an Event of
Default under the Loan Agreement other than those specified in subsection (i)
hereof, if directed to do so by the Agent, no Guarantor shall, at any time
except as may be otherwise permitted by the Agent, collect, realize upon or
receive any payment or distribution with respect to any intercompany notes or
other intercompany obligations owed directly or indirectly to such Guarantor, or
seek or endeavor to do the same; any payments on or with respect to any such
intercompany notes or obligations shall, if collected or received in violation
of subsections (I) or (II) hereof, be held by each Guarantor in trust for the
benefit of the Guaranteed Parties, and each Guarantor shall, promptly upon
receipt thereof, pay over such amount to the Agent, to be applied against the
Total Obligations as provided herein, all without in any way impairing or
otherwise affecting the liability of such Guarantor under any other provision of
this Guaranty. Should any such indebtedness be or become represented by any
written instrument, such instrument shall forthwith be endorsed and delivered to
the Agent. Additionally, in the event the Borrower or any Guarantor becomes a
"debtor" within the meaning of the Bankruptcy Code, the Agent shall be entitled,
at its option, on behalf of the Guaranteed Parties and as attorney-in-fact for
each Guarantor, and is hereby authorized and appointed by each Guarantor, to
file proofs of claim on behalf of such Guarantor and vote the rights of such
Guarantor in any plan of reorganization, and to demand, sue for, collect and
receive every payment and distribution on any indebtedness of the Borrower or
such Subsidiary to any Guarantor in any such proceeding.
3. ABSOLUTE AND PRIMARY LIABILITY. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute and unconditional, are exclusive
and independent of any security for or other guaranty of any Guaranteed
Obligations or other obligations of the Borrower, whether given by such
Guarantor, any other Guarantor or other surety or guarantor of any Guaranteed
Obligations (any such other Guarantor or other surety or guarantor, each, an
"Other Guarantor"), and shall not be discharged, released, limited, deferred,
reduced or otherwise affected to any extent by reason of any of the following,
whether or not such Guarantor has notice or knowledge thereof:
(i) any payments made by the Borrower, such Guarantor, any Other
Guarantor or any other Person, or received or collected therefrom by any of
the Guaranteed Parties by virtue of any action, proceeding, set-off,
appropriation or application at any time or from time to time, in each case
in payment of or reduction of any Guaranteed Obligations, and any direction
by the
-4-
<PAGE>
Borrower or such Guarantor, Other Guarantor or other Person as to
application of payment in connection therewith;
(ii) the invalidity or unenforceability of any Guaranteed
Obligations, any Collateral or other security therefor, or any Loan
Document or other agreement or instrument delivered pursuant thereto;
(iii) any bankruptcy, reorganization, arrangement, liquidation or
insolvency of, or dissolution, termination, reorganization or other change
in the corporate structure or existence of, the Borrower or any Other
Guarantor, whether or not resulting in a corresponding discharge, reduction
or restructuring of any Guaranteed Obligations or the guaranty obligations
of such Other Guarantor;
(iv) any payment made on any Guaranteed Obligations that is repaid
to the Borrower or any Other Guarantor pursuant to court order in a
proceeding pursuant to any Insolvency Laws;
(v) any liability of such Guarantor by endorsement or in any other
way other than under this Guaranty, at any time created or arising, for any
indebtedness owing by the Borrower to any Guaranteed Party;
(vi) the application of any statute, regulation, order, rule,
decree or other determination of any court or other Governmental Authority,
the effect of which is to extend the term or time for payment of any
Guaranteed Obligations; or
(vii) the occurrence of any other event or the existence of any
other circumstances (other than all of the following: (x) the indefeasible
payment in full of the Total Obligations then outstanding, (y) the
termination of all Letters of Credit and (z) the termination of the
Commitments under the Loan Agreement (the events in clauses (x), (y) and
(z) above, collectively, the "Termination Requirements")) that might to any
extent constitute a legal or equitable discharge of, or a defense, set-off
or counterclaim available to, a surety or guarantor, including the
allegation or assertion by the Borrower of any defenses, set-offs or
counterclaims against any Guaranteed Party.
4. RELEASES, EXTENSIONS, MODIFICATIONS, ETC. Each Guarantor agrees that
the Guaranteed Parties, or any of them, may at any time and from time to time,
upon or without any terms or conditions and in whole or in part:
(i) change the manner, place or terms of payment of, change or
extend the time for payment of, or renew, accelerate or otherwise alter,
any Guaranteed Obligations, any guaranty or other liability incurred
directly or indirectly in respect of any Guaranteed Obligations, or any
Collateral or other security therefor;
(ii) sell, exchange, release, substitute, surrender, compromise,
realize upon or otherwise deal with in any manner and in any order, or fail
to protect, perfect, secure, insure, continue or maintain any Liens in, any
Collateral or other security for any Guaranteed Obligations or for any
guaranty or other liability incurred directly or indirectly in respect
thereof;
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(iii) settle, compromise, release or discharge, or accept or
refuse any offer of performance with respect to or substitutions for, any
Guaranteed Obligations or any guaranty or other liability incurred directly
or indirectly in respect thereof, or subordinate the payment of the same to
the payment of any other obligations;
(iv) make or permit any amendment, modification or supplement to or
restatement of, or consent to any rescission or waiver of or departure
from, any provisions (including provisions relating to Events of Default)
of the Loan Agreement, any other Loan Document or any agreement or
instrument delivered pursuant to any of the foregoing;
(v) accept or require any guaranty or undertaking of any other
Person as to any Guaranteed Obligations or any other indebtedness of the
Borrower, including any pledge of security to secure any such guaranty;
(vi) apply, to indebtedness of the Borrower to the Guaranteed
Parties other than the Guaranteed Obligations, any amounts (by whomsoever
paid and howsoever realized), regardless of what Guaranteed Obligations may
remain unpaid after any such application; and
(vii) exercise or refrain from exercising (whether voluntarily or
involuntarily as a result of court order, operation of law or otherwise)
any rights and remedies available under the Loan Documents, including,
without limitation, foreclosing on any Collateral or any other security
held by or for the benefit of any Guaranteed Party in any order and by any
manner of sale permitted under the Loan Documents and applicable law,
whether or not every aspect of such sale is commercially reasonable;
in each case, without notice to or further assent by any of the Guarantors,
whose obligations hereunder shall not be discharged, released, limited,
deferred, reduced or otherwise affected in any manner or to any extent by reason
of any of the foregoing, notwithstanding that any such action or failure to act
may impair or extinguish any right of indemnification, contribution,
reimbursement or subrogation or other right or remedy of any Guarantor against
the Borrower or any Other Guarantor or with respect to any Collateral or other
security for the Guaranteed Obligations or for the obligations of any such Other
Guarantor.
5. WAIVER OF CERTAIN RIGHTS. Each Guarantor hereby knowingly, voluntarily
and expressly waives:
(i) all presentments, demands for payment, demands for performance,
protests and notices, including, without limitation, notices of nonpayment
or other nonperformance (including notices of default under any Loan
Document with respect to any Guaranteed Obligations), protest, dishonor,
acceptance hereof, extension of additional credit to the Borrower, the
consummation of any Acquisitions that may be permitted from time to time
pursuant to the Loan Agreement and of any of the matters referred to in
SECTIONS 3 and 4 and of any rights to consent thereto;
(ii) any right to require the Guaranteed Parties, or any of them,
(y) to proceed against, or to exhaust or have resort to any Collateral or
other security from or any deposit balance or other credit in favor of, the
Borrower, any Other Guarantor or any other Person, or (z) to pursue any
other remedy or enforce any other right; and, without limiting the
generality of the foregoing, each Guarantor hereby specifically waives the
benefits of Sections 26-7 through
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26-9, inclusive, of the General Statutes of North Carolina, as amended from
time to time, and any similar statute or law of any other jurisdiction, as
the same may be amended from time to time;
(iii) any defenses based on or arising by reason of any defense
(other than satisfaction of the Termination Requirements) of the Borrower,
any Other Guarantor or any other Person, including, without limitation, any
defense based on or arising from a lack of authority or other disability of
the Borrower, any Other Guarantor or any other Person, the invalidity or
unenforceability of any Guaranteed Obligations, any Collateral or other
security therefor, or any Loan Document or other agreement or instrument
delivered pursuant thereto, or the cessation of the liability of the
Borrower for any reason other than the satisfaction of the Termination
Requirements;
(iv) any defenses based on (y) any Guaranteed Party's acts or
omissions in the administration of the Guaranteed Obligations, the guaranty
obligations of any Guarantor or Other Guarantor or any Collateral or other
security therefor or (z) promptness, diligence or any requirement that any
Guaranteed Party protect, perfect, secure or insure any liens in any
Collateral or other security now or hereafter directly or indirectly
securing the Guaranteed Obligations or continue or maintain the same;
(v) any right to assert against any Guaranteed Party, as a defense,
counterclaim, crossclaim or set-off, any defense, counterclaim, claim,
right of recoupment or set-off that it may at any time have against any
Guaranteed Party or any other Person, other than compulsory counterclaims;
and
(vi) any defenses based on or afforded by any applicable laws that
limit the liability of or exonerate guarantors and sureties or that may in
any other way conflict with the terms of this Guaranty.
6. SUBROGATION. Until satisfaction of the Termination Requirements, none
of the Guarantors shall exercise any right of subrogation, reimbursement or
indemnity whatsoever or any right of recourse to or with respect to any assets
or properties of the Borrower or any Other Guarantor acquired by any payment
made by it hereunder or in connection with this Guaranty or the performance or
enforcement hereof, including all rights of subrogation to the rights of any of
the Guaranteed Parties against the Borrower or Other Guarantor, all rights of
indemnity, contribution or reimbursement against the Borrower or Other
Guarantor, all rights to enforce any remedies of any Guaranteed Party against
the Borrower or Other Guarantor, and any benefit of, and any right to
participate in, any Collateral or other security held by any Guaranteed Party to
secure payment of the Guaranteed Obligations, in each case whether such claims
or rights arise by contract, statute (including without limitation the
Bankruptcy Code), common law or otherwise. If any amount shall be paid to any
Guarantor on account of any such rights or matters described in this SECTION 6
at any time prior to the satisfaction of the Termination Requirements, such
amount shall be deemed to have been received and to be held in trust for the
benefit of the Guaranteed Parties, and such Guarantor shall, promptly upon the
receipt thereof, pay over such amount to the Agent, to be applied against the
Guaranteed Obligations, whether or not matured.
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Guaranteed
Parties to enter into the Loan Agreement and to induce the Lenders and the
Issuing Bank to extend credit to the Borrower thereunder from time to time, each
Guarantor represents and warrants to the Guaranteed Parties that, as
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of the date hereof (or, in the case of any Person that becomes a Guarantor after
the date hereof, as of the date of its execution of any Guarantor Accession):
(a) Such Guarantor (i) is a corporation, partnership or other entity duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of its state of incorporation or organization; (ii) is qualified
to do business and is in good standing in every other jurisdiction where the
nature of its business or the ownership of its properties requires it to be so
qualified, except to the extent failure to so qualify would not have a Material
Adverse Effect; and (iii) has the full power, authority and legal right to
execute and deliver this Guaranty and to perform and observe the terms and
provisions hereof.
(b) There are no judgments, injunctions or similar orders or decrees, and
no actions, suits, investigations or proceedings pending or, to the knowledge of
such Guarantor, threatened, at law or in equity before any court or
administrative officer or Governmental Authority, (i) that question the validity
of this Guaranty or (ii) otherwise against or affecting such Guarantor that,
individually or in the aggregate, if adversely determined, would have a Material
Adverse Effect.
(c) This Guaranty has been duly authorized by all necessary corporate,
partnership or other action on the part of such Guarantor, has been validly
executed and delivered by such Guarantor and is the legal, valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditor's rights generally or by general principles of equity.
(d) Neither the execution, delivery or performance of this Guaranty by such
Guarantor nor compliance by it herewith: (i) conflicts or will conflict with or
results or will result in any material breach of, or constitutes or will
constitute with the passage of time or the giving of notice or both, a material
default under, (x) the articles of incorporation, bylaws or other organizational
documents of such Guarantor, (y) any law, order, writ, injunction or decree of
any court or Governmental Authority, or (z) any written or oral agreement or
instrument to which such Guarantor is a party or by which it, or any of its
properties, is bound, or (ii) results or will result in the creation or
imposition of any lien upon the properties of such Guarantor pursuant to any
such agreement or instrument, except in the case of items (i)(y) or (z) where
the breach or default would not have a Material Adverse Effect.
(e) No authorization, consent or approval of, or declaration or filing
with, any Governmental Authority is required for the valid execution, delivery
and performance by such Guarantor of this Guaranty or the consummation by it of
the transactions contemplated hereby.
(f) Such Guarantor has been provided with a true and complete copy of the
executed Loan Agreement, as in effect as of the date it became a party hereto,
and its principal officers are familiar with the contents thereof, particularly
insofar as the contents thereof relate or apply to such Guarantor.
8. FINANCIAL CONDITION OF BORROWER. Each Guarantor represents that it has
knowledge of the Borrower's financial condition and affairs and that it has
adequate means to obtain from the Borrower on an ongoing basis information
relating thereto and to the Borrower's ability to pay and perform the Guaranteed
Obligations, and agrees to assume the responsibility for keeping, and to keep,
so informed for so long as this Guaranty is in effect with respect to such
Guarantor. Each Guarantor agrees that the Guaranteed Parties will have no
obligation to investigate the financial condition or affairs of the Borrower
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for the benefit of any Guarantor nor to advise any Guarantor of any fact
respecting, or any change in, the financial condition or affairs of the Borrower
that might become known to any Guaranteed Party at any time, whether or not such
Guaranteed Party knows or believes or has reason to know or believe that any
such fact or change is unknown to any Guarantor, or might (or does) materially
increase the risk of any Guarantor as guarantor, or might (or would) affect the
willingness of any Guarantor to continue as a guarantor of the Guaranteed
Obligations.
9. PAYMENTS; APPLICATION; SET-OFF.
(a) Each Guarantor agrees that, upon the failure of the Borrower to pay any
of the Guaranteed Obligations when and as the same shall become due (whether at
the stated maturity, by acceleration or otherwise), and without limitation of
any other right or remedy that any Guaranteed Party may have at law or in equity
against such Guarantor, such Guarantor will, subject to the provisions of
SECTION 1(B), forthwith pay or cause to be paid to the Agent, for the benefit of
the Guaranteed Parties, an amount equal to the amount of the Guaranteed
Obligations then due and owing as aforesaid. All payments made by each
Guarantor hereunder will be made to the Agent without set-off, counterclaim or
other defense in Dollars and net of any applicable withholding or other taxes
(other than any tax imposed on or measured by or calculated on the basis of net
income or capital of any Lender or the Agent).
(b) All payments made from time to time hereunder shall be applied upon
receipt as follows:
(i) first, to the payment of all Other Obligations owing to the
Agent;
(ii) second, after payment in full of the amounts specified in
clause (i) above, to the payment of all other Total Obligations owing to
the Guaranteed Parties, each Guaranteed Party to receive an amount equal to
the outstanding amount of the Total Obligations then owing to it or, if
such payment is insufficient to pay in full all such Total Obligations, its
Pro Rata Share (as hereinafter defined) of such payment; and
(iii) third, after payment in full of the amounts specified in
clauses (i) and (ii) above, and following the termination of this Guaranty
(as to all Guarantors) pursuant to SECTION 14, to the Guarantors or to any
other Person that may be lawfully entitled to receive such surplus.
(c) For purposes of clause (ii) of subsection (b) above, "Pro Rata Share"
shall mean, when calculating a Guaranteed Party's portion of any payment
hereunder, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then outstanding amount of the Total Obligations owing
to such Guaranteed Party and the denominator of which is the then outstanding
amount of all Total Obligations.
(d) Subject to the provisions of SECTION 1(B), the Guarantors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of all payments made hereunder and the aggregate amount of the sums referred to
in clauses (i) and (ii) of subsection (b) above.
(e) In addition to all other rights and remedies available under the Loan
Documents or applicable law or otherwise, upon and at any time after the
occurrence and during the continuance of any Event of Default (such term to
mean, for purposes of this Section, any "Event of Default" within the meaning of
the Loan Agreement), each Guaranteed Party may, and is hereby authorized by each
Guarantor, at any such time and from time to time, to the fullest extent
permitted by applicable law, without presentment,
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demand, protest or other notice of any kind, all of which are hereby knowingly
and expressly waived by each Guarantor, to set off and to apply any and all
deposits (general or special, time or demand, provisional or final) and any
other property at any time held, and any other indebtedness at any time owing,
by such Guaranteed Party to or for the credit or the account of such Guarantor
against any or all of the obligations of such Guarantor to such Guaranteed Party
hereunder now or hereafter existing, whether or not such obligations may be
contingent or unmatured. Each Guaranteed Party agrees promptly to notify such
Guarantor after any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
10. ENFORCEMENT. The Guaranteed Parties agree that, except as set forth
in SECTION 9(E), this Guaranty may be enforced only by the action of the Agent,
acting upon the instructions or with the consent of the Required Lenders as
provided for in the Loan Agreement, and that no Guaranteed Party shall have any
right individually to enforce or seek to enforce this Guaranty or to realize
upon any Collateral or other security given to secure the payment and
performance of the Guarantors' obligations hereunder. The obligations of each
Guarantor hereunder are independent of the obligations of the Borrower and any
Other Guarantor, and a separate action or actions may be brought against each
Guarantor whether or not action is brought against the Borrower or any Other
Guarantor and whether or not the Borrower or any Other Guarantor is joined in
any such action.
