<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 JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-26190
US ONCOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-1213501
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION) IDENTIFICATION NO.)
16825 NORTHCHASE DRIVE, SUITE 1300
HOUSTON, TEXAS
77060
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(281) 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 AUGUST 12, 1999, 85,467,534 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE OUTSTANDING. IN ADDITION, AS OF AUGUST 12, 1999, THE REGISTRANT HAD AGREED
TO DELIVER 14,400,684 SHARES OF ITS COMMON STOCK ON CERTAIN FUTURE DATES FOR NO
ADDITIONAL CONSIDERATION.
<PAGE>
US ONCOLOGY, INC.
FORM 10-Q
JUNE 30, 1999
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET 3
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME 4
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 16
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
US ONCOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PAR VALUE)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------------- ---------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents........................................................ $ 3,201 $ 13,691
Accounts receivable......................................................... 288,976 243,390
Prepaids and other current assets........................................... 64,659 42,581
Due from affiliated physician groups........................................ 15,409 22,354
---------- ----------
Total current assets................................................... 372,245 322,016
Property and equipment, net.................................................. 242,773 220,944
Management service agreements, net........................................... 523,597 467,214
Other assets................................................................. 22,190 23,354
---------- ----------
$1,160,805 $1,033,528
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term indebtedness................................ $ 23,035 $ 22,426
Accounts payable............................................................ 56,106 80,729
Due to affiliated physician groups.......................................... 11,778 6,606
Accrued compensation costs.................................................. 15,511 10,118
Income taxes payable........................................................ 8,095 4,066
Other accrued liabilities................................................... 28,495 19,809
---------- ----------
Total current liabilities.............................................. 143,020 143,754
Deferred income taxes........................................................ 23,060 23,537
Long-term indebtedness....................................................... 323,555 234,474
---------- ----------
Total liabilities...................................................... 489,635 401,765
---------- ----------
Minority interest............................................................ 2,172 1,965
Stockholders' equity:
Preferred Stock, $.01 par value, 1,500 shares authorized, none issued
and outstanding............................................................
Series A Preferred Stock, $.01 par value, 500 shares authorized and
Reserved, none issued and outstanding......................................
Common Stock, $.01 par value, 250,000 shares authorized, 84,784 and 81,205
issued and 84,784 and 80,830 outstanding................................... 848 812
Additional paid-in capital.................................................. 411,678 404,749
Common Stock to be issued, approximately 15,226 and 16,947 shares........... 102,769 89,142
Treasury Stock, 0 and 375 shares............................................ (3,696)
Accumulated other comprehensive income (loss)............................... (120) 269
Retained earnings........................................................... 153,823 138,522
---------- ----------
Total stockholders' equity............................................. 668,998 629,798
---------- ----------
$1,160,805 $1,033,528
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
3
<PAGE>
US ONCOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------- ---------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue...................................................... $266,412 $204,744 $515,626 $392,381
Operating expenses:
Pharmaceuticals and supplies............................ 123,482 86,497 238,729 163,391
Practice compensation and benefits...................... 52,161 42,292 101,579 82,206
Other practice costs.................................... 32,838 26,722 62,352 52,352
General and administrative.............................. 8,911 9,664 17,805 18,466
Merger and integration costs............................ 24,491 24,491
Depreciation and amortization........................... 15,191 10,888 30,256 21,250
-------- -------- -------- --------
257,074 176,063 475,212 337,665
-------- -------- -------- --------
Income from operations....................................... 9,338 28,681 40,414 54,716
Interest expense, net........................................ (5,290) (3,885) (9,933) (8,073)
-------- -------- -------- --------
Income before income taxes................................... 4,048 24,796 30,481 46,643
Income taxes................................................. 5,262 9,292 15,180 17,550
-------- -------- -------- --------
Net income (loss)............................................ (1,214) 15,504 15,301 29,093
-------- -------- -------- --------
Other comprehensive income (loss), net of tax................ (269) (180) (389) 438
-------- -------- -------- --------
Comprehensive income (loss).................................. $ (1,483) $ 15,324 $ 14,912 $ 29,531
======== ======== ======== ========
Net income (loss) per share - basic.......................... $(0.01) $0.16 $0.15 $0.30
======== ======== ======== ========
Shares used in per share calculations - basic................ 99,847 98,349 99,780 96,999
======== ======== ======== ========
Net income (loss) per share - diluted........................ $(0.01) $0.15 $0.15 $0.29
======== ======== ======== ========
Shares used in per share calculations - diluted.............. 99,847 100,435 101,308 100,026
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
4
<PAGE>
US ONCOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................. $ 15,301 $ 29,093
Noncash adjustments:
Depreciation and amortization......................................... 30,256 21,250
Deferred income taxes................................................. (1,180) 6,237
Non cash merger and integration costs................................. 2,300
Gain on contract termination.......................................... (3,152)
Changes in operating assets and liabilities............................ (54,699) (20,896)
--------- --------
Net cash provided by (used in) operating activities................. (11,174) 35,684
Cash flows from investing activities:
Acquisition of property and equipment.................................. (40,009) (25,107)
Net payments in medical practice transactions.......................... (32,310) (17,800)
Other.................................................................. (1,273) (1,077)
--------- --------
Net cash used in investing activities............................... (73,592) (43,984)
Cash flows from financing activities:
Proceeds from credit facilities........................................ 309,000 30,000
Repayment of credit facilities......................................... (232,120) (5,149)
Repayment of other indebtedness........................................ (6,341) (16,640)
Proceeds from exercise of options...................................... 3,737 3,231
--------- --------
Net cash provided by financing activities........................... 74,276 11,442
--------- --------
Increase (decrease) in cash and equivalents............................. (10,490) 3,142
Cash and equivalents:
Beginning of period.................................................... 13,691 7,772
--------- --------
End of period.......................................................... $ 3,201 $ 10,914
========= ========
Noncash transactions:
Tax benefit from exercise of non-qualified stock options............... $ 4,160
Value of Common Stock to be issued in medical
practice transactions................................................ $ 20,199 7,680
Debt issued in medical practice transactions........................... 18,416 11,954
Debt assumed in medical practice transactions.......................... 86
Debt issued to finance insurance premiums.............................. 649
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
5
<PAGE>
US ONCOLOGY, 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 that are normal and recurring in nature and considered necessary for
a fair presentation of the financial position and the results of operations for
the interim periods presented. 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 US Oncology, Inc.'s Form
8-K/A-2 filed with the Securities and Exchange Commission on August 16, 1999.
Operating segments
During 1998, the Company adopted Financial Accounting Standards Board (FASB)
Statement No. 131, "Disclosures About Segments of an Enterprise and Related
Information" (FAS 131), which requires reporting of summarized financial results
for the operating segments as well as establishes standards for related
disclosures about products and services, geographic areas and major customers.
The Company's sole business is providing comprehensive management services,
facilities and equipment, administrative and technical support and ancillary
services necessary for physicians to establish and maintain a fully integrated
network of outpatient cancer care. The physicians affiliated with the Company
provide all aspects of care related to the diagnosis and outpatient treatment of
cancer, including comprehensive oncology services (including primarily medical,
radiation, and gynecological services), diagnostic radiology services, retail
pharmacy services and clinical research. For the first six months of 1999 and
1998, oncology related services was the only product line that exceeded the
reporting thresholds of FAS 131. The Company, therefore, has used the
aggregation criteria of FAS 131 and reports a single segment.
NOTE 2 - BUSINESS COMBINATION
On June 15, 1999, the Company, formerly American Oncology Resources, Inc. (AOR),
consummated a merger transaction pursuant to which Physician Reliance Network,
Inc. (PRN) became a wholly owned subsidiary of the Company and each outstanding
share of PRN's common stock was converted into .94 shares of the Company's
common stock (the Merger). At the time of the Merger, the Company changed its
name to US Oncology, Inc. The transaction was accounted for as a pooling of
interests and accordingly the financial statements presented herein have been
restated to conform to the presentation and accounting standards of the two
companies. In conjunction with the Merger, the Company recognized merger and
integration costs of approximately $24.5 million. Merger and integration costs
are comprised of transaction costs of approximately $17.2 million for
professional fees, costs of due diligence, severance costs and other out of
pocket expenses; restructuring costs of approximately $3.1 for leasehold and
software abandonment; and, integration costs of approximately $4.2 million for
integration consulting fees, communications, and Merger related Company
meetings.
6
<PAGE>
US ONCOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Combined and separate results of AOR and PRN during the period preceding the
Merger were as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
------------------------------------------------------------------------
AOR PRN ADJUSTMENTS COMBINED
------------- ------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Revenue............................ $139,840 $114,274 $(4,900) $249,214
Income............................. 8,517 7,998 - 16,515
THREE MONTHS ENDED MARCH 31, 1998
------------------------------------------------------------------------
AOR PRN ADJUSTMENTS COMBINED
------------- ------------- ------------------- ------------------
Revenue............................ $100,949 $ 90,513 $(3,825) $187,637
Income............................. 6,871 6,718 - 13,589
</TABLE>
The combined financial results presented above include adjustments made to
conform accounting policies of the two companies. No intercompany transactions
existed between the two companies during the periods presented.
NOTE 3 - REVENUE
Medical service revenue for services to patients by the physician 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 physician
groups is reduced by amounts retained by the physician groups under the
Company's management services agreements to arrive at the Company's management
fee revenue.
The following presents the amounts included in the determination of the
Company's revenue (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Medical service revenue......................... $334,441 $259,975 $624,408 $504,504
Amounts retained by affiliated physician
groups........................................ 77,055 63,139 123,445 124,851
-------- -------- -------- --------
Management fee revenue.......................... 257,386 196,836 500,963 379,653
Other revenue................................... 9,026 7,908 14,663 12,728
-------- -------- -------- --------
Revenue......................................... $266,412 $204,744 $515,626 $392,381
======== ======== ======== ========
</TABLE>
Other revenues are primarily derived from retail pharmacy operations located in
certain of the Company's cancer centers and larger physician offices and
revenues earned under the Company's research agreement with Ilex Oncology, Inc.
(Ilex). The Company recognized approximately $3.2 million of revenue during the
three months ended June 30, 1999 related to the termination of the research
contract with Ilex.
The Company's most significant and only management service agreement to provide
more than 10% of revenues to the Company is with Texas Oncology, P.A. (TOPA).
TOPA accounted for approximately 25.1% and 32.6% for the three months ended June
30, 1999 and 1998, and 25.4% and 33.4% for the six months ended June 30, 1999
and 1998 of the Company's total revenue.
7
<PAGE>
US ONCOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 - CREDIT FACILITY AND MASTER LEASE
Credit Facility
On June 15, 1999, in connection with the Merger, the Company executed a $275
million revolving credit facility (Credit Facility) with First Union National
Bank (First Union) individually and as Administrative Agent for eight additional
lenders ("Lenders"). The Credit Facility consists of a $175 million five-year
revolving credit facility and a $100 million 364-day revolving credit facility.
Initial proceeds under the Revolver were used to refinance existing debt and to
pay certain transaction fees and expenses in connection with the Credit Facility
and the Merger. Proceeds of loans under the Credit Facility may be used to
finance medical practice transactions, to provide working capital and for other
general corporate uses. As of June 30, 1999, the Company had an outstanding
balance of $237 million under the Credit Facility. The Company has classified
the Credit Facility as long-term indebtedness due to its ability and intent to
maintain the borrowings beyond the next twelve months. Costs incurred in
connection with the extinguishment of the Company's previous credit facilities
were expensed in the current period as merger and integration costs.
Borrowings under the Credit Facility are secured by all capital stock of the
Company's subsidiaries, and all of the Company's management services agreements
and all accounts receivable of the Company. At the Company's option, funds may
be borrowed at the Base interest rate or the London Interbank Offered Rate
(LIBOR) up to LIBOR plus an amount determined under a defined formula. The Base
rate is selected by First Union and is defined as their prime rate or Federal
Funds Rate plus 1/2%. Interest on amounts outstanding under Base rate loans is
due quarterly while interest on LIBOR related loans is due at the end of each
applicable interest period or quarterly, if earlier. As of June 30, 1999, the
weighted average interest rate on all outstanding draws under the Credit
Facility was 6.4%.
The Company is subject to restrictive covenants under the Credit Facility,
including the maintenance of certain financial ratios. The agreement limits
certain activities such as incurrence of additional indebtedness, sales of
assets, investments, capital expenditures, mergers and consolidations and the
payment of dividends. Under certain circumstances, additional medical practice
transactions may require First Union's and the Lenders' consent.
Master Lease
On June 15, 1999, the Company amended its $75 million master lease agreement
related to integrated cancer centers to extend the construction and acquisition
period through December 2000. Under the agreement, the lessor purchases and has
title to the properties, pays for the construction costs and thereafter leases
the facilities to the Company. The initial term of the lease is for five years
and can be renewed in one year increments if approved by the lessor. The lease
provides for substantial residual value guarantees and includes purchase options
at original cost on each option. Advances under the master lease agreement as
of June 30, 1999 were $40.2 million.
8
<PAGE>
US ONCOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 5 - EARNINGS PER SHARE
The Company computes earnings per share in accordance with the provisions of
FASB Statement No. 128, "Earnings Per Share", which requires the Company to
disclose "basic" and "diluted" earnings per share (EPS).
The computation of basic EPS is based on a weighted average number of
outstanding shares of Common Stock and Common Stock to be issued during the
periods. The Company includes Common Stock to be issued in both basic and
diluted EPS as there are no foreseeable circumstances that would relieve the
Company of its obligation to issue these shares. The computation of the diluted
EPS is based on a weighted average number of outstanding shares of Common Stock
and Common Stock to be issued during the periods as well as all dilutive
potential Common Stock calculated under the treasury stock method.
The table summarizes the determination of shares used in per share calculations
(in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------------------- ------------------------------------
1999 1998 1999 1998
----------------- -------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Outstanding at end of period:
Common Stock................................. 84,784 80,352 84,784 80,352
Common Stock to be issued.................... 15,226 18,253 15,226 18,253
------- ------- ------- -------
100,010 98,605 100,010 98,605
Effect of weighting.......................... (163) (256) (230) (1,446)
------- ------- ------- -------
Shares used in per share calculations-basic.. 99,847 98,349 99,780 97,159
Effect of weighting and assumed share
equivalents for grants of stock options at
less than the weighted average price and
subordinated convertible promissory notes.. - 2,086 1,528 2,867
------- ------- ------- ---------
Shares used in per share calculations-diluted 99,847 100,435 101,308 100,026
======= ======= ======= =======
Anti-dilutive stock options not included above 11,933 1,684 6,645 1,684
======= ======= ======= =======
</TABLE>
NOTE 6 - RECENT PRONOUNCEMENTS
In June 1998, FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (FAS 133) which is effective for the
Company's financial statements beginning with the first quarter of the year
ending December 31, 2000. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and to measure those instruments at fair value. Management does not
expect such implementation to have a material effect on the Company's
operations.
9
<PAGE>
US ONCOLOGY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
INTRODUCTION
US Oncology, Inc. (the "Company") is a cancer management company which provides
comprehensive management services under long-term agreements to its affiliated
oncology practices, including operational and clinical research services and
data management, and furnishes personnel, facilities, supplies and equipment.
These affiliated practices provide a broad range of medical services to cancer
patients, integrating the specialties of medical and gynecological oncology,
hematology, radiation oncology, diagnostic radiology and stem cell
transplantation. Substantially all of the Company's revenue consists of
management fees and includes all medical practice operating costs for which the
Company is contractually responsible.
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 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 practices will increasingly elect
to enter into management relationships with entities such as the Company.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
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. Forward-looking statements often include
words like "believe", "plan", "expect", "intend" or "estimate". 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 including results of
operations impacted by changes in cancer therapies or the manner in which cancer
care is delivered, the ability to construct integrated cancer centers and to
operate them profitably, 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.
Please refer to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 and the joint proxy statement and prospectus distributed in
connection with the Merger, each of which was filed with the Securities and
Exchange Commission (SEC), and the Company's subsequent filings with the SEC for
a more detailed discussion of such risks and uncertainties. Many of these risks
and uncertainties are beyond the Company's ability to control or predict. 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
Medical service revenue for services to patients by the physician 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 physician
groups is reduced by amounts retained by the physician groups under the
Company's management services agreements to arrive at the Company's management
fee revenue.
10
<PAGE>
US ONCOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
The following presents the amounts included in the determination of the
Company's revenue (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Medical service revenue......................... $334,441 $259,975 $624,408 $504,504
Amounts retained by affiliated physician
groups........................................ 77,055 63,139 123,445 124,851
-------- -------- -------- --------
Management fee revenue.......................... 257,386 196,836 500,963 379,653
Other revenue................................... 9,026 7,908 14,663 12,728
-------- -------- -------- --------
Revenue......................................... $266,412 $204,744 $515,626 $392,381
======== ======== ======== ========
</TABLE>
Other revenues are primarily derived from retail pharmacy operations located in
certain of the Company's cancer centers and larger physician offices and
revenues earned under the Company's research agreement with Ilex Oncology, Inc.
(Ilex). The Company recognized approximately $3.2 million of revenue during the
three months ended June 30, 1999 related to the termination of the research
contract with Ilex.
The Company's most significant and only management service agreement to provide
more than 10% of revenues is with Texas Oncology, P.A. (TOPA). TOPA accounted
for approximately 25.1% and 32.6% for the three months ended June 30, 1999 and
1998, and 25.4% and 33.4% for the six months ended June 30, 1999 and 1998 of the
Company's total revenue.
The following table sets forth the percentages of revenue represented by certain
items reflected in the Company's Statement of Operations and Comprehensive
Income. 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 SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenue.............................................. 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Pharmaceuticals and supplies........................ 46.4 42.2 46.3 41.6
Practice compensation and benefits.................. 19.6 20.7 19.7 21.0
Other practice costs................................ 12.3 13.1 12.1 13.3
General and administrative.......................... 3.3 4.7 3.5 4.7
Merger and integration costs........................ 9.2 - 4.7 -
Depreciation and amortization....................... 5.7 5.3 5.9 5.4
Net interest expense................................ 2.0 1.9 1.9 2.1
----- ----- ----- -----
Income before income taxes........................... 1.5 12.1 5.9 11.9
----- ----- ----- -----
Income taxes......................................... 2.0 4.5 2.9 4.5
----- ----- ----- -----
Net income (loss).................................... (0.5)% 7.6% 3.0% 7.4%
===== ===== ===== =====
</TABLE>
11
<PAGE>
US ONCOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
1999 COMPARED TO 1998
The Company entered into new affiliation agreements with ten oncology groups in
the first six months of 1999 and nine oncology groups in the first six months of
1998, respectively. The results of the new affiliated oncology practices are
included in the Company's operating results from the dates of affiliation.
Changes in results of operations for the first six months of 1998 compared to
the first six months of 1999 were caused, in part, by affiliations with these
oncology practices.
Revenue. Revenue increased from $392.4 million in the first six months of
1998 to $515.6 million in 1999, an increase of $123.2 million, or 31.4% and from
$204.7 million in the second quarter of 1998 to $266.4 million in the second
quarter of 1999, an increase of $61.7 million or 30.1%. Revenue for markets
under management in the first six months of 1998 and 1999 increased $114.4
million or 30.3% over the same period from the prior year and $60.3 million or
30.8% in the second quarter of 1999. This growth was the result of expansion of
services, increases in patient volume, and recruitment of or affiliation with
additional physicians. In addition, the Company recognized revenue of $3.2
million in the second quarter of 1999 from the termination of its research
services contract with Ilex.
Pharmaceuticals and Supplies. Pharmaceuticals and supplies expense, which
includes drugs, medications and other supplies used by the affiliated physician
groups, increased from $163.4 million for the first six months of 1998 to $238.7
million for the first six months of 1999, an increase of $75.3 million, or 46.1%
and from $86.5 million in the second quarter of 1998 to $123.5 million in the
second quarter of 1999 an increase of $37.0 million or 42.8%. As a percentage
of revenue, pharmaceuticals and supplies increased from 41.6% for the first six
months of 1998 to 46.3% for the comparable period of 1999 and from 42.2% in the
second quarter of 1998 to 46.4% in the second quarter of 1999. This increase
was primarily due to a shift in the revenue mix to a higher percentage of drug
revenue, the introduction of a number of new chemotherapy agents and, to a
lesser extent, lower reimbursement from payors. Management expects that third-
party payors will continue to negotiate the reimbursement rate for
pharmaceuticals and supplies, with the goal of lowering reimbursement rates, and
that such lower reimbursement rates as well as shifts in revenue mix may
continue to adversely impact the Company's margins with respect to such items.
Merger and Integration Costs. In the second quarter of 1999 the Company
recognized merger and integration costs of approximately $24.5 million. Merger
and integration costs are comprised of transaction costs of approximately $17.2
million for professional fees, costs of due diligence, severance costs and other
out of pocket expenses; restructuring costs of approximately $3.1 million for
leasehold and software abandonment; and, integration costs of approximately $4.2
million for integration consulting fees, communications, and Merger related
Company meetings.
Income Taxes. Income tax expense decreased from the prior year as a result of
merger and integration costs expensed in the current period. For the first six
months of 1999 the Company recognized a tax provision of $15.2 million resulting
in an effective tax rate of 49.8% compared to 37.6% for the same prior year
period. The increased effective tax rate is the result of certain non-deductible
Merger related costs.
Net Income. Net income decreased from $29.1 million in the first six months
of 1998 to $15.3 million in the first six months of 1999, a decrease of $13.8
million or 47.4% and decreased from $15.5 million for the second quarter of 1998
to a loss of $1.2 million for the second quarter of 1999. Such decreases were
primarily the result of merger and integration costs of $24.5 million.
Excluding the merger costs, net income for the first six months of 1999 would
have been $34.4 million which represents earnings per share of $0.34 and for the
second quarter of 1999 net income would have been $17.8 million which represents
earnings per share of $0.18. Net income as a percentage of revenue decreased
from 7.4% for the six months ended June 30, 1998 to 6.7% for the six months
ended June 30, 1999 excluding merger and integration costs and decreased from
7.6% for the second quarter of 1998 to 6.7% for the second quarter of 1999
excluding merger and integration costs. Such decreases are attributable to the
shift in the revenue mix to a higher percentage of drug revenue as discussed
above, the change in amortization period for management services agreements from
40 years to 25 years, effective July 1, 1998 and, to a lesser extent, the
introduction of a number of new, lower margin chemotherapy agents.
12
<PAGE>
US ONCOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
In response to this decline in margin relating to certain pharmaceutical agents,
the Company has adopted several strategies. Most importantly, the Company has
formed a number of preferred pharmaceutical relationships and continues to
pursue others. In addition, the Company routinely considers and implements
measures to control general and administrative costs to enable it to achieve
greater economies of scale. Lastly, the Company seeks opportunities to expand
its business in areas that are less affected by lower pharmaceutical margins,
such as radiation oncology. The Company believes that its results of operations
and financial condition have benefited from each of these strategies.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital primarily to enter into management services
agreements with, and to purchase the nonmedical assets of, medical and radiation
oncology practices. During the first six months of 1999, the Company paid total
consideration of $70.9 million in connection with affiliations with ten
physician groups including cash and transaction costs of $32.3 million. During
the comparable period of the prior year, the Company paid total consideration of
$37.4 million for affiliations with nine physician groups including cash and
transaction costs of $17.8 million.
To fund its growth and development, the Company has satisfied its transaction
and working capital needs through borrowings under a $275 million syndicated
revolving credit facility ("Credit Facility") with First Union National Bank of
North Carolina ("First Union"), as agent for the various lenders. In addition,
the Company has obtained a $75 million end-loaded leasing facility (Leasing
Facility) for its integrated cancer centers.
During the first six months of 1999, the Company borrowed $77.0 million, net,
under the Credit Facility to fund medical practice transactions, pay merger
related expenses and the acquisition of property and equipment. Borrowings
under the Credit Facility bear interest at a rate equal to a rate based on prime
rate or the London Interbank Offered Rate, based on a defined formula. The
Credit Facility and Leasing Facility contain 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 services
agreements, the capital stock of the Company's subsidiaries and the Company's
accounts receivable are pledged as security under the Credit Facility and
Leasing Facility. The Company is currently in compliance with the Credit
Facility and Leasing Facility covenants, with additional capacity under the
Credit Facility of $38 million and Leasing Facility of approximately $34 million
at June 30, 1999. The Company has relied primarily on management fees received
from its affiliated physician groups to fund its operations.
