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EXHIBIT 10.1
[BANKONE LOGO]
AMENDED AND RESTATED CREDIT AGREEMENT
among
PHYSICIAN RELIANCE NETWORK, INC.,
as Borrower,
BANK ONE, TEXAS, N.A.,
as Agent,
NATIONS BANK OF TEXAS, N.A.,
as Co-Agent
and
BANK ONE, TEXAS, N.A.,
NATIONSBANK OF TEXAS, N.A.,
BANQUE PARIBAS,
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
THE FUJI BANK LIMITED,
MELLON BANK, N.A.
PNC BANK, NATIONAL ASSOCIATION
and
SUN TRUST BANK, CENTRAL FLORIDA, N.A.
(AND THE OTHER LENDERS, IF ANY, FROM TIME TO TIME PARTY HERETO)
as Lenders
Dated as of June 11, 1997
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TABLE OF CONTENTS
ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1.4 Financial Covenants and Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 2 - Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.1 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.2 Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.4 Interest Rate Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.5 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.7 Termination of Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.8 Procedure for Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.9 Manner of Payments; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.11 Reimbursements to the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.12 Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.13 Funding/Booking Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.14 Pro Rata Treatment Among the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.15 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.16 Non-Receipt of Funds By Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.17 Special Provisions for LIBOR Balance Pricing . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.18 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.19 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 3 - Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.1 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.2 First Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.3 Perfection and Protection of the Lenders' Interests . . . . . . . . . . . . . . . . . . . . 28
Section 3.4 Subsidiary Pledge Agreements and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.5 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4 - Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.1 Items to Be Delivered By Borrower Upon Execution of this Agreement . . . . . . . . . . . . 29
Section 4.2 Advances Under the Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 5 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.1 Corporate Names; Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.2 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.3 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.4 Power and Authority; Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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Section 5.5 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.6 Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.8 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.9 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.11 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.12 Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.13 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.14 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.16 Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.17 Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.19 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.20 Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.21 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.22 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.23 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.24 Representations and Warranties Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6 - Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.4 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.5 Operating Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.6 Proxy Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.7 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.8 Notification of Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.9 Notification of Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.10 Notification of Acquisitions and New Subsidiaries . . . . . . . . . . . . . . . . . . . . . 41
Section 6.11 Notification Regarding Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.12 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.13 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.14 Compliance With Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.15 Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.16 Agreements With Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.17 Fees, Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.18 Affiliate Subordination Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.19 Change of Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.20 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.21 Ownership, Management Change: Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.22 Ownership, Change: Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.23 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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Section 6.25 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 7 - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.1 Prohibition Against Liens On Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.2 Prohibition Against Liens On Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.3 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.4 Continuity of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.5 Dissolution, Liquidation, Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.6 Prohibition Against Certain Acquisition Indebtedness . . . . . . . . . . . . . . . . . . . 45
Section 7.7 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.8 Dividends, Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.9 Redemptions and Acquisitions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.10 Loans to Officers, Directors and Shareholders . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.11 Limitation on Non-Material Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 8 - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.1 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.2 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.3 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.4 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.5 Funded Debt to Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.6 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 9 - Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 10 - Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.1 Refusal of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.3 Cash Collateral; Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.4 Enforcement Costs; Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.5 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.6 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.7 Performance By Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.8 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.9 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 11 - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 11.1 Agreements Among the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 12 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.1 Effective Date; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.3 Agent's Records; Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.5 Non-applicability of Chapter 15 of the Texas Credit Code . . . . . . . . . . . . . . . . . 61
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Section 12.6 Judgment Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.7 Interest Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.8 Continuing Rights of the Lenders In Respect of Obligations . . . . . . . . . . . . . . . . 62
Section 12.9 Fees, Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.10 Acceptance and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.11 Waiver of Trial By Jury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.12 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.14 Agent for the Benefit of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 12.15 Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.17 Entirety and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.18 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.19 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.20 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.21 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.22 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.23 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.24 Covenants Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 12.25 Amendment and Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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SCHEDULES
Schedule 5.1 - Trade Names; Mergers; Acquisitions
Schedule 5.6(a) - Borrower's Capital Stock
Schedule 5.6(b) - Subsidiaries and Ownership of Subsidiaries
Schedule 5.8 - Litigation and Judgments
Schedule 5.12 - Service Agreements
Schedule 5.19 - Indebtedness and Capital Leases
Schedule 7.2 - Permitted Liens
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EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Assignment and Acceptance
Exhibit C - Form of Interest Notice
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Guaranty
Exhibit F - Form of Pledge Agreement
Exhibit G - Form of Pledging Subsidiary Pledge Agreement
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AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement ("Agreement"), dated as of June
11, 1997, is executed and entered into by and among PHYSICIAN RELIANCE NETWORK,
INC., a Texas corporation ("Borrower"), each of the lending institutions which
is a party hereto (as evidenced by the signature pages of this Agreement) or
which may from time to time become a party hereto or any permitted successor or
assignee thereof permitted pursuant to Section 2.18 (individually, a "Lender"
and collectively, the "Lenders"), BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (in such capacity,
together with its successors in such capacity, "Agent") and NATIONSBANK OF
TEXAS, N.A., a national banking association, as co-agent.
RECITALS:
A. Borrower, Bank One, Texas, N.A. (as a lender and as agent) and
NationsBank of Texas, N.A. (as a lender) are parties to the Original Loan
Agreement (as defined herein), pursuant to which the "Lenders" (as defined in
the Original Loan Agreement) extended a $90,000,000 revolving credit facility
to Borrower.
B. Borrower has requested that the Original Loan Agreement be amended to
increase the revolving credit facility from $90,000,000 to $140,000,000, the
proceeds of which shall be used by Borrower for the purposes of (a) refinancing
the indebtedness owed by Borrower under the Original Loan Agreement and
increasing the revolving credit facility, (b) financing equipment and real
estate purchases, permitted acquisitions and the development of oncology
treatment centers, and (c) providing working capital available for Borrower's
general corporate purposes; and
C. The Lenders have agreed to provide such increase in the revolving
credit facility to Borrower upon and subject to the terms and conditions set
forth in this Agreement and the other Loan Documents (as defined herein).
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the sufficiency of which are hereby acknowledged,
Borrower, the Lenders and Agent hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Adjusted Base Rate" means a rate equal to the sum of (i) the Base Rate
plus (ii) the Applicable Margin.
"Adjusted LIBOR Rate" means with respect to each Interest Period for a
LIBOR Rate Advance, on any day thereof, an amount equal to the sum of (i) the
quotient of (a) the LIBOR Rate with respect to such Interest Period divided by
(b) the remainder of 1.0 less the LIBOR Reserve
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Requirement in effect on such day, plus (ii) the Applicable Margin. Each
determination by Agent of the Adjusted LIBOR Rate shall, in the absence of
manifest error, be conclusive and binding.