11. AMENDMENTS, ETC. No amendment, modification, waiver, discharge or
termination of this Guaranty or any provision hereof, nor any consent to any
departure by any Guarantor therefrom, shall in any event be effective unless in
writing and signed by the Agent, who shall act with the concurrence of the
Required Lenders, and each Guarantor directly affected thereby (or by the
Borrower on its behalf pursuant to the power of attorney granted in SECTION
17(B)); provided, however, that (x) the Agent may, in accordance with the
provisions of the Loan Agreement, from time to time require Subsidiaries of the
Borrower not already parties hereto to become Guarantors hereunder by executing
a Guarantor Accession hereto in the form of EXHIBIT 1, (y) certain Guarantors
may from time to time be released automatically herefrom in accordance with the
provisions of SECTION 15 and (z) the Required Lenders (or such of the Lenders as
may in any particular case be required under the Loan Agreement) may from time
to time (but without any obligation to do so) release, or direct the Agent to
release, any Guarantor hereunder, in each case under clauses (x), (y) and (z)
above without the necessity of obtaining the consent of any other Guarantor (it
being understood that the release or addition hereunder of any Guarantor shall
not constitute a change, waiver, discharge or termination affecting any
Guarantor other than the Guarantor so released or added).
12. NO WAIVERS, ETC. No delay or failure to take action on the part of any
Guaranteed Party in exercising any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between any of the Guarantors and the
Guaranteed Parties or their agents or employees shall be effective to change,
modify or discharge any provision of this Guaranty or to constitute a waiver of
any Event of Default. No notice to or demand upon any Guarantor in any case
shall entitle such Guarantor or any Other Guarantor to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
right of any Guaranteed Party to exercise any right or remedy or take any other
or further action in any circumstances without notice or demand. All rights and
remedies under this Guaranty and the other Loan Documents are cumulative to, and
not exclusive of, any rights or remedies that are available at law, in equity or
otherwise.
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13. ASSIGNMENT. No Guarantor may assign this Guaranty or any of its rights
or obligations hereunder. Any Guaranteed Party may assign or otherwise transfer
its interest in this Guaranty, in whole or in part, in connection with an
assignment or other transfer of any or all Guaranteed Obligations held by such
Guaranteed Party in accordance with the Loan Agreement (including by the sale of
participations), pursuant to an Assignment and Acceptance, it being understood
and agreed that upon any such assignment pursuant to an Assignment and
Acceptance by any Guaranteed Party, the Person that becomes the holder of the
Guaranteed Obligations that are the subject of such assignment shall (except as
may be otherwise provided by such Guaranteed Party as a term or condition of
such assignment) have and may exercise all of the rights granted to such
Guaranteed Party under this Guaranty to the extent of that part of or interest
in the Guaranteed Obligations so assigned to such Person. No participant
(within the meaning of the Loan Agreement) in any of the Guaranteed Obligations
shall be entitled to exercise any rights under SECTION 9(E). Each Guarantor
hereby irrevocably waives notice of and consents in advance to the assignment as
provided above from time to time by any Guaranteed Party of the Guaranteed
Obligations held by it, or any part thereof or interest therein, and of the
corresponding rights and interest of such Guaranteed Party hereunder in
connection therewith.
14. CONTINUING GUARANTY; TERM. This Guaranty is a continuing guaranty and
covers all of the Guaranteed Obligations as the same may arise and be
outstanding from time to time and at any time from and after the date hereof to
the termination hereof as to all Guarantors, whether pursuant to any extensions
of credit to the Borrower under the Loan Agreement after the date hereof or
otherwise. Unless sooner terminated (as to any particular Guarantor) pursuant
to SECTION 15 or otherwise in accordance with the terms hereof, this Guaranty
and the obligations of the Guarantors hereunder shall continue in effect until
satisfaction of the Termination Requirements. Each Guarantor agrees that to the
extent all or part of any payment of the Guaranteed Obligations made by any
Person is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid by or on behalf of any Guaranteed Party to a
trustee, receiver or any other party under any Insolvency Laws (the amount of
any such payment, a "Reclaimed Amount"), then, to the extent of such Reclaimed
Amount, this Guaranty shall continue in full force and effect or be revived and
reinstated, as the case may be, as to the Guaranteed Obligations intended to be
satisfied as if such payment had not been received; and each Guarantor
acknowledges that the term "Guaranteed Obligations" includes all Reclaimed
Amounts that may arise from time to time.
15. DISCHARGE OF GUARANTOR. In the event that all of the capital stock of
any Guarantor is sold, exchanged or otherwise disposed of (including by merger
or consolidation) in a transaction permitted by the terms of the Loan Agreement
or to which the Required Lenders have consented pursuant to the Loan Agreement
and any proceeds of such disposition have been applied as may be required or
permitted under or pursuant to the Loan Agreement or such consent, then, to the
extent applicable, each Guarantor (i) all of the capital stock of which is so
disposed of or (ii) that is a direct wholly owned Subsidiary of a Guarantor all
of the capital stock of which is so disposed of, shall be released from this
Guaranty and its obligations hereunder shall be automatically discharged without
any further action by any Person, and as to each such Guarantor, this Guaranty
shall terminate and have no further force or effect.
16. SECURITY. The obligations of each Guarantor hereunder are secured by
perfected and, except for Permitted Liens, first-priority security interests in
the personal property and interests in personal property of each such Guarantor
granted to the Agent, for the benefit of the Lenders, under the Guarantors'
Security Agreement between each Guarantor and the Agent, on behalf of the
Lenders. Each Guarantor agrees that in the event any Guarantor fails to pay and
perform its obligations hereunder when
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due, the Agent and each of the Guaranteed Parties shall have all the rights and
remedies available under the Guarantors' Security Agreement immediately and
without further action by the Agent or the Guaranteed Parties.
17. NOTICE; BORROWER AS ATTORNEY-IN-FACT. (a) Except as otherwise
expressly provided herein, notice to the Guarantors or to the Agent hereunder
shall be given in the manner specified in SECTION 10.4 of the Loan Agreement.
(b) Each Guarantor hereby irrevocably designates and appoints the Borrower
as its representative for the purpose of receiving any notice or other
communication hereunder, and agrees that any notice or other communication given
to the Borrower at the address and in the manner specified herein shall be
deemed notice to all Guarantors.
18. GOVERNING LAW; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS GUARANTY HAS BEEN DELIVERED AND ACCEPTED AT, AND SHALL BE DEEMED
TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE INTERPRETED, AND THE RIGHTS
AND LIABILITIES OF THE GUARANTEED PARTIES AND THE GUARANTORS DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF
THE STATE OF NORTH CAROLINA. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS
DAY RECEIVED, EACH GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT LOCATED
WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY PROCEEDING
INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF
OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
PROCEEDING TO WHICH ANY GUARANTEED PARTY OR SUCH GUARANTOR IS A PARTY, INCLUDING
ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY GUARANTEED PARTY OR SUCH GUARANTOR. EACH GUARANTOR IRREVOCABLY AGREES TO BE
BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR
RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED
ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY SUCH PROCEEDING. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF ANY GUARANTEED PARTY OTHERWISE SO ENTITLED TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION.
(b) EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES AND APPOINTS THE BORROWER
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE ON ITS BEHALF ALL SERVICE OF
PROCESS IN ANY ACTION OR PROCEEDING AND ANY OTHER NOTICE OR COMMUNICATION
HEREUNDER, CONSENTS THAT ALL SERVICE OF PROCESS UPON IT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWER AT ITS ADDRESS SET FORTH
IN THE LOAN AGREEMENT (AND
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SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT THEREOF OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN THE UNITED STATES
MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED), AND AGREES THAT SERVICE
SO MADE SHALL BE EFFECTIVE AND BINDING UPON SUCH GUARANTOR IN EVERY RESPECT AND
THAT ANY OTHER NOTICE OR COMMUNICATION GIVEN TO THE BORROWER AT THE ADDRESS AND
IN THE MANNER SPECIFIED HEREIN SHALL BE EFFECTIVE NOTICE TO SUCH GUARANTOR. BY
ITS SIGNATURE HERETO, THE BORROWER CONSENTS TO ITS APPOINTMENT AS PROVIDED FOR
HEREIN AND AGREES PROMPTLY TO DISTRIBUTE ALL PROCESS, NOTICES AND OTHER
COMMUNICATIONS TO EACH GUARANTOR.
(c) NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY GUARANTEED PARTY
TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
(d) EACH GUARANTOR, BY ITS ACCEPTANCE OF THE BENEFITS OF THE LOAN
AGREEMENT, AND THE AGENT AND EACH LENDER, HEREBY WAIVE, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS.
19. ARBITRATION. THE TERMS OF SECTION 10.3 OF THE LOAN AGREEMENT ARE
INCORPORATED HEREIN BY REFERENCE.
20. BINDING EFFECT; SURVIVAL. This Guaranty shall be binding upon and
enforceable against each Guarantor and its successors and permitted assigns.
This Guaranty shall inure to the benefit of and be enforceable by each
Guaranteed Party and its successors and permitted assigns. All representations,
warranties, covenants and agreements herein shall survive the execution and
delivery of this Guaranty and any Guarantor Accession.
21. SEVERABILITY. To the extent any provision of this Guaranty is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.
22. INTERPRETATION. The captions to the various sections of this Guaranty
have been inserted for convenience only and shall not limit or affect any of the
terms hereof. Unless the context otherwise requires, words in the singular
include the plural and words in the plural include the singular, and the use of
any gender shall be applicable to all genders.
23. COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all of
which shall together constitute one and the same instrument. This Guaranty
shall become effective, as to any Guarantor, upon the execution of a counterpart
hereof or a Guarantor Accession or other amendment or supplement hereto by such
Guarantor.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
by its duly authorized officers as of the date first above written.
THE SIGNATURES OF THE GUARANTORS EXECUTING THIS GUARANTY
AS OF THE DATE FIRST ABOVE WRITTEN ARE ON THE FOLLOWING
SEQUENTIALLY NUMBERED SIGNATURE PAGES.
The Borrower hereby joins in this Guaranty for purposes of evidencing its
consent to, and agreement to perform, the provisions of SECTION 18(B).
AMERICAN ONCOLOGY RESOURCES, INC.
By: _______________________________
L. Fred Pounds, Vice President of Finance
Accepted and agreed to:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Agent
By: _________________________________
Ann M. Dodd, Senior Vice President
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GUARANTORS
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AOR, INC.
By:________________________________
L. Fred Pounds, Treasurer
RMCC CANCER CENTER INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF OREGON, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF INDIANA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF MISSOURI, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF ARIZONA, INC.
By:________________________________
L. Fred Pounds, Treasurer
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<PAGE>
AOR MANAGEMENT COMPANY OF SOUTH CAROLINA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF OKLAHOMA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF PENNSYLVANIA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF VIRGINIA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NORTH CAROLINA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NEW YORK, INC.
By:________________________________
L. Fred Pounds, Treasurer
-16-
<PAGE>
AOR MANAGEMENT COMPANY OF FLORIDA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NEVADA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR HOLDING COMPANY OF INDIANA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF TEXAS, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR REAL ESTATE, INC.
By:________________________________
L. Fred Pounds, Treasurer
AORT HOLDING COMPANY, INC.
By:________________________________
L. Fred Pounds, Treasurer
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<PAGE>
AOR OF TEXAS MANAGEMENT LIMITED PARTNERSHIP
By: AOR Management Company of Texas, Inc., General
Partner
By:________________________________
L. Fred Pounds, Treasurer
AOR OF INDIANA MANAGEMENT PARTNERSHIP
By: AOR Management Company of Indiana, Inc., General
Partner
By:________________________________
L. Fred Pounds, Treasurer
By: AOR Holding Company of Indiana, Inc., General
Partner
By:________________________________
L. Fred Pounds, Treasurer
-18-
<PAGE>
Exhibit 1 to First Amended
and Restated
Guaranty Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996
/$150,000,000
_________________________
GUARANTOR ACCESSION
THIS GUARANTOR ACCESSION, dated as of _______________, 19___, is delivered by
[NAME OF NEW GUARANTOR] (the "Guarantor") pursuant to SECTION 11 of the Guaranty
referred to hereinbelow.
Reference is hereby made to the First Amended and Restated Guaranty
Agreement, dated as of October 30, 1996, made by the Guarantors (as defined
therein) named therein (as amended, modified, supplemented or restated from time
to time, the "Guaranty," capitalized terms defined therein being used herein as
therein defined).
The undersigned is a Subsidiary of American Oncology Resources, Inc. (the
"Borrower") and is required to guarantee the Guaranteed Obligations. The
undersigned hereby adopts and makes for itself all of the representations and
warranties set forth in SECTION 7 of the Guaranty as if such representations and
warranties were set forth herein at length.
The undersigned hereby acknowledges that, upon the execution and delivery of
this Guarantor Accession, it will become a party to the Guaranty. The
undersigned hereby adopts the terms and provisions of the Guaranty and agrees to
be bound thereby. This Guarantor Accession and its attachments are hereby
incorporated into the Guaranty and made a part thereof.
[NAME OF NEW GUARANTOR]
By: _______________________________
ATTEST: Title: ____________________________
______________________________
___________ Secretary/1/
___________________
/1/ Or other appropriate officer, in the case of a Guarantor not a
corporation.
<PAGE>
Exhibit D-1 to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.,
Borrower
October 30,
1996/$150,000,000
______________________________
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT, dated as of
October 30, 1996 (this "Security Agreement" or this "Agreement"), is by and
between
AMERICAN ONCOLOGY RESOURCES, INC., a Delaware corporation (the
"Borrower"); and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association with its principal offices in Charlotte, North Carolina, in its
capacity as agent (the "Agent") for the lenders who are party to the Loan
Agreement, as defined below (collectively, the "Lenders").
BACKGROUND STATEMENT
A. Borrower, Lenders and the Agent have entered into a Second Amended
and Restated Loan Agreement, dated as of the date hereof (together with any
amendments, modifications, replacements, substitutes and supplements thereto and
any renewals or extensions thereof, in whole or in part, the "Loan Agreement"),
the terms, conditions and provisions of which are hereby incorporated by
reference. Capitalized terms that are not defined herein shall have the
meanings assigned to such terms in the Loan Agreement.
B. Pursuant to the Loan Agreement, Lenders have agreed to make
certain Loans to Borrower as evidenced by the Notes referenced in the Loan
Agreement. To induce Lenders to make the Loans pursuant to the Loan Agreement
and to secure the payment of the Obligations, Borrower has agreed to grant to
Agent, for the benefit of Lenders, a security interest in the Collateral
described herein on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the willingness of the Lenders to
enter into the Loan Agreement and to agree, subject to the terms and conditions
thereof, to make the Loans to the Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Agent, on behalf of the Lenders, for themselves, their
successors and assigns, hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For the purposes of this Security Agreement, in
addition to the terms defined elsewhere herein, the following terms shall have
the meanings set forth below:
<PAGE>
"Collateral" means and includes all right, title and interest of
Borrower in (i) its Management Services Agreements and (ii) Securities owned by
Borrower, in each case whether now owned or existing or hereafter acquired or
arising and whether in the possession or control of Borrower or the Agent, for
the benefit of the Lenders, or any Lender, and all products and proceeds
thereof, including, without limitation, insurance proceeds of the foregoing
Collateral.
"Interests" means (a) all of the right, title and interest now or
hereafter held by Borrower in any Person that is not a corporation (including,
without limitation, any general or limited partnership, limited liability
company or other non-corporate company or entity), and (b) all rights and
interests of Borrower existing under all Investment Agreements, including,
without limitation, all rights of Borrower to receive payments or other
distributions thereunder and all rights granted or terms supplied by applicable
law thereunder or in connection therewith.
"Investment Agreements" means all partnership, operating, joint
venture or other agreements creating or governing the Interests referred to in
part (a) of the definition thereof to which Borrower is now or may hereafter
become a party, as amended, modified, supplemented or restated from time to
time.
"Management Services Agreements" shall mean the management services
agreements of Borrower as listed on EXHIBIT A, and all management services
agreements of Borrower hereafter acquired or arising, together with any and all
extensions, modifications, amendments, renewals, substitutions or replacements
thereof and all proceeds of any and all of the foregoing.
"Promissory Notes" means all promissory notes (including intercompany
notes), debt securities and other evidences of indebtedness now or hereafter
issued and payable to Borrower, including, without limitation, all rights of
Borrower to receive payments of principal or interest or other distributions
thereunder and all rights granted or terms supplied by applicable law thereunder
or in connection therewith.
"Securities" means all of Borrower's Stock, Interests and Promissory
Notes. The use of the term "Securities" hereunder to refer collectively to the
Stock, the Interests and the Promissory Notes is for convenience of description
only and shall not be construed to mean or suggest that any of the Stock,
Interests or Promissory Notes constitutes a "security" within the meaning of
applicable federal or state securities laws.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stock" means all of Borrower's shares, options, interests or other
equivalents (however designated) of or in a corporation (but excluding shares of
the capital stock of the Borrower), whether now owned or hereafter acquired and
whether voting or non-voting, including without limitation, (i) certificated and
uncertificated securities, common stock, warrants, preferred stock, convertible
debentures, (ii) all agreements, instruments and documents convertible, in
whole or in part, into any one or more or all of the foregoing, (iii) all rights
of Borrower to receive dividends, payments or other distributions thereunder and
(iv) all rights granted or terms supplied by applicable law thereunder or in
connection therewith.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
the State of North Carolina, as amended from time to time, unless in any
particular instance the Uniform Commercial Code of another state is applicable,
in which case it shall mean the Uniform Commercial Code of such state.