Cash used in operations was $11.2 million in the first six months of 1999, a
change of $46.9 million from the comparable period in 1998. The decrease was
due primarily to Merger related expenditures of $16.3 million and the timing of
certain working capital payments. Excluding merger related expenditures, cash
provided from operations would have been $5.1 million. Cash used in investing
activities was $73.6 million for the first six months of 1999, an increase of
$29.6 million from the same period of 1998. Such increase is due primarily to
greater activity in medical practice transactions in 1999. Cash provided by
financing activities was $74.3 million for the first six months of 1999, an
increase of $62.9 million from the comparable prior year period. Such increase
is due to borrowings to pay merger and integration costs as well as fund medical
practice transaction costs. Incremental borrowings of $77.0 million under the
Credit Facility were incurred in the first six months of 1999.
As of June 30, 1999, the Company had net working capital of $229.2 million and
cash and cash equivalents of $3.2 million. The Company's also had $143.0
million of current liabilities, including approximately $23.0 million of long-
term indebtedness maturing before June 30, 2000. The Company currently expects
that its principal use of funds in the near future will be in connection with
anticipated medical practice transactions, merger and integration expenses and
purchases of medical equipment.
13
<PAGE>
US ONCOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
YEAR 2000 ISSUE
The "Year 2000 problem" describes computer programs that use two rather than
four digits to define the applicable year, and thus cannot distinguish between
the year 1900 and the year 2000. The Company's computer hardware and software,
building infrastructure components (e.g., alarm systems and HVAC systems) and
medical equipment (e.g., linear accelerators, which are used to provide
radiation therapy) that are date sensitive may contain programs with the Year
2000 problem. If uncorrected, the problem could result in computer system and
program failure or equipment malfunctions that could disrupt business
operations.
Project. The Company has divided its Year 2000 Project into six phases:
development, awareness, assessment, remediation, validation and implementation.
In connection with its Year 2000 Project, the Company is assessing information
technology software and hardware, medical equipment, third-party payors and
third-party suppliers. The Company's strategy also includes development of
contingency plans to address potential disruption of operations arising from the
Year 2000 problems.
Information Systems. The Company recognizes that investment in information
systems and state-of-the-art medical equipment is integral to its operations.
The majority of the Company's technology expenditures for 1998 and 1999 relate
to the development and implementation of a clinical information system. This
system provides an interactive electronic format for capturing the spectrum of
patient care and creates an electronic medical record. This system is believed
to be Year 2000 compliant. The costs of the clinical information system are
expected to be capitalized and amortized over the life of the asset.
In 1994, the Company began a project to replace the existing practice management
systems (billing and collection systems) with a common system to improve
efficiency and consistency among its affiliated practices of this common
practice management system. The common practice management system being
implemented is believed to be Year 2000 compliant. Any remaining practice
management systems not replaced by the new system have been modified with
vendor-supplied upgrades to make them Year 2000 compliant. Costs to upgrade the
practice management systems that are not converted to the common system would be
expensed; however, such costs are not expected to be material.
In 1996, the Company's management incorporated a business strategy to
accommodate the rapid growth of its operations. One component of this strategy
was the investment in developing an integrated financial system throughout its
network of affiliated physicians. This financial system is believed to be Year
2000 compliant and has been implemented in several locations. The Company
intends to complete the implementation of this financial system by the first
quarter of 2000. The costs incurred in developing this financial system have
been capitalized through the initial implementation date. Any legacy financial
systems not replaced before the end of 1999 are believed to be Year 2000
compliant.
Medical Equipment. The Company has reviewed the Year 2000 readiness of the
linear accelerators and associated equipment used in the affiliated radiation
oncology practices. The suppliers of the radiation oncology equipment have
certified that, with minor upgrades, these systems will be Year 2000 compliant
by the end of the third quarter. The Company has determined that all other
medical equipment is Year 2000 compliant. Costs incurred to upgrade medical
equipment have been expensed.
Third-Party Payors. The Company bills and collects for medical services from
numerous third party payors in operating its business. These third parties
include fiscal intermediaries on behalf of the Medicare program, as well as
insurance companies, HMOs and other private payors. As part of the Company's
Year 2000 strategy, a comprehensive survey has been sent to all significant
payors to assess their timeline for Year 2000 compliance and the impact to the
Company. The response rate for compliance is over 90% and non-respondants are
being contacted directly. All major payors who have responded to the Company's
requests have declared that they are or will be Year 2000 compliant.
14
<PAGE>
US ONCOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Third-Party Suppliers. The Company is currently evaluating third party
vendors of medical supplies and pharmaceuticals in order to determine whether
their services and products will be interrupted or malfunction due to the Year
2000 problem. The Company's pharmaceutical ordering system is a proprietary
system developed by a third party vendor and is utilized under the Company's
purchasing contract with such vendor. This relationship has been identified and
prioritized as the most critical in the vendor evaluation process. The third
party vendor has upgraded its pharmaceuticals purchase ordering system at no
cost to the Company. The upgraded system has been certified as Year 2000
compliant by the vendor and is scheduled for implementation by the third quarter
of 1999.
Risks. The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party payors and third-party
suppliers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. The Company has
received compliance certification from all major payors and its key third party
supplier of pharmaceutical agents which reduces the Company's level of
uncertainly considerably. The Company has also developed contingency plans to
use alternative business practices in the event of unexpected Year 2000 related
failures of third-party systems. However, there can be no assurance that
unexpected Year 2000 related failures will not occur or that such contingency
plans will be sufficient in the event of such failures. Any such failure
affecting the Company or any third party could have a material adverse effect on
the Company's results of operations, liquidity and financial condition.
Costs. The Company estimates that total costs to be incurred in the execution
of its Year 2000 Project are approximately $10.7 million, including
approximately $600,000 relating to laboratory and medical equipment upgrades and
replacements. The Company estimates that approximately $8.2 million of the
costs will be capitalized and amortized over the useful life of the assets as
they represent new applications and expanded capabilities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
In the normal course of business, the financial position of the Company is
routinely subjected to a variety of risks. Among these risks is the market risk
associated with interest rate movements on outstanding debt. The Company
regularly assesses these risks and has established policies and business
practices to protect against the adverse effects of these and other potential
exposures.
The Company's borrowings under the Credit Facility and subordinated notes due to
affiliated physicians contain an element of market risk from changes in interest
rates. The Company manages this risk, in part, through the use of interest rate
swaps. The Company does not enter into interest rate swaps or hold other
derivative financial instruments for speculative purposes.
For purposes of specific risk analysis, the Company uses sensitivity analysis to
determine the impact that market risk exposures may have on the Company. The
financial instruments included in the sensitivity analysis consist of all of the
Company's cash and equivalents, long-term and short-term debt and all derivative
financial instruments.
To perform sensitivity analysis, the Company assesses the risk of loss in fair
values from the impact of hypothetical changes in interest rates on market
sensitive instruments. The market values for interest rate risk are computed
based on the present value of future cash flows as impacted by the changes in
the rates attributable to the market risk being measured. The discount rates
used for the present value computations were selected based on market interest
rates in effect at June 30, 1999. The market values that result from these
computations are compared with the market values of these financial instruments
at June 30, 1999. The differences in this comparison are the hypothetical gains
or losses associated with each type of risk. A one percent increase or decrease
in the levels of interest rates on variable rate debt with all other variables
held constant would not result in a material change to the Company's results of
operations or financial position or the fair value of its financial instruments.
15
<PAGE>
US ONCOLOGY, INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on June 15, 1999
(b) No disclosure required.
(c) The following matters were voted upon at the Annual Meeting:
Election of Directors
<TABLE>
<CAPTION>
WITHHELD
NOMINEE VOTES FOR AUTHORITY
------- --------- ---------
<S> <C> <C>
Russell L. Carson, as a Class III director 33,164,929 188,966
James E. Dalton, as a Class I director 33,164,929 188,966
Stanley A. Marks, M.D., as a Class II director 33,164,929 188,966
Richard B. Mayor, as a Class III director 33,164,929 188,966
Robert A. Ortenzio, as a Class II director 33,164,929 188,966
Edward E. Rogoff, M.D., as a Class I director 33,164,929 188,966
R. Dale Ross, as a Class III director 33,164,929 188,966
</TABLE>
Other Matters
<TABLE>
<CAPTION>
VOTES AGAINST OR
VOTES FOR ABSTAINED
--------- ----------------
<S> <C> <C>
Approval of the issuance of up to 50,000,000 shares of
the Company's common stock (together with associated
Series A Preferred Stock Purchase Rights) to
stockholders of Physician Reliance Network, Inc.
("PRN") pursuant to the Agreement and Plan of Merger,
dated as of December 11, 1998, by and among the 24,404,511 271,903
Company, PRN and Diagnostic Acquisition, Inc.
Approval of the Company's Amended and Restated
Certificate of Incorporation 18,893,202 5,120,234
Approval of an amendment to the Company's 1993 Affiliate
Stock Option Plan 18,634,689 6,041,725
Approval of amendments to the Company's 1993
Non-Employee Director Stock Option Plan 20,136,464 4,539,950
Approval of an amendment to the Company's 1993 Key
Employee Stock Option Plan 19,050,357 5,626,057
Ratification of the Appointment of PricewaterhouseCoopers LLP
as the Company's independent accountants 33,278,834 75,061
</TABLE>
No broker non-votes were recorded.
(d) No disclosure required.
16
<PAGE>
U.S. ONCOLOGY, INC.
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities
In connection with each affiliation transaction between the Company and a
physician group, the Company purchases the nonmedical assets of, and enters into
a long-term management services agreement with, that physician group. In
consideration for that arrangement, the Company typically pays cash, issues
subordinated promissory notes (in general, payable in equal installments on the
third through seventh anniversaries of the closing date at an annual interest
rate of seven percent) and unconditionally agrees to deliver shares of Common
Stock at future specified dates (in general, on each of the third through fifth
anniversaries of the closing date). The price per share is the lower of the
average of the closing price per share for the five days preceding the date of
the letter of intent or the closing date with respect to such affiliation
transaction.
The following table describes all unregistered sales by the Company of the
Company's securities during the first six months of 1999. Each sale was a
private placement made in connection with a physician transaction, as described
in general in the preceding paragraph. The overwhelming majority of the
affiliated physicians are accredited investors. No underwriter was involved in
any such sale, and no commission or similar fee was paid with respect thereto.
Each sale was not registered under the Securities Act of 1933 in reliance on
Section 4(2) of such Act and Rule 506 enacted thereunder.
<TABLE>
<CAPTION>
Number of Shares Aggregate Principal Amount
Date of Transaction Number of Physicians of Common Stock(1) of Notes
- -------------------------- --------------------------- ------------------ ---------------------------
<S> <C> <C> <C>
1/99 8 819,665 $6,316,000
1/99 4 283,568 2,558,000
1/99 2 47,611 233,000
1/99 1 24,426 640,000
1/99 1 18,609 186,000
1/99 1 96,366 680,000
2/99 1 12,881 217,000
3/99 1 33,381 686,000
6/99 10 402,209 2,990,000
</TABLE>
(1) In connection with each affiliation transaction, the Company unconditionally
agrees to deliver shares of Common Stock at specified future dates.
17
<PAGE>
US ONCOLOGY, INC.
OTHER INFORMATION - CONTINUED
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference from the Company's Form 8-K/A, filed June 17, 1999)
3.2 Amended and Restated By-Laws (incorporated by reference from the
Company's Form 8-K/A filed June 17, 1999)
4.1 Rights Agreement between the Company and American Stock Transfer & Trust
Company (incorporated by reference from Form 8-A filed June 2, 1997)
10.1 Fourth Amended and Restated Loan Agreement dated May 11, 1999 among
First Union National Bank, various Lenders and the Company
10.2 Third Amendment to Certain Operative Agreements dated as of May 14, 1999
by and among the Company, various of its subsidiaries, First Security
Bank, National Association as owner trustee, various Lenders and Holders
(as defined herein) and First Union National Bank, as Agent
10.3 Termination Agreement by and between Ilex Oncology, Inc. and PRN
Research, Inc. (a subsidiary of the Company)
27 Financial Data Schedule
(b) Reports on Form 8-K
On June 17, 1999, the Company filed an amendment to Form 8-K in connection
with the consummation of the Merger.
18
<PAGE>
US ONCOLOGY, INC.
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: August 16, 1999 US ONCOLOGY, INC.
By: /s/ L. FRED POUNDS
----------------------------------------
L. Fred Pounds, Chief Financial Officer
and Treasurer (duly authorized signatory
and Principal Financial Officer)
19
<PAGE>
EXHIBIT 10.1
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
FIRST UNION NATIONAL BANK
AS ADMINISTRATIVE AGENT
BANC ONE CAPITAL MARKETS, INC.
AS SYNDICATION AGENT
VARIOUS LENDERS
AND
AMERICAN ONCOLOGY RESOURCES, INC.
AS BORROWER
UP TO
$300,000,000 REVOLVING CREDIT FACILITIES
ARRANGED BY
FIRST UNION CAPITAL MARKETS CORP.
AS LEAD ARRANGER
MAY 11, 1999
<PAGE>
TABLE OF CONTENTS
Page
Recitals....................................................... 1
ARTICLE I
DEFINITIONS
1.1 Defined Terms............................................ 2
1.2 Accounting Terms......................................... 25
1.3 Singular/Plural.......................................... 26
1.4 Other Terms.............................................. 26
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1 Commitments; Loans..................................... 26
2.2 Committed Borrowings................................... 28
2.3 Bid Borrowings......................................... 29
2.4 Disbursements; Funding Reliance; Domicile of Loans..... 33
2.5 Notes.................................................. 34
2.6 Termination and Reduction or Increase of Commitments... 35
2.7 Payments; Voluntary, Mandatory......................... 36
2.8 Interest............................................... 37
2.9 Fees................................................... 39
2.10 Interest Periods....................................... 40
2.11 Conversions and Continuations.......................... 41
2.12 Method of Payments; Computations....................... 42
2.13 Increased Costs, Change in Circumstances, etc.......... 44
2.14 Taxes.................................................. 46
2.15 Compensation........................................... 48
2.16 Use of Proceeds........................................ 49
2.17 Recovery of Payments................................... 49
2.18 Pro Rata Borrowings.................................... 49
2.19 Substitution of Lender................................. 50
2.20 Letters of Credit...................................... 50
2.21 Sale and Assignment of Existing Loans.................. 57
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1 Conditions of Initial Borrowing......................... 58
3.2 Conditions of All Borrowings............................ 62
3.3 Waiver of Conditions Precedent.......................... 63
i
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<TABLE>
<C> <S> <C>
4.1 Corporate Organization and Power...................................... 64
4.2 Litigation; Government Regulation..................................... 64
4.3 Taxes................................................................. 64
4.4 Enforceability of Loan Documents; Compliance with Other Instruments... 64
4.5 Governmental Authorization............................................ 65
4.6 Event of Default...................................................... 65
4.7 Margin Securities..................................................... 65
4.8 Full Disclosure....................................................... 66
4.9 Principal Places of Business.......................................... 66
4.10 ERISA; Employee Benefits.............................................. 66
4.11 Subsidiaries.......................................................... 68
4.12 Financial Statements.................................................. 68
4.13 Title to Assets....................................................... 68
4.14 Solvency.............................................................. 68
4.15 Use of Proceeds....................................................... 68
4.16 Assets for Conduct of Business........................................ 69
4.17 Compliance with Laws.................................................. 69
4.18 Environmental Matters................................................. 69
4.19 First Priority........................................................ 69
4.20 Contracts; Labor Disputes............................................. 69
4.21 Insurance............................................................. 70
4.22 Reimbursement from Third Party Payors................................. 70
4.23 Fraud and Abuse....................................................... 70
4.24 Single Business Enterprise............................................ 71
4.25 Continuing Security Interest.......................................... 71
4.26 Year 2000 Compatibility............................................... 71
4.27 The Merger............................................................ 71
</TABLE>
ARTICLE V
AFFIRMATIVE COVENANTS
<TABLE>
<C> <S> <C>
5.1 Financial and Business Information about the Borrower................. 72
5.2 Notice of Certain Events.............................................. 74
5.3 Corporate Existence and Maintenance of Properties..................... 75
5.4 Payment of Debt....................................................... 75
5.5 Maintenance of Insurance.............................................. 75
5.6 Maintenance of Books and Records; Inspection.......................... 76
5.7 COBRA................................................................. 76
5.8 Payment of Taxes...................................................... 76
5.9 Compliance with Laws.................................................. 76
5.10 Name Change........................................................... 77
5.11 Creation or Acquisition of New Subsidiaries........................... 77
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
5.12 Recoveries in Bankruptcy Proceedings.................................. 77
5.13 Solvency of Subsidiaries.............................................. 78
5.14 Certain Physician Transactions........................................ 78
5.15 Year 2000 Compatibility............................................... 78
5.16 Permitted Asset Securitization........................................ 78
</TABLE>
ARTICLE VI
NEGATIVE COVENANTS
<TABLE>
<C> <S> <C>
6.1 Merger, Consolidation................................................. 79
6.2 Physician Transactions................................................ 79
6.3 Debt.................................................................. 79
6.4 Contingent Obligations................................................ 81
6.5 Liens and Encumbrances................................................ 81
6.6 Disposition of Assets................................................. 81
6.7 Transactions with Related Persons..................................... 82
6.8 Restricted Investments; Loans......................................... 82
6.9 Restricted Payments................................................... 82
6.10 Capital Expenditures.................................................. 83
6.11 Consolidated Net Worth................................................ 83
6.12 EBITDA to Interest Expense............................................ 83
6.13 Annualized EBITDAR to Debt Service Ratio.............................. 83
6.14 Consolidated Debt to Annualized EBITDA................................ 83
6.15 Consolidated Debt to Consolidated Total Capital....................... 83
6.16 Sale and Leaseback.................................................... 83
6.17 New Business.......................................................... 83
6.18 Subsidiaries or Partnerships.......................................... 84
6.19 Transactions Affecting the Collateral................................. 84
6.20 Hazardous Wastes...................................................... 84
6.21 Fiscal Year........................................................... 84
6.22 Amendments; Prepayments............................................... 84
6.23 Fraud and Abuse....................................................... 85
</TABLE>
ARTICLE VII
EVENTS OF DEFAULT
<TABLE>
<C> <S> <C>
7.1 Events of Default....................................................... 85
</TABLE>
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
<TABLE>
<C> <S> <C>
8.1 Remedies: Termination of Commitments, Acceleration, etc................ 89
8.2 Right of Setoff........................................................ 90
8.3 Rights and Remedies Cumulative; Non-Waiver; etc........................ 90
</TABLE>
iii
<PAGE>
ARTICLE IX
THE AGENT
9.1 Appointment..................................................... 90
9.2 Nature of Duties................................................ 90
9.3 Exculpatory Provisions.......................................... 91
9.4 Reliance by Administrative Agent................................ 91
9.5 Non-Reliance on Administrative Agent and Other Lenders.......... 92
9.6 Notice of Default............................................... 92
9.7 Indemnification................................................. 93
9.8 The Administrative Agent in its Individual Capacity............. 93
9.9 Successor Administrative Agent.................................. 93
9.10 Collateral Matters.............................................. 94
9.11 Applicable Parties.............................................. 94
9.12 Syndication Agent............................................... 95
ARTICLE X
MISCELLANEOUS
10.1 Survival....................................................... 95
10.2 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial... 95
10.3 Arbitration; Preservation and Limitation of Remedies........... 96
10.4 Notice......................................................... 97
10.5 Assignments, Participations.................................... 98
10.6 Fees and Expenses.............................................. 101
10.7 Indemnification................................................ 102
10.8 Amendments, Waivers, etc....................................... 102
10.9 Rights and Remedies Cumulative, Non-Waiver, etc................ 103
10.10 Binding Effect, Assignment..................................... 104
10.11 Severability................................................... 104
10.12 Entire Agreement............................................... 104
10.13 Interpretation................................................. 104
10.14 Counterparts, Effectiveness.................................... 105
10.15 Conflict of Terms.............................................. 105
10.16 Injunctive Relief.............................................. 105
10.17 Confidentiality................................................ 105
10.18 Post-Closing Matters........................................... 106
iv
<PAGE>
EXHIBITS
Exhibit A-1 - Form of Revolver A Note
Exhibit A-2 - Form of Revolver B Note
Exhibit A-3 - Form of Bid Loan 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-1 - Form of Bid Request
Exhibit C-2 - Form of Invitation for Bids
Exhibit C-3 - Form of Bid
Exhibit D - Form of Guaranty Agreement
Exhibit E-1 - Form of Security Agreement
Exhibit E-2 - Form of Guarantors' Security Agreement
Exhibit F - Form of Compliance Certificate
Exhibit G - 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
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
ANNEXES
Annex 1 Assignments from Existing Lenders
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FOURTH AMENDED AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AGREEMENT (the "Loan Agreement" or
"Agreement"), dated as of the 11th day of May, 1999 but effective for all
purposes as of the Closing Date, 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"), FIRST UNION
NATIONAL BANK , as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and BANC ONE CAPITAL MARKETS, INC., as syndication
agent. (the "Syndication Agent").
RECITALS
A. The Borrower, certain Lenders, and the Administrative 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, (iii) a First
Amendment to First Amended and Restated Loan Agreement, dated as of September
24, 1996, (iv) a Second Amended and Restated Loan Agreement, dated as of October
30, 1996, (v) a First Amendment to Second Amended and Restated Loan Agreement,
dated as of April 17, 1997, (vi) a Third Amended and Restated Loan Agreement,
dated as of December 29, 1997, and a First Amendment to Third Amended and
Restated Loan Agreement, dated as of September 2, 1998, (such agreement, as
heretofore amended and restated, the "Original Agreement"), pursuant to which
the Lenders have made a reducing revolving credit facility (including a letter
of credit subfacility) available to the Borrower in the principal amount of
$150,000,000.
B. The Borrower, the Lenders, the Administrative Agent and the Syndication
Agent have agreed to amend and restate the Original Agreement to, among other
things, (i) provide for a revolving credit facility in the principal amount of
up to $200,000,000 ($175,000,000 as of the date hereof), (ii) provide for a 364-
day revolving credit facility in the principal amount of up to $100,000,000, and
(iii) consent to the merger of Diagnostic Acquisition, Inc., a wholly-owned
subsidiary of the Borrower ("Diagnostic Acquisition"), with and into Physician
Reliance Network, Inc. ("PRN") which will result in PRN becoming a wholly-owned
subsidiary of the Borrower.
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 and have further guaranteed the Borrower's Swingline
Note (as defined below) to the Administrative Agent in the maximum principal
amount of $5,000,000. 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).
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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, the
Administrative Agent and the Syndication Agent hereby agree as follows:
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:
"Absolute Rate" shall have the meaning given to such term in SECTION
2.3(C)(V).
"Absolute Rate Auction" shall mean a solicitation of Bids setting forth
Absolute Rates pursuant to SECTION 2.3.
"Absolute Rate Loan" shall mean, at any time, any Bid Loan that bears
interest at such time at an Absolute Rate established pursuant to an Absolute
Rate Auction.
"Account Designation Letter" shall mean a letter from the Borrower to the
Administrative Agent, duly completed and signed by an Authorized Officer of the
Borrower and in form and substance satisfactory to the Administrative Agent,
listing any one or more accounts to which the Borrower may from time to time
request the Administrative Agent to forward the proceeds of any Loans made
hereunder.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Committed Loan, a rate per annum equal to the LIBOR Rate plus the Applicable
Margin for the Class of such LIBOR Loan, each as in effect at such time.
"Administrative Agent" shall mean First Union, in its capacity as appointed
in ARTICLE IX hereof, and its permitted successors and assigns.
"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.
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"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 fiscal quarter ending on such date, multiplied
by (b) four (4).
"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 fiscal quarter ending on such
date, plus (ii) Lease Expense for the fiscal quarter ending on such date,
multiplied by (b) four (4).