"Advance" means a loan made to Borrower under the Facility.
"Affiliate" means, as to any Person, any other Person (i) that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with such Person, or (ii) that directly or indirectly
beneficially owns or holds fifty percent (50%) or more of any class of Voting
Stock of such Person or (iii) fifty percent (50%) or more of the Voting Stock
of which is directly or indirectly beneficially owned or held by the Person in
question. As used in this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise; provided that in no event shall Agent or any
Lender be deemed an Affiliate of Borrower or any of its Subsidiaries.
"Affiliate Subordination Agreement" means a subordination agreement
respecting an Affiliate of Borrower as prescribed by Section 6.19.
"Agent" means BANK ONE, TEXAS, N.A., a national banking association, as
administrative agent for the Lenders under this Agreement, whose principal
place of business is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such
successor administrative agent as may be appointed pursuant to Section 11.1(h).
"Agreement" means this Amended and Restated Credit Agreement and all
exhibits, schedules and addenda hereto, and any renewal, extension, amendment,
modification, restatement or supplement hereof.
"Applicable Laws" means all laws, regulations and orders applicable to any
Person and their respective operations and property, including, without
limitation, all current and future judicial, legislative, regulatory,
administrative, common law and governmental instructions, interpretations,
approvals, certifications, permits and opinions relating to Medicare and
Medicaid and similar items issued or promulgated by governmental agencies,
departments, offices, commissions, boards, bureaus or instrumentalities of the
U.S. or the State of Texas, or any political subdivision, and all Environmental
Requirements.
"Applicable Margin" means (i) in respect of the Base Rate Balance, zero
percent (0.0%) and (ii) in respect of the LIBOR Balance, the percentage
corresponding to Borrower's Leverage Ratio as set forth in the table below:
========================================================================================
Leverage Ratio Applicable
-------------- ----------
Margin
------
========================================================================================
Less than or equal to 1.00 to 1.00 0.70%
----------------------------------------------------------------------------------------
Greater than 1.00 to 1.00, but less than or equal to 1.50 to 1.00 0.90%
----------------------------------------------------------------------------------------
Greater than 1.50 to 1.00, but less than or equal to 2.00 to 1.00 1.125%
----------------------------------------------------------------------------------------
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========================================================================================
Leverage Ratio Applicable
-------------- ----------
Margin
------
========================================================================================
Greater than 2.00 to 1.00, but less than or equal to 2.50 to 1.00 1.375%
----------------------------------------------------------------------------------------
Greater than 2.50 to 1.00 1.625%
========================================================================================
With respect to the period beginning on the Closing Date and ending on the next
following date of adjustment of the Applicable Margin (as set forth below), for
purposes of determining the Applicable Margin in respect of the LIBOR Balance
the Leverage Ratio shall be measured and determined according to Borrower's
financial statements dated as of March 31, 1997, and thereafter, the Leverage
Ratio shall be determined according to the latest of the subsequent financial
statements delivered to Agent under Section 6.1 of this Agreement. After the
Closing Date, each change, if any, in the Applicable Margin shall be deemed
effective as of the first day of the calendar month next following the calendar
month in which such financial statements are delivered to Agent.
"Assignee" means an Eligible Assignee acceptable to and approved by Agent,
and Borrower, to whom a Lender, as an Assigning Lender, assigns all or any
portion of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance as provided by Section 2.18.
"Assigning Lender" means any Lender that assigns all or any portion of its
rights and obligations under this Agreement pursuant to an Assignment and
Acceptance as provided by Section 2.18.
"Assignment and Acceptance" means an Assignment and Acceptance Agreement,
in substantially the form of Exhibit "B" hereto, entered into pursuant to
Section 2.18 between a Lender, as an Assigning Lender, and an Assignee, and
accepted by Agent.
"Availability" at any time means an amount determined by taking the lesser
of the Credit Limit or the Commitment Availability, and then subtracting the
Facility Balance.
"Bank One" means Bank One, Texas, N.A., a national bank in its individual
corporate capacity, with its principal place of business located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Base Rate" means the higher of (a) the rate of interest from time to time
announced by Bank One as its "Base Rate" or "Prime Rate," or (b) the Federal
Funds Rate plus one-half of one percent (0.50%). The Base Rate may not be the
lowest or best rate of interest at any time charged by Bank One to any
customer.
"Base Rate Advance" means an Advance that bears interest based upon the
Adjusted Base Rate.
"Base Rate Balance" means any portion of the Facility Balance bearing
interest at the Adjusted Base Rate pursuant to the terms of this Agreement.
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"Borrower" means PHYSICIAN RELIANCE NETWORK, INC., a Texas corporation,
whose chief executive office is located at Two Lincoln Centre, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and its successors and permitted
assigns.
"Borrower Pledge Agreement" means the pledge and security agreement
executed by Borrower, granting to Agent for the ratable benefit of the Lenders
a continuing pledge, security interest and lien in and to all Capital Stock now
or hereafter owned by Borrower in all present and future Material Subsidiaries,
Research and IMC in the form of Exhibit F attached hereto, as such agreement
may be renewed, extended, modified, amended, restated or supplemented from time
to time.
"Business Day" means (a) any calendar day except Saturday, Sunday and those
legal public holidays specified in 5 U.S.C. Section 6103(a), as it may be
amended from time to time, and (b) with respect to all Advances, payments,
conversions, continuations, Interest Periods and notices in connection with the
LIBOR Balance or any LIBOR Rate Advance, any day which is a Business Day
described in clause (a) above and which is also a day on which dealings in U.S.
dollar deposits are carried out in the London interbank Eurodollar market.
"Cancer Center" means a facility for the provision of medical care and
related services, and which is owned or leased by Borrower and occupied by a
Provider.
"Capital Expenditures" means expenditures which are classified as capital
expenditures according to GAAP and expressly excludes any consideration paid in
connection with the acquisition of all or substantially all of the assets or
Capital Stock of another Person.
"Capital Stock" means corporate stock and any and all shares, partnership
interests, membership interests, equity interests, rights, securities or other
equivalent evidences of ownership (however designated) issued by any entity
(whether a corporation, partnership, limited liability company, limited
partnership or other type of entity).
"Capitalization" means, at any time, the sum of Funded Debt plus
Consolidated Net Worth.