-2-
<PAGE>
1.2 UCC Terms. All terms in this Security Agreement that are not
capitalized shall have the meanings provided by the Uniform Commercial Code to
the extent the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
To secure the prompt payment and performance of all of its
Obligations, the Borrower hereby grants, pledges and assigns to the Agent, for
the benefit of the Lenders, a security interest in all of its right, title and
interest in the Collateral.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Borrower hereby represents, warrants and covenants as follows:
3.1 Perfection of Security Interest. The security interest granted
hereunder, has been properly perfected (i) by the filing of Financing Statements
in all jurisdictions set forth on EXHIBIT B attached hereto and (ii) the deposit
with the Agent of any Securities owned by the Borrower on the date hereof,
accompanied by such instruments of transfer as are reasonably acceptable to the
Agent. Such security interest shall constitute at all times (assuming the
timely filing of continuation statements when due and continued possession by
the Agent of any Securities) a valid and perfected security interest in favor of
the Agent, for the benefit of the Lenders, in and upon the Collateral.
3.2 Priority. The Agent's security interest hereunder is a first
priority security interest in the Collateral and is not and hereinafter shall
not become subordinate or junior to the security interests, liens or claims,
except for the Permitted Liens, of any other Person, including any Governmental
Authority.
3.3 Authority and Conflicts. The Borrower has or will have, as the
case may be, the full corporate power and authority and legal right to deliver
and pledge all the Securities pledged and to be pledged pursuant to this
Agreement; this Agreement has been duly authorized, executed and delivered by
the Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditor's rights
generally or by general principles of equity; no authorization, consent or
approval of, or declaration or filing with, any Governmental Authority is
required for the valid execution, delivery and performance by the Borrower of
this Agreement or the consummation by it of the transactions contemplated
hereby, except for the filings referred to in Section 3.1; neither the
execution, delivery or performance of this Agreement by the Borrower nor
compliance by it herewith: (i) conflicts or will conflict with or results or
will result in any breach of, or constitutes or will constitute with the passage
of time or the giving of notice or both, a default under, (x) the articles of
incorporation or bylaws of the Borrower, (y) any law, order, writ, injunction or
decree applicable to the Borrower of any Governmental Authority, or (z) any
written or oral agreement or instrument to which the Borrower is a party or by
which it, or any of its properties, is bound, including, without limitation, any
Investment Agreement, (ii) results or will result
-3-
<PAGE>
in the creation or imposition of any lien upon the properties of the Borrower
pursuant to any such agreement or instrument, except as contemplated by this
Agreement and except for Permitted Liens, or (iii) requires or will require any
consent or approval of any partners or other Persons under any agreements or
instruments, other than consents and approvals that have already been obtained
and delivered in writing to the Agent, except where such conflict, breach or
default or failure to obtain such consent or approval would not have a Material
Adverse Effect.
3.4 Further Assurances. The Borrower shall execute and deliver to
the Agent concurrently with the execution of this Security Agreement, and at any
time or times hereafter at the request of the Agent, all assignments,
certificates of title, conveyances, assignment statements, additional Financing
Statements, renewal Financing Statements, security agreements, affidavits,
notices and all other agreements, instruments and documents (collectively,
"Other Documents") that the Agent may reasonably request, each in form
satisfactory to the Agent, and shall take any and all other steps reasonably
requested by the Agent, in each case, in order to perfect and maintain the
security interests and liens granted herein and to fully consummate all of the
transactions contemplated under this Security Agreement, including, without
limitation, (a) recording or filing such Financing Statements and Other
Documents as may from time to time be reasonably requested by the Agent with
such Governmental Authorities as may be necessary or advisable in order to
perfect, establish, confirm and maintain the security interest and lien created
hereunder, and (b) defending the title of the Borrower to the Collateral by
means of negotiation with and, if appropriate in the exercise of sound business
judgment, appropriate legal proceedings against, each and every party claiming
an interest therein contrary or adverse to the Borrower's title to same. A
carbon, photographic or other reproduction of this Agreement may be filed as a
Financing Statement.
3.5 Attorney-in-fact. The Borrower does hereby irrevocably make,
constitute and appoint the Agent, its successors or assigns, as the true and
lawful attorneys of the Borrower with power to: (a) upon the occurrence and
during the continuance of any Event of Default, sign the name of the Borrower on
any Financing Statement, renewal Financing Statement, notice or other similar
document that in the Agent's reasonable opinion should be filed in order to
perfect or continue perfected the security interest granted in this Security
Agreement; (b) upon the occurrence and during the continuance of an Event of
Default, to act on the Borrower's behalf, at the Borrower's cost, in obtaining
any orders, consents, approvals, licenses or certificates required by any
Governmental Authorities as a prerequisite to the Agent's exercise of its rights
and remedies relating to any of the Collateral, to the extent permitted by
applicable law; and (c) upon the occurrence and during the continuance of an
Event of Default, to do all other things necessary to carry out the provisions
of this Security Agreement and the other Loan Documents, specifically including,
without limitation, those actions described in SECTION 5.2 hereof. Neither the
Agent nor any Lender nor their attorneys will be liable for any act or omission
or for any error of judgment or mistake of fact in the exercise of this power of
attorney unless such act, omission, error or mistake shall occur as a result of
the fraud, gross negligence, willful misconduct, or violation of law of the
Agent or such Lender. This power, being coupled with an interest, is
irrevocable so long as any of the outstanding Obligations remain unpaid or any
Lender's obligation to make advances under the Loan Documents has not
terminated.
-4-
<PAGE>
3.6 Location of Collateral; Records. The Borrower has possession and
control of all tangible Collateral now in existence, except for any Securities
delivered to and in possession of the Agent. The list attached hereto as
EXHIBIT C accurately and completely describes the street address, county and
state where any and all Collateral is currently located other than such
Securities so delivered to the Agent. The Borrower covenants and agrees that
the Borrower shall not relocate or cease doing business at any of the locations
listed on EXHIBIT C except as permitted by the Loan Agreement or remove any
Collateral from the locations listed on EXHIBIT C with respect to the Borrower
in a manner that would impair the perfection of the Agent's security interest in
the Collateral unless in each case the Borrower has first given to the Agent
thirty (30) days' prior written notice of such relocation, cessation of business
or removal of Collateral, and, if the Agent determines, in its sole discretion,
that it may not have a perfected first priority security interest in any
Collateral located or to be located at such new location not listed on EXHIBIT
C, the Borrower has delivered to the Agent such documents, instruments and
Financing Statements reasonably required by the Agent to perfect a first
priority security interest in the Collateral located or to be located at such
new location, subject to Permitted Liens.
3.7 Notices and Reports. In addition to those notices required by
Borrower to the Agent under the terms of the Loan Agreement, the Borrower shall
promptly notify the Agent in writing of any charge, lien, security interest,
claim or encumbrance asserted against any material portion of the Collateral
other than Permitted Liens, any material litigation or claim asserted against
the Collateral, any material theft, loss, injury or similar incident involving
the Collateral, and any other matter materially and adversely affecting the
Collateral or the Agent's interest therein. The Borrower shall furnish such
other reports, information and data regarding the Collateral as the Agent may
reasonably request from time to time.
3.8 Tax Liens. In the event the Borrower shall fail to pay any tax,
assessment, levy or governmental charge as contemplated by Section 5.8 of the
Loan Agreement, then the Agent, without waiving or releasing any obligation or
default of the Borrower hereunder, may at any time or times hereafter, but shall
be under no obligation to do so, make such payment, settlement, compromise or
release or cause to be released any related lien, and take any other action with
respect thereto that the Agent deems advisable. All sums paid by the Agent in
satisfaction of, or on account of any tax, levy or assessment or governmental
charge, or to discharge or release any related lien, and any expenses, including
reasonable attorneys' fees, court costs and other charges relating thereto,
shall be deemed a part of the Obligations, shall be secured by the Collateral
and shall be payable on demand.
ARTICLE IV
MANAGEMENT SERVICES AGREEMENTS
4.1 Covenants Relating to the Management Services Agreements.
(a) The Borrower agrees to faithfully abide by, perform and discharge
each and every material obligation, covenant, condition and agreement contained
in each of the Management Services Agreements to be performed by the Borrower
and to enforce performance by the other parties to such contracts other than the
Borrower (the "Contract Parties") of each and every material obligation,
covenant, condition and agreement to be performed by such Contract Parties.
(b) With respect to Management Services Agreements hereafter acquired
or arising, the Borrower agrees to use its commercially reasonable efforts to
deliver to the Agent, in form and substance
-5-
<PAGE>
reasonably satisfactory to the Agent, no later than thirty (30) days from the
execution thereof, all consents that are required by the terms and conditions of
such contracts to be executed and delivered by the Contract Parties in
connection with the collateral assignment of such contracts contemplated hereby
and to keep the Agent informed of the Borrower's progress in obtaining such
consents. In the event that any of such Management Services Agreements would be
voidable on account of the assignment contemplated herein, the collateral
assignment of the specific contract which requires such consent shall be void ab
initio and in such event the Borrower covenants and agrees to re-grant a
security interest in such contract when and if consent is obtained and prior to
such consent to exercise all of its material rights and remedies under such
contract for the benefit of the Agent and the Lenders in a commercially
reasonable manner. Upon receipt of a consent as described above (or upon the
making of a Management Services Agreement if no such consent is required), the
Borrower shall promptly provide a fully completed and executed amendment to this
Agreement in the form of Annex A (a "Pledge and Security Amendment") to the
Agent.
(c) Anything herein to the contrary notwithstanding, (i) the Borrower
shall remain liable under the Management Services Agreements to perform all of
its obligations thereunder to the extent as if this Agreement had not been
executed; (ii) the exercise by the Agent of any of its rights hereunder shall
not release the Borrower from any of its obligations under such contracts; and
(iii) the Agent shall not have any obligation or liability by reason of this
Agreement under the Management Services Agreements, nor shall the Agent be
obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder. The powers conferred on the Agent hereunder are solely to protect
its interest and privilege in such contracts, as collateral, and shall not
impose any duty upon it to exercise any such powers.
4.2 Default Under Contract. During the continuance of an Event of
Default, upon the occurrence of a material default or breach by the Borrower
under any of the Management Services Agreements, the Agent, for the benefit of
the Lenders, shall have the right (but not the obligation) to correct, to the
extent the Borrower fails to do so after written demand by the Agent, any such
default in such manner and to such extent as the Agent reasonably may deem
necessary to protect the security hereof, including specifically, without
limitation, the right (but not the obligation) to appear in and defend any
action or proceeding purporting to affect the security hereof or the rights or
powers of the Agent and the Lenders, and also the right (but not the obligation)
to perform and discharge each and every material obligation, covenant, condition
and agreement of the Borrower under such contracts, to the extent the Borrower
fails to do so after written demand by the Agent, and, in exercising any such
powers, to pay necessary and reasonable costs and expenses, employ counsel and
incur and pay reasonable attorneys' fees and expenses. The Agent shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under any of the Management
Services Agreements.
4.3 Performance of Contracts for Agent and Lenders. Each of the
Contract Parties, upon written notice from the Agent of the occurrence of an
Event of Default hereunder, shall be and is hereby authorized by the Borrower to
perform each of the Management Services Agreements for the benefit of the Agent
and the Lenders in accordance with the terms and conditions thereof without any
obligation to determine whether or not such an Event of Default has in fact
occurred.
4.4 Representations and Warranties. The Borrower hereby further
covenants, represents and warrants to the Agent that (a) the Borrower is not in
default in any material respect under any of the Management Services Agreements,
and to the best knowledge of the Borrower, after diligent inquiry,
-6-
<PAGE>
none of the Contract Parties is in material default under any of such contracts
except as disclosed in writing to the Agent; (b) no amendments or modifications
to or waivers under the Management Services Agreements that are inconsistent
with the terms hereof or that alter any material term of a Management Services
Agreement will be made without the prior written consent of the Agent; (c) upon
execution of any Management Services Agreement, the Borrower will deliver a copy
of such contract to the Agent, for the benefit of the Lenders, and (if the
consent of the Contract Parties is required by the terms and conditions thereof
in connection with the collateral assignment thereof contemplated hereby),
subject to Section 4.1(b) hereof, will require the Contract Parties thereto to
execute and deliver to the Agent a consent in form and substance reasonably
satisfactory to the Agent; (d) to the best knowledge of the Borrower, the
Management Services Agreements are, and each such contract entered into in the
future will be, legal, valid and binding obligations of the parties thereto,
enforceable against such parties in accordance with the respective terms thereof
and no defense, offset, deduction or counterclaim exists thereunder in favor of
any such party except where any such unenforceability, defense, offset deduction
or counterclaim would not have a Material Adverse Effect; (e) performance by the
Borrower of its obligations hereunder in a manner consistent with applicable law
will not contravene any law or governmental regulation or any contractual
restriction binding on or affecting the Borrower or any of the properties of the
Borrower and will not result in or require the creation of any lien, security
interest or other charge or encumbrance, except as contemplated by this
Agreement and except for Permitted Liens, upon or with respect to any of the
properties of the Borrower, except where such contravention would not have a
Material Adverse Effect; (f) this Agreement creates a valid collateral
assignment of, and security interest in favor of the Agent in, the Management
Services Agreements, and the filing of the Financing Statements required to be
filed pursuant to the Loan Agreement will perfect, and establish (subject only
to Permitted Liens) the first priority of, the Agent's security interest
hereunder in such contracts, securing the Obligations; (g) the Contract Parties
listed in EXHIBIT A hereto are all of the Contract Parties (other than the
Borrower) to such contracts as of the Closing Date; and (h) the Borrower will
immediately notify the Agent in writing upon the happening of any of the
following events with respect to its Management Services Agreements: i) any
material amendment or waiver by the Borrower or Contract Party under any such
contract which adversely affects the amount of monies due or to become due under
such contract, or otherwise substantially adversely affects the Borrower's
interests under such contract; ii) termination of any Management Services
Agreement in whole or in part; iii) failure of any party under any Management
Services Agreement to perform any of its material obligations thereunder; and
iv) the Borrower, for any other alleged reason, is in default of any material
provision of any Management Services Agreement.
ARTICLE V
SECURITIES
5.1 Representations and Warranties. The Borrower represents and
warrants that, as of the date hereof and as of the date of execution of any
Pledge and Security Amendment (a) it is, or at the time when pledged hereunder
will be, the sole legal, record and beneficial owner of, and has, or at the time
pledged hereunder will have, good and marketable title to, all Securities
pledged hereunder, subject to no Lien whatsoever other than the security
interest created by this Agreement and Permitted Liens; (b) all the shares of
capital stock constituting Stock pledged by Borrower have been duly and validly
issued, are fully paid and nonassessable and are subject to no preemptive
rights, options to purchase or similar rights; (c) such pledged Stock consists
as of the date hereof of the number and type of shares of the capital stock of
the corporations as described in Exhibit D; (d) such Stock constitutes as of the
date hereof that
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<PAGE>
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Exhibit D; (e) the pledged Promissory Notes are
described as of the date hereof in Exhibit D; and (f) the Borrower is the holder
of record and sole beneficial owner of the Stock, Promissory Notes and any other
Securities pledged by it hereunder, and there exist as of the date hereof no
warrants, options, preemptive rights or other rights or restrictions in favor of
third parties in respect of any of the Securities other than as evidenced by
this Agreement except as described in Exhibit D and except for Permitted Liens.
5.2 After-Acquired Securities. If the Borrower shall acquire (by
purchase, stock dividend or otherwise) any additional Securities (or
certificates or instruments representing Securities) at any time or from time to
time after the date hereof, it will forthwith pledge and deposit the
certificates or instruments representing such Securities as security with the
Agent and deliver to the Agent any certificates or instruments therefor,
accompanied by such instruments of transfer as are reasonably acceptable to the
Agent, and will promptly thereafter deliver to the Agent a fully completed and
duly executed Pledge and Security Amendment in respect of such additional
Securities. The Borrower hereby authorizes the Agent to attach each Pledge and
Security Amendment to this Agreement and agrees that all such Securities listed
on any Pledge and Security Amendment shall for all purposes be deemed pledged
hereunder.
5.3 Uncertificated Securities. If any Securities (whether now owned
or hereafter acquired) are "uncertificated securities" within the meaning of the
applicable Uniform Commercial Code or are otherwise not evidenced by any stock
certificate or similar certificate or instrument, the Borrower will promptly
notify the Agent thereof and will promptly take all actions required to perfect
the security interest of the Agent under applicable law, including, as
applicable, under Article 8 or 9 of the applicable Uniform Commercial Code. The
Borrower further agrees to take such actions as the Agent reasonably deems
necessary or desirable to effect the foregoing and to permit the Agent to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Agent with respect to any such
pledge of uncertificated Securities promptly upon request of the Agent.
5.4 Endorsements. The Stock pledged hereunder may be held, in the
discretion of the Agent during the continuance of an Event of Default, in the
name of the Agent, or any nominee or nominees of the Agent.