"Applicable Margin" shall mean, at any time with respect to any LIBOR
Committed Loan of either Class, 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 Revolver A Revolver B
Debt to Annualized EBITDA Applicable Margin Applicable Margin
<S> <C> <C>
Greater than 3.00 to 1.0 1.550% 1.575%
Greater than 2.50 to 1.0 1.450% 1.475%
but less than or equal
to 3.00 to 1.0
Greater than 2.00 to 1.0 1.325% 1.350%
but less than or equal
to 2.50 to 1.0
Greater than 1.50 to 1.0 1.225% 1.250%
but less than or equal
to 2.00 to 1.0
Greater than 1.00 to 1.0 1.100% 1.125%
but less than or equal to
1.50 to 1.0
Less than or equal to 1.000% 1.025%
1.00 to 1.0
</TABLE>
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From the Closing Date until the fifth (5th) day after receipt by the
Administrative Agent of the first financial statements and Compliance
Certificate pursuant to SECTION 5.1(A) and (D) below (which financial statements
and Compliance Certificate shall be prepared on a pro forma basis as if the
Merger had occurred on the first day of such quarter), the Applicable Margin
shall be 1.225% for Revolver A Loans and 1.250% for Revolver B Loans. The
Applicable Margin shall be reset from time to time in accordance with the above
matrix on the fifth (5th) day after receipt by the Administrative Agent in
accordance with SECTIONS 5.1(A) and (B) 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).
"Assigned Rights" shall have the meaning assigned to such term in SECTION
2.21.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement entered into between a Lender and an Eligible Assignee, and accepted
by the Administrative Agent, in substantially the form of EXHIBIT G.
"Assignment Restrictions" shall mean, with respect to any contracts or
agreements assigned to the Administrative 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
Administrative 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 Administrative 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, at any time, a rate per annum equal to the higher
of (i) the per annum interest rate publicly announced from time to time by First
Union in Charlotte, North Carolina, to be its prime or base rate (which may not
necessarily be its best lending rate), as adjusted to conform to changes as of
the opening of business on the date of any such change in such prime or base
rate, or (ii) 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 Committed Loan that bears
interest at such time at the Base Rate.
"Bid" shall mean an offer by a Lender to make one or more Bid Loans in
accordance with the provisions of SECTION 2.3.
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"Bid Borrowing" shall mean the incurrence by the Borrower on a single date
of any one or more Bid Loans of a single Type and as to which a single Interest
Period is in effect, in accordance with the provisions of SECTION 2.3.
"Bid Loan Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A-3, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Bid Loans" shall have the meaning given to such term in SECTION 2.1(B).
"Bid Request" shall have the meaning given to such term in SECTION 2.3(A).
"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. The corporate name of the Borrower
is expected to be changed upon the consummation of the Merger.
"Borrowing" shall mean a Committed Borrowing or a Bid Borrowing on a given
date.
"Borrowing Date" shall mean a Business Day on which a Borrowing is made.
"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 (i) 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 and (ii) any lease entered into pursuant to the ELLF and any other tax
retention operating lease or synthetic lease that is treated as a capital lease
of the lessee or its consolidated group for tax purposes.
"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
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Accounting Principles, appear on a balance sheet as a liability of such lessee
in respect of such Capital Lease (or such amount similarly calculated for any
Capital Lease that does not appear on a balance sheet), net of any government
grant applicable to such Capital Lease.
"Cash Collateral Account" shall have the meaning given to such term in
SECTION 2.20(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 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; provided,
that the PRN Transaction shall not constitute a Change of Control.
"Class" shall have the meaning given to such term in SECTION 2.1(D).
"Closing" shall mean the initial funding of the Loans contemplated by this
Agreement; provided, that if such initial funding of the Loans shall not have
occurred prior to August 1, 1999, the Closing shall not occur and this Fourth
Amended and Restated Loan Agreement shall
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not become effective after such date so that the Original Agreement shall not be
amended and restated or otherwise affected hereby.
"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, (iii) the Accounts (as
defined in the Security Agreements) of the Borrowers and such Guarantor, and
(iv) 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 Administrative Agent, for the
benefit of the Lenders, or any Lender, provided, that the Administrative Agent
shall release any part of such collateral as required by and pursuant to the
approved terms of any Permitted Asset Securitization.
"Committed Borrowing" shall mean the incurrence by the Borrower (including
as a result of conversions and continuations of outstanding Committed Loans
pursuant to SECTION 2.11) on a single date of a group of Committed Loans of a
single Type and Class and, in the case of LIBOR Committed Loans, as to which a
single Interest Period is in effect.
"Committed Loan Notes" shall mean the Revolver A Notes and the Revolver B
Notes
"Committed Loans" shall mean the Revolver A Loans and the Revolver B Loans.
"Commitment" shall mean, with respect to any Lender at any time, such
Lender's Revolver A Commitment and Revolver B Commitment.
"Compliance Certificate" shall mean a fully completed certificate in the
form of EXHIBIT F.
"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
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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 F.
"Credit Parties" shall have the meaning given to such term in the
Participation Agreement.
"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 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
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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 net amounts
payable under or in respect of Interest Rate Protection Agreements upon their
termination, to the extent accrued but not paid by the Borrower and its
Subsidiaries during such period, (ix) the aggregate amount of capital or other
equivalent principal amount of the financing provided from time to time under
any Permitted Asset Securitization, (x) the outstanding principal amount of
Loans and Holder Advances (as such terms are defined in the Participation
Agreement) under the ELLF, (xi) all indebtedness referred to in clauses (i)
through (x) 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 (xii) 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 fiscal quarter ending on such date
multiplied by four (4) 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, plus, (iv) for any of the fiscal quarter in which the Merger is
consummated and the following two fiscal quarters, to the extent net income has
been reduced thereby in such fiscal quarter, nonrecurring Merger-related
expenses in an aggregate amount in all of such fiscal quarters not to exceed
$30,000,000.
"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
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Administrative 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.
"ELLF shall mean the End Loaded Lease Facility as embodied in the
Participation Agreement and the other Operative Agreements (as defined in the
Participation Agreement).
"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 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.
"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.
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"ERISA Affiliate" shall mean any Person that would be deemed to be under
"common control" with, or a member of the same "controlled group" as, the
Borrower or any of its Subsidiaries within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code or Section 4001 of ERISA.
"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 ERISA 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 ERISA 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 ERISA 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
ERISA Affiliate engages in or otherwise becomes liable for a non-exempt
prohibited transaction; or (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 ERISA Affiliate may be directly or indirectly liable.
"Event of Default" shall have the meaning specified in ARTICLE VII hereof.
"Existing Loans" shall have the meaning assigned to such term in SECTION
2.1(A)(II).
"Existing Outstandings" shall have the meaning assigned to such term in
SECTION 2.1(A)(II).
"Exiting Lender" shall mean, if the Required Lenders shall have consented
to the terms and conditions of a requested Permitted Asset Securitization, each
Lender that (after notice of such consent and of its right to become an Exiting
Lender) requests that the Borrower arrange for the assignment, at par value
(with reasonable provisions being made for payment of accrued interest, fees and
any other amounts payable to such Lender through the date of assignment), of all
of such Lender's Commitments and Loans and commitments and loans (if any) under
the ELLF to an Eligible Assignee prior to the closing of such securitization.
If, after the Required Lenders shall have consented to the terms and conditions
of a requested Permitted Asset Securitization, an Exiting Lender is provided the
opportunity (confirmed in writing) to assign, at par value and on the terms set
forth in the Assignment and Acceptance, all of its Commitments and Loans and
commitments and loans under the ELLF to an Eligible Assignee and thereafter the
Exiting Lender fails to make such an assignment within a reasonably prompt time,
then such Lender shall cease to be considered an Exiting Lender.
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"Facilities" shall mean the revolving credit facilities established
pursuant to this Agreement.
"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 Administrative
Agent from three federal funds brokers of recognized standing selected by the
Administrative Agent.
"Financials" or "Financial Statements" shall mean the audited consolidated
financial statements of the Borrower and its Subsidiaries and PRN and its
Subsidiaries for the fiscal years ended December 31, 1997 and December 31, 1998
and all other financial statements of the Borrower and its Subsidiaries and PRN
and its Subsidiaries subsequent to December 31, 1998 that have previously been
delivered by the Borrower or any Subsidiary to the Administrative 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 Administrative 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 Administrative Agent.
"First Union" shall mean First Union National Bank, 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.
"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 each party to the Guaranty Agreement, their
successors and assigns, each future direct and indirect Subsidiary of the
Borrower and any other Person that
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guarantees the Obligations of the Borrower and the obligations of the other
Guarantors under the Guaranty Agreement; provided, that unless requested by the
Required Lenders AOR Synthetic Real Estate, Inc. shall not be required to become
a Guarantor so long as it (i) is the Lessee (as defined in the Participation
Agreement) under the ELLF, (ii) is not a party to any Management Services
Agreements and (iii) does not have any Subsidiaries; provided further, that a
special purpose Subsidiary formed in connection with any Permitted Asset
Securitization shall not be required to become a Guarantor.
"Guarantors' Security Agreement" shall mean the Fourth Amended and Restated
Guarantors' Security Agreement, substantially in the form of EXHIBIT E-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 Third Amended and Restated Guaranty
Agreement substantially in the form of EXHIBIT D, 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.
"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, all lease payments made by the
Borrower and its Subsidiaries pursuant to the ELLF and all fees, charges,
discounts and other costs incurred in connection with any Permitted Asset
Securitization, other than one-time arrangement fees, start-up costs, legal and
accounting fees and similar expenses.
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"Interest Period" shall have the meaning set forth in SECTION 2.10 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.
"Invitation for Bids" shall have the meaning given to such term in SECTION
2.3(B).
"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
2.20(C) hereof.
"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 Capital Leases and 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 office of such
Lender designated as its "Lending Office" on its signature page hereto or in an
Assignment and Acceptance, or such other office as may be otherwise designated
in writing from time to time by such Lender to the Borrower and the
Administrative Agent. A Lender may designate separate Lending Offices as
provided in the foregoing sentence for the purposes of making or maintaining
different Classes and/or Types of Loans, and, with respect to LIBOR Loans, such
office may be a domestic or foreign branch or Affiliate of such Lender.
"Letter of Credit 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).
"Letter of Credit Request" shall have the meaning assigned to such term in
SECTION 2.20(B) hereof.
"Letters of Credit" shall have the meaning set forth in SECTION 2.20(A)
hereof.
"LIBOR Auction" shall mean a solicitation of Bids setting forth LIBOR Bid
Margins pursuant to SECTION 2.3.
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"LIBOR Bid Loan" shall mean, at any time, any Bid Loan that bears interest
at such time at a rate equal to the LIBOR Rate as in effect at such time plus
(or minus) a LIBOR Bid Margin established pursuant to a LIBOR Auction.
"LIBOR Bid Margin" shall have the meaning given to such term in SECTION
2.3(C)(IV).
"LIBOR Committed Loan" shall mean, at any time, any outstanding Committed
Loan that bears interest at such time at the Adjusted LIBOR Rate as in effect at
such time.
"LIBOR Loan" shall mean any LIBOR Bid Loan or any LIBOR Committed Loan.
"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
Administrative 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 First Union's Loan comprising part of such LIBOR Loan. For purposes of this
definition, with respect to LIBOR Bid Loans comprising a Bid Borrowing in which
First Union is not participating, the LIBOR Rate shall be determined as if such
LIBOR Bid Loans were LIBOR Committed Loans.
"Loan" or "Loans" shall mean and collectively refer to the Committed Loans
and the Bid Loans.
"Loan Documents" shall mean and collectively refer to this Agreement, the
Notes, the Security Agreements, the Guaranty Agreement, the Financing
Statements, 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 Administrative 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.
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"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.
"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
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
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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.
"Merger" shall mean the merger of Physician Reliance Network, Inc. with and
into Diagnostic Acquisition, Inc. pursuant to that certain Agreement and Plan of
Merger by and among Physician Reliance Network, Inc., American Oncology
Resources, Inc. and Diagnostic Acquisition, Inc., dated as of December 11, 1998.
"Merger Documents" shall mean the Agreement and Plan of Merger by and among
Physician Reliance Network, Inc., American Oncology Resources, Inc. and
Diagnostic Acquisition, Inc., dated as of December 11, 1998, and the schedules
and exhibits thereto.
"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 Committed Loan Notes and the Bid Loan Notes.
"Notice of Committed 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 2.11(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 the Borrower to the Administrative
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 Administrative Agent or any Lender under this Agreement
or any
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of the other Loan Documents, (iii) all obligations to any Lender pursuant to any
Interest Rate Protection Agreement (if any) in respect of the Notes, (iv) the
obligations of the Borrower to First Union arising pursuant to the Swingline
Note, and, (v) for purposes of the Security Agreements and Sections 4.19, 7.1(q)
and 9.10(b) hereof, the obligations of the Borrower and its Subsidiaries as
Credit Parties under the ELLF.
"Original Agreement" shall have the meaning set forth in the Recitals to
this Agreement.
"Original Lenders" shall mean the banks and other financial institutions
that are "Lenders" (within the meaning of the Original Agreement) under the
Original Agreement as of the Closing Date.
"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.
"Participation Agreement" shall mean the Participation Agreement, dated as
of a date on or about December 29, 1997 (together with any amendments,
modifications, replacements, substitutes and supplements thereto and any
renewals or extensions thereof, in whole or in part), among the Borrower, First
Security Bank, National Association, as owner trustee, and First Union, as
agent.,
"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 Asset Securitization" shall mean any transaction or series of
related transactions (including extensions and increases in the amount of the
financing) providing for the financing of receivables and/or other assets
through one or more securitizations of the receivables and/or other assets of
the Borrower and the Subsidiaries that satisfies each of the following
conditions:
(a) the maximum aggregate capital or other equivalent principal amount of
the financing to be provided under such securitization shall not exceed
$150,000,000 at any time outstanding;
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(b) the terms and conditions of the securitization (including, without
limitation, any waivers or other limitations of the application of the
provisions of this Agreement to any special purpose Subsidiary) shall be
satisfactory in all respects to, and approved in writing by, the Required
Lenders in their absolute discretion;
(c) each Exiting Lender shall have assigned, at par value (with reasonable
provisions being made for payment of accrued interest, fees and any other
amounts payable to such Lender through the date of assignment), all of its
Commitments and Loans hereunder and its commitments and loans (if any) pursuant
to the ELLF to an Eligible Assignee; and
(d) the full documentation of the securitization shall be consistent with
all of the approved terms and conditions and otherwise reasonably satisfactory
in form and substance to the Administrative Agent.
If any Exiting Lender has requested an assignment as described in subsection
(C), the Borrower may engage the Administrative Agent and First Union Capital
Markets Corp. (the "Arranger"), on a best efforts basis and in cooperation with
the Borrower, to arrange for such assignment to an Eligible Assignee, and the
Administrative Agent and Arranger hereby agree to such engagement, subject to
mutual agreement with the Borrower on reasonable and customary terms. If less
than the Required Lenders, in their absolute discretion, approve the request for
a securitization, or if the Administrative Agent (with the assistance of the
Arranger) is unable to arrange for an Eligible Assignee to accept the
assignment, at par value, of each Exiting Lender (and each such Exiting Lender
does not otherwise have the opportunity to assign, at par value, its Commitment
and Loans hereunder and commitments and loans under the ELLF) then such
securitization shall not be a Permitted Asset Securitization. The Borrower
shall pay the processing fee set forth in SECTION 10.5(A) upon the assignment by
any Exiting Lender.
"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 Administrative 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
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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;
(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 Administrative Agent, the Borrower or such
Subsidiary has established reserves reasonably satisfactory to the
Administrative Agent with respect thereto;
(e) Liens upon property leased under a Capital Lease and either (i) 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 (A) shall not encumber any other
property of the Borrower or any Subsidiary and (B) shall not exceed the total of
such lease payments, or (ii) entered into or arising in compliance with the
terms of the ELLF;
(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 Administrative 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 Administrative 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;
(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);
(m) Liens granted pursuant to the ELLF; and
(n) Liens created pursuant to the approved terms of a Permitted Asset
Securitization.
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"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 Administrative 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 $100,000,000 (subject to the proviso below); and
(E) in the fiscal year of such Physician Transaction, the aggregate Transaction
Amount for all Permitted Physician Transactions in such year shall not exceed
$250,000,000; provided, that within 45 days following receipt by the
Administrative Agent of documentation (pursuant to SECTION 5.14(C)) of any
Permitted Physician Transaction with a Transaction Amount in excess of
$50,000,000, the Required Lenders in their sole discretion may by notice to the
Borrower from and after the date of delivery of such notice reduce the
individual Permitted Physician Transaction limit in clause (D) above to
$50,000,000. 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.
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"Physician Transaction" shall mean any bona fide transaction or series of
related transactions, consummated after the Closing Date, 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).
"PRN" shall mean Physicians Reliance Network, Inc., which, following the
Merger, shall be a wholly-owned subsidiary of the Borrower.
"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).
"Purchasing Lender" shall have the meaning assigned to such term in SECTION
2.21.
"Regulations D, T, U and X" shall mean Regulations D, T, U and X,
respectively, of the Federal Reserve Board and any successor regulations.
"Reimbursement Obligations" shall have the meaning set forth in SECTION
2.20(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 with 66-2/3% or
more of the aggregate of all Commitments at such time or, if the Commitments
have been terminated, Lenders owning or holding 66-2/3% or more of the then
aggregate principal amount of the Loans and Letter of Credit Outstandings then
outstanding.
"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 Interest Period, the
reserve percentage (expressed as a decimal) in effect from time to time during
such Interest Period, as
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provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body), applied for determining the reserve requirement
(including, without limitation, basic, supplemental, marginal and emergency
reserves) applicable to First Union under Regulation D with respect to
"Eurocurrency liabilities" within the meaning of Regulation D, or under any
similar or successor regulation with respect to Eurocurrency liabilities or
Eurocurrency funding.
"Revolver A 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 "Revolver A 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 Administrative Agent pursuant to
SECTION 10.5(B) as such Lender's "Revolver A Commitment," as such amount may be
reduced at or prior to such time pursuant to the terms hereof. The aggregate
amount of Revolver A Commitments as of the date hereof is $175,000,000.
"Revolver B 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 "Revolver B 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 Administrative Agent pursuant to
SECTION 10.5(B) as such Lender's "Revolver B Commitment," as such amount may be
reduced at or prior to such time pursuant to the terms hereof. The aggregate
amount of Revolver B Commitments as of the date hereof is $100,000,000.
"Revolver A Lender" shall mean any Lender (i) holding all or a portion of
any outstanding Revolver A Loans and (ii) having a Revolver A Commitment (unless
the Revolver A Commitments have been terminated pursuant to this Agreement).
"Revolver B Lender" shall mean any Lender (i) holding all or a portion of
any outstanding Revolver B Loans and (ii) having a Revolver B Commitment (unless
the Revolver B Commitments have been terminated pursuant to this Agreement).
"Revolver A Loans" shall have the meaning given to such term in SECTION
2.1(A)(I).
"Revolver B Loans" shall have the meaning given to such term in SECTION
2.1(A)(III).
"Revolver A Maturity Date" shall mean the fifth anniversary of the Closing
Date.
"Revolver B Maturity Date" shall mean the date 364 days after the Closing
Date.
"Revolver A Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A-1, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Revolver B Notes" shall mean the promissory notes of the Borrower in
substantially the form of EXHIBIT A-2, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
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"Revolver A Termination Date" shall mean the Revolver A Maturity Date or
such earlier date of termination of the Revolver A Commitments pursuant to
SECTION 2.6 or SECTION 8.1.
"Revolver B Termination Date" shall mean the Revolver B Maturity Date or
such earlier date of termination of the Revolver B Commitments pursuant to
SECTION 2.6 or SECTION 8.1.
"Security Agreement" shall mean the Fourth Amended and Restated Security
Agreement, substantially in the form of EXHIBIT E-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.
"Selling Lender" shall have the meaning assigned to such term in SECTION
2.21.
"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 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 Administrative 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
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(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 including, unless expressly excluded, PRN and its
Subsidiaries.
"Swingline Note" shall mean the note from Borrower to First Union in a
principal amount of $5,000,000 delivered in connection with the Borrower's cash
management facility.
"Taxes" shall have the meaning assigned to such term in SECTION 2.12(A).
"Total Commitment" shall mean, at any time, the sum of the Revolver A
Commitments and the Revolver B Commitments of each Lender at such time.
"Total Unutilized Revolver A Commitment" shall mean, at any time, the sum
of the Unutilized Revolver A Commitments of each Lender at such time.
"Total Unutilized Revolver B Commitment" shall mean, at any time, the sum
of the Unutilized Revolver B 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(D).
"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 Revolver A Commitment" shall mean, with respect to any Lender
at any time, such Lender's Revolver A Commitment at such time less (i) the
aggregate principal amount of all Revolver A Committed Loans made by such Lender
that are outstanding at such time,
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(ii) such Lender's Pro Rata Share of Letter of Credit Outstandings and (iii)
such Lender's Pro Rata Share of all Bid Loans outstanding at such time (even
though such Lender may not have made some or all of the Bid Loans).
"Unutilized Revolver B Commitment" shall mean, with respect to any Lender
at any time, such Lender's Revolver B Commitment at such time less the aggregate
principal amount of all Revolver B Committed Loans made by such Lender that are
outstanding at such time.
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. The terms "Lease Agreement", "Agency Agreement",
"Credit Agreement", "Tranche A Obligations", and "Operative Agreements" have the
meanings set forth in Appendix A to the Participation Agreement. 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 Commitments; Loans.
(a) (i) Each Revolver A Lender severally agrees, subject to and on the terms
and conditions of this Agreement, to make loans (each, a "Revolver A Loan," and
collectively, the "Revolver A Loans") to the Borrower, from time to time on any
Business Day during the period from the Closing Date to but not including the
Revolver A Termination Date; provided, that no Borrowing of Revolver A Loans
shall be made if, immediately after giving effect thereto, the sum of (x) the
aggregate principal amount of Revolver A Loans outstanding at such time
(exclusive of Revolver A Loans that are repaid with the proceeds of, and
simultaneously with the incurrence of, such Borrowing) plus (y) the aggregate
Letter of Credit Outstandings at such time (exclusive of Reimbursement
Obligations that are repaid with the proceeds of, and
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simultaneously with the incurrence of, such Borrowing) plus (z) the aggregate
principal amount of Bid Loans outstanding at such time (exclusive of Bid Loans
that are repaid with the proceeds of, and simultaneously with the incurrence of,
such Borrowing) would exceed the aggregate Revolver A Commitments. Subject to
and on the terms and conditions of this Agreement, the Borrower may borrow,
repay and reborrow Revolver A Loans.
(ii) On the Closing Date, and after giving effect to the concurrent
assignment and purchase of a portion of the Existing Loans among the Lenders in
accordance with SECTION 2.21, the aggregate principal amount of all Loans (as
defined in the Original Credit Agreement) made pursuant to the Original
Agreement and outstanding on the Closing Date (the "Existing Loans") shall
automatically be converted to an equivalent principal amount of Revolver A Loans
hereunder, made by the Lenders ratably in accordance with their respective
Revolver A Commitments, and for all purposes of this Agreement shall be deemed
to be Loans hereunder and entitled to the benefits of (and subject to the terms
of) this Agreement and the other Loan Documents. All such Loans hereunder shall
be of the same Type, and shall have the same Interest Period, as the
corresponding Existing Loans. On the Closing Date, and after giving effect to
the concurrent assignment and purchase among the Lenders in accordance with
SECTION 2.21, the aggregate outstanding principal amount of all Letter of Credit
Outstandings (as defined in the Original Credit Agreement, the "Existing
Outstandings") shall automatically be converted to an equivalent amount of
Letter of Credit Outstandings hereunder, and for all purposes of this Agreement
shall be deemed to be Letter of Credit Outstandings hereunder and entitled to
the benefits of (and subject to the terms of) this Agreement and the other Loan
Documents.