"Claim" means a claim (whether directly, as assignee, by law or otherwise)
for payment or reimbursement from a Payor in respect of the rendition of
medical care and related services, or the sale or rental of equipment,
inventory or other supplies or merchandise in connection therewith, to a
Patient by or on behalf of a Provider which gives rise to an account or a
receivable, and all security or guaranties for same, and all proceeds of any of
the foregoing. "Claim" includes, without limitation, any such claims under
Medicare or Medicaid and all Claims from time to time provided for purchase by
Borrower from a Provider under any Service Agreement.
"Closing Date" means the effective date specified in the preamble of this
Agreement.
"Code" means the Uniform Commercial Code in effect in the State of Texas.
"Collateral" has the meaning set forth in Section 3.1.
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"Commitment Availability" means an amount determined by multiplying
Borrower's EBITDA for the preceding four fiscal quarters by three (3). The
Commitment Availability shall be certified to Agent in the Compliance
Certificate delivered to Agent pursuant to Section 6.1(d). Each change, if
any, in the Commitment Availability shall be deemed effective as of the first
day of the calendar month next following the calendar month in which financial
statements are delivered to Agent pursuant to Section 6.1 of this Agreement.
As of the Closing Date the Commitment Availability shall be determined by
reference to Borrower's financial statements dated March 31, 1997.
"Committed Maximum" means, as to any Lender at any time, the dollar amount
specified adjacent to its name on the signature pages hereof or, if such Lender
is a party to an Assignment and Acceptance, the amount set forth in the most
recent Assignment and Acceptance of such Lender.
"Committed Percentage" means, as to any Lender at any time, the percentage
determined by dividing the Committed Maximum of such Lender by the Credit Limit
at such time.
"Confidential Information" means any financial statements, business plans
and projections (denoted as such) of Borrower or any of its Subsidiaries, any
Service Agreement and medical records of a Patient, and such other nonpublic
information about Borrower or any of its Subsidiaries which is delivered to
Agent or any Lender in connection with the Facility by Borrower or any of its
Subsidiaries and which is marked and identified as "Confidential" or otherwise
is designated by Borrower or such Subsidiary as confidential at the time such
information is disclosed to Agent or the Lenders.
"Consequential Loss" means, as to any Lender, with respect to Borrower's
payment, or conversion to a different Interest Option, of all or any portion of
the LIBOR Balance on a day other than the last day of the Interest Period
related thereto, any loss, cost or expense incurred by such Lender in
redepositing such principal amount, including, without limitation, the sum of
(i) the interest which, but for such payment, such Lender would have earned in
respect of such principal amount so paid, for the remainder of the Interest
Period applicable to such sum, reduced, if such Lender is able to redeposit
such principal amount so paid for the balance of such Interest Period, by the
interest earned by such Lender as a result of so redepositing such principal
amount plus (ii) any expense or penalty incurred by such Lender on redepositing
such principal amount.
"Consolidated Net Worth" means, at any time, shareholders equity for
Borrower and its Subsidiaries, determined according to GAAP.
"Contract Rate" at any time means the Adjusted Base Rate with respect to
the Base Rate Balance or, the Adjusted LIBOR Rate with respect to the LIBOR
Balance, as the case may be, in effect at any time pursuant to an Interest
Notice or otherwise pursuant to the terms of this Agreement, provided that at
any time when an Event of Default is in existence, the Contract Rate otherwise
applicable shall increase to a floating annual rate of interest equal to the
lesser of (i) the sum of the Base Rate plus two percent (2.0%) or (ii) the
Maximum Rate, effective beginning upon written notice to Borrower by Agent and
continuing until such time, if any, as such Event of Default is cured to
Agent's satisfaction, waived or until such increase may be rescinded by Agent
in its discretion.
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"Contract Term" means the period beginning on the Closing Date and
continuing through and including the Maturity Date.
"Contractual Debt" means all indebtedness and other obligations for
borrowed money (including, without limitation, Subordinated Debt) or the
deferred purchase price of goods or services, including, without limitation,
obligations under capital leases. Contractual Debt excludes the unfunded
portion, if any, from time to time under the Facility, but includes the
unfunded portion, if any, from time to time under any other credit agreement.
"Credit Limit" at any time means an amount equal to the lesser of (i) One
Hundred Forty Million Dollars ($140,000,000) or (ii) the aggregate Committed
Maximum for all Lenders.
"Current Ratio" means, at any time, the ratio of current assets to current
liabilities, each determined according to GAAP.
"Determining Lenders" means, as of the date of any determination, any
combination of Lenders (excluding however, any Lender that is in default of any
obligations to make funds available to Agent pursuant to Section 2.8(b)) having
at least sixty-six and two thirds percent (66.67%) of the Facility Balance,
provided that if at any time there is no principal outstanding under the
Facility, "Determining Lenders" means any combination of Lenders whose combined
Committed Percentages equal at least sixty-six and two thirds percent (66.67%)
of the Credit Limit.
"EBITDA" means, for any period, earnings before interest, taxes,
depreciation and amortization, determined for such period according to GAAP.
"Eligible Assignee" means any Person that is an Exempt Person.
"Environmental Damages" means all costs, judgments, good faith settlements,
claims, damages, losses, penalties, fines, liabilities, encumbrances, liens,
costs and expenses, of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, and reasonable attorneys'
fees costs and expenses in connection therewith, which are incurred at any time
as a result of (a) the handling of Hazardous Materials by or on behalf of
Borrower or any Guarantor, or (b) the existence of conditions giving rise to
any violation of Environmental Requirements. Such Environmental Damages
include, without limitation, (i) all reasonable costs incurred in connection
with the investigation or remediation of Hazardous Materials or violations of
Environmental Requirements which are necessary to comply with any Environmental
Requirements, including, without limitation, reasonable fees incurred for the
services of attorneys, consultants, contractors, experts and laboratories, and
all other reasonable costs incurred in the preparation of any feasibility
studies or reports or the performance of any cleanup, remediation, removal,
response, abatement, containment, closure, restoration or monitoring work, (ii)
damages for personal injury, injury to property or natural resources occurring
on or off of affected real property, consequential damages, the cost of
demolition and rebuilding of any improvements on real property, and interest
and penalties, and (iii) liability to any third party or governmental agency to
reimburse, indemnify or provide contribution to such person or agency. With
respect to any parcel of real property owned by Borrower, or any of its
Subsidiaries, Environmental Damages does not include any of the foregoing which
(1) is based solely upon, or arises solely from, conditions or actions which
first occur
6
14
or come into existence, at a time, if any, after ownership, possession, control
and management of any such property has been transferred to a Person (not
including Borrower, any of its Subsidiaries, or any Person directly or
indirectly affiliated or related to, or controlled by, or who is an agent or
nominee of, any of them) in a transaction which itself does not give rise to or
result in an Event of Default under the Loan Documents and (2) which are not
caused (directly or indirectly) by Borrower, any of its Subsidiaries, or any
Person directly or indirectly affiliated or related to, or controlled by, or
who is an agent or nominee of, any of them.