5.5 Voting Prior to Event of Default. Unless and until an Event of
Default shall have occurred and be continuing, Borrower shall be entitled to
vote any and all Securities owned by it, and to give consents, waivers or
ratifications in respect thereof; provided, that no vote shall be cast, nor any
consent, waiver or ratification given or any action taken, nor any other action
taken or fail to be taken, that would, or could reasonably be expected to,
violate or be inconsistent with any of the terms of this Agreement, the Loan
Agreement or any other Loan Document. All such rights of the Borrower to vote
any Stock and to give consents, waivers and ratifications in respect thereof
shall cease immediately upon notice from the Agent upon the occurrence and at
all times during the continuance of an Event of Default.
5.6 Dividends and Other Distributions. Unless an Event of Default
shall have occurred and be continuing (or would occur as a result thereof), all
cash dividends or distributions payable in respect of the Securities may be paid
to the Borrower; provided, that all cash dividends or distributions payable in
respect of the Stock in connection with the dissolution, liquidation,
recapitalization or reduction of the capital of any entity (other than any such
transaction permitted by the Loan Agreement) that are determined by the Agent,
in its sole and absolute discretion, to represent in whole or in part an
extraordinary or liquidating distribution in return of capital shall be paid, to
the extent so determined to represent an extraordinary or liquidating
distribution in return of capital, to the Agent and retained by
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<PAGE>
it as part of the Collateral (unless such cash dividends are applied to the
repayment of the Obligations). The Agent also shall be entitled to retain as
part of the Collateral:
(i) all other or additional Stock or other Securities or property
(other than cash) paid or distributed by way of dividend, stock split, spin-
off, split-up, reclassification, combination of shares or otherwise in
respect of the pledged Securities; and
(ii) all other or additional Stock or other Securities or, during
the continuance of an Event of Default, property (including cash, unless
applied to the repayment of the Obligations) paid or distributed in respect
of the Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization.
Nothing contained in this Section shall limit or restrict in any way the Agent's
right to a security interest in proceeds of the Collateral in any form. All
dividends, distributions or other payments that are received by Borrower
contrary to the provisions of this Section shall be received in trust for the
benefit of the Agent, shall be segregated from other property or funds of the
Borrower and shall be forthwith paid over to the Agent as Collateral in the same
form as so received (with any necessary endorsements).
5.7 Intercompany Obligations. Notwithstanding any other provision of
this Agreement or any of the other Loan Documents, (i) after the occurrence and
during the continuance of an Event of Default under Section 7.1(a), (i) or (j)
of the Loan Agreement, unless directed to do so by the Agent, the Borrower shall
not, at any time collect, realize upon or receive any payment or distribution
with respect to any intercompany notes or other intercompany obligations owed
directly or indirectly to the Borrower, or seek or endeavor to do the same, and
all such rights to collect, realize upon and receive any such payment or
distribution shall vest solely in the Agent at all times after the occurrence
and during the continuance of such an Event of Default and (ii) after the
occurrence and during the continuance of an Event of Default under the Loan
Agreement other than those specified in subsection (i) hereof, if directed to do
so by the Agent, the Borrower shall not, at any time except as may be otherwise
permitted by the Agent, collect, realize upon or receive any payment or
distribution with respect to any intercompany notes or other intercompany
obligations owed directly or indirectly to the Borrower, or seek or endeavor to
do the same.
ARTICLE VI
DEFAULT
6.1 Event of Default. Any one of the following events will constitute
an "Event of Default" hereunder:
(a) failure of the Borrower to perform or comply with any of the terms
of this Security Agreement and the same remains uncured for thirty (30) days
after Agent's delivery of notice thereof to the Borrower; or
(b) the occurrence of an Event of Default (as defined in the Loan
Agreement).
6.2 Rights and Remedies. The Agent shall have, in addition to any
other rights and remedies contained in this Security Agreement or in any other
Loan Documents, all the rights and remedies of a
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<PAGE>
secured party under the Uniform Commercial Code, and all other rights and
remedies provided by law, all of which shall be cumulative to the extent
permitted by law. To the extent permitted by law, during the existence of any
Event of Default, the Agent shall have the right without further notice to the
Borrower to take possession and control of, set off and apply to the payment of
any or all of the Obligations, any or all of the Collateral, in such manner as
the Agent shall in its sole discretion determine, to vote all or any part of the
Stock (whether or not transferred into the name of the Agent), and to enforce
the Management Services Agreements or any other Collateral, to settle,
compromise or release, in whole or in part, any amounts owing on the Collateral,
to prosecute any action, suit or proceeding with respect to the Collateral, to
make allowances and adjustments with respect thereto, to issue credits, to sell,
assign and deliver the Collateral (or any part thereof), at public or private
sale, at broker's board, for cash, upon credit or otherwise, at the Agent's sole
option and discretion, and, to the extent permitted by law, the Agent or any
Lender may bid or become purchaser at any such sale, if public, free from any
right of redemption, which is hereby expressly waived. The Borrower agrees that
the giving of ten (10) days' notice by the Agent, sent by certified mail, return
receipt requested postage prepaid, to the Borrower, at the address set forth in
the Loan Agreement for the receipt of notices by Borrower, designating the place
and time of any public sale or of the time after which any private sale or other
intended disposition of the Collateral is to be made, shall be deemed to be
reasonable notice thereof to the Borrower and the Borrower waives any other
notice with respect thereto. The net cash proceeds resulting from the exercise
of any of the foregoing rights or remedies shall be applied by the Agent to the
payment of the Obligations, in such order as the Agent, for the benefit of the
Lenders, may elect, and the Borrower shall remain liable to the Lenders for any
deficiency, together with interest thereon at the rates provided in the Loan
Agreement, and the reasonable costs and expenses of collection of such
deficiency, including, without limitation, reasonable attorneys' fees, expenses
and disbursements. The balance, if any, remaining after payment in full of a
the Obligations, shall be paid to the Borrower, subject to any duty of the Agent
and the Lenders imposed by law, or to the holder of any subordinate security
interest in the Collateral known to the Agent or the Lenders. The Borrower
hereby authorizes the Agent, for the benefit of the Lenders, and the Agent, for
the benefit of the Lenders, shall have the right at any time and from time to
time during the existence of an Event of Default, without notice to the
Borrower, subject to any restrictions imposed by applicable law, (a) to notify
any or all debtors to the Borrower that the Agent, for the benefit of the
Lenders, has a security interest in such Collateral and direct all such Persons
to make payments to the Agent, on behalf of the Lenders, or to a lockbox
designated by the Agent, on behalf of the Lenders, of all sums owing by them to
the Borrower; and (b) to receive, endorse, assign and deliver, in the Borrower's
name or in the name of the Agent all checks, notes, drafts and other instruments
relating to any Collateral. Any and all disbursements for reasonable costs and
expenses incurred or paid by the Agent with respect to the enforcement,
collection or protection of its interest in the Collateral, or against the
Borrower, whether by suit or otherwise, notification of debtors to the Borrower
and other obligors, including reasonable attorneys' fees, court costs and
similar expenses, if any, shall become a part of the Obligations secured by the
Collateral, payable on demand.
6.3 Other Provisions Concerning Sale of Collateral. Each purchaser
at any sale effected by the Agent shall, to the extent permitted by law, hold
the property sold absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of the Borrower, and Borrower hereby
specifically waives, to the extent permitted by law, all rights of redemption,
stay or appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted. Upon any sale of any Collateral by the Agent
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Agent or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over
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<PAGE>
to the Agent or such officer or be answerable in any way for the misapplication
or nonapplication thereof. At any such sale, unless prohibited by applicable
law, the Agent, any Lender or any holder of any of the Obligations, may purchase
all or any of the Collateral being sold, free from any equity or right of
redemption, which is hereby waived and released by Borrower, to the extent
permitted by law, and may make payment therefor by endorsement, without
recourse, of the Obligations in lieu of cash in the amount then due thereon,
which Borrower hereby agrees to accept. Neither the Agent nor any other Lender
shall be liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing, nor shall any of them be under any
obligation to take any action whatsoever with regard thereto.
6.4 Securities Act; Private Sale Borrower recognizes that, by reason
of certain prohibitions contained in the Securities Act, applicable state
securities laws or other applicable laws as in effect from time to time, the
Agent may be compelled, with respect to any sale of all or any part of the
Collateral conducted without registration or qualification under the Securities
Act and such state securities laws, to limit purchasers to any one or more
Persons who will represent and agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Borrower acknowledges that any such private
sales may be made in such commercially reasonable manner and circumstances as
the Agent may deem necessary or advisable in its sole and absolute discretion,
including at prices and on terms less favorable than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act),
and, notwithstanding such circumstances, agrees that the Agent shall have no
obligation to conduct any public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit its registration for
public sale under the Securities Act and applicable state securities laws, and
shall not have any responsibility or liability as a result of its election so
not to conduct any such public sales or delay the sale of any Collateral,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after such registration. Borrower
hereby waives any claims against the Agent or any Lender arising by reason of
the fact that the price at which any Collateral may have been sold at any
private sale was less than the price that might have been obtained at a public
sale or was less than the aggregate amount of the Obligations.
6.5 Care of Pledged Collateral. Neither the Agent nor any Lender
shall have any duty as to the collection or protection of the Collateral or any
income thereon or as to the preservation of any rights pertaining thereto,
beyond the safe custody of any Collateral actually in its possession. Neither
the Agent nor any Lender shall have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
redemptions, offers, tenders or other matters relative to any Collateral,
whether or not the Agent or the Lenders have or are deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral. Borrower releases the Agent and the
Lenders from any claims, causes of action and demands at any time arising out of
or with respect to this Agreement, the Collateral or any actions taken or
omitted to be taken by the Agent or the Lenders with respect thereto, and
Borrower hereby agrees to hold the Agent and the Lenders harmless from and with
respect to any and all such claims, causes of action and demands, except, in the
case of all of the foregoing, to the extent resulting from the gross negligence
or willful misconduct of the Agent or any of the Lenders or to the extent
otherwise provided in this Agreement.
6.6 Attorneys' Fees and Other Expenses. If at any time or times
hereafter, the Agent or (during the continuance of an Event of Default) any
Lender employs counsel for advice with respect to this Security Agreement or any
other Loan Documents, or to intervene, file a petition, answer, motion or
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<PAGE>
other pleading in any suit or proceeding relating to this Security Agreement or
any other Loan Documents, or relating to any Collateral, or to protect, take
possession of, or liquidate any Collateral, or to attempt to enforce any
security interest or lien in any Collateral, or to represent the Agent or any
Lender in any pending or threatened litigation with respect to the affairs of
the Borrower in any way relating to any of the Collateral or to the Obligations
or to enforce any rights of the Agent or the Lenders or liabilities of the
Borrower, debtors to the Borrower, or any other person, firm or corporation
which may be obligated to the Agent or the Lenders by virtue of this Security
Agreement or any of the other Loan Documents, then in any of such events, all of
the reasonable attorneys' fees arising from such services, and any reasonable
expenses and charges relating thereto, including court costs and similar
expenses, shall be deemed a part of the Obligations, shall be secured by the
Collateral, and shall be payable on demand, all in accordance with and subject
to Section 10.6 of the Loan Agreement.
6.7 No Waiver. The Agent's failure at any time or times hereafter to
require strict performance by the Borrower of any of the provisions, warranties,
terms and conditions contained in this Security Agreement or any other Loan
Documents shall not waive, affect or diminish any right of the Agent or any
Lender at any time or times hereafter to demand strict performance therewith and
with respect to any other provisions, warranties, terms and conditions contained
in this Security Agreement or any other Loan Documents, and any waiver of any
Event of Default shall not waive or affect any other Event of Default, whether
prior or subsequent thereto, and whether of the same or a different type. None
of the warranties, conditions, provisions and terms contained in this Security
Agreement or any other Loan Documents shall be deemed to have been waived by any
act or knowledge of the Agent or any Lender, their agents, officers or employees
except by an instrument in writing signed by an officer of the Agent and
directed to the Borrower specifying such waiver.
6.8 Waiver by the Borrower. Except for the notices expressly provided
for herein, to the extent permitted by law, the Borrower waives any and all
notices or demands that the Borrower might be entitled to receive with respect
to this Security Agreement by virtue of any applicable statute or law,
including, without limitation, demand, presentment, protest, notice of protest,
notice of default, notice of intent to accelerate, release, compromise,
settlement, extension or renewal of all commercial paper, accounts, contract
rights, instruments, guaranties and otherwise, at any time held by the Agent on
which the Borrower may in any way be liable, and notice of any action taken by
the Agent unless expressly required by this Security Agreement or any other Loan
Document.
6.9 No Marshalling. To the extent that any of the Obligations are
now or hereafter secured by property other than the Collateral, or by a
guaranty, endorsement or property of any other Person, then the Agent shall have
the right to proceed against such other property, guaranty or endorsement upon
the existence of an Event of Default, and the Agent shall have the right, in the
Agent's sole discretion, to determine which rights, security, liens, security
interests or remedies the Agent shall at any time pursue, relinquish,
subordinate, modify or take any other action with respect thereto, without in
any way modifying or affecting any of them or any of the Agent's or any Lender's
rights or any of the Obligations.
-12-
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 Binding Effect. This Security Agreement and any other instruments and
documents executed and delivered pursuant hereto or to consummate the
transactions contemplated hereunder shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto.
7.2 Amendment and Restatement of Prior Security Agreement and Pledge
Agreement. This Security Agreement amends, restates and consolidates the Amended
and Restated Security Agreement dated as of January 1, 1996 and the Pledge
Agreement of the Borrower, dated December 5, 1994 (each of the foregoing, as
amended to the date hereof, the "Prior Agreements"). The security interests
granted under the Prior Agreements, to the extent granted hereunder, shall be
continued without interruption under the granting clause of ARTICLE II hereof.
7.3 Governing Law. The internal laws and judicial decisions of the State
of North Carolina shall govern and control the construction, enforceability,
validity and interpretation of this Security Agreement, except to the extent
that matters of perfection and validity of the security interests hereunder, or
remedies hereunder, are governed by the laws of a jurisdiction other than the
State of North Carolina.
7.4 Survival of Agreement. All representations and warranties of the
Borrower contained in this Security Agreement and in any other Loan Documents
shall be true and correct at the time of the execution of this Security
Agreement, and shall survive the execution and delivery of this Security
Agreement and all other Loan Documents.
7.5 Termination of Security Interest; Assignment. This Security
Agreement and the security interest in the Collateral created hereby will
terminate when all of the then outstanding Obligations have been paid and
finally discharged in full, all Letters of Credit are terminated, and the
Lenders are no longer obligated to make advances under the Loan Agreement or
issue Letters of Credit. In the event of a sale or assignment by any Lender of
all or any of the Obligations held by it in accordance with Section 10.5 of the
Loan Agreement, such Lender may assign or transfer its rights and interest under
this Security Agreement in whole or in part to the purchaser or purchasers of
such Obligations, whereupon such purchaser or purchasers will become vested with
all of the powers, rights and responsibilities of such Lender hereunder, and
such Lender will thereafter be forever released and fully discharged from any
liability or responsibility hereunder with respect to the rights, interest and
responsibilities so assigned, other than liabilities arising out of actions
taken prior to the date of assignment. The Borrower may not assign this
Security Agreement without the express written consent of the Agent.
Upon termination of this Agreement or upon the disposition or release of
any Collateral as permitted by and pursuant to the terms of the Loan Agreement,
the Agent shall, upon the reasonable request of the Borrower, forthwith assign,
transfer and deliver to the Borrower (without recourse and without
representation or warranty and "as is"), such of the Collateral to be released
as may be in the possession of the Agent or any Lender or any of their
respective representatives or agents and as shall not have been sold or
otherwise applied pursuant to the terms hereof, on the order of the Borrower,
and proper instruments (including Uniform Commercial Code termination statements
on Form UCC-3) acknowledging the termination of this Agreement or partial
release of Collateral, as applicable.
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<PAGE>
7.6 Notices. Except as otherwise provided herein, notice to the Borrower
or to Agent shall be given or delivered in the manner set forth in SECTION 10.4
of the Loan Agreement.
7.7 Severability. To the extent any provision of this Security Agreement
is prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
7.8 Captions. The captions to the various sections and subsections of
this Agreement have been inserted for convenience only and shall not limit or
affect any of the terms hereof.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
7.10 Amendments. Neither this Agreement nor any of its provisions may be
changed, amended or modified except by an instrument in writing signed by the
parties hereto; provided, however, that this Agreement may be amended by the
execution and delivery of Pledge and Security Amendments as provided herein.
7.11 Collateral Agent.
(a) The Agent shall hold the Collateral at any time received under this
Agreement in accordance with the terms of this Agreement. To the extent
permitted by law, the obligations of the Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement and the other Loan Documents, are only those expressly set
forth in this Agreement and the other Loan Documents. The Agent shall act
hereunder at the direction, or with the consent, of the Required Lenders and on
the terms and conditions set forth in the Loan Agreement. Except for treatment
of the Collateral in its possession in a manner substantially equivalent to that
which the Agent, in its individual capacity, accords its own property of a
similar nature, and the accounting for moneys actually received by it hereunder,
and, in all events, the exercise of reasonable care with respect to Collateral
in its possession, the Agent shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to the Collateral. To the extent permitted by law,
neither the Agent nor any other Lender shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing, nor
shall any of them be under any obligation to take any action whatsoever with
regard thereto except as expressly required by this Agreement and the other Loan
Documents.