(iii) Each Revolver B Lender severally agrees, subject to and on the
terms and conditions of this Agreement, to make loans (each, a "Revolver B
Loan," and collectively, the "Revolver B Loans") to the Borrower, from time to
time on any Business Day during the period from the Closing Date to but not
including the Revolver B Termination Date; provided, that no Borrowing of
Revolver B Loans shall be made if, immediately after giving effect thereto, the
aggregate principal amount of Revolver B Loans outstanding at such time
(exclusive of Revolver B Loans that are repaid with the proceeds of, and
simultaneously with the incurrence of, such Borrowing) would exceed the
aggregate Revolver B Commitments. Subject to and on the terms and conditions of
this Agreement, the Borrower may borrow, repay and reborrow Revolver B Loans.
(b) In addition to Committed Loans, each Lender severally agrees that the
Borrower may, subject to and on the terms and conditions of this Agreement and
as more particularly set forth in SECTION 2.3, request the Lenders to submit
offers to make loans (each, a "Bid Loan," and collectively, the "Bid Loans") to
the Borrower, from time to time on any Business Day during the period from the
Closing Date to but not including the earlier of (i) the date that is one (1)
Business Day prior to the seventh (7th) day prior to the Revolver A Maturity
Date or (ii) the Revolver A Termination Date; provided, that the Lenders may,
but shall have no obligation to, submit such offers and the Borrower may, but
shall have no obligation to, accept any such offers; and provided further, that
no Borrowing of Bid Loans shall be made if, immediately after giving effect
thereto, the sum of (x) the aggregate principal amount of Revolver A Loans
outstanding at such time (exclusive of Revolver A Loans that are repaid with the
proceeds of, and simultaneously with
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the incurrence of, such Borrowing) 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, such
Borrowing) plus (z) the aggregate principal amount of Bid Loans outstanding at
such time (exclusive of Bid Loans that are repaid with the proceeds of, and
simultaneously with the incurrence of, such Borrowing) would exceed the
aggregate Revolver A Commitments.
(c) No Borrowing shall be required of any Lender if, immediately after
giving effect thereto, a Default or Event of Default would exist.
(d) The Loans shall, at the option of the Borrower and subject to the terms
and conditions of this Agreement, (i) in the case of Revolver A Loans and
Revolver B Loans (each a "Class" of Loan), be either LIBOR Committed Loans or
Base Rate Loans, or (ii) in the case of Bid Loans, either Absolute Rate Loans or
LIBOR Bid Loans (Revolver A or Revolver B Base Rate Loans, Revolver A or
Revolver B LIBOR Committed Loans, Absolute Rate Loans and LIBOR Bid Loans, each,
a "Type" of Loan), provided that all Loans comprising the same Borrowing shall,
unless otherwise specifically provided herein, be of the same Class and Type.
(e) Any Loans made on the Closing Date shall be made initially as Base Rate
Loans.
(f) 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 (including the accrued commitment fee pursuant
to SECTION 2.7(A) of the Original Agreement and all amounts required to be paid
pursuant to SECTION 2.13 of the Original Agreement), on or prior to the Closing
Date.
2.2 Committed Borrowings.
(a) Whenever the Borrower desires to make a Committed Borrowing hereunder
(other than continuations or conversions of outstanding Loans pursuant to
SECTION 2.11 or any Borrowing pursuant to SECTION 2.20), the Borrower will give
the Administrative Agent written notice (by telecopier or otherwise), prior to
9:00 a.m., Charlotte time, at least two (2) Business Days prior to each
Borrowing to be comprised of LIBOR Committed Loans and on the same Business Day
of each Borrowing to be comprised of Base Rate Loans; provided, that Base Rate
Loans may be borrowed upon written notice delivered prior to 12:00 p.m. (noon),
Charlotte time, on the same Business Day of the proposed Borrowing Date for any
Bid Borrowing of Absolute Rate Loans duly requested in accordance with SECTION
2.3. Each such notice (each, a "Notice of Committed 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, Class and
Type of the Loans to be made pursuant to such Borrowing (and, in the case of
LIBOR Committed 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:
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(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 (or, if less, in the amount of the Total
Unutilized Revolver A Commitments or Total Unutilized Revolver B
Commitments, as applicable) and (z) in the case of Borrowings comprised of
LIBOR Committed 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 and if the Borrower
shall have failed to designate the Class of Loans comprising a Borrowing,
the Borrower shall be deemed to have requested a Borrowing comprised of
Revolver A Loans to the extent of the Total Unutilized Revolver A
Commitments and, otherwise, Revolver B Loans.
(iii) if the Borrower shall have failed to select the duration of
the Interest Period to be applicable to any Borrowing of LIBOR Committed
Loans, then the Borrower shall be deemed to have selected an Interest
Period with a duration of one month; and
(iv) LIBOR Committed Loans under the Facility may not be outstanding
under more than ten (10) separate Interest Periods at any one time, less
the number of Bid Loans outstanding at such time.
(b) Upon its receipt of a Notice of Committed Borrowing, the Administrative
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 Committed Borrowing. Each such Lender will make the amount of its Pro Rata
Share of such Borrowing available to the Administrative 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 Administrative Agent as provided hereinabove, the
Administrative Agent will make the aggregate of such amounts available to the
Borrower in accordance with SECTION 2.4(A) below and in like funds as received
by the Administrative Agent, as soon as practicable prior to 3:30 p.m.,
Charlotte time, on the Borrowing Date.
2.3 Bid Borrowings.
(a) In order to request the Lenders to submit Bids to make Bid Loans
hereunder, the Borrower will give the Administrative Agent written notice not
later than 11:00 a.m., Charlotte time, (y) four (4) Business Days prior to the
requested Bid Borrowing, in the case of a LIBOR Auction, or (z) two (2) Business
Days prior to the requested Bid Borrowing, in the case of an Absolute Rate
Auction. The Borrower may request offers to make Bid Loans for up to three (3)
separate Interest Periods in a single notice, and each such request for offers
for a separate Interest Period shall be deemed a request for a separate Bid
Borrowing. Each such notice (each, a "Bid
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Request") shall be given in the form of EXHIBIT C-1 and shall specify, with
respect to each requested Bid Borrowing for a particular Interest Period:
(i) the Interest Period to be applicable to such Bid Borrowing;
(ii) the aggregate amount of such requested Bid Borrowing, which
shall not (with respect to any single Interest Period) be less than
$5,000,000 or, if greater, an integral multiple of $1,000,000 in excess
thereof, but shall not cause the limits specified in Section 2.1(c) to be
exceeded as of the proposed Borrowing Date of the Bid Borrowing.
(iii) whether the Bid Borrowing requested for a particular Interest
Period is to be comprised of LIBOR Bid Loans or Absolute Rate Loans; and
(iv) the requested Borrowing Date, which shall be a Business Day;
provided, however, that (w) no Interest Period applicable to any Bid Borrowing
shall expire on a date later than the Business Day prior to the Revolver A
Maturity Date, (x) the Borrower may not submit a Bid Request within five (5)
Business Days after the date of submission of any previous Bid Request, (y) the
Borrower may not submit more than three (3) Bid Requests in any calendar month,
and (z) no Bid Borrowing shall be made if, immediately after giving effect
thereto, there would be outstanding Bid Loans having more than four (4) separate
Interest Periods or outstanding LIBOR Committed Loans and Bid Loans together
having more than ten (10) separate Interest Periods (for which purpose Interest
Periods applicable to either Class of LIBOR Committed Loans and Interest Periods
applicable to LIBOR Bid Loans shall be deemed to be separate Interest Periods
even if they are coterminous). A Bid Request not given in the form of EXHIBIT
C-1 or otherwise not given in compliance with the requirements of this
subsection (a) may be rejected by the Administrative Agent in its sole
discretion, and the Administrative Agent shall promptly notify the Borrower of
any such rejection.
(b) Upon receipt of a Bid Request that is not rejected as aforesaid, the
Administrative Agent will promptly deliver to the Lenders a notice in
substantially the form of EXHIBIT C-2 (each such notice, an "Invitation for
Bids"), the delivery of which shall constitute an invitation by the Borrower to
each Lender to submit Bids, on the terms and subject to the conditions of this
Agreement, offering to make Bid Loans pursuant to such Bid Request.
(c) Each Lender may, at its discretion, submit a Bid containing an offer or
offers to make Bid Loans in response to any Invitation for Bids; provided that
such Lender may submit a single Bid containing an offer or offers to make up to
three separate Bid Loans for each Interest Period specified in the relevant Bid
Request. Each Bid must comply with the requirements of this subsection (c) and
must be submitted to the Administrative Agent in writing (by facsimile
transmission or otherwise) not later than 10:30 a.m., Charlotte time, (y) two
(2) Business Days prior to the requested Borrowing Date, in the case of a LIBOR
Auction, or (z) on the requested Borrowing Date, in the case of an Absolute Rate
Auction; provided, however, that Bids submitted by the Administrative Agent (or
any Affiliate of the Administrative Agent) in its capacity as a Lender may be
submitted only if the Administrative Agent or such Affiliate notifies the
Borrower
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of the terms of the offer or offers contained therein not later than 10:15 a.m.,
Charlotte time, (y) two (2) Business Days prior to the requested Bid Borrowing,
in the case of a LIBOR Auction, or (z) on the requested Borrowing Date, in the
case of an Absolute Rate Auction. Each Bid by a Lender shall (subject to the
conditions of Article III and Section 7.1) be irrevocable, shall be submitted in
substantially the form of EXHIBIT C-3 and shall specify:
(i) the identity of such Lender;
(ii) the Interest Period with respect to each Bid Loan for which
such Bid is being made;
(iii) with respect to each such Interest Period, the principal
amount of each Bid Loan for which such Bid is being made, which principal
amounts shall, in the aggregate with respect to each such Interest Period,
be not less than $5,000,000 or, if greater, in an integral multiple of
$1,000,000 in excess thereof, provided that (y) the aggregate principal
amount of all Bid Loans for which a Bid is submitted may be equal to,
greater than or less than the Commitment of such Lender, and (z) the
aggregate principal amount of all Bid Loans offered by such Lender for a
single Interest Period shall not exceed the requested principal amount of
the Bid Borrowing for such Interest Period;
(iv) in the case of a LIBOR Auction, the margin above or below the
applicable LIBOR Rate (the "LIBOR Bid Margin") offered for each such Bid
Loan, expressed as a percentage (rounded to the nearest 1/1000 of 1%) to be
added to or subtracted from the applicable LIBOR Rate;
(v) in the case of an Absolute Rate Auction, the fixed rate of
interest per annum (rounded to the nearest 1/1000th of 1%) offered for each
such Bid Loan (the "Absolute Rate"); and
(vi) the proposed Borrowing Date.
A Bid shall be disregarded by the Administrative Agent if it (w) is not
given substantially in the form of EXHIBIT C-3 or fails to specify all of the
information required by this subsection (c), (x) contains qualifying,
conditional or similar language, (y) proposes terms other than or in addition to
those set forth in the applicable Invitation for Bids (other than setting forth
separate offers for any Interest Period as contemplated by the preceding
sentence), or (z) is submitted to the Administrative Agent after 10:30 a.m.,
Charlotte time, (i) two (2) Business Days prior to the requested Borrowing Date,
in the case of a LIBOR Auction, or (ii) on the requested Borrowing Date, in the
case of an Absolute Rate Auction.
(d) Promptly upon receipt thereof and in any event not later than 11:00
a.m., Charlotte time, (y) two (2) Business Days prior to the requested Borrowing
Date, in the case of a LIBOR Auction, or (z) on the requested Borrowing Date, in
the case of an Absolute Rate Auction, the Administrative Agent will notify the
Borrower of the terms (i) of each Bid, if any, submitted by a Lender in
compliance with the provisions of subsection (c) above, and (ii) of each Bid, if
any, submitted by a Lender that amends, modifies or is otherwise inconsistent
with a previous Bid
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submitted by such Lender with respect to the same Bid Request. Any such
subsequent Bid shall be disregarded by the Administrative Agent unless such
subsequent Bid is submitted solely to correct a manifest error in such former
Bid and is timely received as provided in subsection (c) above. The
Administrative Agent's notice to the Borrower shall specify the aggregate
principal amount of each Bid Borrowing in respect of which Bids were made for
each Interest Period specified in the relevant Bid Request, the respective
principal amounts and LIBOR Bid Margins or Absolute Rates, as the case may be,
so offered, and the identity of the Lender that made each such Bid.
(e) Not later than 11:30 a.m., Charlotte time, (y) two (2) Business Days
prior to the requested Borrowing Date, in the case of a LIBOR Auction, or (z) on
the requested Borrowing Date, in the case of an Absolute Rate Auction, the
Borrower will notify the Administrative Agent of its acceptance or rejection of
the offers referred to in subsection (d) above. The Borrower shall be under no
obligation to accept any offer and may choose in its discretion to reject all
offers, provided that the failure by the Borrower to give such notice in a
timely manner shall be deemed to constitute a rejection of all Bids. In the
case of acceptance, such notice shall specify the aggregate principal amount of
offers for each Interest Period that are accepted. The Borrower may accept any
Bid in whole or in part, subject to the limitations on the aggregate outstanding
principal amount of Bid Loans set forth in Section 2.1(b) and provided that:
(i) the aggregate principal amount of each Bid Borrowing with regard
to each Interest Period shall not exceed the applicable amount set forth in
the related Bid Request;
(ii) the aggregate principal amount of each Bid Borrowing shall not
be less than $5,000,000 or, if greater, an integral multiple of $1,000,000
in excess thereof (subject to the provisions of clause (v) below);
(iii) acceptance of Bids may be made only on the basis of ascending
(i.e., from the lowest effective yield to the highest) LIBOR Bid Margins or
Absolute Rates within each Interest Period, as the case may be (subject to
clause (v) below);
(iv) the Borrower may not accept any Bid that has been disregarded
under the provisions of subsection (c) above or that otherwise fails to
comply with the terms and conditions of this Section 2.3; and
(v) if offers are made by two or more Lenders with the same LIBOR
Bid Margins or Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers are
permitted to be accepted for the related Interest Period, then if the
Borrower elects to accept any such offers, the aggregate principal amount
of Bid Loans in respect of which such offers are accepted shall be
allocated by the Borrower among such Lenders (after consultation with the
Administrative Agent) as nearly as practicable (in such integral multiples
of not less than $1,000,000 as the Borrower, after consultation with the
Administrative Agent, may deem appropriate) in proportion to the respective
aggregate principal amounts of such offers. Determinations by the Borrower
and the Administrative Agent of the amounts of Bid Loans shall be
conclusive absent manifest error.
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(f) The Administrative Agent will promptly notify each Lender having
submitted a Bid whether its offer has been accepted or rejected and, if
accepted, with regard to each applicable Interest Period, of the amount and
Absolute Rate or LIBOR Bid Margin, as the case may be). Not later than 2:00
p.m., Charlotte time, on the requested Borrowing Date, each Lender that has
received such notice of an accepted Bid will make available to the
Administrative Agent at its office referred to in SECTION 10.4 (or at such other
location as the Administrative Agent may designate) an amount, in Dollars and in
immediately available funds, equal to the amount of the Bid Loan or Bid Loans
required to be made by such Lender. To the extent the relevant Lenders have
made such amounts available to the Administrative Agent as provided hereinabove,
the Administrative Agent will make the aggregate of such amounts available to
the Borrower by 3:30 p.m. Charlotte time in accordance with SECTION 2.4(A) and
in like funds as received by the Administrative Agent. The Administrative
Agent, in its discretion, may provide details of the Bids to the Lenders.
(g) In respect of each Bid Request received by the Administrative Agent
hereunder (regardless of whether any Bid Loans shall be offered or made in
response thereto), the Borrower will pay to the Administrative Agent, on the
date of receipt by the Administrative Agent of such Bid Request, a fee of
$1,500.
(h) Notwithstanding the foregoing provisions of this SECTION 2.3, if on the
last day of any Interest Period applicable to one or more Bid Loans the Borrower
is unable to make a Committed Borrowing or Bid Borrowing because of the
Borrower's inability to meet the conditions of SECTION 3.2(B) or (C), any Lender
of one or more such Bid Loans may in its sole discretion agree (but in no event
more than one time with respect to any Bid Loan) in writing to extend the
Interest Period applicable to any such Bid Loan for no more than thirty (30)
days at an Absolute Rate equal to the Base Rate or, if applicable, the interest
rate on Committed Loans then in effect pursuant to SECTION 2.8(B). An extension
of any Bid Loan as provided herein shall require the agreement and consent only
of the extending Lender and the Borrower. On or prior to the Business Day
following any such extension, the Borrower and extending Lender each shall give
written notice of the terms thereof to the Administrative Agent, which shall
give prompt notice thereof to the Lenders.
2.4 Disbursements; Funding Reliance; Domicile of Loans.
(a) The Borrower hereby authorizes the Administrative 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
Administrative 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 Administrative Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.
(b) Unless the Administrative Agent has received, prior to 1:00 p.m.,
Charlotte time, on any Borrowing Date, written notice from a Lender that such
Lender will not make available to the Administrative Agent its Bid Loan or Pro
Rata Share of the relevant Committed Loan, the Administrative Agent may assume
that such Lender has made its Loan available to the
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<PAGE>
Administrative Agent on such Borrowing Date in accordance with the terms of this
Agreement, and the Administrative 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 Loan available to
the Administrative Agent, and the Administrative 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 Administrative
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 Administrative 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 the Class and Type of
Loans comprising such Borrowing, as determined under SECTION 2.8. If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
(c) 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.
(d) 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.
2.5 Notes
(a) The Loans made by each Lender shall be evidenced by a Revolver A Note
appropriately completed in substantially the form of EXHIBIT A-1, a Revolver B
Note appropriately completed in substantially the form of EXHIBIT A-2 and a Bid
Loan Note appropriately completed in substantially the form of EXHIBIT A-3. The
Notes 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 Closing Date (or,
in the case of Notes issued pursuant to an Assignment and Acceptance, as of the
effective date thereof), (iv) bear interest in accordance with the provisions of
SECTION 2.8, as the same may be applicable to the Loans made by such Lender from
time to time, and (v) be entitled to all of the benefits of this Agreement and
the other Loan Documents and subject to the provisions hereof and thereof.
Committed Loan Notes shall be in a stated principal amount equal to such
Lender's Revolver A Commitment and Revolver B Commitment, respectively, and Bid
Loan Notes shall be in a stated principal amount equal to the aggregate Revolver
A Commitments.
(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
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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.
2.6 Termination and Reduction or Increase of Commitments.
(a) The Revolver A Commitments shall be automatically and permanently
terminated on the Revolver A Maturity Date unless sooner terminated pursuant to
subsection (B) or (C) below or SECTION 8.1. The Revolver B Commitments shall be
automatically and permanently terminated on the Revolver B Maturity Date unless
sooner terminated pursuant to subsection (B), (C) or (D) below or SECTION 8.1.
(b) At any time and from time to time, upon at least five (5) Business
Days' prior written notice to the Administrative Agent, the Borrower may
terminate in whole or reduce in part the aggregate Revolver A Commitments or the
aggregate Revolver B Commitments, provided that the amount of any partial
reduction (i) may not exceed the Total Unutilized Revolver A Commitment or the
Total Unutilized Revolver B Commitment, as applicable (after taking into account
any prepayments to be made at such time) and (ii) 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 (B) may not thereafter
be reinstated.
(c) 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).
Such reduction shall apply first to the aggregate Revolver B Commitments and
then to the aggregate Revolver A Commitments.
(d) The aggregate Revolver B Commitments shall automatically be permanently
reduced by an amount equal to 100% of the capital or other equivalent principal
amount of the financing provided from time to time under any Permitted Asset
Securitization. Prior to the commencement of any Permitted Asset
Securitization, the Borrower shall reduce the Revolver B Commitments in the
manner set forth in SECTION 2.6(B) and the capital or other equivalent principal
amount of the financing provided under such Permitted Asset Securitization shall
not exceed the amount of such reduction of the Revolver B Commitments (unless
the aggregate Revolver B Commitments are reduced to zero). If the Borrower
desires to increase the financing utilized under any Permitted Asset
Securitization, the Borrower shall further reduce the Revolver B Commitments, in
an amount greater than such increased Permitted Asset Securitization
utilization, in the manner set forth in SECTION 2.6(B).
(e) Each reduction of the Commitments under this Section shall be applied
ratably to the applicable Commitments of the Lenders according to their
respective Percentages. After any such reduction, the fee provided for in
SECTION 2.9 shall be calculated with respect to the reduced Commitments.
(f) From time to time within one year of the Closing Date, the Borrower
(with the reasonable assistance of the Administrative Agent and the Arranger,
which they hereby agree to provide) may obtain additional Revolver A Commitments
either from any existing Lender that
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<PAGE>
desires to increase its Revolver A Commitment or from any other Person that
desires to become a Lender and meets the requirements for an Eligible Assignee
(in either case, an "Increasing Lender"); provided that such additional Revolver
A Commitments shall not increase the aggregate Revolver A Commitments to an
amount in excess of $200,000,000; provided, further that the Revolver A
Commitments may not be increased if a Default or an Event of Default shall have
occurred and be continuing at such time or would exist after giving effect to
the increase in the Revolver A Commitments. Nothing herein shall require any
Lender to increase its Commitment without such Lender's express written consent
given in its sole discretion.
(g) Each Increasing Lender that is an existing Lender shall execute a
replacement signature page hereto with its increased Commitment shown on such
signature page and any new Increasing Lender shall execute a signature page
hereto and shall become a Lender hereunder for all purposes from the
effectiveness of the additional Commitments. Each additional Commitment shall
be effective upon receipt by the Administrative Agent of the following: (i) the
executed signature page of the Increasing Lender, which signature page shall be
signed by the Borrower and the Administrative Agent to indicate their acceptance
thereof, (ii) the payment in immediately available funds by the Increasing
Lender of its Pro Rata Share of all outstanding Committed Loans, such Pro Rata
Share to be calculated by the Administrative Agent based on the increased Total
Commitment, (iii) executed Notes payable to the Increasing Lender in the amounts
of its Commitment and (iv) executed replacement Bid Notes for each Lender. Upon
its receipt of the foregoing, the Administrative Agent shall (x) give the
Lenders written notice of the additional Commitment with an attachment showing
each Lender's Commitment and adjusted Percentage and (y) distribute the
Increasing Lender's funding of its Pro Rata Share of the existing Committed
Loans to the existing Lenders so that such Lenders' Pro Rata Shares of the
Committed Loans reflect their adjusted Percentages and (z) distribute the new
Notes to the Lenders as applicable (and the Notes replaced therewith shall be
cancelled and returned to the Borrower by such Lenders).
2.7 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 Administrative Agent prior to 9:00 a.m., Charlotte time, at least two (2)
Business Days' prior to each intended prepayment of LIBOR Loans and on the same
Business Day of each intended prepayment of Base Rate Loans or Absolute Rate
Loans, provided that (i) each partial prepayment of Committed Loans 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) each partial prepayment of
Bid Loans shall be in an aggregate principal amount of no less than $5,000,000
and, if greater, in an integral multiple of $1,000,000 in excess thereof, (iii)
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 (iv) unless made together with all
amounts required under SECTION 2.15 to be paid as a consequence of such
prepayment, a prepayment of a LIBOR Loan or Absolute Rate 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
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principal amount and the Classes and Types of the Loans to be prepaid (and, in
the case of LIBOR Loans and Absolute Rate 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 Revolver A
Loans outstanding plus Letter of Credit Outstandings plus Bid Loans on any date
exceeds the aggregate Revolver A Commitments 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 Revolver A Loans and the Bid 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 Revolver A Loans and
Bid Loans outstanding immediately prior to the application of such prepayment,
the amount so prepaid shall be retained by the Administrative Agent and held in
the Cash Collateral Account as collateral for the Letter of Credit Outstandings,
as more particularly described in SECTION 2.20(J), and thereupon such cash shall
be deemed to reduce the aggregate Letter of Credit Outstandings by an equivalent
amount. Each such Prepayment shall be applied (i) first, to the outstanding
principal amount of the Revolver A Loans, ratably among the Lenders based upon
their Percentages and (ii) second, to the outstanding principal amount of the
Bid Loans, ratably among the Lenders holding Bid Loans in proportion to the
aggregate principal amount of Bid Loans held by each. Such payment shall be
accompanied by all amounts required under SECTION 2.15 if applied to a LIBOR
Loan or Absolute Rate Loan and such payment is not made on the last day of the
Interest Period applicable thereto.