"Environmental Requirements" means all legislative, regulatory,
administrative and common law requirements relating to the protection of human
health and safety or the environment, including, without limitation, applicable
present and future statutes, regulations, rules, ordinances, codes, licenses,
permits, judgments, orders, judicial opinions, approvals, authorizations,
concessions, franchise and similar items issued or promulgated by governmental
agencies, departments, commissions, boards, bureaus or instrumentalities of the
U.S., any state or any political subdivision.
"Equipment" collectively means all of Borrower's equipment, furniture,
furnishings, art work and removable fixtures now owned or hereafter acquired,
of whatever nature and wherever located, all materials used or consumed in
connection therewith and all tools, parts, accessories, processes, plans,
manuals and specifications relating thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all regulations issued pursuant
thereto and published interpretations thereunder.
"ERISA Affiliate" means any Person which, together with Borrower, would be
treated as a single employer under Section 4001 of ERISA or Section 414 of the
IRC.
"Event of Default" has the meaning set forth in Section 9.1.
"Exempt Person" means any Person (not an individual) who either (a) is
organized under the laws of, and located and principally operating within, the
U.S., or any state thereof or (b) has on file with Agent such currently
effective duly executed form(s) or statement(s) which may, from time to time be
prescribed by law and which, pursuant to applicable provisions of an (i) income
tax treaty between the U.S. and the country of residence of such Person or (ii)
the IRC, as amended, or any applicable rules or regulations in effect under
either, permits Agent to disburse to such Person payments under this Agreement
free of any obligation or liability for withholding.
"Facility" means the loan facility established by the Lenders in favor of
Borrower pursuant to this Agreement, and any and all renewals, extensions or
modifications thereof.
"Facility Balance" at any time means the aggregate unpaid balance of
outstanding principal under the Facility.
"Federal Funds Rate" means the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System in effect
at the Federal Reserve Bank in Dallas, Texas as determined on any basis
reasonably selected by Agent. The Federal Funds Rate
7
15
applicable each day shall be the Federal Funds Rate reported as applicable to
Federal Funds transactions on that date. In the case of Saturday, Sunday or
any legal holiday, the Federal Funds Rate shall be the rate applicable to
federal funds transactions on the immediately preceding day for which the
Federal Funds Rate is determined.
"Fixed Charge Coverage Ratio" means for any period, the ratio of (A) EBITDA
(not including any minority interests), plus rental expense, divided by (B)
Fixed Charges.
"Fixed Charges" means the sum of interest expense, current maturities of
long term debt and current obligations on long term capital leases, required
dividends on preferred stock, rental expense and taxes (exclusive of refunds or
other credits).
"Funded Debt" means, at any time, the sum of (i) Contractual Debt, (ii) the
aggregate amount of mandatory redemption obligations of Borrower in respect of
any of its Capital Stock, (iii) the aggregate amount of unfunded letters of
credit outstanding for which Borrower is obligated to the issuer thereof for
reimbursement, (iv) the aggregate amount, if any, for which Borrower is
obligated under guaranty agreements, capital maintenance and cash flow support
agreements, and other contingent debt obligations.
"Funding Period" means the period beginning on the Closing Date and ending
at the close of Agent's business on the Business Day preceding the Maturity
Date.
"GAAP" means generally accepted accounting principles existing as of the
effective date of this Agreement as promulgated by opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements of the Financial Accounting Standards Board, consistently applied.
"Guarantor" means each of Borrower's present or future Material
Subsidiaries, Research and IMC, and each other Person that hereafter executes a
Guaranty, respectively, and "Guarantors" means all of such Persons,
collectively.
"Guaranty" means a guaranty agreement, in the form of Exhibit E attached
hereto, executed and delivered by a Guarantor to and in favor of Agent for the
benefit of Agent and the Lenders, pursuant to which such Guarantor guarantees
the payment and performance of the Obligations as required by Section 3.4
hereof and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
"Hazardous Materials" means any chemical substances, pollutants,
contaminants, materials, or wastes, or combinations thereof, whether solid,
liquid or gaseous in nature, the presence of which requires or may require
investigation or remediation under any federal, state or local statute,
regulations, ordinance, order, action, policy or common law or which poses or
threatens to pose a hazard to the health or safety of persons on or about real
property affected by Borrower's or any of its Subsidiaries' activities,
including, without limitation, material (i) which is or becomes defined as a
"hazardous waste," "hazardous substance," "pollutant or contaminant" under any
Environmental Requirements, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C. section 9601
et seq.) or the Resource Conservation and
8
16
Recovery Act (42 U.S.C. section 6901 et seq.) or (ii) which contains gasoline,
diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls (PCBs),
asbestos, urea formaldehyde foam insulation or radon gas.
"IMC" means Innovative Medical Communications, Inc., a Texas corporation,
whose chief executive office is located at Two Lincoln Centre, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Indemnified Claims" means any and all claims (including, without
limitation, claims for recoupment or recovery of overpayments by a Payor),
demands, actions, causes of action, judgments, obligations, liabilities,
losses, damages and consequential damages, penalties, fines, costs, fees,
expenses and disbursements (including, without limitation, fees and expenses of
attorneys and other professional consultants and experts in connection with
investigation or defense) of every kind, known or unknown, existing or
hereafter arising, foreseeable or unforeseeable, which may be imposed upon,
threatened or asserted against, or incurred or paid by, any Indemnified Person
at any time and from time to time, because of, resulting from, in connection
with, or arising out of any transaction, act, omission, event or circumstance
in any way connected with the Loan Documents (including, without limitation,
enforcement of the Lenders' rights thereunder or defense of Agent's actions
thereunder), including, but not limited to, economic loss, property damage,
personal injury or death occurring in connection with, any act performed or
omitted to be performed under any Loan Document, any breach by Borrower, any
Guarantor or any Pledging Subsidiary of any representation, warranty, covenant,
agreement or condition contained in any Loan Document or any Event of Default
as defined in this Agreement. Indemnified Claims includes, without limitation,
Environmental Damages. Indemnified Claims does not include any claims arising
from the gross negligence or willful misconduct of an Indemnified Person.