(b) The parties agree that, except as set forth herein regarding setoff,
the rights under this Agreement may be enforced only by the action of the Agent,
acting upon the instructions or with the consent of the Required Lenders and as
provided in the Loan Agreement, and that no Lender shall have any right
individually to enforce or seek to enforce the rights under this Agreement or to
realize upon any Collateral or other security given to secure the payment and
performance of the Borrower's obligations hereunder.
7.12 Standard of Conduct. Except as otherwise set forth in this
Agreement, neither the Agent, the Lenders nor their attorneys will be liable for
any act or omission or for any error of judgment or mistake of fact in the
exercise of their rights and powers under this Agreement unless such act,
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<PAGE>
omission, error or mistake shall occur primarily as a result of the fraud, gross
negligence, willful misconduct or violation of law of any such Person (as
finally determined by a court of competent jurisdiction or pursuant to
arbitration as set forth in the Loan Agreement). The exercise by the Agent of
any of its rights pursuant to this Article shall not create any further
obligation on the part of the Agent to exercise any other rights hereunder or to
take any other or further action in respect thereof.
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<PAGE>
IN WITNESS WHEREOF, this Second Amended and Restated Security Agreement
has been executed as of the day and year first above written by the duly
authorized officers of the parties hereto.
AMERICAN ONCOLOGY RESOURCES, INC.
By:________________________________
L. Fred Pounds, Chief Financial Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT
By: ________________________________
Ann M. Dodd, Senior Vice President
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<PAGE>
Exhibit A to Second Amended
and
Restated Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_________________________________
LIST OF MANAGEMENT SERVICES AGREEMENTS
None.
<PAGE>
Exhibit B to Second Amended
and
Restated Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_________________________________
SCHEDULE OF LOCATIONS FOR FILING UCC FINANCING STATEMENTS
[TO BE UPDATED BY MDCK]
Secretary of State of Arizona
Secretary of State of Colorado
Secretary of State of Florida
Secretary of State of Kansas
Secretary of State of Missouri
Secretary of State of Nevada
Secretary of State of New York
Secretary of State of North Carolina
Secretary of State of Ohio
Oklahoma County, Oklahoma
Secretary of State of Oregon
Secretary of State of Pennsylvania
Secretary of State of South Carolina
Secretary of State of Texas
State Corporation Commission of Virginia
Jackson County, MO
Albany County, NY
Latham County, NY
Rexford County, NY
Saratoga County, NY
Wake County, NC
Buncombe County, NC
Jefferson County, OH
Allegheny County, PA
Beaver County, PA
Washington County, PA
Hampton City, VA
Newport News City, VA
Williamsburg City, VA
<PAGE>
Exhibit C to Second Amended
and
Restated Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_________________________
LOCATIONS OF COLLATERAL
-----------------------
16825 Northchase Drive, Suite 1300
Houston, TX 77060
<PAGE>
Exhibit D to Second Amended
and
Restated Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
___________________________
PLEDGED SECURITIES
------------------
Part I. Pledged Stock
-------------
Percentage of
Outstanding
Name of Type of Number of Certificate Shares of
Issuing Corporation Shares Shares Number Capital Stock
------------------- ------- --------- ------ -------------
Part II. Pledged Notes
-------------
Original
Principal
Date Lender Borrower Amount
---- ------ -------- ---------
Part III. Pledged Interests
-----------------
Name of Partnership, Joint Ownership
Venture or Other Entity Nature of Interest Percentage
----------------------- ------------------ ----------
Part IV. Other Rights or Restrictions
----------------------------
Any Permitted Liens under item (d) of the definition of Permitted
Liens in the Loan Agreement.
<PAGE>
Annex 1 to Second Amended
and
Restated Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
__________________________
[FORM OF] PLEDGE AND SECURITY AMENDMENT
THIS PLEDGE AND SECURITY AMENDMENT, dated as of _______________, 19___, is
delivered by American Oncology Resources, Inc. (the "Borrower") pursuant to
SECTION 4.1(B) and/or SECTION 5.2, as applicable, of the Second Amended and
Restated Security Agreement, dated as of October 30, 1996, made by the Borrower,
to First Union National Bank of North Carolina, as Agent (as amended, modified,
supplemented or restated from time to time, the "Security Agreement,"
capitalized terms defined therein being used herein as therein defined). The
Borrower has agreed, under the terms of the Agreement, that this Pledge and
Security Amendment shall be attached to the Security Agreement and that the
Securities and/or Management Services Agreements listed on ANNEX A to this
Pledge and Security Amendment shall be deemed to be part of the Securities
and/or Management Services Agreements (as applicable) within the meaning of the
Security Agreement and shall become part of the Collateral and shall secure the
Obligations as provided in the Security Agreement. This Pledge and Security
Amendment and its attachments are hereby incorporated into the Security
Agreement and made a part thereof.
AMERICAN ONCOLOGY RESOURCES, INC.
By:___________________________
Title: _______________________
[attach Annex A]
<PAGE>
Exhibit D-2 to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.,
Borrower
October 30,
1996/$150,000,000
________________________
SECOND AMENDED AND RESTATED GUARANTORS' SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED GUARANTORS' SECURITY AGREEMENT, dated
as of the October, 30, 1996 (this "Security Agreement" or this "Agreement"), is
by and between
THE UNDERSIGNED CORPORATIONS, each a Delaware corporation and a
subsidiary of American Oncology Resources, Inc. (each corporation is referred to
hereafter individually as a "Guarantor" and collectively as the "Guarantors");
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association with its principal offices in Charlotte, North Carolina, in its
capacity as agent (the "Agent") for the lenders who are party to the Loan
Agreement, as defined below (collectively, the "Lenders"), for the benefit of
AMERICAN ONCOLOGY RESOURCES, INC., a Delaware corporation (the
"Borrower").
BACKGROUND STATEMENT
A. Borrower, Lenders and the Agent have entered into a Second Amended
and Restated Loan Agreement, dated as of the date hereof (together with any
amendments, modifications, replacements, substitutes and supplements thereto and
any renewals or extensions thereof, in whole or in part, the "Loan Agreement"),
the terms, conditions and provisions of which are hereby incorporated by
reference, pursuant to which the Lenders have agreed to extend certain loans to,
and to issue certain letters of credit for the benefit of, the Borrower. The
Loans made by the Lenders pursuant to the Loan Agreement are evidenced by the
Notes referred to in the Loan Agreement. All capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the Loan
Agreement.
B. Each of the Guarantors is a Subsidiary of the Borrower and will
benefit directly or indirectly from the transactions contemplated in the Loan
Agreement.
C. As a condition among others to the Lenders entering into the Loan
Agreement and making Loans from time to time to the Borrower thereunder, (i)
each Guarantor has executed the First Amended and Restated Guaranty Agreement or
an Accession thereto (collectively, the "Guaranty") guaranteeing the payment of
part or all of the Total Obligations (as defined in the Guaranty) and (ii) each
Guarantor is required to grant to Agent, for the benefit of Lenders, a perfected
security interest in the Collateral described herein to secure such guarantee
obligations (the "Guaranty Obligations").
D. Certain of the Guarantors previously have executed the Amended and
Restated Guarantors' Security Agreement. The Agent and Guarantors hereby desire
to amend and restate the Amended and Restated Guarantors' Security Agreement as
provided herein.
<PAGE>
E. Because of the direct or indirect benefit to the Guarantors of the
Lenders making the Loans to the Borrower, each of the Guarantors has agreed to
secure the payment of its Guaranty Obligations on the terms set forth herein.
NOW, THEREFORE, in consideration of the willingness of the Lenders to
enter into the Loan Agreement and to agree, subject to the terms and conditions
thereof, to make the Loans to the Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors and the Agent, on behalf of the Lenders, for themselves, their
successors and assigns, hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For the purposes of this Security Agreement, in
addition to the terms defined elsewhere herein, the following terms shall have
the meanings set forth below:
"Collateral" means and includes all right, title and interest of each
Guarantor in (i) its Management Services Agreements and (ii) Securities owned by
such Guarantor, in each case whether now owned or existing or hereafter acquired
or arising and whether in the possession or control of any Guarantor or the
Agent, for the benefit of the Lenders, or any Lender, and all products and
proceeds thereof, including, without limitation, insurance proceeds of the
foregoing Collateral.
"Guarantor" means any of the Persons who now or hereafter become
parties as Guarantors hereunder; and "Guarantors" shall mean some or all of the
Guarantors.
"Interests" means (a) all of the right, title and interest now or
hereafter held by any Guarantor in any Person that is not a corporation
(including, without limitation, any general or limited partnership, limited
liability company or other non-corporate company or entity), and (b) all rights
and interests of any Guarantor existing under all Investment Agreements,
including, without limitation, all rights of any Guarantor to receive payments
or other distributions thereunder and all rights granted or terms supplied by
applicable law thereunder or in connection therewith.
"Investment Agreements" means all partnership, operating, joint
venture or other agreements creating or governing the Interests referred to in
part (a) of the definition thereof to which any Guarantor is now or may
hereafter become a party, as amended, modified, supplemented or restated from
time to time.
"Management Services Agreements" shall mean the management services
agreements of any Guarantor as listed on EXHIBIT A, and all management services
agreements of any Guarantor hereafter acquired or arising, together with any and
all extensions, modifications, amendments, renewals, substitutions or
replacements thereof and all proceeds of any and all of the foregoing.
"Promissory Notes" means all promissory notes (including intercompany
notes), debt securities and other evidences of indebtedness now or hereafter
issued and payable to any Guarantor, including, without limitation, all rights
of any Guarantor to receive payments of principal or interest or other
distributions thereunder and all rights granted or terms supplied by applicable
law thereunder or in connection therewith.
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"Securities" means all of any Guarantor's Stock, Interests and
Promissory Notes. The use of the term "Securities" hereunder to refer
collectively to the Stock, the Interests and the Promissory Notes is for
convenience of description only and shall not be construed to mean or suggest
that any of the Stock, Interests or Promissory Notes constitutes a "security"
within the meaning of applicable federal or state securities laws.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stock" means all of any Guarantor's shares, options, interests or
other equivalents (however designated) of or in a corporation (but excluding
shares of the capital stock of the Borrower), whether now owned or hereafter
acquired and whether voting or non-voting, including without limitation, (i)
certificated and uncertificated securities, common stock, warrants, preferred
stock, convertible debentures, (ii) all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing,
(iii) all rights of any Guarantor to receive dividends, payments or other
distributions thereunder and (iv) all rights granted or terms supplied by
applicable law thereunder or in connection therewith.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
the State of North Carolina, as amended from time to time, unless in any
particular instance the Uniform Commercial Code of another state is applicable,
in which case it shall mean the Uniform Commercial Code of such state.
1.2 UCC Terms. All terms in this Security Agreement that are not
capitalized shall have the meanings provided by the Uniform Commercial Code to
the extent the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
To secure the prompt payment and performance of all of its Guaranty
Obligations, each Guarantor hereby grants, pledges and assigns to the Agent, for
the benefit of the Lenders, a security interest in all of its right, title and
interest in the Collateral.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Guarantor hereby represents, warrants and covenants as follows:
3.1 Perfection of Security Interest. The security interest granted
hereunder, has been properly perfected (i) by the filing of Financing Statements
in all jurisdictions set forth on EXHIBIT B attached hereto and (ii) the deposit
with the Agent of any Securities owned by the Guarantor on the date hereof,
accompanied by such instruments of transfer as are reasonably acceptable to the
Agent. Such security interest shall constitute at all times (assuming the
timely filing of continuation statements when due and continued possession by
the Agent of any Securities) a valid and perfected security interest in favor of
the Agent, for the benefit of the Lenders, in and upon the Collateral.
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3.2 Priority. The Agent's security interest hereunder is a first
priority security interest in the Collateral and is not and hereinafter shall
not become subordinate or junior to the security interests, liens or claims,
except for the Permitted Liens, of any other Person, including any Governmental
Authority.
3.3 Authority and Conflicts. Each Guarantor has or will have, as the
case may be, the full corporate or other organizational power and authority and
legal right to deliver and pledge all the Securities pledged and to be pledged
pursuant to this Agreement; this Agreement has been duly authorized, executed
and delivered by such Guarantor and constitutes a legal, valid and binding
obligation of the Guarantor, enforceable against each Guarantor in accordance
with its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditor's rights generally or by general principles of equity; no
authorization, consent or approval of, or declaration or filing with, any
Governmental Authority is required for the valid execution, delivery and
performance by each Guarantor of this Agreement or the consummation by it of the
transactions contemplated hereby, except for the filings referred to in Section
3.1; neither the execution, delivery or performance of this Agreement by such
Guarantor nor compliance by it herewith: (i) conflicts or will conflict with or
results or will result in any breach of, or constitutes or will constitute with
the passage of time or the giving of notice or both, a default under, (x) the
articles of incorporation or bylaws of such Guarantor, (y) any law, order, writ,
injunction or decree applicable to such Guarantor of any Governmental Authority,
or (z) any written or oral agreement or instrument to which such Guarantor is a
party or by which it, or any of its properties, is bound, including, without
limitation, any Investment Agreement, (ii) results or will result in the
creation or imposition of any lien upon the properties of such Guarantor
pursuant to any such agreement or instrument, except as contemplated by this
Agreement and except for Permitted Liens, or (iii) requires or will require any
consent or approval of any partners or other Persons under any agreements or
instruments, other than consents and approvals that have already been obtained
and delivered in writing to the Agent, except where such conflict, breach or
default or failure to obtain such consent or approval would not have a Material
Adverse Effect.
3.4 Further Assurances. Each Guarantor shall execute and deliver to
the Agent concurrently with the execution of this Security Agreement, and at any
time or times hereafter at the request of the Agent, all assignments,
certificates of title, conveyances, assignment statements, additional Financing
Statements, renewal Financing Statements, security agreements, affidavits,
notices and all other agreements, instruments and documents (collectively,
"Other Documents") that the Agent may reasonably request, each in form
satisfactory to the Agent, and shall take any and all other steps reasonably
requested by the Agent, in each case, in order to perfect and maintain the
security interests and liens granted herein and to fully consummate all of the
transactions contemplated under this Security Agreement, including, without
limitation, (a) recording or filing such Financing Statements and Other
Documents as may from time to time be reasonably requested by the Agent with
such Governmental Authorities as may be necessary or advisable in order to
perfect, establish, confirm and maintain the security interest and lien created
hereunder, and (b) defending the title of such Guarantor to the Collateral by
means of negotiation with and, if appropriate in the exercise of sound business
judgment, appropriate legal proceedings against, each and every party claiming
an interest therein contrary or adverse to such Guarantor's title to same. A
carbon, photographic or other reproduction of this Agreement may be filed as a
Financing Statement.
3.5 Attorney-in-fact. Each Guarantor does hereby irrevocably make,
constitute and appoint the Agent, its successors or assigns, as the true and
lawful attorneys of such Guarantor with power to: (a) upon the occurrence and
during the continuance of any Event of Default, sign the name of such Guarantor
on any Financing Statement, renewal Financing Statement, notice or other similar
document that in the Agent's reasonable opinion should be filed in order to
perfect or continue perfected the security
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interest granted in this Security Agreement; (b) upon the occurrence and during
the continuance of an Event of Default, to act on such Guarantor's behalf, at
such Guarantor's cost, in obtaining any orders, consents, approvals, licenses or
certificates required by any Governmental Authorities as a prerequisite to the
Agent's exercise of its rights and remedies relating to any of the Collateral,
to the extent permitted by applicable law; and (c) upon the occurrence and
during the continuance of an Event of Default, to do all other things necessary
to carry out the provisions of this Security Agreement and the other Loan
Documents, specifically including, without limitation, those actions described
in SECTION 6.2 hereof. Neither the Agent nor any Lender nor their attorneys
will be liable for any act or omission or for any error of judgment or mistake
of fact in the exercise of this power of attorney unless such act, omission,
error or mistake shall occur as a result of the fraud, gross negligence, willful
misconduct, or violation of law of the Agent or such Lender. This power, being
coupled with an interest, is irrevocable so long as any of the outstanding
Obligations remain unpaid or any Lender's obligation to make advances under the
Loan Documents has not terminated.
3.6 Location of Collateral; Records. Each Guarantor has possession
and control of all tangible Collateral of such Guarantor now in existence,
except for any Securities delivered to and in possession of the Agent. The list
attached hereto as EXHIBIT C accurately and completely describes the street
address, county and state where any and all Collateral is currently located
other than such Securities so delivered to the Agent. Each Guarantor covenants
and agrees that such Guarantor shall not relocate or cease doing business at any
of the locations listed on EXHIBIT C except as permitted by the Loan Agreement
or remove any Collateral from the locations listed on EXHIBIT C with respect to
such Guarantor in a manner that would impair the perfection of the Agent's
security interest in the Collateral unless in each case such Guarantor has first
given to the Agent thirty (30) days' prior written notice of such relocation,
cessation of business or removal of Collateral, and, if the Agent determines, in
its sole discretion, that it may not have a perfected first priority security
interest in any Collateral located or to be located at such new location not
listed on EXHIBIT C, such Guarantor has delivered to the Agent such documents,
instruments and Financing Statements reasonably required by the Agent to perfect
a first priority security interest in the Collateral located or to be located at
such new location, subject to Permitted Liens.