(c) In the event that the aggregate principal amount of the Revolver B
Loans outstanding on any date exceeds the aggregate Revolver B Commitments as of
such date (after giving effect to any termination or reduction thereof as of
such date, including as a result of any Permitted Asset Securitization), the
Borrower will repay the principal amount of the Revolver B Loans on such date in
the amount of such excess. Such payment shall be accompanied by all amounts
required under SECTION 2.15 if applied to a LIBOR Loan and such payment is not
made on the last day of the Interest Period applicable thereto.
(d) The Borrower shall repay the Revolver A Notes and Bid Notes in full on
the Revolver A Termination Date and shall repay the Revolver B Notes in full on
the Revolver B Termination Date.
2.8 Interest.
(a) The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full,
(i) in respect of each Committed Loan, (y) at the Base Rate, as in
effect from time to time during such periods as such Loan is a Base Rate
Loan, and (z) at the Adjusted LIBOR Rate applicable to the Class of such
Loan, as in effect from time to time during such periods as such Loan is a
LIBOR Loan, and
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(ii) in respect of each Bid Loan, (y) at the applicable Absolute
Rate established in accordance with the provisions of SECTION 2.3, if such
Loan is an Absolute Rate Loan, and (z) at a rate per annum equal to the
LIBOR Rate, as in effect from time to time during the applicable Interest
Period, plus (or minus) the applicable LIBOR Bid Margin, if such Loan is a
LIBOR Bid 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
plus 2% (or, in the case of fees and other amounts, at the Base Rate plus 2%),
and, in each case, such default interest shall be payable on demand. To the
greatest extent permitted by law, interest shall continue to accrue after the
filing by or against the Borrower of any petition seeking any relief in
bankruptcy or under any law pertaining to insolvency or debtor relief.
(c) Accrued (and theretofore unpaid) interest shall be payable as follows:
(i) in respect of each Base Rate Loan (including any Base Rate Loan
or portion thereof paid or prepaid pursuant to the provisions of SECTION
2.7, except as provided in the proviso hereinbelow), in arrears on the last
Business Day of each calendar quarter; provided, that in the event the Base
Rate Loans are repaid or prepaid in full and the Commitments have been
terminated, then accrued interest in respect of all Base Rate Loans shall
be payable together with such repayment or prepayment on the date thereof;
(ii) in respect of each LIBOR Loan (including any LIBOR Committed
Loan or portion thereof paid or prepaid pursuant to the provisions of
SECTION 2.7, except as provided in the proviso hereinbelow), in arrears (y)
on the last Business Day of the Interest Period applicable thereto (subject
to the provisions of clause (iv) in SECTION 2.10) and (z) in the case of a
LIBOR Loan having an Interest Period of six months, on the date three
months after the first day of such Interest Period; provided, that in the
event all LIBOR Loans made pursuant to a single Borrowing are repaid or
prepaid in full, then accrued interest in respect of such LIBOR Loans shall
be payable together with such repayment or prepayment on the date thereof;
(iii) in respect of each Absolute Rate Loan, (y) in arrears on the
last day of the Interest Period applicable thereto, and (2) on the date of
any repayment or prepayment thereof in full; and
(iv) in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other 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
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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 Administrative 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 Committed Borrowing, Notice of Conversion/Continuation
or Bid; provided, however, that the failure of the Administrative 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 Administrative 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.
2.9 Fees.
(a) The Borrower agrees to pay the Administrative Agent, for the ratable
benefit of each Lender, a facility fee per annum determined pursuant to the
following table, for the period from the Closing Date to the Termination Date.
<TABLE>
<CAPTION>
Ratio of Consolidated Revolver A Revolver B
Debt to Annualized EBITDA Facility Fee Facility Fee
<S> <C> <C>
Greater than 3.0 to 1.0 0.325% 0.300%
Greater than 2.0 to 1.0 0.300% 0.275%
but less than or equal
to 3.0 to 1.0
Greater than 1.0 to 1.0 0.275% 0.250%
but less than or equal to
2.0 to 1.0
Less than or equal to 0.250% 0.225%
1.0 to 1.0
</TABLE>
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<PAGE>
The facility fee shall be applied to the average daily aggregate Revolver A
Commitments and average daily aggregate Revolver B Commitments, payable in
arrears on the last Business Day of each fiscal quarter, commencing with the
first fiscal quarter ending after the Closing Date, and calculated on the basis
of actual days elapsed over a year of 360 days. From the Closing Date until the
fifth (5th) day after receipt by the Administrative Agent of the first financial
statements and Compliance Certificate pursuant to SECTION 5.1(A) and (D) below
(which financial statements and Compliance Certificate shall be prepared on a
pro forma basis as if the Merger had occurred on the first day of such quarter),
the Revolver A facility fee shall be .2750% per annum and the Revolver B
facility fee shall be 0.250% per annum. The facility fee shall be reset from
time to time in accordance with the above matrix on the fifth (5th) day after
receipt by the Administrative Agent in accordance with SECTIONS 5.1(A) and (B)
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 Administrative Agent, for its own
account, an annual administrative fee in the amount and as set forth in the Fee
Letter.
2.10 Interest Periods. Concurrently with the giving of any Notice of
Committed Borrowing or Notice of Conversion/Continuation in respect of any
Borrowing comprised of LIBOR Committed Loans and concurrently with the giving of
a Bid Request in respect of any requested Bid 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 Loans, which Interest Period, (x) in the case
of any LIBOR Committed Loan and at the option of the Borrower, shall be a one,
two, three or six (subject to availability for all Lenders) month period, (y) in
the case of any LIBOR Bid Loan and as agreed to by the Borrower and the Lender
making such LIBOR Bid Loan, shall be a one, two, three or six month period, or
(z) in the case of any Absolute Rate Loan and as agreed to by the Borrower and
the Lender making such Absolute Rate Loan, shall be a period of not less than
seven (7) nor more than one hundred eighty (180) days; 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 for a
Revolver A Loan or Bid Loan that expires after the Revolver A Maturity Date
or for a Revolver B Loan that expires after the Revolver B 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
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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
Committed 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.
2.11 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 integral multiple of $500,000 in
excess thereof and (B) in the case of LIBOR Committed Loans, $3,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof) of the
outstanding principal amount of any such Committed Loans of one Type and Class
made pursuant to one or more Borrowings (and, in the case of LIBOR Committed
Loans, having the same Interest Period) into a Borrowing or Borrowings of
Committed Loans of the other Type within the same Class, 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 Committed 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 2.13(D), LIBOR Committed 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 Committed 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 2.15 to be paid as a consequence thereof), (ii) if any
partial conversion of LIBOR Committed Loans into Base Rate Loans shall have
reduced the outstanding principal amount of the remaining LIBOR Committed Loans
made pursuant to a single Borrowing (and thereby continued) to less than
$3,000,000, such remaining LIBOR Committed Loans shall be converted immediately
into Base Rate Loans and may not thereafter be converted into or continued as
LIBOR Committed Loans unless the requirements of clause (y) above are satisfied,
(iii) no conversion of Base Rate Loans into LIBOR Committed Loans or
continuation of LIBOR Committed 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 Administrative Agent prior to 9:00 a.m., Charlotte time, at least two (2)
Business Days prior to the effective date of any conversion of Base Rate Loans
into, or continuation of, LIBOR
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Committed Loans and on the same Business Day of any conversion of LIBOR
Committed 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 Committed Loans, the Interest Period to be applicable
thereto and (z) the aggregate amount, Class and Type of the Committed Loans
being converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Administrative 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 Committed Loans, such LIBOR Committed Loans shall
automatically be converted to Base Rate Loans upon the expiration of the then
current Interest Period applicable thereto.
2.12 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 Administrative Agent, for the account of the
Lenders (except as otherwise provided herein as to payments required to be made
to the Administrative 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 2.10 are applicable, such due date shall be
the next preceding Business Day), and such extension of time shall then be
included in the computation of payment of interest, fees or other applicable
amounts.
(b) The Administrative Agent will distribute payments made to the
Administrative Agent for the account of the Lenders as follows: (i) with respect
to fees and Committed Loans, to each Lender such Lender's Pro Rata Share of such
payment and (ii) with respect to Bid Loans, to each Lender participating in such
Bid Loan, its pro rata share based on its respective principal amount of the
relevant Bid Loans. If any such payment is received by 12:00 noon, Charlotte
time, in immediately available funds, the Administrative Agent will make
available on the same date, by wire transfer of immediately available funds, the
amounts to each Lender as provided in the foregoing sentence. If such payment
is received after 12:00 noon, Charlotte time, or in other than immediately
available funds, the Administrative Agent will make available to each such
Lender its respective 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 Administrative 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 Administrative
Agent will pay to each such Lender, on demand, the principal amount of its
respective payment with interest thereon at the Federal Funds Rate for each day
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from the date such amount was required to be disbursed by the Administrative
Agent until the date repaid to such Lender.
(c) Unless the Administrative 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 Administrative Agent may assume
that the Borrower has made such payment in full to the Administrative Agent on
such date, and the Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 and Absolute Rate Loans, the specific
Borrowing or Borrowings pursuant to which made, provided that (i) unless made
together with all amounts required under SECTION 2.15 to be paid as a
consequence thereof, a prepayment of a LIBOR Loan or Absolute Rate 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, or if an Event of Default has occurred and
is continuing, the Administrative Agent shall, subject to the foregoing, make
such designation in its sole discretion or as the Required Lenders may direct,
subject to the foregoing and the other provisions of this Agreement.
(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 Absolute Rate Loans and of 365/366
days and the actual number of days (including the first day, but excluding the
last day) elapsed for Base Rate Loans.
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2.13 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 Administrative 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
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Borrower will, within fifteen (15) days after delivery to the Borrower by such
Lender of written demand therefor (with a copy thereof to the Administrative
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
Administrative 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 Committed 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 Committed Loan during
such Interest Period or (ii) the Administrative Agent shall have determined that
adequate and reasonable means do not exist for ascertaining the applicable LIBOR
Rate for such Interest Period, the Administrative 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 Committed 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 Committed 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 Administrative 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 Administrative 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 Committed 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 Administrative 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
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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 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
Administrative 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.
2.14 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 Administrative Agent or any Lender) (y) by the
jurisdiction under the laws of which the Administrative 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 Administrative 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 Administrative 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 Administrative 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
Administrative 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
Administrative 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
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Administrative 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 Administrative 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 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 Administrative 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 Administrative 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 Administrative Agent, then the
Administrative 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 Administrative 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
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under this SECTION 2.14 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.
2.15 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 Administrative 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 or Absolute Rate Loans) that
such Lender may sustain (i) if for any reason (other than a default by such
Lender or the Administrative Agent or, with respect to any Borrowing, a change
in law described in SECTION 2.13 or any Taxes payable as described in SECTION
2.14 or additional costs under SECTION 2.15(B), in each such case arising during
the two (2) 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 Committed Loan if such extension would create undue
hardship for such Lender) a Borrowing of, or conversion of or into, LIBOR Loans
or Absolute Rate Loans does not occur on a date specified therefor in a Notice
of Borrowing, Invitation for Bids or Notice of Conversion/Continuation, (ii) if
any repayment, prepayment or conversion of any of its LIBOR Loans or Absolute
Rate Loans (including as a result of an assignment by an Exiting Lender) 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 2.13(C) or (D)),
(iii) if any prepayment of any of its LIBOR Loans or Absolute Rate Loans is not
made on any date specified in a notice of prepayment given by the Borrower or
(iv) as a consequence of any other failure by the Borrower to make any payments
with respect to LIBOR Loans or Absolute Rate 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 Administrative 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 with respect
to LIBOR Loans 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 Committed Loans, additional interest at a rate
per annum equal to
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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 Administrative Agent, in which case such
additional interest on the LIBOR Committed 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 Committed 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 Committed Loan until
such Lender withdraws its notice, then no further notice shall be due.
2.16 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower and its Subsidiaries (i) to refinance certain existing Debt of the
Borrower and PRN and its Subsidiaries, (ii) to pay certain fees and expenses in
connection with this Facility and the Merger, and (iii) to provide working
capital for, and to finance, the Borrower's and its Subsidiaries' general
business purposes including the financing of 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.
The Borrower will not use any of the proceeds of the Loans or any advances under
the Swingline Note to purchase or carry Margin Stock, or to extend credit to
others for that purpose and will at all times be in compliance with Section 4.7.
2.17 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 Administrative 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 Administrative Agent to a Lender are
subsequently returned or repaid by the Administrative 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 Administrative Agent, pay the Administrative
Agent such amount. If any such amounts are recovered by the Administrative
Agent from the Borrower or its representative or successor in interest, the
Administrative Agent shall redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.
2.18 Pro Rata Borrowings.
(a) All Borrowings, continuations and conversions of Committed Loans of
either Class shall be made by the Lenders pro rata on the basis of their
respective Percentages, rounded to the nearest penny.
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(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, enforcement of any
right under the Loan Documents, or otherwise) applicable to the payment of any
of the Obligations (other than Bid Loans or obligations arising under the
Swingline Note or Interest Rate Protection Agreement) 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. If any Lender receives an amount
(as described in the first sentence of this section) applicable to the payment
of any Bid Loans that exceeds its ratable share of payments on account of such
Bid Loans, then the foregoing provisions of this section shall be applied with
respect to those Lenders also participating in such Bid Loans.
2.19 Substitution of Lender. If (i) the obligation of any Lender to make
LIBOR Committed Loans has been suspended pursuant to SECTION 2.13 or (ii) any
Lender has demanded compensation under SECTION 2.13 or SECTION 2.15(B), or if
any Lender has notified the Borrower to make any payments under SECTION 2.14,
the Borrower shall have the right, with the assistance of the Administrative
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 Administrative 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.
2.20 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
Revolver A Maturity Date and (ii) the Revolver A Termination Date, upon request
by the Borrower in accordance with the provisions of SECTION 2.20(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
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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:
(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 Revolver A Loans and Bid Loans then outstanding, would exceed
the aggregate Revolver A Commitments at such time;
(ii) No Letter of Credit shall be issued that by its terms expires
later than the seventh day prior to the Revolver A Maturity Date or, in any
event, more than one (1) year after its date of issuance (subject to
renewal as provided below); 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
Administrative 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
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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 Administrative
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 Administrative
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 2.20(C).
(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 2.20(L)(II)
and 2.20(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. Any L/C Participant may request a
copy of any outstanding Letter of Credit from the Issuing Bank.
(d) Reimbursement. The Borrower hereby agrees to reimburse the Issuing
Bank for any drawing made under any Letter of Credit and, subject to SECTION
2.20(E), shall make payment to the Administrative 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 2.20(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 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 Administrative 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 Administrative Agent will promptly pay to the
Issuing Bank any such amounts received by it under this Section.
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(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
2.20(D), and to the extent that any amounts then held in the Cash Collateral
Account established pursuant to SECTION 2.20(J) shall be insufficient to satisfy
such Reimbursement Obligation in full, the Issuing Bank will promptly notify the
Administrative Agent, and the Administrative Agent will promptly notify each L/C
Participant, of such failure. If the Administrative 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
Administrative Agent, for the account of the Issuing Bank, its Pro Rata Share of
the amount of such payment on such Business Day in immediately available funds.
If the Administrative 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
Administrative 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 Administrative Agent, such L/C Participant agrees
to pay to the Administrative 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 Administrative Agent at
the Federal Funds Rate. The failure of any L/C Participant to make available to
the Administrative 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 Administrative Agent its Pro Rata Share of any payment
under any Letter of Credit on the date required, as specified above, but no L/C
Participant shall be responsible for the failure of any other L/C Participant to
make available to the Administrative 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 2.20(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 Participants. Whenever the Issuing Bank receives a
payment in respect of a Reimbursement Obligation as to which the Administrative
Agent has received, for the account of the Issuing Bank, any payments from the
L/C Participants pursuant to SECTION 2.20(E), the Issuing Bank will promptly pay
to the Administrative Agent, and the Administrative 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
Administrative 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
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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 Administrative 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 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.
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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 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 Administrative 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 Administrative Agent), setting
forth a reasonably detailed calculation of such additional amount and the basis
for the determination of such additional amount or
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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 Administrative Agent, at the
direction, or with the consent, of the Required Lenders, may require the
Borrower to deliver to the Administrative 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 2.7(B), the Administrative Agent will retain such
amount as may then be required to be retained under the proviso in SECTION
2.7(B), such amounts in each case under clauses (i) and (ii) above to be held by
the Administrative 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 Administrative 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
Administrative Agent; provided that the Administrative 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 Administrative 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 Administrative
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 Administrative 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 2.7(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, 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.
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(k) Effectiveness. Notwithstanding any termination of the Commitments or
repayment of the Loans, or both, the obligations of the Borrower under this
SECTION 2.20 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 Administrative 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 Revolver A Applicable Margin 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 June 30, 1999, 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 June 30, 1999, 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.
2.21 Sale and Assignment of Existing Loans.
(a) Each of the Original Lenders party hereto that is selling Existing
Loans pursuant to this SECTION 2.21 (each, a "Selling Lender," and collectively,
the "Selling Lenders") hereby represents and warrants to (i) each of the Lenders
party hereto that is not an Original Lender, and (ii) each other Original Lender
party hereto that is purchasing Existing Loans pursuant to this SECTION 2.21
(the Lenders described under (i) and (ii), each, a "Purchasing Lender," and
collectively, the "Purchasing Lenders"), that it is the legal and beneficial
owner of the interest in the Existing Loans being assigned by it hereunder and
that such interest is free and clear of any adverse claim. In order to give
effect to the assignment to the Purchasing Lenders of their respective Pro Rata
Shares of the Existing Loans to be concurrently converted to Revolver A Loans
hereunder as of the Closing Date, all as contemplated hereunder, each Selling
Lender shall and does hereby sell and assign to each Purchasing Lender, without
recourse, representation
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or warranty (except as set forth in the first sentence of this subsection (a)),
and each Purchasing Lender shall and does hereby purchase and assume from each
Selling Lender, a portion of all of the rights and obligations of each Selling
Lender with respect to such Existing Loans converted to Revolver A Loans
hereunder as of the Closing Date and to each of the Loan Documents, in each case
in the amounts (as determined by the Administrative Agent and reasonably
approved by the Lenders) set forth in ANNEX 1 which shall be attached hereto as
of the Closing Date (the "Assigned Rights"), such that after giving effect to
such sale and assignment, the Lenders shall own the Existing Loans converted to
Revolver A Loans hereunder in proportion to their respective Revolver A
Commitments. Upon payment by the Purchasing Lenders to the Selling Lenders of
the amounts calculated by the Administrative Agent pursuant to subsection (b)
below, each Lender shall be entitled to its respective Pro Rata Share of (y) all
interest on and any fees in respect of the Revolver A Loans and Revolver A
Commitments which accrue on and after the Closing Date and (z) all payments of
principal made on the Revolver A Loans attributable to such Lender that occur
after the Closing Date.
(b) Pursuant to the sale and assignment of the Assigned Rights to the
Purchasing Lenders under this SECTION 2.21, each Selling Lender is entitled to
receive a payment from each Purchasing Lender in an amount equal to the portion
of such Selling Lender's Existing Loans representing the Assigned Rights ratably
purchased by each Purchasing Lender. In order to facilitate and give effect to
the sale and assignment of the Assigned Rights, each of the Selling Lenders and
Purchasing Lenders agrees that (i) the Administrative Agent shall calculate the
amount owing to the Selling Lenders and to be paid or funded by the Purchasing
Lenders on the Closing Date, (ii) each of the Purchasing Lenders shall pay or
fund, as the case may be, to the Administrative Agent the amount specified by
the Administrative Agent in writing to such Purchasing Lender, and (iii) the
Administrative Agent shall, to the extent such payments or fundings are actually
made, apply such amounts ratably to pay the amount owed to the Selling Lenders.
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 Administrative 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, dated as of the date hereof and signed by
each of the parties hereto;
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(ii) a Revolver A Note and Revolver B Note for the account of each
Lender that is a party hereto as of the Closing Date, in the amount,
respectively, of such Lender's Revolver A Commitment and Revolver B
Commitment and duly completed and executed by the Borrower;
(iii) a Bid Loan Note for the account of each Lender that is a
party hereto as of the Closing Date, in the amount of the aggregate
Revolver A Commitments and duly completed and executed by the Borrower;
(iv) the Guaranty, duly completed and executed by the Guarantors;
(v) the Security Agreements, duly completed and executed by the
Borrower and the Guarantors 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;
(vi) arrangements satisfactory to the Administrative Agent shall
have been made for the proper filing or recording of each document
(including Financing Statements) required by law or reasonably requested by
the Administrative 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 Administrative 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;
(vii) a certificate, signed by the chief executive officer or chief
financial officer of the Borrower, in form and substance satisfactory to
the Administrative 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 the Merger and 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 the Merger and 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 Merger and other transactions contemplated by this
Agreement, no Material Adverse Change has occurred since December 31, 1998,
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, (D) the Borrower has
satisfied each of the conditions set forth in this Section applicable to
the Borrower and its Subsidiaries, and (E) all conditions to the
consummation of the Merger have been satisfied and have not been waived or
amended without the prior written consent of the Administrative Agent;
(viii) a certificate of the secretary or an assistant secretary of
each of the Borrower and its Subsidiaries, in form and substance
satisfactory to the Administrative Agent, certifying (A) that attached
thereto is a true and complete copy of the articles or
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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 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
Administrative Agent;
(ix) 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 Administrative Agent;
(x) the favorable opinions of Mayor, Day, Caldwell & Keeton, L.L.P.,
counsel to the Borrower, and Phillip H. Watts, general counsel to the
Borrower, addressed to the Administrative Agent and the Lenders, in form
and substance satisfactory to the Administrative Agent and each Lender;
(xi) a copy of each opinion delivered in connection with the Merger;
(xii) certificates, and copies of policies, of insurance, in form
and substance satisfactory to the Administrative Agent, upon the Collateral
and the business of the Borrower and each Guarantor; and
(xiii) revisions, if any, to the schedules to this Agreement
reflecting any additional or changed matters as of the Closing Date, in
form and substance reasonably satisfactory to the Administrative Agent and
the Required Lenders.
(b) All legal matters, documentation and corporate or other proceedings
incident to the transactions contemplated hereby shall be reasonably acceptable
to the Administrative 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
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Merger and other transactions contemplated hereby shall have been obtained
(without the imposition of conditions that are not reasonably acceptable to the
Administrative 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 Administrative 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 Merger and the other transactions
contemplated hereby, or that, in the opinion of the Administrative Agent, would
otherwise be reasonably likely to have a Material Adverse Effect.
(c) Since December 31, 1998, both immediately before and after giving
effect to the consummation of the Merger and other 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.
(d) The Borrower shall have paid (i) to the Administrative Agent, the
initial quarterly installment of the annual administrative fee and (ii) all
other fees and expenses of the Administrative 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 Administrative Agent shall have received certified reports from an
independent search service satisfactory to it listing any judgment or tax lien
filing or Uniform Commercial Code financing statement that names the Borrower or
any Subsidiary as debtor in the jurisdictions selected by the Administrative
Agent and the results thereof shall be satisfactory to the Administrative Agent.
(f) The Administrative 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.
(g) The Lenders shall have received (i) the Financial Statements, (ii) a
pro forma balance sheet of the Borrower as of a recent date and giving effect to
the Merger and the initial Loans and the other transactions contemplated
hereunder (iii) a Covenant Compliance Worksheet, duly completed and certified by
the chief financial officer of the Borrower, demonstrating the Borrower's
compliance with the financial covenants set forth in SECTIONS 6.11 through 6.15,
determined on a pro forma basis as of June 30, 1999 after giving effect to the
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Merger and the initial Loans and the other transactions contemplated hereunder
and (iv) projected financial statements (including balance sheets and statements
of income and cash flows) of the Borrower and its Subsidiaries prepared on an
annual basis through December 31, 2003, in each case in form and substance
satisfactory to the Administrative Agent.
(h) 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.