"Indemnified Persons" collectively means Agent and each Lender, and their
respective officers, directors, shareholders, employees, agents, attorneys and
representatives, and any Person owned or controlled by, or which owns or
controls, or is under common control or is otherwise affiliated with, Agent or
any Lender, and any successor or assignee of Agent or any Lender.
"Interest Notice" means a notification by Borrower to Agent, in the form
attached hereto as Exhibit C, giving notice of Borrower's election and exercise
of an Interest Option, therein specifying the Interest Option selected, the
amount of the Facility Balance to bear interest at the rate selected and, if
the Adjusted LIBOR Rate is specified, the length of the applicable Interest
Period.
"Interest Option" means an option exercised by Borrower as provided by
Section 2.4 to designate any portion of the Facility Balance to accrue interest
according to the Adjusted Base Rate or the Adjusted LIBOR Rate.
"Interest Payment Date" means, with respect to the Base Rate Balance, the
first day of each January, April, July and October, and the Maturity Date, and,
with respect to the LIBOR Balance, the last day of each corresponding Interest
Period, provided that with respect to any portion of the LIBOR Balance with an
Interest Period in excess of three (3) months, Interest Payment Date shall also
include the first day following the last day of the third month of such
Interest Period.
9
17
"Interest Period" means, with respect to any LIBOR Balance, a period
commencing on the date specified in the applicable Interest Notice as the date
on which the principal amount of such LIBOR Balance begins to accrue interest
at the Adjusted LIBOR Rate (or, in the case of a successive Interest Period,
commencing on the Business Day following the last day of the immediately
preceding Interest Period), and ending one (1), two (2), three (3) or six (6)
months thereafter as Borrower shall elect in accordance with Section 2.4;
provided that (a) any Interest Period which would otherwise end on a day which
is not a LIBOR Business Day shall be extended to end on the next succeeding
LIBOR Business Day unless such day falls in the next succeeding calendar month
in which case the Interest Period shall end on the next preceding LIBOR
Business Day, and (b) any Interest Period which would otherwise end after the
Maturity Date shall instead end on the Maturity Date.
"Interest Recapture Amount" means, on any date, the amount, if any, by
which (i) the amount of all interest that would have accrued to such date on
the principal of the Facility Balance at the Contract Rate, without limitation
by the Maximum Rate, exceeds (ii) the aggregate amount of interest that
actually accrued on the Facility Balance to such date pursuant to the terms of
this Agreement.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Lender" means (i) each lending institution which is a party to this
Agreement as shown on the signature pages hereof, (ii) each Assignee that
hereafter becomes a party to this Agreement by execution of an Assignment and
Acceptance and (iii) each of the successors of any Person in clauses (i) and
(ii) preceding.
"Lender Facility Balance" for a Lender, at any time, means an amount equal
to the unpaid principal balance of Advances owing to such Lender at such time.
"Leverage Ratio" means, for any period, a ratio (i) the numerator of which
is Funded Debt as of such period end and (ii) the denominator of which is the
result of (a) EBITDA calculated for such period less (b) minority interests
calculated for such period.
"LIBOR Additional Costs" means such additional amount or amounts, if any,
as Agent or any Lender shall reasonably determine will compensate Agent or such
Lender for actual costs incurred by Agent or such Lender in maintaining
Adjusted LIBOR Rates on the LIBOR Balance, or any portion thereof, as a result
of any change, after the Closing Date, in any applicable law, rule or
regulation or in the interpretation or administration thereof, or the
compliance by Agent or such Lender with any request or directive from any
domestic or foreign governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) or by any
domestic or foreign court changing the basis of taxation of payments to Agent
or such Lender in respect of the LIBOR Balance or any other fees or amounts
payable under this Agreement (other than taxes imposed on all or any portion of
the overall net income of Agent or such Lender by the State of Texas or the
U.S. government), or imposition, modification or application of any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, credit extended by, or any other acquisition of funds for loans
by Agent or such Lender, or imposing on Agent or such Lender, as the case may
be, or on the London interbank Eurodollar market, any other condition affecting
this Agreement or the LIBOR Balance so as to increase the cost to Agent or such
Lender
10
18
in making or maintaining Adjusted LIBOR Rates with respect to the LIBOR Balance
or any portion thereof, respectively, or to reduce the amount of any sum
received or receivable by Agent or such Lender under this Agreement (whether of
principal, interest or otherwise), by an amount deemed by Agent or such Lender
to be material, but without duplication for the LIBOR Reserve Requirement.
"LIBOR Balance" means any portion of the Facility Balance that bears
interest at the Adjusted LIBOR Rate pursuant to the terms of this Agreement.
"LIBOR Business Day" means a day on which dealings in U.S. dollars are
carried out in the London interbank Eurodollar market.
"LIBOR Rate" means, with respect to each Interest Period, the rate of
interest per annum (determined as of 11:00 a.m. (London, England time) two (2)
LIBOR Business Days prior to the first day of such Interest Period and rounded
upward, if necessary, to the nearest one-one hundredth of one percent) at which
deposits in U.S. dollars are offered by the major London clearing banks, as
reported by ▇▇▇▇▇▇-▇▇▇▇▇▇ news service (or such other similar news reporting
service to which Agent may subscribe at the time such LIBOR Rate is
determined), in the London interbank Eurodollar market for a period of time
equal or comparable to such Interest Period and in an amount equal or
comparable to the principal amount of the LIBOR Balance to which such Interest
Period relates.
"LIBOR Rate Advance" means any Advance that bears interest based upon the
Adjusted LIBOR Rate.
"LIBOR Reserve Requirement" means, as of any day, that percentage
(expressed as a decimal fraction) which is in effect on such day, as provided
by the Board of Governors of the Federal Reserve System (or any successor
governmental body) for determining the reserve requirements (including, without
limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined
in Regulation D, or under any similar or successor regulation. For purposes of
this definition, any LIBOR Balances hereunder shall be deemed "Eurocurrency
liabilities" under Regulation D without benefit of or credit for prorations,
exemptions or offsets under Regulation D. Agent's determination of the LIBOR
Reserve Requirement shall be conclusive.
"Loan Documents" means this Agreement, the Revolving Notes, the Guarantees,
the Pledge Agreements and any other documents, agreements or instruments at any
time executed by Borrower, any Guarantor or any Pledging Subsidiary in
connection with any of the foregoing, and also includes any and all renewals,
restatements, extensions, modifications, supplements or amendments of any of
the foregoing.
"Material Adverse Effect" means (i) a materially adverse effect on the
business, assets, operations, prospects or condition, financial or otherwise,
of Borrower, or (ii) a materially adverse effect on the business, assets,
operations, prospects or condition, financial or otherwise, of any Guarantor
which, taken together with the financial condition and operations of Borrower
and its Subsidiaries as a whole, is material, or (iii) material impairment of
the ability of Borrower or any Guarantor to perform any material obligation
under the Loan Documents.