3.7 Notices and Reports. In addition to those notices required by
Borrower to the Agent under the terms of the Loan Agreement, each Guarantor
shall promptly notify the Agent in writing of any charge, lien, security
interest, claim or encumbrance asserted against any material portion of the
Collateral of such Guarantor other than Permitted Liens, any material litigation
or claim asserted against the Collateral of such Guarantor, any material theft,
loss, injury or similar incident involving the Collateral of such Guarantor, and
any other matter materially and adversely affecting the Collateral of such
Guarantor or the Agent's interest therein. Guarantors shall furnish such other
reports, information and data regarding the Collateral as the Agent may
reasonably request from time to time.
3.8 Tax Liens. In the event any Guarantor shall fail to pay any tax,
assessment, levy or governmental charge as contemplated by Section 5.8 of the
Loan Agreement, then the Agent, without waiving or releasing any obligation or
default of such Guarantor hereunder, may at any time or times hereafter, but
shall be under no obligation to do so, make such payment, settlement, compromise
or release or cause to be released any related lien, and take any other action
with respect thereto that the Agent deems advisable. All sums paid by the Agent
in satisfaction of, or on account of any tax, levy or assessment or governmental
charge, or to discharge or release any related lien, and any expenses, including
reasonable attorneys' fees, court costs and other charges relating thereto,
shall be deemed a part
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of the Guaranty Obligations of the relevant Guarantor, shall be secured by the
Collateral of such Guarantor and shall be payable on demand.
ARTICLE IV
MANAGEMENT SERVICES AGREEMENTS
4.1 Covenants Relating to the Management Services Agreements.
(a) Each Guarantor agrees to faithfully abide by, perform and
discharge each and every material obligation, covenant, condition and agreement
contained in each of the Management Services Agreements to be performed by such
Guarantor and to enforce performance by the other parties to such contracts
other than such Guarantor (the "Contract Parties") of each and every material
obligation, covenant, condition and agreement to be performed by such Contract
Parties.
(b) With respect to Management Services Agreements hereafter acquired
or arising, each Guarantor agrees to use its commercially reasonable efforts to
deliver to the Agent, in form and substance reasonably satisfactory to the
Agent, no later than thirty (30) days from the execution thereof, all consents
that are required by the terms and conditions of such contracts to be executed
and delivered by the Contract Parties in connection with the collateral
assignment of such contracts contemplated hereby and to keep the Agent informed
of such Guarantor's progress in obtaining such consents. In the event that any
of such Management Services Agreements would be voidable on account of the
assignment contemplated herein, the collateral assignment of the specific
contract which requires such consent shall be void ab initio and in such event
such Guarantor covenants and agrees to re-grant a security interest in such
contract when and if consent is obtained and prior to such consent to exercise
all of its material rights and remedies under such contract for the benefit of
the Agent and the Lenders in a commercially reasonable manner. Upon receipt of
a consent as described above (or upon the making of a Management Services
Agreement if no such consent is required), such Guarantor shall promptly provide
a fully completed and executed amendment to this Agreement in the form of Annex
A (a "Pledge and Security Amendment") to the Agent.
(c) Anything herein to the contrary notwithstanding, (i) each
Guarantor shall remain liable under the Management Services Agreements to be
performed by such Guarantor to perform all of its obligations thereunder to the
extent as if this Agreement had not been executed; (ii) the exercise by the
Agent of any of its rights hereunder shall not release such Guarantor from any
of its obligations under such contracts; and (iii) the Agent shall not have any
obligation or liability by reason of this Agreement under the Management
Services Agreements, nor shall the Agent be obligated to perform any of the
obligations or duties of such Guarantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder. The powers
conferred on the Agent hereunder are solely to protect its interest and
privilege in such contracts, as collateral, and shall not impose any duty upon
it to exercise any such powers.
4.2 Default Under Contract. During the continuance of an Event of
Default, upon the occurrence of a material default or breach by any Guarantor
under any of the Management Services Agreements, the Agent, for the benefit of
the Lenders, shall have the right (but not the obligation) to correct, to the
extent such Guarantor fails to do so after written demand by the Agent, any such
default in such manner and to such extent as the Agent reasonably may deem
necessary to protect the security hereof, including specifically, without
limitation, the right (but not the obligation) to appear in and defend
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any action or proceeding purporting to affect the security hereof or the rights
or powers of the Agent and the Lenders, and also the right (but not the
obligation) to perform and discharge each and every material obligation,
covenant, condition and agreement of such Guarantor under such contracts, to the
extent such Guarantor fails to do so after written demand by the Agent, and, in
exercising any such powers, to pay necessary and reasonable costs and expenses,
employ counsel and incur and pay reasonable attorneys' fees and expenses. The
Agent shall not be obligated to perform or discharge, nor does it hereby
undertake to perform or discharge, any obligation, duty or liability under any
of the Management Services Agreements.
4.3 Performance of Contracts for Agent and Lenders. Each of the
Contract Parties, upon written notice from the Agent of the occurrence of an
Event of Default hereunder, shall be and is hereby authorized by Guarantors to
perform each of the Management Services Agreements for the benefit of the Agent
and the Lenders in accordance with the terms and conditions thereof without any
obligation to determine whether or not such an Event of Default has in fact
occurred.
4.4 Representations and Warranties. Each Guarantor hereby further
covenants, represents and warrants to the Agent that (a) such Guarantor is not
in default in any material respect under any of the Management Services
Agreements to be performed by such Guarantor, and to the best knowledge of such
Guarantor, after diligent inquiry, none of the Contract Parties is in material
default under any of such contracts to be performed by such Guarantor except as
disclosed in writing to the Agent; (b) no amendments or modifications to or
waivers under the Management Services Agreements to be performed by such
Guarantor that are inconsistent with the terms hereof or that alter any material
term of a Management Services Agreement will be made without the prior written
consent of the Agent; (c) upon execution of any Management Services Agreement,
such Guarantor will deliver a copy of such contract to the Agent, for the
benefit of the Lenders, and (if the consent of the Contract Parties is required
by the terms and conditions thereof in connection with the collateral assignment
thereof contemplated hereby), subject to Section 4.1(b) hereof, will require the
Contract Parties thereto to execute and deliver to the Agent a consent in form
and substance reasonably satisfactory to the Agent; (d) to the best knowledge of
such Guarantor, the Management Services Agreements to be performed by such
Guarantor are, and each such contract to be performed by such Guarantor entered
into in the future will be, legal, valid and binding obligations of the parties
thereto, enforceable against such parties in accordance with the respective
terms thereof and no defense, offset, deduction or counterclaim exists
thereunder in favor of any such party except where any such unenforceability,
defense, offset deduction or counterclaim would not have a Material Adverse
Effect; (e) performance by such Guarantor of its obligations hereunder in a
manner consistent with applicable law will not contravene any law or
governmental regulation or any contractual restriction binding on or affecting
such Guarantor or any of the properties of such Guarantor and will not result in
or require the creation of any lien, security interest or other charge or
encumbrance, except as contemplated by this Agreement and except for Permitted
Liens, upon or with respect to any of the properties of such Guarantor, except
where such contravention would not have a Material Adverse Effect; (f) this
Agreement creates a valid collateral assignment of, and security interest in
favor of the Agent in, the Management Services Agreements to be performed by
such Guarantor, and the filing of the Financing Statements required to be filed
pursuant to the Loan Agreement will perfect, and establish (subject only to
Permitted Liens) the first priority of, the Agent's security interest hereunder
in such contracts, securing the Guaranty Obligations of such Guarantor; (g) the
Contract Parties listed in EXHIBIT A hereto are all of the Contract Parties
(other than Guarantors) to such contracts as of the Closing Date to be performed
by such Guarantor; and (h) such Guarantor will immediately notify the Agent in
writing upon the happening of any of the following events with respect to its
Management Services Agreements: i) any material amendment or waiver by the
Guarantor or Contract Party under any such contract which
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adversely affects the amount of monies due or to become due under such contract,
or otherwise substantially adversely affects such Guarantor's interests under
such contract; ii) termination of any Management Services Agreement in whole or
in part; iii) failure of any party under any Management Services Agreement to
perform any of its material obligations thereunder; and iv) such Guarantor, for
any other alleged reason, is in default of any material provision of any
Management Services Agreement.
ARTICLE V
SECURITIES
5.1 Representations and Warranties. Each Guarantor represents and
warrants that, as of the date hereof and as of the date of execution of any
Pledge and Security Amendment: (a) it is, or at the time when pledged hereunder
will be, the sole legal, record and beneficial owner of, and has, or at the time
pledged hereunder will have, good and marketable title to, all Securities
pledged by such Guarantor hereunder, subject to no Lien whatsoever other than
the security interest created by this Agreement and Permitted Liens; (b) all the
shares of capital stock constituting Stock pledged by such Guarantor have been
duly and validly issued, are fully paid and nonassessable and are subject to no
preemptive rights, options to purchase or similar rights; (c) such pledged Stock
consists as of the date hereof of the number and type of shares of the capital
stock of the corporations as described in Exhibit D; (d) such Stock constitutes
as of the date hereof that percentage of the issued and outstanding capital
stock of the issuing corporation as is set forth in Exhibit D; (e) the pledged
Promissory Notes are described as of the date hereof in Exhibit D; and (f) such
Guarantor is the holder of record and sole beneficial owner of the Stock,
Promissory Notes pledged by such Guarantor and any other Securities pledged by
it hereunder, and there exist as of the date hereof no warrants, options,
preemptive rights or other rights or restrictions in favor of third parties in
respect of any of the Securities other than as evidenced by this Agreement
except as described in Exhibit D and except for Permitted Liens.
5.2 After-Acquired Securities. If any Guarantor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities (or
certificates or instruments representing Securities) at any time or from time to
time after the date hereof, such Guarantor will forthwith pledge and deposit the
certificates or instruments representing such Securities as security with the
Agent and deliver to the Agent any certificates or instruments therefor,
accompanied by such instruments of transfer as are reasonably acceptable to the
Agent, and will promptly thereafter deliver to the Agent a fully completed and
duly executed Pledge and Security Amendment in respect of such additional
Securities. The Guarantor hereby authorizes the Agent to attach each Pledge and
Security Amendment to this Agreement and agrees that all such Securities listed
on any Pledge and Security Amendment shall for all purposes be deemed pledged
hereunder.
5.3 Uncertificated Securities. If any Securities (whether now owned
or hereafter acquired) are "uncertificated securities" within the meaning of the
applicable Uniform Commercial Code or are otherwise not evidenced by any stock
certificate or similar certificate or instrument, the Guarantor will promptly
notify the Agent thereof and will promptly take all actions required to perfect
the security interest of the Agent under applicable law, including, as
applicable, under Article 8 or 9 of the applicable Uniform Commercial Code. The
Guarantor further agrees to take such actions as the Agent reasonably deems
necessary or desirable to effect the foregoing and to permit the Agent to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Agent with respect to any such
pledge of uncertificated Securities promptly upon request of the Agent.
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5.4 Endorsements. The Stock pledged hereunder may be held, in the
discretion of the Agent during the continuance of an Event of Default, in the
name of the Agent, or any nominee or nominees of the Agent.
5.5 Voting Prior to Event of Default. Unless and until an Event of
Default shall have occurred and be continuing, each Guarantor shall be entitled
to vote any and all Securities owned by it, and to give consents, waivers or
ratifications in respect thereof; provided, that no vote shall be cast, nor any
consent, waiver or ratification given or any action taken, nor any other action
taken or fail to be taken, that would, or could reasonably be expected to,
violate or be inconsistent with any of the terms of this Agreement, the Loan
Agreement or any other Loan Document. All such rights of the Guarantors to vote
any Stock and to give consents, waivers and ratifications in respect thereof
shall cease immediately upon notice from the Agent upon the occurrence and at
all times during the continuance of an Event of Default.
5.6 Dividends and Other Distributions. Unless an Event of Default
shall have occurred and be continuing (or would occur as a result thereof), all
cash dividends or distributions payable in respect of the Securities may be paid
to the relevant Guarantor; provided, that all cash dividends or distributions
payable in respect of the Stock in connection with the dissolution, liquidation,
recapitalization or reduction of the capital of any entity (other than any such
transaction permitted by the Loan Agreement) that are determined by the Agent,
in its sole and absolute discretion, to represent in whole or in part an
extraordinary or liquidating distribution in return of capital shall be paid, to
the extent so determined to represent an extraordinary or liquidating
distribution in return of capital, to the Agent and retained by it as part of
the Collateral (unless such cash dividends are applied to the repayment of the
Obligations). The Agent also shall be entitled to retain as part of the
Collateral:
(i) all other or additional Stock or other Securities or property
(other than cash) paid or distributed by way of dividend, stock split, spin-
off, split-up, reclassification, combination of shares or otherwise in
respect of the pledged Securities; and
(ii) all other or additional Stock or other Securities or, during
the continuance of an Event of Default, property (including cash, unless
applied to the repayment of the Obligations) paid or distributed in respect
of the Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization.
Nothing contained in this Section shall limit or restrict in any way the Agent's
right to a security interest in proceeds of the Collateral in any form. All
dividends, distributions or other payments that are received by any Guarantor
contrary to the provisions of this Section shall be received in trust for the
benefit of the Agent, shall be segregated from other property or funds of the
Guarantor and shall be forthwith paid over to the Agent as Collateral in the
same form as so received (with any necessary endorsements).
5.7 Intercompany Obligations. Notwithstanding any other provision of
this Agreement or any of the other Loan Documents, (i) after the occurrence and
during the continuance of an Event of Default under Section 7.1(a), (i) or (j)
of the Loan Agreement, unless directed to do so by the Agent, no Guarantor
shall, at any time collect, realize upon or receive any payment or distribution
with respect to any intercompany notes or other intercompany obligations owed
directly or indirectly to such Guarantor, or seek or endeavor to do the same,
and all such rights to collect, realize upon and receive any such payment or
distribution shall vest solely in the Agent at all times after the occurrence
and during the continuance of such an Event of Default and (ii) after the
occurrence and during the continuance of an Event of Default under the Loan
Agreement other than those specified in subsection (i) hereof, if directed
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to do so by the Agent, no Guarantor shall, at any time except as may be
otherwise permitted by the Agent, collect, realize upon or receive any payment
or distribution with respect to any intercompany notes or other intercompany
obligations owed directly or indirectly to such Guarantor, or seek or endeavor
to do the same.
ARTICLE VI
DEFAULT
6.1 Event of Default. Any one of the following events will constitute
an "Event of Default" hereunder:
(a) failure of any Guarantor to perform or comply with any of the
terms of this Security Agreement and the same remains uncured for thirty (30)
days after Agent's delivery of notice thereof to such Guarantor; or
(b) the occurrence of an Event of Default (as defined in the Loan
Agreement).
6.2 Rights and Remedies. The Agent shall have, in addition to any
other rights and remedies contained in this Security Agreement or in any other
Loan Documents, all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other rights and remedies provided by law, all of which
shall be cumulative to the extent permitted by law. To the extent permitted by
law, during the existence of any Event of Default, the Agent shall have the
right without further notice to Guarantors to take possession and control of,
set off and apply to the payment of any or all of a Guarantor's Guaranty
Obligations, any or all of such Guarantor's Collateral, in such manner as the
Agent shall in its sole discretion determine, to vote all or any part of the
Stock (whether or not transferred into the name of the Agent), to enforce the
Management Services Agreements or any other Collateral, to settle, compromise or
release, in whole or in part, any amounts owing on such Guarantor's Collateral,
to prosecute any action, suit or proceeding with respect to such Guarantor's
Collateral, to make allowances and adjustments with respect thereto, to issue
credits, to sell, assign and deliver such Guarantor's Collateral (or any part
thereof), at public or private sale, at broker's board, for cash, upon credit or
otherwise, at the Agent's sole option and discretion, and, to the extent
permitted by law, the Agent or any Lender may bid or become purchaser at any
such sale, if public, free from any right of redemption, which is hereby
expressly waived. Each Guarantor agrees that the giving of ten (10) days'
notice by the Agent, sent by certified mail, return receipt requested postage
prepaid, to the Guarantors, at the address set forth in the Loan Agreement for
the receipt of notices by Borrower, designating the place and time of any public
sale or of the time after which any private sale or other intended disposition
of the Collateral is to be made, shall be deemed to be reasonable notice thereof
to Guarantors and Guarantors waive any other notice with respect thereto. The
net cash proceeds resulting from the exercise of any of the foregoing rights or
remedies shall be applied by the Agent to the payment of the Guaranty
Obligations, in such order as the Agent, for the benefit of the Lenders, may
elect, and each Guarantor shall remain liable to the Lenders for any deficiency
in such Guarantor's Guaranty Obligation, together with interest thereon at the
rates provided in the Loan Agreement, and the reasonable costs and expenses of
collection of such deficiency, including, without limitation, reasonable
attorneys' fees, expenses and disbursements. The balance, if any, remaining
after payment in full of a Guarantor's Guaranty Obligations, shall be paid to
such Guarantor, subject to any duty of the Agent and the Lenders imposed by law,
or to the holder of any subordinate security interest in the Collateral known to
the Agent or the
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Lenders. Each Guarantor hereby authorizes the Agent, for the benefit of the
Lenders, and the Agent, for the benefit of the Lenders, shall have the right at
any time and from time to time during the existence of an Event of Default,
without notice to Guarantors, subject to any restrictions imposed by applicable
law, (a) to notify any or all debtors to such Guarantor that the Agent, for the
benefit of the Lenders, has a security interest in such Collateral and direct
all such Persons to make payments to the Agent, on behalf of the Lenders, or to
a lockbox designated by the Agent, on behalf of the Lenders, of all sums owing
by them to such Guarantor; and (b) to receive, endorse, assign and deliver, in
such Guarantor's name or in the name of the Agent all checks, notes, drafts and
other instruments relating to any Collateral. Any and all disbursements for
reasonable costs and expenses incurred or paid by the Agent with respect to the
enforcement, collection or protection of its interest in the Collateral of such
Guarantor, or against any Guarantor, whether by suit or otherwise, notification
of debtors to such Guarantor and other obligors, including reasonable attorneys'
fees, court costs and similar expenses, if any, shall become a part of the
Guaranty Obligations of such Guarantor secured by the Collateral of such
Guarantor, payable on demand.