(i) All aspects of the structure and documentation of the Merger and this
Agreement, all legal, tax, accounting and other matters relating to the Merger
and this Agreement, and all corporate or other proceedings incident to the
Merger and this Agreement, shall be reasonably satisfactory in form and
substance to the Administrative Agent and the Lenders, and the Administrative
Agent shall have received copies of the executed Merger Documents in such number
as it shall have reasonably requested.
(j) The Merger Documents shall not have been amended, modified or
supplemented, nor any provision thereof waived, in any material respect since
the date thereof, except as shall have been approved in writing by the
Administrative Agent; each of American Oncology Resources, Inc., Physicians
Reliance Network, Inc. and Diagnostic Acquisition, Inc. shall have duly complied
with and performed in all material respects all of its agreements and conditions
set forth in the Merger Documents and required to be complied with or performed
by it on or prior to the closing date thereunder; the Merger Documents shall be
in full force and effect; the Administrative Agent shall have received evidence
satisfactory to it that, concurrently with the making of the initial Loans
hereunder, all material conditions to closing the Merger set forth in the Merger
Documents shall have been met or waived with the consent of the Administrative
Agent and the Merger shall be consummated in accordance with the terms of the
Merger Documents and in compliance with all applicable Requirements of Law,
including any necessary stockholder approvals.
(k) The Administrative Agent shall have received evidence satisfactory to
it that (i) concurrently with the making of the initial Loans hereunder, (x) all
principal, interest and other amounts outstanding with respect to the Debt of
the Borrower and its Subsidiaries, other than as allowed pursuant to SECTION
6.3, shall be repaid and satisfied in full, (y) all commitments to extend credit
under the agreements and instruments relating thereto shall be terminated, and
(z) any Liens securing any such Debt shall be released and any related filings
terminated of record (or arrangements satisfactory to the Administrative Agent
made therefor), and (ii) any letters of credit outstanding with respect to such
Debt shall have been terminated or canceled.
(l) The Administrative Agent and each Lender shall have received such other
documents, certificates, and instruments as the Administrative 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
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of Credit hereunder, is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date or date of issuance:
(a) The Administrative Agent shall have received a Notice of Borrowing, if
required, in accordance with SECTION 2.2(A), a Bid Request in accordance with
SECTION 2.3(A) or a Letter of Credit Request in accordance with SECTION 2.20(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
Administrative 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.
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
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Administrative Agent and each Lender, which representations and warranties shall
be deemed to be made on the Closing Date immediately after giving effect to the
Merger:
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 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
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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.
4.7 Margin Securities. No proceeds of the Loans or advances under the
Swingline Note will be used, directly or indirectly, to purchase or carry any
Margin Stock, to extend credit for such purpose or for any other purpose that
would violate or be inconsistent with Regulations
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T, U or X. As of the date hereof and at all times during the term of this
Agreement, including following the application of the proceeds of each Loan and
each advance under the Swingline Note, the Borrower will conduct its business
and cause its Subsidiaries to conduct their respective businesses such that not
more than 25% of the value of the assets of the Borrower will consist of assets
which are Margin Stock and such that not more than 25% of the value of the
assets of the Borrower and its Subsidiaries will consist of assets which are
Margin Stock.
4.8 Full Disclosure. The written estimates, projections and forecasts
provided to the Lenders and the Administrative Agent with the syndication
materials dated March 1999 were prepared 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 Administrative 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 Administrative 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 Administrative 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
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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.
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
Administrative 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 Coopers 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.
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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.
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 to the extent contemplated by the Security Documents, 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
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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, discount formula, cost-based reimbursement or other
adjustment or limitation to the usual charges of such physician group.
4.23 Fraud and Abuse. Except where a failure to comply with the
following provisions of this SECTION 4.23 would not, individually or in the
aggregate, have a Material Adverse Effect, 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
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received notification, written or oral, by a Governmental Authority of competent
jurisdiction as to any such violation; provided, that the receipt by the
Borrower or any Subsidiary of notification of a violation shall not in and of
itself constitute a breach of this Section. The provisions of SUBSECTION (III)
hereof shall not require the Borrower or any Subsidiary (unless otherwise
required by law) to disclose to the Administrative 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 Administrative 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.
4.26 Year 2000 Compatibility. Any reprogramming required to permit the
proper functioning, before, on and after January 1, 2000, of (i) the Borrower's
and its Subsidiaries' computer-based systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's or any of its Subsidiaries' systems interface), and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by June 30, 1999. The cost to the Borrower and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of the
year 2000 to the Borrower and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance will continue for the
term of this Agreement to be, sufficient to permit the Borrower and its
Subsidiaries to conduct their respective businesses without a Material Adverse
Effect.
4.27 The Merger. The Borrower has heretofore delivered, or will on or
prior to the Closing Date deliver, to the Administrative Agent a true, complete
and correct copy of each of the Merger Documents executed and delivered in
connection therewith, together with all amendments and modifications thereto.
Each such Merger Document (together with all
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schedules and exhibits thereto) comprises, or upon execution and delivery on or
prior to the Closing Date will comprise, a full and complete copy of all
agreements between the parties thereto with respect to the subject matter
thereof, and there are no, and will not then be any, other agreements or
understandings, written or oral, or side agreements not contained therein that
relate to or modify the substance thereof. Each such Merger Document is, or upon
execution and delivery on or prior to the Closing Date will be, in full force
and effect and, except with the prior approval of the Administrative Agent, no
provision thereof has been, or will then have been, amended, modified or waived
by any party thereto. Each of the representations and warranties of the Borrower
and its Subsidiaries set forth in the Merger Documents is true and correct in
all material respects as of the date made or deemed to be made (after giving
effect to any disclosure schedule update permitted by the Merger Agreement,
provided that any matter disclosed in any such update would not reasonably be
expected to have a Material Adverse Effect). As of the Closing Date, the Merger
will have been consummated in accordance with the terms of the Merger Documents
and all material applicable Requirements of Law, and the Borrower will be the
legal owner of all of the outstanding Capital Stock of PRN, free and clear of
any Liens other than the Liens created by the Loan Documents.
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 Administrative Agent and the Lenders:
(a) 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 June 30, 1999, 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
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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 one hundred (100) days after the close of each fiscal year of
the Borrower, beginning with the fiscal year ending December 31, 1999, 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 PricewaterhouseCoopers, LLP 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 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;
(c) Concurrently with the delivery of the financial statements described in
subsection (B) 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;
(d) Concurrently with the delivery of the financial statements described in
subsections (A) and (B) above, (i) 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 and, (ii) with respect to each Physician Transaction
closed during such period, (x) a description of the practice whose stock, equity
interests or assets were acquired ("Practice"), (y) projected revenue and
practice contribution levels with respect to such Practice, prepared on a
quarterly basis for the two-year period following the consummation of such
Physician Transaction, in reasonable detail and (z) 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.
(e) 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
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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;
(f) 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;
(g) Concurrently with each delivery of the financial statements described
in subsections (A) and (B) an aging of the accounts receivable of the Borrower
and its Subsidiaries by payor class as of the end of such fiscal quarter; and
(h) Upon the Administrative 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 Administrative 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 Administrative 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;
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(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 Administrative 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 Administrative
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 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 Administrative Agent and deliver certificates and copies of
policies of such insurance to the Administrative 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 Administrative Agent may, at the
Borrower's expense, without waiving or releasing any
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obligation or Default by the Borrower hereunder, procure the same, but shall not
be required to do so. All sums so disbursed by the Administrative 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 Administrative Agent from time to
time, the Borrower shall deliver to the Administrative 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 Administrative 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.
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 Administrative
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
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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 Administrative 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 Administrative Agent in all of
its Collateral and shall have taken such other actions and executed such
documents as the Administrative 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 Administrative 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
Administrative 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 Administrative Agent, pursuant to which
such new Subsidiary shall become a party thereto, (ii) the Borrower will
execute and deliver to the Administrative Agent (with sufficient copies for
each Lender) an amendment or supplement to the Security Agreement, in form and
substance satisfactory to the Administrative 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 shall be pledged to the
Administrative 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. Notwithstanding the foregoing, with respect to any special purpose
Subsidiary organized in connection with a Permitted Asset Securitization, the
Borrower and such Subsidiary shall not be required to comply with the
provisions in clause (I) above.
5.12 Recoveries in Bankruptcy Proceedings. Should any Subsidiary become a
debtor under the Bankruptcy Code, the Administrative 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
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amounts owed by any Subsidiary of the Borrower to the Borrower. The
Administrative 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 Administrative Agent by fax or otherwise in writing 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).
(d) 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
subsection (C) above 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.
5.15 Year 2000 Compatibility. The Borrower will, and will cause each of
its Subsidiaries to, take all action necessary to ensure that its material
(whether individually or in the aggregate) computer-based systems are able to
operate and effectively process data including dates on and after January 1,
2000. At the request of the Agent or the Required Lenders, the Borrower will
provide reasonable assurance of its Year 2000 compatibility.
5.16 Permitted Asset Securitization. In the event that the Borrower shall
enter into a Permitted Asset Securitization, the Borrower shall maintain such
Permitted Asset Securitization (or a replacement Permitted Asset Securitization)
in effect at all times, unless any Collateral
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previously released in respect of such Permitted Asset Securitization is re-
pledged to the Administrative Agent for the benefit of the Lenders.
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.
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 Administrative 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;
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(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 Administrative 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, but excluding Debt otherwise
permitted under this SECTION 6.3) in an aggregate principal amount at any
time outstanding not to exceed $75,000,000 for the Borrower and its
Subsidiaries, provided, that other Consolidated Debt permitted pursuant to
this clause (VI) shall not include Debt incurred in connection with an
asset securitization;
(vii) Debt of the Borrower under any Interest Rate Protection
Agreements (if any) entered into in respect of the Debt incurred pursuant
to this Agreement or any Permitted Asset Securitization; provided that the
notional amount of all such agreements at any time shall not exceed the
aggregate amount of the Commitments at such time;
(viii) Debt incurred pursuant to the Swingline Note;
(ix) Debt incurred pursuant to the ELLF; and
(x) Debt approved by the Required Lenders in connection with
their approval of any Permitted Asset Securitization (including loans to
the Borrower from a special purpose Subsidiary formed in connection with
such Permitted Asset Securitization).
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 Administrative 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 aggregate Revolver A 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 2.7(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 Administrative 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; (vi) the sale or other disposition
of any Margin Stock; (vii)
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dispositions made in compliance with the terms of the ELLF of property (y)
financed with the proceeds of the ELLF or (z) conveyed to the Trust (as defined
in the Participation Agreement) by the Borrower or any Subsidiary, and (viii)
transactions pursuant to a Permitted Asset Securitization.
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 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 or (c)
pursuant to a Permitted Asset Securitization; 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, (g) investments made in connection with a
Permitted Asset Securitization and (h) other investments not covered in clauses
(a) through (f) having an aggregate cost to the Borrower and its Subsidiaries
not to exceed $40,000,000 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 (H) 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
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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 $75,000,000 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 fifteen percent (15%) 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
connection with and as permitted under the ELLF.
6.11 Consolidated Net Worth. Permit Consolidated Net Worth at the
$525,000,000, increased by 80% of end of any fiscal quarter, beginning with
Consolidated Net Income (if positive) for the fiscal quarter ending June 30,
1999, such quarter and each fiscal quarter to be less than (i) thereafter, 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
from the Closing Date.
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 3.0 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 1.2 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. Permit the ratio of
Consolidated Debt to Capital Consolidated Total Capital as of the end of any
fiscal quarter to be greater than 0.65 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, other than a lease pursuant to the ELLF of property transferred as
permitted under SECTION 6.6(VII).
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
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the acquisition and construction of properties in connection therewith and the
activities of any special purpose Subsidiary formed and acting solely in
connection with a Permitted Asset Securitization) 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
(y) a Permitted Physician Transaction or an approved Physician Transaction
consummated in compliance with SECTION 5.14 or 6.2, respectively, of this
Agreement or (z) a Permitted Asset Securitization, 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 or pursuant to a Permitted
Asset Securitization.
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. (a) Amend or modify (or permit the amendment
or modification of) any of the terms or provisions of any Subordinated Debt,
Permitted Subordinated Debt or Permitted Asset Securitization or, in either
case, any agreement related thereto, (b) prepay a Permitted Asset Securitization
unless, after giving effect hereto, the Borrower would be in compliance with
SECTION 5.16; or (c) 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 or Permitted Asset Securitization 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" (ii) such Permitted Asset Securitization, as amended or
modified, complies with the terms and conditions of the Permitted Asset
Securitization as expressly approved by the Required Lenders and (iii) such
amendment or modification does not materially adversely effect the rights or
interests of the Administrative Agent or Lenders.
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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; provided, that the
occurrence of any of the foregoing shall not constitute a breach of this Section
if such occurrence would not, individually or in the aggregate, have a Material
Adverse Effect. With respect to this Section, knowledge by an individual
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 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; provided, that the receipt by the
Borrower or any Subsidiary of notification of a violation shall not in and of
itself constitute a breach of this Section. The provisions of SUBSECTION (III)
hereof shall not require the Borrower or any Subsidiary (unless otherwise
required by law) to disclose to the Administrative 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.
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":
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(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 Administrative 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 Administrative 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) (i) 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 (including, without limitation, the Operative Documents (as defined
in the definition of "ELLF" herein)) pursuant to which the Borrower or such
Subsidiary has incurred any Debt having an aggregate outstanding principal
amount of greater than $1,000,000 (other than the intercompany loans), which
default would permit acceleration of such Debt; (ii) the occurrence of any
default or event of default, and the expiration of any cure or grace period
applicable thereto, on the part of the Borrower or any Subsidiary under the
terms of any agreement, document or instrument entered into in connection with
any Permitted Asset Securitization having an aggregate outstanding principal
amount of greater than $1,000,000 or (iii) the failure to pay when due any
termination or other payment under any Interest Rate Protection Agreement in an
amount of greater than $1,000,000;
(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;
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(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 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 $1,000,000 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 $1,000,000
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 $1,000,000 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;
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(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;
(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 Administrative 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 and termination of the ELLF, 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 Administrative 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 Administrative 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;
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(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 $1,000,000 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 Administrative Agent shall at the direction, or may with the
consent, of the Required Lenders, take any or all of the following actions at
the same or different times:
(a) Declare the Revolver A Commitments and/or Revolver B 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 Administrative
Agent, to deposit) with the Administrative 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 Administrative Agent in the Cash
Collateral Account as security for the Letter of Credit Outstandings as
described in SECTION 2.20(J); and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Loan Documents and applicable law.
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8.2 Right of Setoff. The Administrative 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 Administrative 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 Administrative Agent's and the Lenders' rights and remedies
set forth in this Agreement is not intended to be exhaustive, and the exercise
by the Administrative 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 Administrative 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 Administrative 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 Administrative Agent or the Lenders or their agents or 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 Administrative 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 Administrative 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 Administrative Agent shall have no
duties or responsibilities other than those expressly set forth in this
Agreement and the other Loan Documents. The Administrative 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
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impose upon the Administrative Agent any obligations or liabilities in
respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. The Administrative 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
Administrative 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
Administrative 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 Administrative 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 Administrative Agent. The Administrative 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 Administrative Agent may deem
and treat each Lender as the owner of its interest hereunder for all purposes
hereof unless and until a written notice of the assignment, negotiation or
transfer thereof shall have been given to the Administrative Agent in accordance
with the provisions of this Agreement. The Administrative 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 Administrative 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
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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 Administrative Agent as a result of the
Administrative 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 Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative 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 Administrative
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 Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that (i) it has, independently and
without reliance upon the Administrative 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 Administrative 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 Administrative
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 Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.6 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative 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 Administrative Agent receives such a notice, the Administrative
Agent will give prompt notice thereof to the Lenders; provided, however, that if
any such notice has also been furnished to the Lenders, the Administrative Agent
shall have no obligation to notify the Lenders with respect thereto. The
Administrative 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 Administrative
Agent shall have received such directions, the Administrative Agent may (but
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shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.7 Indemnification. To the extent the Administrative 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 Administrative
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 Administrative 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 Administrative Agent under or in connection with
any of the foregoing, and (ii) to reimburse the Administrative 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 Administrative 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 Administrative 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 Administrative Agent in its
individual capacity and not as Administrative 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
Administrative Agent in its individual capacity. The Administrative 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 Administrative 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 Administrative Agent. The Administrative 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
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Borrower (which consent shall not be unreasonably withheld), appoint from among
the Lenders a successor to the Administrative 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
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within such thirty-day period, then the
retiring Administrative Agent may, on behalf of the Lenders and after consulting
with the Lenders and the Borrower, appoint a successor Administrative Agent from
among the Lenders. Upon the acceptance of any appointment as Administrative
Agent by a successor Administrative Agent, such successor Administrative Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring Administrative
Agent's resignation as Administrative 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 Administrative Agent. If no successor to the Administrative Agent
has accepted appointment as Administrative Agent by the thirtieth (30th) day
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall thereafter perform all of the duties of the
Administrative Agent hereunder and under the other Loan Documents until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided for hereinabove.
9.10 Collateral Matters.
(a) The Administrative 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 Administrative
Agent, at its option and in its discretion, to release any Lien granted to or
held by the Administrative Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all of the Obligations and termination of the
ELLF, (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 Administrative Agent at any time, the Lenders will confirm in writing the
Administrative 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
Administrative 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 Administrative Agent shall act solely as the Administrative Agent of the
Lenders and does not
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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.
9.12 Syndication Agent. Notwithstanding any other provision of this
Agreement or any of the other Loan Documents, the Syndication Agent is named as
such for recognition purposes only, and in its capacities as such shall have no
powers, rights, duties, responsibilities or liabilities with respect to this
Agreement and the other Loan Documents and the transactions contemplated hereby
and thereby.
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 2.17 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 2.13(A),
2.13(B), 2.14, 2.15, 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.
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
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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 Administrative Agent and the Lenders, or any of them, shall be
resolved by binding arbitration as 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
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which the principal office of either the Administrative 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:
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
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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 Administrative
Agent: First Union National Bank
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Telephone: (704) 383-6882
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 Administrative Agent shall not be effective until received
by the Administrative 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
participations in Letters of Credit); provided, however, that (i) each such
assignment shall be of an equal percentage of such Lender's rights and
obligations (including its Revolver A Commitment and Revolver B Commitment, the
outstanding Loans
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made by it, the Note or Notes held by it, its participations in Letters of
Credit and its commitment and loans (if any) as a Lender (as defined in the
Participation Agreement) under the ELLF), (ii) 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 Administrative Agent and the Borrower (to be
evidenced by their counterexecution of the relevant Assignment and Acceptance),
which consent shall not be unreasonably withheld, (iii) 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 (iv) the parties to each such assignment will execute and
deliver to the Administrative 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 Administrative 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
Administrative Agent thereof (unless the Administrative 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
Administrative Agent and the other parties hereto as if set forth at length
herein.
(b) The Administrative 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 Administrative 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.
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(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 Administrative Agent
will (i) accept such Assignment and Acceptance, (ii) on the effective date
thereof, record the information contained therein in the Register and (iii) give
notice thereof to the Borrower and the Lenders. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, will execute
and deliver to the Administrative 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 EXHIBITS A-1 and
A-2. The Administrative Agent will return canceled Notes to the Borrower.
(d) Subject to SECTION 10.5(A)(I), Each Lender may, without the consent of
the Borrower, the Administrative 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, except that the foregoing shall not
prohibit a Lender from selling to an Affiliate of such Lender a participation in
all of such Lender's rights and obligations under this Agreement so long as
after reasonable investigation by such Lender (including due inquiry of the
Borrower, if necessary or advisable), such participation would not give rise to
a "prohibited transaction" under ERISA with respect to the Borrower, (iii) the
amount of the participation shall in no event be less than $3,000,000, (iv) the
Borrower, the Administrative 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
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Commitment shall not constitute such an increase), and (v) 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 2.19
hereof each Participant shall have the rights of a Lender for purposes of
SECTIONS 2.13(A), 2.13(B), 2.14, 2.15 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.
(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 Administrative 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 Administrative
Agent (including, without limitation, reasonable attorneys' fees, but excluding
salaries of the Administrative Agent's regularly employed personnel and overhead
incurred or paid by the Administrative 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 Administrative 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 Administrative Agent's regularly employed
personnel and overhead incurred or paid by any Lender or the Administrative
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
Administrative Agent and each
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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
Administrative 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 Administrative Agent's and the Lenders' other rights and remedies
against the Borrower, the Borrower agrees to indemnify and hold harmless the
Administrative 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
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
Administrative Agent or any Lender or any other Indemnified Person for any
consequential damages. Neither the Administrative 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
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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 Administrative 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 2.8(B)
during the continuance of an Event of Default), fees (other than fees payable to
the Administrative 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 Administrative
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 (other than as approved by the Required Lenders in connection
with a Permitted Asset Securitization), (vi) release all or substantially all of
the Guarantors from their obligations under the Guaranty Agreement, (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, or (viii) amend, modify or waive the proviso to
SECTION 6.3(VI); and no such amendment, modification, waiver, discharge,
termination or consent shall restrict any Lender's right to become an Exiting
Lender (with the right to have its Commitments and Loans under this Agreement
and its commitments and loans under the ELLF assigned at par value) in
connection with any Permitted Asset Securitization, without the consent of such
Lender; and
(c) no provision relating to the rights or obligations of the
Administrative 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
Administrative Agent or Issuing Bank, as applicable.
10.9 Rights and Remedies Cumulative, Non-Waiver, etc. The enumeration
of the Administrative 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 Administrative 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 Administrative
Agent on their behalf), or that may now or hereafter exist in law or in equity
or by suit or otherwise. No delay or failure to take
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action on the part of the Administrative 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 Administrative 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 Administrative 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 Administrative 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
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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.
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
Administrative Agent and the Lenders. The Borrower therefore agrees that the
Administrative Agent and the Lenders, if the Administrative 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 Administrative 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,
(vi) to such Lender's Affiliates, provided that such Affiliates shall be bound
by the provisions of this SECTION 10.17 and the Lender shall remain liable for
any breach hereof by such Affiliate and (vii) 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, Administrative 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 (vii) of
this SECTION 10.17, the Administrative 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
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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 Administrative Agent in the
syndication of the Facilities and the resultant addition of Lenders after the
Closing Date.
[Signatures begin on following page.]
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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: __________________________________________
ATTEST: L. Fred Pounds, Chief Financial Officer
By: __________________________
Leo E. Sands, Secretary
FIRST UNION NATIONAL BANK, AS AGENT
By: ___________________________________
Name: _________________________________
Title: ________________________________
S-1
<PAGE>
FIRST UNION NATIONAL BANK
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $37,500,000.00
Revolver B Commitment: $21,428,571.43
Address:
First Union National Bank
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Telephone: (704) 383-6882
Telecopier: (704) 383-0288
Wiring Instructions:
First Union National Bank
Charlotte, North Carolina
ABA #053000219
Account #: 465906 RC5007
Reference: American Oncology
Resources, Inc.
Attention: Syndication Agency Services
S-2
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $35,000,000.00
Revolver B Commitment: $20,000,000.00
Address:
The First National Bank of Chicago The First National Bank of Chicago
One First National Plaza, Suite 0091 One First National Plaza, Suite 0091
Chicago, IL 60607 Chicago, IL 60607
Attention: Richard L. Schiller, Vice Attention: Jason D. White
President Telephone: 312/732-1798
Telephone: 312/732-5932 Telecopier: 312/732-2016
Telecopier: 312/732-0550
Wiring Instructions:
First National Bank of Chicago
ABA: 071000013
For Further Credit: DES Incoming Clearing
Account # 7521765
Reference: American Oncology Resources Inc.
S-3
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND",
NEW YORK BRANCH
By: ___________________________________
Title:
By: ___________________________________
Title:
Revolver A Commitment: $25,000,000.00
Revolver B Commitment: $14,285,714.29
Address:
Lending Office:
245 Park Avenue
New York, NY 10167
Attention: Corporate Services Department
Telephone: 212/916-7800
Telecopier: 212/916-7880
Wiring Instructions:
Bank of New York
ABA: 021000018
A/C Rabobank New York
Account: 802-6002533
Reference: American Oncology Resources, Inc.