11
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"Material Subsidiary" means TOPS and any other Subsidiary of Borrower,
present or future, which at any time after the Closing Date has (i) total
assets in excess of $5,000,000, or (ii) gross revenue in excess of $5,000,000
during any twelve (12) month period, and "Material Subsidiaries" means all of
such Persons, collectively.
"Maturity Date" means the date which is the fifth anniversary of the
Closing Date.
"Maximum Rate" means the greater of (i) the "monthly ceiling" as referred
to and in effect from time to time under the provisions of Tex. Rev. Civ. Stat.
▇▇▇. art. 5069-1.04(c), as amended, or (ii) the maximum rate of interest
permitted from day to day by any other applicable state or federal law.
"Medicaid" means the federal-state medical assistance program established
under Title XIX of the Social Security Act, as amended, and administered by the
State of Texas, and all regulations, interpretations and instructions
thereunder, as the same may be amended from time to time.
"Medicare" means the federal Health Insurance for the Aged and Disabled
program established by Title XVIII of the Social Security Act, and all
regulations, interpretations and instructions thereunder, as the same may be
amended from time to time.
"Net Worth Adjustment" means, at any time, commencing with the fiscal
quarter ending June 30, 1997, the aggregate amount of the Net Worth Increase
determined as of such time.
"Net Worth Increase" means, for any period, an amount (not less than zero)
equal to fifty percent (50.0%) of net income (determined according to GAAP) for
such period, plus one hundred percent (100%) of the net proceeds received by
Borrower upon the issuance or sale of any shares of its Capital Stock.
"Obligations" means (i) all obligations and indebtedness now or hereafter
owing by Borrower under this Agreement or otherwise arising in connection with
this Agreement or any of the other Loan Documents, including, without
limitation, all loan repayment obligations, accrued interest and fees, costs
and expenses as provided by this Agreement or any of the other Loan Documents,
and any other amounts from time to time owing by Borrower to Agent or the
Lenders in connection therewith, (ii) any and all renewals and extensions of
the foregoing, or any part thereof and (iii) all obligations of Borrower for
losses, damages, expenses or any other liabilities of any kind that any of
Agent or the Lenders may suffer by reason of a breach by Borrower of any
obligation, covenant or undertaking with respect to the Loan Documents.
"Original Loan Agreement" means that certain Amended and Restated Loan and
Security Agreement dated effective December 31, 1995, among Borrower, Bank One
(in its capacity as "Administrative Lender" for itself and the other "Lenders"
party thereto) and the "Lenders" party thereto.
"Patient" means a natural person who is the recipient of medical care and
related services, or the sale or rental of equipment, inventory or other
supplies or merchandise in connection therewith, from a Provider.
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"Payor" means the U.S., the State of Texas or any other state (or any
governmental agency, intermediary, carrier or agent thereof, respectively), or
any insurance company, health maintenance organization, preferred provider
organization, health care plan or other commercial entity obligated to make
payment or reimbursement in respect of a Claim.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means any individual, corporation, limited liability company,
joint venture, general or limited partnership, trust, unincorporated
organization, governmental entity or agency or other similar entity.
"Plan" means (i) any "employee benefit plan," as defined in Section 3(3) of
ERISA, established or maintained by Borrower, any of its Subsidiaries or any of
their ERISA Affiliates now or during any of the preceding six years, and (ii)
any other plan established or maintained now or during any of the preceding six
years by any of Borrower, its Subsidiaries or their ERISA Affiliates for its
employees which is covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 of the IRC.
"Pledge Agreements" means the Borrower Pledge Agreement and the Pledging
Subsidiary Pledge Agreements, collectively, and "Pledge Agreement" means any of
such Pledge Agreements, individually.
"Pledging Subsidiary" means any Subsidiary of Borrower which is required to
execute a Pledge Agreement pursuant to the terms of this Agreement.
"Pledging Subsidiary Pledge Agreement" means each pledge and security
agreement executed or to be executed by a Subsidiary of Borrower which as of
the Closing Date or at any time thereafter is an owner of Capital Stock which
constitutes Collateral under this Agreement, granting to Agent for the ratable
benefit of the Lenders a continuing pledge, security interest and lien in and
to all such Capital Stock now or hereafter owned by such Person, in the form of
Exhibit G attached hereto, as such agreement may be renewed, extended,
modified, amended, restated or supplemented from time to time.
"Principal Office" means the principal office of Agent which is presently
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Prohibited Transaction" means any transaction described in Section 406 of
ERISA which is not exempt under Section 408 of ERISA and any transaction
described in Section 4975(c) of the IRC which is not exempt under Section
4974(c)(2) or Section 4975(d) of the IRC, or by the transitional rules of
Section 414(c) and Section 2003(c) of ERISA.
"Pro Rata Percentage" means, for any Lender, a percentage determined by
dividing the Lender Facility Balance of such Lender by the Facility Balance.
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"Provider" means any Person who lawfully (i) provides medical care and
related services to or for a Patient or (ii) provides for the sale, rental or
other use of equipment, inventory or other supplies or merchandise in
connection with medical care and related services provided to a Patient.
"Provider" includes Borrower and also includes, without limitation, TOPA and
any other Person with whom Borrower is party to a Service Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System in effect as of the Closing Date and shall include any
amendment to such regulation or successor or other regulation relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Reportable Event" means (i) any transaction described in Section 406 of
ERISA or the regulations thereunder for which the 30-day notice is not waived
by said regulations, (ii) a withdrawal from a plan described in Section 4063 or
Section 4064 of ERISA, or (iii) a cessation of operations described in Section
4062(f) of ERISA.
"Research" means PRN Research, Inc., a Texas corporation and wholly owned
Subsidiary of Borrower whose chief executive office is located at Two Lincoln
Centre, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
"Revolving Note" means any promissory note executed by Borrower in favor of
a Lender in the form of Exhibit A attached hereto, and any and all renewals,
extensions, amendments, modifications, replacements, restatements or
supplements thereof and all substitutions therefor (including any promissory
note executed by Borrower pursuant to Section 2.18), and "Revolving Notes"
means all of such promissory notes, collectively.