6.3 Other Provisions Concerning Sale of Collateral. Each purchaser
at any sale effected by the Agent shall, to the extent permitted by law, hold
the property sold absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of the Guarantors, and each
Guarantor hereby specifically waives, to the extent permitted by law, all rights
of redemption, stay or appraisal which it has or may have under any rule of law
or statute now existing or hereafter adopted. Upon any sale of any Collateral
by the Agent hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Agent or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication or nonapplication thereof. At any such sale, unless prohibited
by applicable law, the Agent, any Lender or any holder of any of the Obligations
or Guaranty Obligations, may purchase all or any of the Collateral being sold,
free from any equity or right of redemption, which is hereby waived and released
by each Guarantor, to the extent permitted by law, and may make payment therefor
by endorsement, without recourse, of the Obligations and Guaranty Obligations in
lieu of cash in the amount then due thereon, which each Guarantor hereby agrees
to accept. Neither the Agent nor any other Lender shall be liable for failure
to collect or realize upon any or all of the Collateral or for any delay in so
doing, nor shall any of them be under any obligation to take any action
whatsoever with regard thereto.
6.4 Securities Act; Private Sale Each Guarantor recognizes that, by
reason of certain prohibitions contained in the Securities Act, applicable state
securities laws or other applicable laws as in effect from time to time, the
Agent may be compelled, with respect to any sale of all or any part of the
Collateral conducted without registration or qualification under the Securities
Act and such state securities laws, to limit purchasers to any one or more
Persons who will represent and agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Each Guarantor acknowledges that any such
private sales may be made in such commercially reasonable manner and
circumstances as the Agent may deem necessary or advisable in its sole and
absolute discretion, including at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act), and, notwithstanding such circumstances, agrees that the
Agent shall have no obligation to conduct any public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit its
registration for public sale under the Securities Act and applicable state
securities laws, and shall not have any responsibility or liability as a result
of its election so not to conduct any such public sales or delay the
-11-
<PAGE>
sale of any Collateral, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after such
registration. Each Guarantor hereby waives any claims against the Agent or any
Lender arising by reason of the fact that the price at which any Collateral may
have been sold at any private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Guaranty
Obligations.
6.5 Care of Pledged Collateral. Neither the Agent nor any Lender
shall have any duty as to the collection or protection of the Collateral or any
income thereon or as to the preservation of any rights pertaining thereto,
beyond the safe custody of any Collateral actually in its possession. Neither
the Agent nor any Lender shall have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
redemptions, offers, tenders or other matters relative to any Collateral,
whether or not the Agent or the Lenders have or are deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral. Each of the Guarantors releases the
Agent and the Lenders from any claims, causes of action and demands at any time
arising out of or with respect to this Agreement, the Collateral or any actions
taken or omitted to be taken by the Agent or the Lenders with respect thereto,
and each of the Guarantors hereby agrees to hold the Agent and the Lenders
harmless from and with respect to any and all such claims, causes of action and
demands, except, in the case of all of the foregoing, to the extent resulting
from the gross negligence or willful misconduct of the Agent or any of the
Lenders or to the extent otherwise provided in this Agreement.
6.6 Attorneys' Fees and Other Expenses. If at any time or times
hereafter, the Agent or (during the continuance of an Event of Default) any
Lender employs counsel for advice with respect to this Security Agreement or any
other Loan Documents, or to intervene, file a petition, answer, motion or other
pleading in any suit or proceeding relating to this Security Agreement or any
other Loan Documents, or relating to any Collateral, or to protect, take
possession of, or liquidate any Collateral, or to attempt to enforce any
security interest or lien in any Collateral, or to represent the Agent or any
Lender in any pending or threatened litigation with respect to the affairs of
any Guarantor in any way relating to any of the Collateral or to the Obligations
or to enforce any rights of the Agent or the Lenders or liabilities of any
Guarantor, debtors to such Guarantor, or any other person, firm or corporation
which may be obligated to the Agent or the Lenders by virtue of this Security
Agreement or any of the other Loan Documents, then in any of such events, all of
the reasonable attorneys' fees arising from such services, and any reasonable
expenses and charges relating thereto, including court costs and similar
expenses, shall be deemed a part of the Guaranty Obligations of such Guarantor,
shall be secured by the Collateral of such Guarantor, and shall be payable on
demand, all in accordance with and subject to Section 10.6 of the Loan
Agreement.
6.7 No Waiver. The Agent's failure at any time or times hereafter to
require strict performance by any Guarantor of any of the provisions,
warranties, terms and conditions contained in this Security Agreement or any
other Loan Documents shall not waive, affect or diminish any right of the Agent
or any Lender at any time or times hereafter to demand strict performance
therewith and with respect to any other provisions, warranties, terms and
conditions contained in this Security Agreement or any other Loan Documents, and
any waiver of any Event of Default shall not waive or affect any other Event of
Default, whether prior or subsequent thereto, and whether of the same or a
different type. None of the warranties, conditions, provisions and terms
contained in this Security Agreement or any other Loan Documents shall be deemed
to have been waived by any act or knowledge of the Agent or any Lender, their
agents, officers or employees except by an instrument in writing signed by an
officer of the Agent and directed to Guarantors specifying such waiver.
-12-
<PAGE>
6.8 Waiver by Guarantors. Except for the notices expressly provided
for herein, to the extent permitted by law, each Guarantor waives any and all
notices or demands that such Guarantor might be entitled to receive with respect
to this Security Agreement by virtue of any applicable statute or law,
including, without limitation, demand, presentment, protest, notice of protest,
notice of default, notice of intent to accelerate, release, compromise,
settlement, extension or renewal of all commercial paper, accounts, contract
rights, instruments, guaranties and otherwise, at any time held by the Agent on
which such Guarantor may in any way be liable, and notice of any action taken by
the Agent unless expressly required by this Security Agreement or any other Loan
Document.
6.9 No Marshalling. To the extent that any of the Obligations or
Guaranty Obligations are now or hereafter secured by property other than the
Collateral, or by a guaranty, endorsement or property of any other Person, then
the Agent shall have the right to proceed against such other property, guaranty
or endorsement upon the existence of an Event of Default, and the Agent shall
have the right, in the Agent's sole discretion, to determine which rights,
security, liens, security interests or remedies the Agent shall at any time
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of them or any of the
Agent's or any Lender's rights or any of the Obligations or Guaranty
Obligations.
ARTICLE VII
MISCELLANEOUS
7.1 Binding Effect. This Security Agreement and any other instruments and
documents executed and delivered pursuant hereto or to consummate the
transactions contemplated hereunder shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto.
7.2 Amendment and Restatement of Guarantors' Security Agreement; Release
of Certain Collateral. This Security Agreement amends and restates the Amended
and Restated Guarantors' Security Agreement. The security interests granted
under such prior agreement shall be continued without interruption under the
granting clause of ARTICLE II hereof.
7.3 Governing Law. The internal laws and judicial decisions of the State
of North Carolina shall govern and control the construction, enforceability,
validity and interpretation of this Security Agreement, except to the extent
that matters of perfection and validity of the security interests hereunder, or
remedies hereunder, are governed by the laws of a jurisdiction other than the
State of North Carolina.
7.4 Survival of Agreement. All representations and warranties of each
Guarantor contained in this Security Agreement and in any other Loan Documents
shall be true and correct at the time of the execution of this Security
Agreement, and shall survive the execution and delivery of this Security
Agreement and all other Loan Documents.
7.5 Termination of Security Interest; Assignment. This Security
Agreement and the security interest in the Collateral created hereby will
terminate when all of the then outstanding Guaranty Obligations have been paid
and finally discharged in full, all Letters of Credit are terminated, and the
Lenders are no longer obligated to make advances under the Loan Agreement or
issue Letters of Credit. In the event of a sale or assignment by any Lender of
all or any of the Obligations or Guaranty Obligations held by it in accordance
with Section 10.5 of the Loan Agreement, such Lender may assign
-13-
<PAGE>
or transfer its rights and interest under this Security Agreement in whole or in
part to the purchaser or purchasers of such Obligations, whereupon such
purchaser or purchasers will become vested with all of the powers, rights and
responsibilities of such Lender hereunder, and such Lender will thereafter be
forever released and fully discharged from any liability or responsibility
hereunder with respect to the rights, interest and responsibilities so assigned,
other than liabilities arising out of actions taken prior to the date of
assignment. Guarantors may not assign this Security Agreement without the
express written consent of the Agent.
Upon termination of this Agreement or upon the disposition or release of
any Collateral as permitted by and pursuant to the terms of the Loan Agreement,
the Agent shall, upon the reasonable request of Guarantors, forthwith assign,
transfer and deliver to Guarantors (without recourse and without representation
or warranty and "as is"), such of the Collateral to be released as may be in the
possession of the Agent or any Lender or any of their respective representatives
or agents and as shall not have been sold or otherwise applied pursuant to the
terms hereof, on the order of Guarantors, and proper instruments (including
Uniform Commercial Code termination statements on Form UCC-3) acknowledging the
termination of this Agreement or partial release of Collateral, as applicable.
7.6 Notices. Except as otherwise provided herein, notice to the
Guarantors (which notice shall be sent in care of the Borrower) or to Agent
shall be given or delivered in the manner set forth in SECTION 10.4 of the Loan
Agreement.
7.7 Severability. To the extent any provision of this Security Agreement
is prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
7.8 Captions. The captions to the various sections and subsections of
this Agreement have been inserted for convenience only and shall not limit or
affect any of the terms hereof.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
7.10 Amendments. Neither this Agreement nor any of its provisions may be
changed, amended or modified except by an instrument in writing signed by the
parties hereto; provided, however, that this Agreement may be amended by the
execution and delivery of Pledge and Security Amendments as provided herein;
provided, further, that the Agent may, in accordance with the provisions of the
Loan Agreement, from time to time require Subsidiaries of the Borrower not
already parties hereto to execute an instrument of accession hereto in the form
of ANNEX 2 (each a "Guarantor Accession to Guarantors' Security Agreement").
7.11 Collateral Agent.
(a) The Agent shall hold the Collateral at any time received under this
Agreement in accordance with the terms of this Agreement. To the extent
permitted by law, the obligations of the Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement and the other Loan Documents, are only those expressly set
forth in this Agreement and the other Loan Documents. The Agent shall act
hereunder at the direction, or with the consent, of the
-14-
<PAGE>
Required Lenders and on the terms and conditions set forth in the Loan
Agreement. Except for treatment of the Collateral in its possession in a manner
substantially equivalent to that which the Agent, in its individual capacity,
accords its own property of a similar nature, and the accounting for moneys
actually received by it hereunder, and, in all events, the exercise of
reasonable care with respect to Collateral in its possession, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to the
Collateral. To the extent permitted by law, neither the Agent nor any other
Lender shall be liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing, nor shall any of them be under any
obligation to take any action whatsoever with regard thereto except as expressly
required by this Agreement and the other Loan Documents.
(b) The parties agree that, except as set forth herein regarding setoff,
the rights under this Agreement may be enforced only by the action of the Agent,
acting upon the instructions or with the consent of the Required Lenders and as
provided in the Loan Agreement, and that no Lender shall have any right
individually to enforce or seek to enforce the rights under this Agreement or to
realize upon any Collateral or other security given to secure the payment and
performance of the Guarantors' obligations hereunder.
7.12 Standard of Conduct. Except as otherwise set forth in this
Agreement, neither the Agent, the Lenders nor their attorneys will be liable for
any act or omission or for any error of judgment or mistake of fact in the
exercise of their rights and powers under this Agreement unless such act,
omission, error or mistake shall occur primarily as a result of the fraud, gross
negligence, willful misconduct or violation of law of any such Person (as
finally determined by a court of competent jurisdiction or pursuant to
arbitration as set forth in the Loan Agreement). The exercise by the Agent of
any of its rights pursuant to this Article shall not create any further
obligation on the part of the Agent to exercise any other rights hereunder or to
take any other or further action in respect thereof.
IN WITNESS WHEREOF, this Second Amended and Restated Guarantors' Security
Agreement has been executed as of the day and year first above written by the
duly authorized officers of the parties hereto.
GUARANTORS
----------
AOR, INC.
By:_________________________
L. Fred Pounds, Treasurer
RMCC CANCER CENTER INC.
By:__________________________
L. Fred Pounds, Treasurer
-15-
<PAGE>
AOR MANAGEMENT COMPANY OF OREGON, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF INDIANA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF MISSOURI, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF ARIZONA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF SOUTH CAROLINA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF OKLAHOMA, INC.
By:________________________________
L. Fred Pounds, Treasurer
-16-
<PAGE>
AOR MANAGEMENT COMPANY OF PENNSYLVANIA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF VIRGINIA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NORTH CAROLINA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NEW YORK, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF FLORIDA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF NEVADA, INC.
By:________________________________
L. Fred Pounds, Treasurer
-17-
<PAGE>
AOR HOLDING COMPANY OF INDIANA, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR MANAGEMENT COMPANY OF TEXAS, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR REAL ESTATE, INC.
By:________________________________
L. Fred Pounds, Treasurer
AORT HOLDING COMPANY, INC.
By:________________________________
L. Fred Pounds, Treasurer
AOR OF TEXAS MANAGEMENT LIMITED PARTNERSHIP
By: AOR Management Company of Texas, Inc., General
Partner
By:________________________________
L. Fred Pounds, Treasurer
-18-
<PAGE>
AOR OF INDIANA MANAGEMENT PARTNERSHIP
By: AOR Management Company of Indiana, Inc.,
General Partner
By:________________________________
L. Fred Pounds, Treasurer
By: AOR Holding Company of Indiana, Inc., General
Partner
By:________________________________
L. Fred Pounds, Treasurer
AGENT
-----
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT
By: ________________________________
Ann M. Dodd, Senior Vice President
-19-
<PAGE>
Annex 1 to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
________________________
[FORM OF] PLEDGE AND SECURITY AMENDMENT
THIS PLEDGE AND SECURITY AMENDMENT, dated as of _______________, 19___, is
delivered by the undersigned [INSERT NAME OF GUARANTOR] (a "Guarantor") pursuant
to SECTION 4.1(B) and/or SECTION 5.2, as applicable, of the Second Amended and
Restated Guarantors' Security Agreement, dated as of October 30, 1996, made by
the Guarantors named therein, to First Union National Bank of North Carolina, as
Agent (as amended, modified, supplemented or restated from time to time, the
"Guarantors' Security Agreement," capitalized terms defined therein being used
herein as therein defined). The Guarantors have agreed, under the terms of the
Guarantors' Security Agreement, that this Pledge and Security Amendment shall be
attached to the Guarantors' Security Agreement and that the Securities and/or
Management Services Agreements listed on ANNEX A to this Pledge and Security
Amendment shall be deemed to be part of the Securities and/or Management
Services Agreements (as applicable) within the meaning of the Guarantors'
Security Agreement and shall become part of the Collateral and shall secure the
Guaranty Obligations as provided in the Guarantors' Security Agreement. This
Pledge and Security Amendment and its attachments are hereby incorporated into
the Guarantors' Security Agreement and made a part thereof.
[INSERT NAME OF GUARANTOR]
By:___________________________
Title: _______________________
[attach Annex A]
<PAGE>
Annex 2 to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
____________________
GUARANTOR ACCESSION TO
GUARANTORS' SECURITY AGREEMENT
THIS GUARANTOR ACCESSION TO THE AMENDED AND RESTATED GUARANTORS'
SECURITY AGREEMENT, dated as of _________________, is delivered by
_______________________________________, a ________ [corporation] (the
"Guarantor") to First Union National Bank of North Carolina, as Agent (the
"Agent") under the Loan Agreement referred to hereinbelow.
Reference is hereby made to the Second Amended and Restated Loan
Agreement between American Oncology Resources, Inc. (the "Borrower") and the
Agent, dated October 30, 1996 and the First Amended and Restated Guaranty
Agreement, dated as of October 30, 1994, and the Second Amended and Restated
Guarantors' Security Agreement, dated October 30, 1996, made by the Guarantors
(as defined therein) named therein (the "Guaranty" and the "Guarantors' Security
Agreement," respectively), each of the above and as amended, modified,
supplemented or restated from time to time. Capitalized terms not defined
herein being those used in the Guarantors' Security Agreement.
The undersigned Guarantor is a Subsidiary of the Borrower and has
acceded as of the date hereof to the Guaranty, thereby guaranteeing the Guaranty
Obligations. To secure its obligations under the Guaranty, the undersigned
Guarantor hereby adopts and hereby grants a security interest in its Collateral
as set forth in ARTICLE II of the Guarantors' Security Agreement as if such
grant was set forth herein at length. The Management Services Agreements of the
Guarantor as of the date hereof are listed in EXHIBIT A. The locations for the
filing of financing statements to perfect the security interest granted hereby
and the location of the Guarantor's Collateral and records are listed on EXHIBIT
B and EXHIBIT C respectively. The Securities of the Guarantor as of the date
hereof are listed in EXHIBIT D.