S-4
<PAGE>
BANKERS TRUST COMPANY
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $17,500,000.00
Revolver B Commitment: $10,000,000.00
Address:
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Attention: G. Andrew Keith
Telephone: 212/250-8617
Telecopier: 212-250-7218
Wiring Instructions:
Bankers Trust Company 021-001-033
Account #99401268
Attn: Commercial Loan Division
Ref: Jennifer Laino, American Oncology
S-5
<PAGE>
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $15,000,000.00
Revolver B Commitment: $8,571,428.57
Address:
Wells Fargo Bank (Texas) National
Association
1000 Louisiana Avenue, 3rd Floor
Houston, TX 77002
Attention: Christopher King
Telephone: 713-319-1333
Telecopier: 713-739-1082
Wiring Instructions:
Wells Fargo Bank (Texas) National
Association
ABA: 121000248
Account: #2712-507201
Attention: Commercial Banking Services
Reference: American Oncology Resources,
Inc.
S-6
<PAGE>
CHASE BANK OF TEXAS, N.A.
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $15,000,000.00
Revolver B Commitment: $8,571,428.57
Address:
Chase Bank of Texas, N.A..
6550 Fannin, Suite 237
Houston, TX 77030
Attention: Jerry L. Boyd
Telephone: 713/795-7344
Telecopier: 713/795-7309
Wiring Instructions:
Chase Bank of Texas, N.A.
ABA: 113000609
Account: G/L #13681-7800
Loan Acct. #4004-004-0317305
Reference: American Oncology Resources Inc.
S-7
<PAGE>
NATIONSBANK, N.A.
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $12,500,000.00
Revolver B Commitment: $7,142,857.14
Address:
NationsBank, N.A.
700 Louisiana Street, 8th Floor
Houston, TX 77002
Attention: Larry Gordon
Telephone: 713/247-6619
Telecopier: 713/247-6719
Wiring Instructions:
NationsBank, N.A.
ABA: 111000025
Further Credit: 1292000883
Attention: Corporate Loans
Reference: American Oncology Resources Inc.
Attn: Larry J. Gordon
S-8
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $10,000,000.00
Revolver B Commitment: $5,714,285.71
Address:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Martin Golden
Telephone: (212) 261-7791
Telecopier: (212) 261-3440
Wiring Instructions:
Credit Lyonnais New York Branch
New York, NY
ABA: 0260-0807-3
Account: 01-88179-3701
Reference: American Oncology Resources, Inc.
Attention: Loan Servicing
S-9
<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By: ___________________________________
Name: _________________________________
Title: ________________________________
Revolver A Commitment: $7,500,000.00
Revolver B Commitment: $4,285,714.29
Address:
U.S. Bank National Association
601 Second Avenue South
Minneapolis, MN 55402
Attention: Brian O'Neill
Telephone: 612-973-0981
Telecopier: 612-973-0829
Wiring Instructions:
U.S. Bank National Association 091000022
GL #00001301540830
Reference: American Oncology Resources
S-10
<PAGE>
EXHIBIT 10.2
THIRD AMENDMENT TO CERTAIN
OPERATIVE AGREEMENTS
THIS THIRD AMENDMENT TO CERTAIN OPERATIVE AGREEMENTS dated as of May 14,
1999 (this "Amendment") is by and among AOR SYNTHETIC REAL ESTATE, INC., a
Delaware corporation (the "Lessee" or the "Construction Agent" or a "Tranche A
Guarantor"); AMERICAN ONCOLOGY RESOURCES, INC., a Delaware corporation (the
"Guarantor" or a "Tranche A Guarantor"); the various entities which are parties
hereto as guarantors of the Tranche A Loans (subject to the definition of
Tranche A Guarantors in Appendix A of the Participation Agreement, as defined
below, individually a "Tranche A Guarantor" and collectively, the "Tranche A
Guarantors"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (in its individual capacity, the "Trust Company"),
except as expressly stated herein, but solely as the Owner Trustee under the AOR
Trust 1997-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the various
banks and other lending institutions which are parties hereto as lenders
(subject to the definition of Lenders in Appendix A of the Participation
Agreement, individually, a "Lender" and collectively, the "Lenders"); the
various banks and other lending institutions which are parties hereto as holders
of certificates issued with respect to the AOR Trust 1997-1 (subject to the
definition of Holders in Appendix A of the Participation Agreement,
individually, a "Holder" and collectively, the "Holders"); and FIRST UNION
NATIONAL BANK, a national banking association ("FUNB"), as the agent for the
Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a certain Assignment and Assumption Agreement dated on
or about the date hereof (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Loan Assignment to First Union") among the
various banks and other lending institutions which were parties to the Existing
Participation Agreement, in their capacity as lenders (in such capacity, the
"Prior Lenders"), FUNB and the other parties referenced on the signature pages
thereto, the Prior Lenders assigned to FUNB, and FUNB assumed, the right, title
and interest of the Prior Lenders, in their capacity as lenders (subject to
limited exceptions and all as more fully set forth therein);
WHEREAS, pursuant to a certain Assignment and Assumption Agreement dated on
or about the date hereof (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Holder Advance Assignment to First Union")
among the various banks and other lending institutions which were parties to the
Existing Participation Agreement, in their capacity as holders (in such
capacity, the "Prior Holders"), FUNB and the other parties referenced on the
signature pages thereto, the Prior Holders assigned to FUNB, and FUNB assumed,
the right, title and interest of the Prior Holders, in their capacity as holders
(subject to limited exceptions and all as more fully set forth therein);
<PAGE>
WHEREAS, pursuant to a certain Assignment and Assumption Agreement dated on
or about the date hereof (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Loan Assignment to the New Lenders") among
FUNB, the Lenders and the other parties referenced on the signature pages
thereto, FUNB assigned to the Lenders, and the Lenders assumed, the right, title
and interest of FUNB, in its capacity as lender (subject to limited exceptions
and all as more fully set forth therein);
WHEREAS, pursuant to a certain Assignment and Assumption Agreement dated on
or about the date hereof (as amended, modified, supplemented, restated and/or
replaced from time to time, the "Holder Advance Assignment to the New Holders")
among FUNB, the Holders and the other parties referenced on the signature pages
thereto, FUNB assigned to the Holders, and the Holders assumed, the right, title
and interest of FUNB, in its capacity as holder (subject to limited exceptions
and all as more fully set forth therein);
WHEREAS, prior to the effective date of the Loan Assignment to First Union,
the Holder Advance Assignment to First Union, the Loan Assignment to the New
Lenders and the Holder Advance Assignment to the New Holders (collectively, the
"Assignments"), the Prior Lenders, the Prior Holders, the Lessee, the Guarantor,
the Tranche A Guarantors, the Owner Trustee and FUNB, as the agent for the Prior
Lenders and respecting the Security Documents, as the agent for the Prior
Lenders and the Prior Holders, were parties to the Participation Agreement dated
as of December 30, 1997, as amended by the First Amendment to Participation
Agreement and Credit Agreement dated as of January 30, 1998 and as further
amended by the Second Amendment to certain Operative Agreements dated as of
November 30, 1998 (as so amended, and as further amended, modified,
supplemented, restated and/or replaced from time to time prior to the date of
this Agreement, the "Existing Participation Agreement");
WHEREAS, the Existing Participation Agreement, as amended by this
Amendment, may be referred to herein as the "Participation Agreement";
WHEREAS, the parties to this Amendment wish to amend certain agreements,
instruments and other documents to which they are a party (or to which certain
of them are a party) in connection with a lease financing arrangement provided
in favor of Lessee by the other parties to this Amendment with regard to the
Properties; and
WHEREAS, after the effective date of the above-referenced assignments and
after the effective date of this Amendment, the parties to this Amendment intend
for the Loans, the Holder Advances and the other obligations evidenced by the
Operative Agreements to constitute the same Loans, Holder Advances and other
such obligations that existed prior to the effective date of such assignments
and prior to the effective date of this Amendment and not to constitute a
novation.
2
<PAGE>
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Amendment
agree as follows:
1. Definitions. Capitalized terms used herein but not otherwise defined
herein shall have the meaning set forth therefor in Appendix A to the
Participation Agreement. In the case of any conflict between the provisions of
this Amendment and the provisions of the Operative Agreements, the provisions of
this Amendment shall control construction of the terms.
2. Agency Agreement. The Agency Agreement is amended as follows:
(a) Section 3.2(a) is amended by adding the following sentence as the
final sentence thereto:
"Notwithstanding the foregoing, it is specifically understood and
agreed that if at any time the total Property Costs remaining to be
expended exceed the Unfunded Amount, the Construction Agent shall have
the right to purchase or cause the Lessee to purchase any one or more
of the Properties as set forth in Section 5.3(c) and the limitations
on recourse set forth in Section 5.4 shall not apply.";
(b) Section 3.3 is amended by deleting it in its entirety and
replacing it with the following:
"3.3 Failure to Complete Construction Period Properties and Purchase
Obligation.
If at any time prior to the Completion Date with respect to any
Construction Period Property (a) there occurs a Casualty, or
Condemnation, the loss from which exceeds or is expected to exceed ten
percent (10%) of the aggregate Construction Budget for such
Construction Period Property or that will prevent such Construction
Period Property from being completed by the Construction Period
Termination Date, (b) there shall occur any Environmental Violation
which the Lessor deems material in its reasonable judgment, (c) there
shall occur a Force Majeure Event which lasts beyond three (3) months,
(d) the Construction Agent shall abandon or permanently discontinue
the construction and development of such Construction Period Property
(which abandonment or permanent discontinuance shall be deemed to have
occurred if no work at such Construction Period Property site is
undertaken or completed during a period of thirty (30) days or more
for reasons other than a Force Majeure Event) and such abandonment or
permanent discontinuance shall be determined by an arbitrator in
accordance with the provisions of Section 12.7 of the Participation
Agreement to be an act of willful misconduct, fraud or an illegal act
on the part of the Construction Agent or (e) the Construction Agent
shall abandon or permanently discontinue the construction and
development of such Construction Period
3
<PAGE>
Property (which abandonment or permanent discontinuance shall be
deemed to have occurred if no work at such Construction Period
Property site is undertaken or completed during a period of thirty
(30) days or more for reasons other than a Force Majeure Event) and
either no arbitration proceeding referred to in the foregoing
subsection (d) shall have been commenced within sixty (60) days from
the date each of the parties hereto has knowledge of such abandonment
or permanent discontinuance or an arbitrator, in a proceeding in
accordance with the provisions of Section 12.7 of the Participation
Agreement, shall determine such abandonment or permanent
discontinuance is not an act of willful misconduct, fraud or an
illegal act on the part of the Construction Agent then on a date
(subject to the following two sentences) designated by the Lessor (v)
in the case of the foregoing subsections (b) and (d), the Construction
Agent shall pay to Lessor (and the limitations on recourse set forth
in Section 5.4 shall not apply) an aggregate amount equal to the
liquidated damages amount referenced in Section 5.3(b) of this
Agreement regarding such Construction Period Property and on such
date, so long as such liquidated damages amount is paid in full,
Lessor shall transfer and convey to the Construction Agent all right,
title and interest of Lessor in and to such Construction Period
Property and all insurance, condemnation and other proceeds with
respect to such Construction Period Property (to the extent such
proceeds do not constitute a portion of such liquidated damages
amount) and (w) in the case of the foregoing subsections (a), (c) and
(e), the Construction Agent shall have the option (i) to pay to Lessor
an aggregate amount equal to the liquidated damages amount referenced
in Section 5.3(b) of this Agreement regarding such Construction Period
Property (and the limitations on recourse set forth in Section 5.4
shall not apply) and on such date Lessor shall transfer and convey to
the Construction Agent all right, title and interest of Lessor in and
to such Construction Period Property and all insurance, condemnation
and other proceeds with respect to such Construction Period Property
(to the extent such proceeds do not constitute a portion of such
liquidated damages amount) or (ii) (subject to the limitations of all
applicable usury laws and the usury savings provisions of the
Operative Agreements, including, without limitation, Section 12.16 of
the Participation Agreement and Section 30.14 of the Lease) to pay to
Lessor the Maximum Amount regarding such Construction Period Property
and abandon all right, title and interest of the Construction Agent in
and to such Construction Period Property. If either the foregoing
subsections (d) or (e) applies to any Construction Period Property,
then the Construction Agent shall pay the Lessor on a date designated
by the Lessor the Maximum Amount as aforesaid, but without regard as
to whether any applicable arbitration proceedings (if any) have been
completed. To the extent subsection (d) is thereafter determined by
such arbitrator to apply, then such Maximum Amount previously paid
will be credited against the liquidated damages amount referenced in
Section 5.3(b) of this Agreement. Upon payment of the Maximum Amount
(except during the pendency of any arbitration proceeding referred to
above or the sixty (60) day period referenced in the foregoing
subsection (e)) respecting any particular Construction Period Property
(as calculated for such Construction
4
<PAGE>
Period Property only) as aforesaid, no further amounts shall be owed
by any Credit Party with respect to such Construction Period Property,
and Lessor and each person or entity acting by or through the Lessor,
including without limitation the Agent, the Lenders and the Holders
shall have no (i) right against any Credit Party to any additional
amount regarding such Construction Period Property, or (ii) claim
respecting any other Property to satisfy any amount owed by any Credit
Party with respect to such Construction Period Property or that would
otherwise have been owed by any Credit Party with respect to such
Construction Period Property. The parties to the Third Amendment
(including their successors and assigns) nonetheless acknowledge and
agree that (x) even though the maximum aggregate recovery from the
Credit Parties is limited by the Maximum Amount in the foregoing
subsection (w)(ii), the Lessor's right of recovery from such
Construction Period Property (as opposed to any recovery from the
Credit Parties) is not so limited (subject to the limitations of all
applicable usury laws and the usury savings provisions of the
Operative Agreements, including, without limitation, Section 12.16 of
the Participation Agreement and Section 30.14 of the Lease) and (y)
the provisions of this Section 3.3 shall in no way limit or otherwise
affect the obligations of the Lessee and the Construction Agent (or
the recourse of the Agent, the Lenders and the Holders against the
Lessee and the Construction Agent) with respect to the Properties that
are not Construction Period Properties (whether such obligations or
recourse arise under the Operative Agreements or otherwise). At the
cost and expense of the Construction Agent with respect to any
Construction Period Property to be conveyed to the Construction Agent
pursuant to this Section 3.3, the Lessor shall convey such
Construction Period Property for which an amount equal to the
liquidated damages amount referenced in Section 5.3(b) has been paid
"AS-IS, WHERE-IS" and in its then present physical condition to the
Construction Agent or its designee free and clear of Lessor Liens. If
the foregoing subsections (v) and/or (w) are not applicable to a
particular Construction Period Property because the requirements of
the foregoing subsections (a), (b), (c), (d) or (e) are not satisfied,
then the Construction Agent shall promptly and diligently complete the
development, acquisition, refinancing, installation, construction and
testing of such Construction Period Property in accordance with the
Plans and Specifications and with the terms hereof and cause the
Completion Date with respect to such Construction Period Property to
occur on or prior to the Construction Period Termination Date. Any
determination that an Environmental Violation is immaterial for
purposes of this Agreement shall not limit the obligations of Lessee
respecting such Environmental Violation under the Lease. The
Construction Agent shall notify the Lessor of the occurrence of any of
the matters described in the foregoing subsections (a), (c), (d) or
(e) promptly upon the Construction Agent gaining knowledge thereof and
the Construction Agent shall perform its obligations under Section
15.2 of the Lease regarding Environmental Violations as to any
Property subject thereto."; and
(c) A new Section 5.4 is added as follows:
5
<PAGE>
"5.4 LIMITATION ON RECOURSE.
Notwithstanding anything contained herein or in any other
Operative Agreement to the contrary (except as expressly stated in
Sections 3.2(a) and 3.3 of this Agreement and in the usury savings
provisions of the Operative Agreements, including, without limitation,
Section 12.16 of the Participation Agreement and Section 30.14 of the
Lease), upon the occurrence and during the continuance of an Agency
Agreement Event of Default relating solely to one or more of the
Construction Period Properties (other than as a result of (x) a Lease
Event of Default arising under Sections 17.1(g), (h), (i) or (j) of
the Lease or (y) any indemnity claim pursuant to the Operative
Agreements including without limitation pursuant to Sections 11.1
through 11.5 of the Participation Agreement, in either such case
pursuant to the foregoing subsections (x) or (y), the limitations
contained in this Section 5.4 shall not apply), the maximum aggregate
amount that the Lessor, or any person or entity acting by or through
the Lessor, including without limitation the Agent, the Lenders and
the Holders, shall be entitled to recover from the Credit Parties on
account of such Agency Agreement Event of Default with respect to each
such Construction Period Property or Construction Period Properties
shall be an amount equal to the sum of (collectively, the amounts
referenced in the following provisions of this sentence may be
referred to as the "Maximum Amount") (i) 89.9% of the aggregate
Property Cost for all Construction Period Properties (unless Lessor
upon the written advice of the Agent elects to exercise such remedy
against fewer than all Construction Period Properties, in which case
the amount for the foregoing portion of this subsection (i) shall be
89.9% of the aggregate Property Cost for such Construction Period
Properties), exclusive of the portion of the aggregate Property Cost
expended for the purchase of the Land related to such Construction
Period Properties (the "Land Cost") plus (ii) 100% of the Land Cost,
plus (iii) all amounts owed by the Lessee or the Construction Agent
under or with respect to any Operative Agreement in connection with
any Environmental Violation (including without limitation
Environmental Violations referred to in Section 3.3) related to such
Construction Period Properties plus (iv) any loss, cost or damage
suffered by the Lessor, the Agent or any Lender or Holder in
connection with or as a result of (1) fraud, misapplication of funds,
illegal acts or willful misconduct on the part of the Lessee or the
Construction Agent or (2) any claim by any third party caused by or
resulting from the Lessee's or the Construction Agent's actions or
failure to act while in possession or control of any such Construction
Period Property (it being understood and agreed that the Construction
Agent shall be deemed to be in possession and control of each
Construction Period Property at all times until such possession and
control is relinquished pursuant to the terms of the Operative
Agreements) minus (v) any amount relating to such Construction Period
Properties expended by the Construction Agent on behalf of the Lessor
if the Lessor is obligated to reimburse the Construction Agent for
such amount but such reimbursement has not yet occurred. The parties
to the Third Amendment (including their successors and assigns)
nonetheless acknowledge and agree that
6
<PAGE>
(x) even though the maximum aggregate recovery from the Credit Parties
is limited as aforesaid, the Lessor's right of recovery from the
Construction Period Properties (as opposed to any recovery from the
Credit Parties) is not so limited (subject to the limitations of all
applicable usury laws and the usury savings provisions of the
Operative Agreements, including, without limitation, Section 12.16 of
the Participation Agreement and Section 30.14 of the Lease), (y) the
provisions of this Section 5.4 shall in no way limit or otherwise
affect the obligations of the Lessee and the Construction Agent (or
the recourse of the Agent, the Lenders and the Holders against the
Lessee and the Construction Agent) with respect to the Properties that
are not Construction Period Properties (whether such obligations or
recourse arise under the Operative Agreements or otherwise) and (z)
the provisions of this Section 5.4 shall in no way limit or otherwise
affect the right of the Construction Agent under Section 5.3(c) of
this Agreement to purchase or cause the Lessee to purchase a Property
to cure an Agency Agreement Event of Default regarding such Property
(to the extent such Agency Agreement Event of Default is no longer
continuing with respect to any other Property remaining subject to
this Agreement after such purchase) for an amount equal to the
liquidated damages amount set forth in Section 5.3(b) of this
Agreement."
(d) The following is added as subsection 4.1(c) to the Agency
Agreement:
"The Construction Agent shall have the option to submit as a Property
Cost a requisition for the insurance premiums for insurance required
by the Operative Agreements, including without limitation Article XIV
of the Lease, to the extent such requisition is otherwise permitted
and eligible for funding under the provisions of the Operative
Agreements."
3. Participation Agreement. The Participation Agreement is amended as
follows:
(a) Section 2 of the Participation Agreement is amended by deleting
each reference to "three percent (3%)" and replacing each with a reference
to "three and four tenths percent (3.4%)";
(b) Section 5.2(c) of the Participation Agreement is amended by:
(i) deleting the reference to "ninety-seven percent (97%)" and
replacing it with a reference to "ninety-six and six tenths percent
(96.6%)";
(ii) deleting the reference to "twelve percent (12%)" and
replacing it with a reference to "eleven and six tenths percent
(11.6%)"; and
(iii) deleting the reference to "three percent (3%)" and
replacing it with a reference to "three and four tenths percent
(3.4%)";
7
<PAGE>
(c) Section 7.4 of the Participation Agreement is amended by deleting
it in its entirety and replacing it with the following:
"7.4. Facility Fee.
Until the Maturity Date, the Lessee agrees to pay or to cause to
be paid to the Agent for the account of (a) the Lenders, respectively,
a facility fee (the "Lender Facility Fee") equal to the product of
either (i) the average daily Commitment of each Lender (for Tranche A
Loans and Tranche B Loans) during the Commitment Period or (ii) after
the Commitment Period, the average daily aggregate amount of the
Advances of such Lender outstanding until the Maturity Date, in each
case multiplied by the applicable percentage set forth in the matrix
below per annum and (b) the Holders, respectively, a facility fee (the
"Holder Facility Fee") equal to the product of either (i) the average
daily Holder Commitment of each Holder during the Commitment Period or
(ii) after the Commitment Period, the average daily aggregate amount
of the Advances of such Holder outstanding until the Maturity Date, in
each case multiplied by the applicable percentage set forth in the
matrix below per annum. From the Effective Date until the fifth (5th)
day after delivery of the first financial statements and Compliance
Certificate pursuant to Section 28.1 of the Lease following the
consummation of the Merger (which financial statements and Compliance
Certificate shall be prepared on a pro forma basis as if the Merger
had occurred on the first day of such quarter), such applicable
percentage shall be 0.275% for both the Lender Facility Fee and for
the Holder Facility Fee. Thereafter, such Facility Fees shall be
calculated on the basis of a year of three hundred sixty (360) days
for the actual days elapsed and shall be payable in arrears on the
last Business Day of each fiscal quarter of the Lessee, commencing
with the fiscal quarter first ending after the Effective Date. The
Facility Fees shall be reset from time to time at the time of the
resetting of the Applicable Margin. If all or a portion of any such
Facility Fee shall not be paid when due, such overdue amount shall
bear interest, payable by the Lessee on demand, at a rate per annum
equal to the ABR (or in the case of Holder Yield, the ABR plus the
Applicable Margin for Eurodollar Holder Advances) plus two percent
(2%) from the date of such non-payment until such amount is paid in
full (as well as before judgment).
<TABLE>
<CAPTION>
Ratio of Consolidated Lender Holder
Debt to Annualized EBITDA Facility Fee Facility Fee
--------------------------- ------------ ------------
<S> <C> <C>
Greater than 3.00 to 1.00 0.325% 0.325%
Greater than 2.50 to 1.00 but less than or equal to 3.00 0.300% 0.300%
to 1.00
Greater than 2.00 to 1.00 but less than or equal to 2.50 0.300% 0.300%
to 1.00
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Ratio of Consolidated Lender Holder
Debt to Annualized EBITDA Facility Fee Facility Fee
--------------------------- ------------ ------------
<S> <C> <C>
Greater than 1.50 to 1.00 but less than or equal to 2.00 0.275% 0.275%
to 1.00
Greater than 1.00 to 1.00 but less than or equal to 1.50 0.275% 0.275%
to 1.00
Less than or equal to 1.00 to 1.00 0.250% 0.250%"
</TABLE>
(d) Section 8.7(b)(iii) of the Participation Agreement is deleted in its
entirety and replaced with the following"
"(iii) Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition (or lease upon the
exercise of remedies) of the Properties or any portion thereof, whether
pursuant to Article XXII of the Lease or the exercise of remedies under the
Security Documents or otherwise, the execution of remedies set forth in the
Lease and any payment in respect of excess wear and tear pursuant to
Section 22.3 of the Lease (whether such payment relates to a period before
or after the Construction Period Termination Date) shall be applied and
allocated by the Agent first, ratably to the payment of the principal and
interest of the Tranche B Loans then outstanding, second, ratably to the
payment of the principal and interest of the Tranche A Loans then
outstanding, third, to the extent such amount exceeds the maximum amount to
be returned pursuant to the foregoing provisions of this paragraph (iii),
ratably to the payment to the Holders of the outstanding principal balance
of all Holder Advances plus all outstanding Holder Yield with respect to
such outstanding Holder Advances, fourth, to any and all other amounts
owing under the Operative Agreements to the Lenders under the Tranche B
Loans, fifth, to any and all other amounts owing under the Operative
Agreements to the Lenders under the Tranche A Loans, sixth, to any and all
other amounts owing under the Operative Agreements to the Holders, and
seventh, to the extent moneys remain after application and allocation
pursuant to clauses first through sixth above, to the Owner Trustee for
application and allocation to any and all other amounts owing to the
Holders or the Owner Trustee and as the Holders shall determine; provided,
where no Event of Default shall exist and be continuing and a prepayment is
made for any reason with respect to less than the full amount of the
outstanding principal amount of the Loans and the outstanding Holder
Advances, the proceeds shall be applied and allocated ratably to the
Lenders and to the Holders."