"Service Agreement" means an agreement between Borrower and a Provider, in
form and substance reasonably satisfactory to Agent, pursuant to which Borrower
lawfully agrees to purchase from such Provider, and such Provider lawfully
agrees to sell, transfer and assign to Borrower, all of such Provider's right,
title and interest in accounts, receivables and Claims from time to time owned
by and owing to such Provider, and all related security agreements, financing
statements and other agreements incident thereto. "Service Agreement"
includes, without limitation, the TOPA Service Agreement, and any amendment,
modification, renewal or extension of any Service Agreement.
"Subordinated Debt" means all indebtedness of Borrower or any of Borrower's
Subsidiaries which by its terms is subordinate in right of payment and claim in
favor of Lender pursuant to an Affiliate Subordination Agreement or other
agreement in form and substance satisfactory to Agent.
"Subsidiary" means, with respect to any Person, any corporation or other
entity at any time appropriate for inclusion in the consolidated financial
statements of such Person determined according to GAAP, including, without
limitation, any Person which would be a "subsidiary" of any Subsidiary
hereunder, and "Subsidiaries" means all such Persons, collectively.
"TOPA" means Texas Oncology, P.A., a Texas professional association, and
its permitted successors and assigns.
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"TOPA Service Agreement" means the certain Service Agreement dated October
1, 1993, between Borrower and TOPA, as amended, and also includes any renewal,
extension, modification, amendment, restatement or supplement thereof.
"TOPS" means TOPS Pharmacy Services, Inc., a Texas corporation and wholly
owned Subsidiary of Borrower, whose chief executive office is located at Two
Lincoln Centre, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Type" means any type of Advance (i.e. a Base Rate Advance or a LIBOR Rate
Advance).
"Unused Facility Commitment Fee Rate" means, with respect to the fees
payable by Borrower pursuant to Section 2.12(b), the percentage corresponding
to Borrower's Leverage Ratio, determined for each period by reference to the
financial statements delivered by Borrower in accordance with Section 6.1
during such period as set forth in the table below:
========================================================================================
Leverage Ratio Commitment
-------------- Fee
----------
========================================================================================
Less than or equal to 1.00 to 1.00 0.225%
----------------------------------------------------------------------------------------
Greater than 1.00 to 1.00, but less than or equal to 1.50 to 1.00 0.275%
----------------------------------------------------------------------------------------
Greater than 1.50 to 1.00, but less than or equal to 2.00 to 1.00 0.325%
----------------------------------------------------------------------------------------
Greater than 2.00 to 1.00, but less than or equal to 2.50 to 1.00 0.375%
----------------------------------------------------------------------------------------
Greater than 2.50 to 1.00 0.400%
========================================================================================
"U.S." means the United States of America.
"Voting Stock" means sufficient shares or other ownership interests of
Capital Stock of a Person (however designated) having ordinary voting power for
the election of a majority of the members of its board of directors or other
governing body (not including shares having such power only in the event of a
contingency).
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the Code, unless otherwise defined herein,
shall have the meanings specified in the Code.
Section 1.3 Accounting Terms and Determinations.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP consistent with such accounting
principles applied in the preparation
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of the audited financial statements referred to in Section 6.1. All
financial information delivered to Agent pursuant to Section 6.1 shall be
prepared in accordance with GAAP applied on a basis consistent with such
accounting principles applied in the preparation of the audited financial
statements referred to in Section 6.1(a).
(b) Borrower shall deliver to Agent at the same time as the delivery
of any annual or quarterly financial statement under Section 6.1 (i) a
description, in reasonable detail, of any material variation between the
application of GAAP employed in the preparation of the immediately prior
annual or quarterly financial statements and (ii) reasonable estimates of
the difference between such statements arising as a consequence thereof.
Section 1.4 Financial Covenants and Reporting. Except as expressly
provided otherwise, the financial covenants contained in Article 8 shall be
calculated on a consolidated basis for Borrower and its Subsidiaries in
accordance with GAAP consistent with such accounting principles applied in the
preparation of the audited financial statements referred to in Section 6.1.
ARTICLE 2
Facility
Section 2.1 Advances. Subject to the terms, conditions and other
provisions of this Agreement, each Lender severally agrees to make one or more
revolving loans to Borrower from time to time during the Funding Period,
provided, however, that the Lender Facility Balance owing to any Lender at any
time shall not exceed an amount equal to the lesser of such Lender's Committed
Maximum or its Committed Percentage of the Credit Limit, and provided further,
that the Facility Balance shall not at any time exceed an amount equal to the
lesser of (a) the Credit Limit or (b) the Commitment Availability. Subject to
the foregoing limitations and the other terms and conditions of this Agreement,
Borrower may borrow, repay and reborrow the principal under the Facility from
time to time during the Funding Period. No Advances shall be made after
expiration of the Funding Period.
Section 2.2 Revolving Notes. Advances made by each Lender shall be
evidenced by a single Revolving Note dated the Closing Date, or the date of the
most recent Assignment and Acceptance applicable to such Lender, payable to the
order of such Lender in a principal amount equal to such Lender's Committed
Maximum and otherwise duly completed. Each Lender is hereby authorized by
Borrower to endorse on a schedule (or a continuation thereof) attached to the
Revolving Note of such Lender, to the extent applicable, the date, amount and
Type of and the Interest Period for each Advance made by such Lender to
Borrower hereunder and the amount of each payment or prepayment of principal of
such Advances received by such Lender, provided that any failure by such Lender
to make any such endorsement shall not affect the obligations of Borrower under
such Revolving Note or this Agreement in respect of such Advances.
Section 2.3 Interest. Interest shall accrue on the Facility Balance from
day to day outstanding at a rate equal to the lesser of the Contract Rate or
the Maximum Rate. Each change in the Maximum Rate or the Base Rate shall
become effective without prior notice automatically as of the opening of
business on the Business Day of such change. Unpaid principal, if any,
remaining
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unpaid on the Maturity Date shall accrue interest from and after such date at
an annual rate equal to the Maximum Rate.
Section 2.4 Interest Rate Option. Subject to the provisions hereof,
Borrower shall have the option to have designated portions of the Facility
Balance bear interest at a Contract Rate determined according to the Adjusted
Base Rate or the Adjusted LIBOR Rate, provided however, that any portion of the
Facility Balance designated to bear interest at a Contract Rate determined
according to the Adjusted LIBOR Rate for any particular Interest Period shall
not be for less than $1,000,000 of unpaid principal or an integral multiple
thereof, and no more than six (6) Interest Periods shall be allowed to exist at
any one time. Any such option shall be exercised in the manner provided below:
(a) At Time of Borrowing. Contemporaneously with each request for an
Advance, Borrower shall give Agent an Interest Notice indicating the
Interest Option selected with respect to the principal balance of such
Advance. If the required Interest Notice shall not have been timely
received by Agent, Borrower shall be deemed to have selected a rate based
on the Adjusted Base Rate and to have given Agent notice of such selection.