The undersigned hereby acknowledges that, upon the execution and
delivery of this Accession, it will become a party to the Guarantors' Security
Agreement. The undersigned hereby adopts the terms, provisions, representations
and warranties of the Guarantors' Security Agreement and agrees to be bound
thereby. This Accession and its attachments are hereby incorporated into the
Guarantors' Security Agreement and made a part thereof.
[Signature of Guarantor]
[Exhibits A through D shall be identical in form to the corresponding exhibits
to the Guarantors' Security Agreement.]
<PAGE>
Exhibit A to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_________________________
LIST OF MANAGEMENT SERVICES AGREEMENTS
<PAGE>
Exhibit B to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_______________________
SCHEDULE OF LOCATIONS FOR FILING UCC FINANCING STATEMENTS
<PAGE>
Exhibit C to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
________________________
LOCATIONS OF COLLATERAL
-----------------------
<PAGE>
Exhibit D to Second Amended
and
Restated Guarantors'
Security
Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.
October 30, 1996 /
$150,000,000
_________________________
PLEDGED SECURITIES
------------------
Part I. Pledged Stock
-------------
Percentage of
Outstanding
Name of Type of Number of Certificate Shares of
Issuing Corporation Shares Shares Number Capital Stock
------------------- ------- --------- ------ -------------
Part II. Pledged Notes
-------------
Original
Principal
Date Lender Borrower Amount
---- ------ -------- ---------
Part III. Pledged Interests
-----------------
Name of Partnership, Joint Ownership
Venture or Other Entity Nature of Interest Percentage
----------------------- ------------------ ----------
Part IV. Other Rights or Restrictions
----------------------------
Any Permitted Liens under item (d) of the definition of Permitted Liens in the
Loan Agreement.
<PAGE>
Exhibit E to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as Agent
American Oncology Resources,
Inc.,
Borrower
October 30, 1996/$150,000,000
______________________________
[FORM OF]
COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to SECTION 5.1(E) of the Second
Amended and Restated Loan Agreement, dated as of October 30, 1996, among the
undersigned as Borrower, the banks and other financial institutions party
thereto from time to time (the "Lenders"), and First Union National Bank of
North Carolina, as Agent for the Lenders and as the Issuing Bank (as amended,
modified or supplemented from time to time, the "Loan Agreement"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Loan Agreement.
The undersigned hereby certifies on behalf of the Borrower that:
1. He is the duly elected [Chief Executive Officer] [Vice President of
Finance] [Chief Financial Officer] of the Borrower.
2. Enclosed with this Certificate are copies of the financial
statements of the Borrower and its Subsidiaries as of _____________, and for the
[________-month period] [year] then ended, required to be delivered under
SECTION [5.1(B)] [5.1(C)]] of the Loan Agreement. Such financial statements
fairly present in all material respects the financial condition of the Borrower
and its Subsidiaries on a consolidated basis as of the date indicated and the
results of operations of the Borrower and its Subsidiaries on a consolidated
basis for the period covered thereby.
3. The undersigned officer has reviewed the terms of the Loan
Agreement and has made, or caused to be made under the supervision of the
undersigned officer, a review in reasonable detail of the transactions and
condition of the Borrower and its Subsidiaries during the accounting period
covered by such financial statements.
4. The examination described in paragraph (3) above did not disclose
the existence or occurrence of any Default or Event of Default (which has not
been previously disclosed to the Agent) at the end of the accounting period
covered by such financial statements. [, except as set forth below.]
5. The undersigned officer has no actual knowledge of the existence
or occurrence of any Default or Event of Default (which has not been previously
disclosed to the Agent) during or at the end of the accounting period covered by
such financial statements or as of the date of this Certificate. [, except as
set forth below]
[Describe here or in a separate attachment any exceptions to paragraph
(4) or (5) above by listing, in reasonable detail, the nature of the Default or
Event of Default, the period during which it has existed and the action that the
Borrower has taken or proposes to take with respect thereto.]
6. Attached to this Certificate as Attachment A is a Covenant
Compliance Worksheet reflecting the computation of the financial covenants set
forth in ARTICLE VI of the Loan Agreement as of the last day of the period
covered by the financial statements enclosed herewith.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the _______ day of _____________, ____.
AMERICAN ONCOLOGY RESOURCES, INC.
[signature of CEO, CFO, Vice President
of Finance]
Name: _______________________________
Title: ______________________________
-2-
<PAGE>
ATTACHMENT A
COVENANT COMPLIANCE WORKSHEET
<TABLE>
<CAPTION>
CAPITAL EXPENDITURES NOT TO EXCEED 10% OF CONSOLIDATED
(SECTION 6.10 OF THE LOAN AGREEMENT): NET REVENUE IN ANY QUARTER
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Capital Expenditures (other than
in connection with a Physician
Transaction allowed under Sections
5.14 or 6.2) for quarter ending on
the measurement date $____________
(2) Less: Capital Expenditures
for radiation or medical oncology
facilities and acquisition and
construction in connection therewith
(per proviso to Section 6.10): $____________
Net Capital Expenditures $____________
Consolidated Net Revenue for quarter
ending on the measurement date x 10% $____________
(3) Do net Capital Expenditures exceed 10% of
Consolidated Net Revenue? YES ___ NO ___
(4) Total Capital Expenditures
for radiation or medical oncology
facilities and acquisition and
construction in connection therewith
(per proviso to Section 6.10 may not $____________
exceed $36,000,000)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED NET WORTH
(SECTION 6.11 OF THE LOAN AGREEMENT): NOT LESS THAN THE FOLLOWING:
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Base for calculating required Consolidated Net Worth $200,000,000
(2) Consolidated Net Income for
each fiscal quarter (if positive) ending
after September 30, 1996 $____________
Multiplied by: 80%
Equals: Net income adjustment $
=============
(3) Aggregate amount of all increases
in the capital stock and additional
paid-in capital accounts of the Borrower
resulting from the issuance of equity
securities or other capital investments
after the Closing Date $____________
Multiplied by: 90%
Equals: Capital adjustment $
=============
(4) Required Consolidated Net Worth
Add Lines 1, 2 and 3 $
=============
(5) Actual Consolidated Net Worth as of measurement date $
=============
</TABLE>
<TABLE>
<CAPTION>
RATIO OF EBITDA TO INTEREST EXPENSE
(SECTION 6.12 OF THE LOAN AGREEMENT): NOT LESS THAN 3.5 TO 1.0
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) EBITDA for quarter ending on
the measurement date $____________
(2) Interest Expense for quarter ending
on the measurement date $____________
(3) Ratio of EBITDA to Interest Expense
============
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
RATIO OF ANNUALIZED EBITDAR TO DEBT SERVICE
(SECTION 6.13 OF THE LOAN AGREEMENT): NOT LESS THAN 1.35 TO 1.0
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) EBITDA for the two consecutive
quarters ending on the
measurement date $__________
(2) Lease Expense for the two
consecutive quarters ending
on the measurement date +$__________
(3) EBITDAR for two quarters $__________
x two (2)
(4) Annualized EBITDAR $
============
(5) Debt Service
(a) Lease Expense for the two
consecutive quarters ending
on the measurement date $__________
(b) Interest Expense for the two
consecutive quarters ending
on the measurement date +$__________
(c) Fixed Charges for
Two quarters $
==========
x two (2)
(d) Fixed Charges (Annualized) $__________
(e) Current maturities of Debt +$__________
(f) Debt Service (5(d) + 5(e)) $
============
(6) Ratio of Annualized EBITDAR to Debt Service
============
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED DEBT TO ANNUALIZED EBITDA
(SECTION 6.14 OF THE LOAN AGREEMENT): NO GREATER THAN 3.50 TO 1.0
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Consolidated Debt as of the measurement date $
============
(2) EBITDA for the two consecutive
quarters ending on the
measurement date $
------------
x two (2)
(3) Annualized EBITDA $
============
(4) Ratio of Consolidated Debt to Annualized EBITDA
============
</TABLE>
<TABLE>
<CAPTION>
RATIO OF CONSOLIDATED DEBT TO CONSOLIDATED TOTAL CAPITAL
(SECTION 6.15 OF THE LOAN AGREEMENT): NOT GREATER THAN .55 TO 1.0
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) Consolidated Debt as of the measurement date $
============
(2) Consolidated Total Capital:
(a) Consolidated Net Worth as of the
measurement date $
-------------
(b) Consolidated Debt as of the
measurement date $
-------------
(c) Consolidated Total Capital
Add Lines 2(a) and 2(b) $
============
(3) Ratio of Consolidated Debt to Consolidated Total Capital
Divide Line 1 by Line 2(c)
============
</TABLE>
-4-
<PAGE>
Exhibit F to Second Amended and
Restated Loan Agreement
First Union National Bank
of North Carolina, as
Agent
American Oncology
Resources, Inc.,
Borrower
October 30,
1996/$150,000,000
________________________
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE (this "Assignment and Acceptance") is
made this _____ day of ____________, ____, by and between____________________
(the "Assignor"), and _______________________ (the "Assignee"). Reference is
made to the Second Amended and Restated Loan Agreement, dated as of October 30,
1996, among American Oncology Resources, Inc. (the "Borrower"), the banks and
other financial institutions party thereto from time to time (the "Lenders"),
and First Union National Bank of North Carolina, as Agent for the Lenders and as
the Issuing Bank (as amended, modified or supplemented from time to time, the
"Loan Agreement"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Loan Agreement.
The Assignor and the Assignee hereby agree as follows:
1. ASSIGNMENT AND ASSUMPTION. Subject to the terms and conditions
hereof, the Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, without recourse and, except as
expressly provided herein, without representation or warranty, that interest as
of the Effective Date (as hereinafter defined) in and to all of the Assignor's
rights and obligations under the Loan Agreement and the other Loan Documents (in
its capacity as a Lender thereunder), represented by the percentage interest
specified in Item 4 of Annex I of the aggregate outstanding rights and
obligations of the Lenders under the Loan Agreement and Loan Documents (the
"Assigned Share"), including, without limitation, the Assigned Share of (i) the
Assignor's Commitment, (ii) the outstanding Loans made by the Assignor and (iii)
the Assignor's Percentage of Letter of Credit Outstandings.
2. THE ASSIGNOR. The Assignor (i) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it hereunder,
that such interest is free and clear of any adverse claim, that as of the date
hereof the amount of its Commitment, outstanding Loans and Percentage of Letter
of Credit Outstandings is as set forth in Item 4 of Annex I, and that after
giving effect to the assignment provided for herein the respective Commitments
of the Assignor and the Assignee will be as set forth in Item 4(a) of Annex I,
(ii) except as set forth in clause (i) above, makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Agreement
or any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any other Loan
Document or any other instrument or document furnished pursuant thereto and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its Subsidiaries or
the performance or observance by the Borrower or any of its Subsidiaries of any
of their respective obligations under the Loan Agreement or any other Loan
Document or any other instrument or document furnished pursuant thereto.
3. THE ASSIGNEE. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance, (ii) confirms
that it has received a copy of the Loan Agreement, together with copies of the
Financial Statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment
<PAGE>
and Acceptance, (ii) agrees that it will, independently and without reliance
upon the Agent, the Assignor or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Agreement,
(iii) confirms that it is an Eligible Assignee, (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Agreement and the other Loan Documents and any other
instruments and agreements referred to therein, and to exercise such powers and
to perform such duties thereunder, as are specifically delegated to or required
of the Agent by the terms thereof and such other powers as are reasonably
incidental thereto, (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Loan Agreement are
required to be performed by it as a Lender, [and] (vi) specifies as its address
for payments and notices the office set forth beneath its name on its signature
page hereto [, and (vii) to the extent legally entitled to do so, attaches the
forms described in SECTION 2.12(C) of the Loan Agreement]./1/
4. EFFECTIVE DATE. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, an executed original hereof,
together with all attachments hereto and the processing fee referred to in
SECTION 10.5(A) of the Loan Agreement, shall be delivered to the Agent. The
effective date of this Assignment and Acceptance (the "Effective Date") shall be
the earlier of (i) the date of acceptance hereof by the Agent or (ii) the date,
if any, designated as the Effective Date in Item 5 of Annex I (which date shall
be at least five Business from the delivery to the Agent of an executed copy of
such Annex). As of the Effective Date, (y) the Assignee shall be a party to the
Loan Agreement and, to the extent provided in this Assignment and Acceptance,
shall have the rights and obligations of a Lender thereunder and under the other
Loan Documents, and (z) the Assignor shall, to the extent provided in this
Assignment and Acceptance and from and after the Effective Date, relinquish its
rights (other than rights under the provisions of the Loan Agreement and the
other Loan Documents relating to indemnification or payment of fees, costs and
expenses, to the extent such rights relate to the time prior to the Effective
Date) and be released from its obligations under the Loan Agreement and the
other Loan Documents.
5. PAYMENTS; SETTLEMENT. On or prior to the Effective Date, in
consideration of the sale and assignment provided for herein and as a condition
to the effectiveness of this Assignment and Acceptance, the Assignee will pay to
the Assignor an amount (to be confirmed between the Assignor and the Assignee)
that represents the Assigned Share of the principal amount of the Loans made by
the Assignor and outstanding on the Effective Date (together, if and to the
extent the Assignor and the Assignee so elect, with the Assigned Share of any
related accrued but unpaid interest, fees and other amounts). From and after
the Effective Date, the Agent will make all payments required to be made by it
under the Loan Agreement in respect of the interest assigned hereunder
(including, without limitation, all payments of principal, interest and fees in
respect of the Assigned Share of the Assignor's Commitment and Loans assigned
hereunder) directly to the Assignee. The Assignor and the Assignee shall be
responsible for making between themselves all appropriate adjustments in
payments due under the Loan Agreement in respect of the period prior to the
Effective Date. All payments required to be made hereunder or in connection
herewith shall be made in Dollars by wire transfer of immediately available
funds to the appropriate party at its address for payments designated in Annex
I.
________________________
/1/Insert if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
-2-
<PAGE>
6. GOVERNING LAW. This Assignment and Acceptance shall be governed
by, and construed in accordance with, the internal laws of the State of North
Carolina (without regard to the conflicts of laws principles thereof).
7. ENTIRE AGREEMENT. This Assignment and Acceptance, together with
the Loan Agreement and the other Loan Documents, embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings of the parties, verbal or written, relating to the subject matter
hereof.
8. SUCCESSORS AND ASSIGNS. This Assignment and Acceptance shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
9. COUNTERPARTS. This Assignment and Acceptance may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which shall together constitute one and the same
instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and
Acceptance to be executed by their duly authorized officers as of the date first
above written.
ASSIGNOR:
________________________________
By:______________________________
Title:___________________________
ASSIGNEE:
________________________________
By:_____________________________
Title:__________________________
Accepted this _______ day of
______________, 19___:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Agent
By: _______________________________
Title: ____________________________
Consented and agreed to:
AMERICAN ONCOLOGY RESOURCES, INC.
By: _______________________________
Title: ____________________________
-4-
<PAGE>
EXHIBIT 11
AMERICAN ONCOLOGY RESOURCES, INC.
STATEMENT RE-COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30,
1996 1995 1996 1995
-------- -------- --------- --------
<S> <C> <C> <C> <C>
NET INCOME $ 4,303 $ 4,654 $12,810 $ 7,704
======= ======= ======= =======
OUTSTANDING AT END OF PERIOD:
Shares of Common Stock 28,360 27,476 28,360 27,476
Commitments to issue Common Stock at
specific future dates 16,999 14,252 16,999 14,252
Effect of weighting (637) (232) (1,438) (7,498)
------- ------- ------- -------
44,722 41,496 43,921 34,230
------- ------- ------- -------
Options to purchase Common Stock 5,128 5,128
Effect of treasury stock method (2,402) (1,602)
Dilutive effect of options to purchase
Common Stock granted April 1, 1994 and
prior - 1,296 - 1,122
------- ------- ------- -------
Additional assumed shares for 1994 and
1995 grants and issuancesat less than
the initial public offering price:
Options to purchase Common Stock 3,570 3,570
Effect of treasury stock method - (732) - (1,044)
------- ------- ------- -------
- 2,838 - 2,526
------- ------- ------- -------
Total shares used in per share
calculation 47,448 45,630 47,447 37,878
======= ======= ======= ======
Net income per share $0.09 $0.10 $ 0.18 $ 0.20
======= ======= ======= =======
ASSUMING FULL DILUTION:
Outstanding per above 47,448 45,630 47,447 37,878
Additional dilution resulting from use
of period end price per share if
higher than average 132 160 44 280
------- ------- ------- -------
Total shares used in per share 47,580 45,790 47,491 38,158
calculation ======= ======= ======= =======
Net income per share $0.09 $0.10 $ 0.27 $ 0.20
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,988
<SECURITIES> 4,083
<RECEIVABLES> 50,144
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 69,365
<PP&E> 20,928
<DEPRECIATION> 5,068
<TOTAL-ASSETS> 316,132
<CURRENT-LIABILITIES> 32,427
<BONDS> 0
0
0
<COMMON> 284
<OTHER-SE> 224,326
<TOTAL-LIABILITY-AND-EQUITY> 316,132
<SALES> 0
<TOTAL-REVENUES> 53,701
<CGS> 0
<TOTAL-COSTS> 45,919
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,064
<INCOME-PRETAX> 6,940
<INCOME-TAX> 2,637
<INCOME-CONTINUING> 4,303
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,303
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