(e) The first sentence of Section 10.1 is deleted and replaced with
the following sentence:
9
<PAGE>
"Each Lender may participate, assign or transfer all or a portion
of its interest hereunder and under the other Operative Agreements in
accordance with Sections 9.7 and 9.8 of the Credit Agreement;
provided, at such time each participant, assignee or transferee must
obtain an equal percentage of such Lender's interest in the Available
Commitments for Tranche A Loans, all outstanding Tranche A Loans, the
Available Commitments for Tranche B Loans and all outstanding Tranche
B Loans and in the Lessee Credit Agreement; provided, further, any
such participation, assignment or transfer of an interest under the
Lessee Credit Agreement must also satisfy the requirements of the
Lessee Credit Agreement. (As an example, if a Lender holds under the
Lessee Credit Agreement, a commitment percentage of 12.5% of each
facility thereunder and under the Credit Agreement a commitment
percentage of 12.0% regarding each of the Tranche A Commitments and
the Tranche B Commitments and if such Lender desires to sell an
assignment of 20.0% of its interests under the Lessee Credit Agreement
and the Credit Agreement, then such Lender shall sell under the Lessee
Credit Agreement an interest of 2.5% of all available commitments and
of all outstandings thereunder, assuming all other requirements are
met thereunder, and under the Credit Agreement an interest of 2.4% of
all of the Available Commitments for Tranche A Loans and all
outstanding Tranche A Loans and an interest of 2.4% of all of the
Available Commitments for Tranche B Loans and all outstanding Tranche
B Loans.)" and
(f) A new Section 11.6 is added as follows:
"11.6. INDEMNITY PRIOR TO COMPLETION DATE / CONSTRUCTION PERIOD
TERMINATION DATE.
NOTWITHSTANDING THE PROVISIONS OF SECTIONS 11.1, 11.2, 11.3, 11.4 AND 11.5,
THE OWNER TRUSTEE SHALL BE THE ONLY BENEFICIARY OF THE PROVISIONS SET FORTH IN
SECTIONS 11.1, 11.2, 11.3, 11.4 AND 11.5 WITH RESPECT TO ANY CLAIM ARISING
THEREUNDER FOR THE PERIOD PRIOR TO THE EARLIER TO OCCUR OF THE APPLICABLE
COMPLETION DATE AND THE CONSTRUCTION PERIOD TERMINATION DATE RELATED TO THE
APPLICABLE PROPERTY. NOTWITHSTANDING THE FOREGOING, TO THE EXTENT THAT THE
OWNER TRUSTEE BECOMES OBLIGATED TO ANY INDEMNIFIED PERSON PURSUANT TO THE NEXT
SUCCEEDING PARAGRAPH OF SECTION 11.6, THE OWNER TRUSTEE SHALL BE ENTITLED TO
FURTHER INDEMNITY FROM THE INDEMNITY PROVIDER UNDER SECTIONS 11.1, 11.2, 11.3,
11.4 AND 11.5, AS APPLICABLE, WITH RESPECT TO ALL AMOUNTS OWING OR PAID BY IT
UNDER THIS SECTION 11.6.
TO THE EXTENT THE INDEMNITY PROVIDER IS NOT OBLIGATED TO INDEMNIFY ANY
INDEMNIFIED PERSON WITH RESPECT TO CLAIMS ARISING UNDER SECTIONS 11.1, 11.2,
11.3, 11.4 OR 11.5, PRIOR TO THE EARLIER TO OCCUR OF THE APPLICABLE COMPLETION
DATE OR CONSTRUCTION PERIOD TERMINATION DATE, THE OWNER TRUSTEE SHALL PROVIDE
SUCH INDEMNITIES IN FAVOR OF SUCH INDEMNIFIED PERSON IN ACCORDANCE WITH THE
RELEVANT PROVISIONS OF SECTIONS 11.1, 11.2, 11.3, 11.4 OR 11.5 AS THE CASE MAY
BE. IT IS ACKNOWLEDGED AND AGREED THAT ANY AMOUNT FOR WHICH THE OWNER TRUSTEE
BECOMES OBLIGATED TO ANY INDEMNIFIED PERSON PURSUANT HERETO SHALL BECOME A CLAIM
FOR WHICH THE OWNER TRUSTEE IS ENTITLED TO INDEMNITY FROM THE INDEMNITY
PROVIDER.
10
<PAGE>
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO THIS
SECTION 11.6 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9."
4. Appendix A to the Participation Agreement. Appendix A to the Participation
Agreement is amended as follows:
(a) by deleting the phrase "in no event shall the Expiration Date be
later than the fifth annual anniversary of the Initial Closing Date," from
the definition of Expiration Date and replacing it with the following: "in
no event shall the Expiration Date be later than the fifth annual
anniversary of the Effective Date,";
(b) by adding the following definitions in appropriate alphabetical
order:
""Direct Ground Lease" shall have the meaning specified in the Third
Amendment.";
""Effective Date" shall have the meaning specified in the Third
Amendment.";
""Indirect Ground Lease" shall have the meaning specified in the Third
Amendment.";
""Land Cost" shall have the meaning specified in Section 5.4 of the
Agency Agreement.";
""Maximum Amount" shall have the meaning specified in Section 5.4 of
the Agency Agreement.";
""Merger" shall mean the merger of Physician Reliance Network, Inc.
with and into Diagnostic Acquisition, Inc. pursuant to that certain
Agreement and Plan of Merger by and among Physician Reliance Network,
Inc., American Oncology Resources, Inc. and Diagnostic Acquisition,
Inc., dated as of December 11, 1998."
""Third Amendment" shall mean the Third Amendment to Certain Operative
Agreements dated as of May 14, 1999 by and among the parties to the
Participation Agreement as of such date, to be effective on the
Effective Date.
""Total Commitments" shall mean the aggregate of the Lender
Commitments and the Holder Commitments.";
(c) by deleting the reference to "$2,250,000;" in the definition of
Holder Commitment and replacing it with the following: "the aggregate
committed amount set forth in Schedule I to the Trust Agreement, as such
Schedule I may be amended and replaced from time to time;";
11
<PAGE>
(d) by deleting the reference to "$72,750,000;" in the definition of
Lender Commitment and replacing it with the following: "the aggregate
committed amount set forth in Schedule 1.1 to the Credit Agreement, as such
Schedule 1.1 may be amended and replaced from time to time;";
(e) by deleting the text after "(ii)" in the definition of
Construction Period Termination Date and replacing it with the following:
"the second anniversary of the Effective Date or (b) such later date as
shall be agreed by the Majority Secured Parties.";
(f) The definition for "Applicable Margin" is deleted in its entirety
and replaced with the following:
""Applicable Margin" shall mean, at any time with respect to any
Eurodollar Loan or any Eurodollar Holder Advances, 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 for Applicable Margin for Applicable Margins for
Debt to Eurodollar Eurodollar Eurodollar
Annualized EBITDA Tranche A Loans Tranche B Loans Holder Advances
---------------------- ---------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Greater than 3.00 to 1.00 1.550% 1.925% 2.300%
Greater than 2.50 to 1.00 but less than or 1.450% 1.825% 2.200%
equal to 3.00 to 1.00
Greater than 2.00 to 1.00 but less than or 1.325% 1.700% 2.075%
equal to 2.50 to 1.00
Greater than 1.50 to 1.00 but less than or 1.225% 1.600% 1.975%
equal to 2.00 to 1.00
Greater than 1.00 to 1.00 but less than or 1.100% 1.475% 1.850%
equal to 1.50 to 1.00
Less than or equal to 1.00 to 1.00 1.000% 1.375% 1.750%
</TABLE>
From the Effective Date until the fifth (5th) day after receipt
by the Agent of the first financial statements and Compliance
Certificate pursuant to Section 28.1 of the Lease following the
consummation of the Merger (which financial statements and Compliance
Certificate shall be prepared on a pro forma basis as if the Merger
had occurred on the first day of such quarter), the Applicable Margin
shall be 1.225% (for the Eurodollar Tranche A Loans), 1.600% (for the
Eurodollar Tranche B Loans) and 1.975% (for the Eurodollar Holder
Advances). Thereafter, the Applicable Margin shall be reset from time
to time in accordance with the above matrix on the fifth (5th) day
after receipt by the Agent in accordance with Section 28.1 of the
Lease of financial statements together with a Compliance Certificate
(reflecting the computation of the ratio of Consolidated Debt to
12
<PAGE>
Annualized EBITDA as of the last day of the preceding fiscal quarter
or fiscal year, as appropriate)."; and
(g) The definition for "Lessee Credit Agreement" is amended by
deleting it in its entirety and replacing it with the following:
""Lessee Credit Agreement" shall mean that certain Fourth Amended
and Restated Loan Agreement dated as of the date of the Third
Amendment among AOR, the various lenders parties thereto from time to
time and First Union National Bank, as the agent thereunder, as such
may hereafter be amended, modified, supplemented, restated and/or
refinanced or otherwise replaced from time to time."
5. Trust Agreement. The Trust Agreement is amended as follows:
(a) Exhibit A to the Trust Agreement is amended by deleting it in its
entirety and replacing it with Exhibit A attached hereto; and
(b) Schedule I to the Trust Agreement is amended by deleting it in its
entirety and replacing it with Exhibit B attached hereto.
6. Credit Agreement. The Credit Agreement is amended as follows:
(a) Section 2.5(a) of the Credit Agreement is amended by deleting the
reference to "ninety-seven percent (97%)" and replacing it with a reference
to "ninety-six and six tenths percent (96.6%)";
(b) Exhibit A-1 and Exhibit A-2 to the Credit Agreement are amended by
deleting them in their entirety and replacing them respectively with
Exhibit C-1 and Exhibit C-2 attached hereto; and
(c) Schedule 1.1 to the Credit Agreement is amended by deleting it in
its entirety and replacing it with Exhibit D attached hereto.
7. Lease Agreement. The Lease Agreement is amended as follows:
(a) The first paragraph of Section 2.2 is edited by removing the
phrase "Initial Closing Date," and replacing it with the following:
"Effective Date," and
(b) The first sentence of the second paragraph of Section 2.2 of the
Lease is amended by deleting the reference to "Initial Closing Date" and
replacing it with a reference to "Effective Date".
8. Security Agreement. The Preliminary Statement of the Security Agreement
is amended by deleting the references to "$72,750,000" and "$2,250,000" and
replacing them with
13
<PAGE>
references to "the aggregate Lender Commitments from time to time" and "the
aggregate Holder Commitments from time to time" respectively.
9. Effective Date. The effective date for this Amendment (the "Effective
Date") shall be the date as of which the following conditions precedent have
been satisfied or waived by the Agent (provided, that any such waiver shall
require subsequent satisfaction (unless expressly stated to be a permanent
waiver) of any such condition so waived; provided, further, if the Effective
Date does not occur prior to August 1, 1999 then there shall be no Effective
Date and none of the Assignments nor this Amendment shall have any further force
or effect; provided, further, from and after the Effective Date, the obligations
of the Credit Parties shall not be subject to any conditions contained in this
Section 9 which are required to be performed by any Credit Party):
(a) The Fourth Amended and Restated Loan Agreement dated as of or
about the date hereof among First Union National Bank, as administrative
agent thereunder, First Chicago Capital Markets, Inc., as syndication agent
thereunder, the various lenders thereunder and American Oncology Resources,
Inc., as borrower thereunder, shall be in full force and effect;
(b) All entities subject to the requirements of Section 5.8 of the
Participation Agreement prior to the Effective Date shall have satisfied in
full all such requirements;
(c) Each of the Lessee, the Guarantor and each Tranche A Guarantor
shall have delivered or caused to be delivered to the Agent (i) copies of
good standing certificates or certificates of existence from their
respective states of incorporation and their respective principal places of
business, (ii) an Officer's Certificate of all of the Credit Parties
certifying as to the correctness of the representations and warranties of
each Credit Party set forth in the Operative Agreements (except for any
such representations and warranties which relate solely to an earlier time)
and certifying that no Default or Event of Default shall have occurred and
be continuing, (iii) secretary's certificates regarding charter documents,
by-laws, resolutions and incumbency and (iv) an opinion of counsel, in each
case with respect to the foregoing subsections (i), (ii), (iii) and (iv) in
form and substance reasonably satisfactory to the Agent;
(d) The Lessee shall have delivered or caused to be delivered to the
Agent such of the following as shall be reasonably requested by the Agent:
(i) amendments to Uniform Commercial Code financing statements and fixture
filings, (ii) amendments to the memoranda of Lease and Lease Supplements,
(iii) amendments to the Mortgage Instruments and (iv) (A) endorsements to
existing title policies (or binding commitments for such endorsements)
and/or newly issued title policies (or binding commitments for such title
policies), in each case with respect to the Properties or (B) to the extent
Lessee shall fail to secure such endorsements or policies, opinions of
counsel from the states in which the Properties are located, in each case
with respect to the foregoing subsections (i), (ii), (iii) and (iv) in form
and substance reasonably satisfactory to the Agent;
14
<PAGE>
(e) Each of the Loan Assignment to First Union, the Holder Advance
Assignment to First Union, the Loan Assignment to the New Lenders and the
Holder Advance Assignment to the New Holders (in each case in form and
substance reasonably satisfactory to the Agent) shall have been delivered
to the Agent and shall be in full force and effect;
(f) Replacement Certificates and Notes in favor of the Holders and
Lenders, respectively, shall have been delivered to the Agent and shall be
in full force and effect;
(g) The Lessee shall have delivered no less than three (3) Business
Days notice to the Agent identifying the specific date as of which the
Effective Date shall occur, and the Agent shall be responsible for promptly
forwarding such notice to each Lender, Holder, Prior Lender and Prior
Holder; and
(h) Any other documents or items in connection with matters relating
to this Amendment, reasonably required by the Agent, shall have been
delivered to the Agent.
10. Ground Leases. The Operative Agreements provide that a Property may be
subject to a Ground Lease provided the Ground Lease is in a form and substance
satisfactory to the Agent. The parties hereto acknowledge that a proposed
Ground Lease may either be a direct Ground Lease from a ground lessor to the
Lessor (a "Direct Ground Lease") or a Ground Lease from a ground lessor to the
Lessee (or any Subsidiary of any Credit Party) that is subsequently sub-ground
leased to the Lessor (an "Indirect Ground Lease"). All references in the
Operative Agreements to a Ground Lease shall be deemed to be a reference to
either a Direct Ground Lease or an Indirect Ground Lease, as applicable.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and it shall not be necessary in making proof of this Amendment to
produce or account for more than one such counterpart provided, that to the
extent this Amendment constitutes chattel paper (as such term is defined in the
Uniform Commercial Code), no Lien on this Amendment may be created or perfected
through the transfer or possession of any counterpart hereof other than the
counterpart bearing the receipt therefor executed by the Agent on the signature
page hereof, which counterpart shall constitute the only "original" hereof for
purposes of the Uniform Commercial Code.
12. Continued Effectiveness of Operative Agreements. Except as modified
hereby, all of the terms and conditions of the Operative Agreements shall remain
in full force and effect.
13. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of North Carolina except as to Section 5
of this Amendment and the Trust Agreement which shall be governed by, and
construed in accordance with, the laws of the State of Utah.
15
<PAGE>
14. No Novation. After the effective date of the Assignments and after the
effective date of this Amendment, the parties to this Amendment intend for the
Loans, the Holder Advances and the other obligations evidenced by the Operative
Agreements to constitute the same Loans, Holder Advances and other such
obligations that existed prior to the effective date of the Assignments and
prior to the effective date of this Amendment and not to constitute a novation.
15. Ratification. Although not required due to the authority granted to the
Agent pursuant to Section 8.6 of the Participation Agreement and Section 7 of
the Credit Agreement, each Holder and each Lender which is a party to this
Amendment hereby ratifies the actions of the Agent regarding the Agent's
execution and delivery of the amendments to the Mortgage Instruments and all
matters related thereto and/or to this Amendment.
[The remainder of this page has been intentionally left blank.]
16
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
duly executed and delivered as of the date first above written.
AOR SYNTHETIC REAL ESTATE, INC., as the Construction Agent,
as the Lessee and as a Tranche A Guarantor
AMERICAN ONCOLOGY RESOURCES, INC.,
as the Guarantor and as a Tranche A Guarantor
AOR REAL ESTATE, INC., as a Tranche A Guarantor
AOR, INC., as a Tranche A Guarantor
RMCC CANCER CENTER INC., as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF OREGON, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF INDIANA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF MISSOURI, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF ARIZONA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF SOUTH CAROLINA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF OKLAHOMA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF PENNSYLVANIA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF VIRGINIA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF NORTH CAROLINA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF NEW YORK, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF FLORIDA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF NEVADA, INC.,
as a Tranche A Guarantor
AOR HOLDING COMPANY OF INDIANA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF TEXAS, INC.,
as a Tranche A Guarantor
[SIGNATURE PAGES CONTINUED]
17
<PAGE>
AOR MANAGEMENT COMPANY OF CENTRAL FLORIDA, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF OHIO, INC.,
as a Tranche A Guarantor
AOR MANAGEMENT COMPANY OF KANSAS, INC.,
as a Tranche A Guarantor
AORT HOLDING COMPANY, INC., as a Tranche A Guarantor
AORIP, INC., as a Tranche A Guarantor
GREENVILLE RADIATION CARE, INC.,
as a Tranche A Guarantor
By:
--------------------------------------------
Name: L. Fred Pounds
Title: Treasurer of each of the foregoing Entities
AOR OF TEXAS MANAGEMENT LIMITED PARTNERSHIP,
a Texas limited partnership, as a Tranche A Guarantor
By: AOR MANAGEMENT COMPANY OF TEXAS, INC.,
a Delaware corporation, as general partner
By:
--------------------------------------------
Name: L. Fred Pounds
Title: Treasurer
AOR OF INDIANA MANAGEMENT PARTNERSHIP,
an Indiana general partnership, as a Tranche A Guarantor
by: AOR MANAGEMENT COMPANY OF INDIANA, INC., a Delaware
corporation, as general partner
By:
--------------------------------------------
Name: L. Fred Pounds
Title: Treasurer
By: AOR HOLDING COMPANY OF INDIANA, INC., a Delaware
corporation, as general partner
By:
--------------------------------------------
Name: L. Fred Pounds
Title: Treasurer
[Signature pages continued]
18
<PAGE>
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as Owner Trustee under the AOR
Trust 1997-1
By:
--------------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
[Signature pages continued]
19
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender
and as a Holder
By:
--------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
[SIGNATURE PAGES CONTINUED]
20
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender and as a Holder
By:
--------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
[SIGNATURE PAGES CONTINUED]
21
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
"Rabobank Nederland", NEW YORK BRANCH,
as a Lender and as a Holder
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
22
<PAGE>
BANKERS TRUST COMPANY,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
23
<PAGE>
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
24
<PAGE>
CHASE BANK OF TEXAS NATIONAL ASSOCIATION,
as a Lender and as a Holder
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
25
<PAGE>
NATIONSBANK, N.A.,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
26
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGES CONTINUED]
27
<PAGE>
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
----------------------------------------
[SIGNATURE PAGES CONTINUED
28
<PAGE>
Receipt of the original counterpart of the foregoing Amendment is hereby
acknowledged on this ____ day of ______________, 1999./1/
FIRST UNION NATIONAL BANK, as Agent
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
- ------------
/1/ This acknowledgment is executed in the original counterpart only.
29
<PAGE>
EXHIBIT 10.3
TERMINATION AGREEMENT
This Termination Agreement dated effective June 30, 1999, is made by and
between ILEX ONCOLOGY, INC., a Delaware corporation ("ILEX"), and PRN RESEARCH,
INC., a Texas corporation ("PRN").
W I T N E S S E T H:
WHEREAS, ILEX and PRN are parties to a Service Agreement (the "Service
Agreement") dated effective June 30, 1997; and
WHEREAS, ILEX and PRN desire to terminate the Service Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, ILEX and PRN agree as follows:
1. ILEX shall issue 629,200 shares of common stock, $.01 par value ("Common
Stock") to PRN. PRN recognizes that the Common Stock is not being registered
under the Securities Act of 1933, as amended (the "Securities Act"), in
reliance upon an exemption from the Securities Act which is predicated, in
part, on the representations and agreements of PRN set forth in this
Agreement. PRN represents and warrants to ILEX that it is an "accredited
investor" as that term is defined in Rule 501(a) of the Rules and
Regulations promulgated pursuant to the Securities Act, and that the Common
Stock is being acquired solely for its own account for investment and not
with a view to, or for offer or resale in connection with, a distribution
thereof within the meaning of the Securities Act. PRN understands that the
effect of such representation and warranty is that the Common Stock must be
held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available at the time for any
proposed sale or other transfer thereof. PRN represents that it has
consulted with its counsel in regard to the Securities Act and that it is
fully familiar with the circumstances under which it is required to hold the
Common Stock and the limitations upon the transfer or other disposition
thereof. PRN acknowledges that ILEX is relying upon the trust and accuracy
of the foregoing representations and warranties in issuing the Common Stock
under the Securities Act. PRN agrees to and shall indemnify and hold ILEX
harmless against all liabilities, costs and expenses, including reasonable
attorneys' fees, incurred by ILEX as a result of any sale, transfer or other
disposition by PRN of all or any part of the Common Stock in violation of
the Securities Act. The certificate representing the Common Stock shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT."
<PAGE>
2. The Service Agreement and the terms, provisions, covenants and agreements
contained therein are hereby terminated in all respects, and neither PRN
nor ILEX have any continuing liabilities or obligations to one another
under the terms and provisions of the Service Agreement.
3. The Registration Rights Agreement dated July 9, 1997 by an between PRN and
ILEX shall continue in full force and existence, and this Termination
Agreement will not in any manner effect the rights and obligations of
either ILEX or PRN pursuant to such Registration Rights Agreement.
IN WITNESS WHEREOF, the parties have caused this Termination Agreement to
be duly executed effective as of the date and year first above written.
ILEX ONCOLOGY, INC.
By: /s/ Michael T. Dwyer
-------------------------------
Name: M. T. Dwyer
Title: Vice President & CFO
PRN RESEARCH, INC.
By: /s/ L. Fred Pounds
--------------------------------
Name: L. Fred Pounds
Title: CFO
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,201
<SECURITIES> 6,587
<RECEIVABLES> 288,976
<ALLOWANCES> 0
<INVENTORY> 18,418
<CURRENT-ASSETS> 372,245
<PP&E> 349,306
<DEPRECIATION> 106,533
<TOTAL-ASSETS> 1,160,805
<CURRENT-LIABILITIES> 143,020
<BONDS> 323,555
0
0
<COMMON> 848
<OTHER-SE> 668,998
<TOTAL-LIABILITY-AND-EQUITY> 1,160,805
<SALES> 0
<TOTAL-REVENUES> 515,626
<CGS> 0
<TOTAL-COSTS> 475,212
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,933
<INCOME-PRETAX> 30,481
<INCOME-TAX> 15,180
<INCOME-CONTINUING> 15,301
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,301
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.15
</TABLE>