(b) At Expiration of Interest Periods. Not less than two (2) LIBOR
Business Days prior to the termination of any Interest Period for any LIBOR
Rate Advance, Borrower shall give Agent an Interest Notice indicating the
Interest Option to be applicable to such LIBOR Rate Advance upon the
expiration of such Interest Period if Borrower elects to have such LIBOR
Rate Advance continued as part of the LIBOR Balance. If the required
Interest Notice shall not have been timely received by Agent prior to the
expiration of such Interest Period, Borrower shall be deemed to have
selected a rate based upon the Adjusted Base Rate to be applicable to such
LIBOR Rate Advance upon the expiration of such Interest Period and to have
given Agent notice of such selection.
(c) Conversion From Adjusted Base Rate. Subject to the other
provisions of this Agreement, during any period in which any Base Rate
Balance is in existence, Borrower shall have the right, on any LIBOR
Business Day, to convert all or a portion thereof to a LIBOR Rate Advance
by giving Agent an Interest Notice of such conversion not less than two (2)
LIBOR Business Days prior to the date of such conversion.
Agent, at its option, may accept telephonic instructions as an Interest Notice
(provided that Borrower agrees that any such telephonic request shall promptly
be confirmed to Agent by Borrower delivering a written Interest Notice to
Agent) and Agent hereby is authorized and directed to honor all telephonic or
other oral Interest Notices from any Person authorized by Borrower to request
an Advance. Borrower agrees to indemnify and hold Agent and the Lenders
harmless from any loss or liability incurred by any of them in connection with
honoring any telephonic or other oral Interest Notices. All written Interest
Notices are effective only upon receipt by Agent. Each Interest Notice,
whether written or oral, shall be irrevocable and binding upon Borrower.
Section 2.5 Payments. Borrower shall pay to Agent for the account of each
Lender the outstanding principal of the Facility Balance and the accrued
interest under the Facility as follows:
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(a) Accrued interest shall be payable in arrears on each Interest
Payment Date.
(b) Principal outstanding at the expiration of the Funding Period
shall be due and payable, and shall be repaid in full, on the Maturity
Date.
(c) Borrower shall have the right to prepay the Obligations in full at
any time without penalty. Borrower's right to prepay the Obligations is
subject to each of the following: (i) not less than one (1) Business Day
prior to any prepayment of the Base Rate Balance and two (2) LIBOR Business
Days prior to any prepayment of the LIBOR Balance not corresponding with
the last day of an Interest Period, Borrower shall give Agent written or
oral notice indicating whether such prepayment is to be applied to the Base
Rate Balance or a particular portion of the LIBOR Balance; (ii) each
prepayment of principal under the Revolving Notes shall be in an amount
equal to $1,000,000 or an integral multiple of $1,000,000 in excess thereof
(or any lesser amount if such amount is equal to the remaining balance owed
under the Facility); (iii) if the notice referenced in clause (i) is not
timely received by Agent, Borrower shall be deemed to have selected to
prepay the Base Rate Balance and, if any sums remain after satisfying all
of the Base Rate Balance, the remaining sums shall be applied to any
portion of the LIBOR Balance that Agent determines in its sole discretion;
(iv) Borrower agrees to indemnify and hold Agent harmless from any loss or
liability incurred by Agent in connection with honoring telephonic or other
oral notices indicating how a prepayment is to be applied; and (v) if
Borrower makes any payment of principal with respect to any portion of the
LIBOR Balance on any day prior to the last day of the corresponding
Interest Period, Borrower shall pay Agent, on demand, the Consequential
Loss incurred as a result of the timing of such payment (a certificate of
Agent delivered to Borrower with such demand and setting forth the basis
for the determination of the Consequential Loss shall, in the absence of
manifest error, be conclusive and binding as to such determination and
amount).
(d) If on each Interest Payment Date or any other date on which
interest payments are required hereunder, the Lenders do not receive
interest on the Facility Balance computed at the Contract Rate because the
Contract Rate exceeds or has exceeded the Maximum Rate, then upon the
written demand of Agent, Borrower shall pay to Agent for the account of the
Lenders, in addition to the interest otherwise required to be paid
hereunder, on each Interest Payment Date after such demand, the Interest
Recapture Amount (calculated as of such later Interest Payment Date);
provided that in no event shall Borrower be required to pay, for any
period, interest at a rate exceeding the Maximum Rate effective during such
period.
Section 2.6 Mandatory Prepayments. Borrower shall make a prepayment to
Agent in respect of the Obligations as follows:
(a) Within one (1) Business Day after the occurrence of the Facility
Balance exceeding an amount equal to the lesser of (i) the Credit Limit or
(ii) the Commitment Availability, Borrower shall pay to Agent the amount of
such excess;
(b) Within five (5) Business Days, Borrower shall pay to Agent, for
the benefit of the Lenders, the net proceeds of any sale of real or
personal property of Borrower or any
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Subsidiary (including, without limitation, the sale of (i) any Cancer
Center or (ii) the Capital Stock or all or substantially all of the assets
of any Subsidiary), excluding sales of assets in the ordinary course of
Borrower's and its Subsidiaries' business; and
(c) Within five (5) Business Days, Borrower shall pay to Agent Agent,
for the benefit of the Lenders, the net proceeds of (i) any issuance or
sale of Capital Stock of Borrower or (ii) any agreement with respect to
issuing debt securities or any other loan agreement entered into by
Borrower pursuant to which Borrower will be the debtor thereunder, provided
such new indebtedness is not debt issued pursuant to Section 7.2 or Section
7.6.
Section 2.7 Termination of Facility. Subject to the provisions of Article
10, the Facility shall terminate and all outstanding principal, unpaid accrued
interest and other obligations in respect thereof shall be due and payable in
full on the Maturity Date. Borrower shall have the right to terminate or
reduce in part the unused portion of the aggregate Committed Maximum at any
time and from time to time, provided that (i) Borrower shall give notice to
Agent of each such termination or reduction not less than three (3) Business
Days prior to the effective date of such termination or reduction and (ii) each
partial reduction or termination shall be in an aggregate amount at least equal
to $2,000,000 or an integral of $2,000,000 in excess thereof. The aggregate
Committed Maximum may not be reinstated after it has been terminated or
reduced.
Section 2.8 Procedure for Borrowing and Disbursement.
(a) In order to receive an Advance, Borrower shall, not later than
11:00 a.m. (Dallas, Texas time) on any day specified in this Section
2.8(a), notify Agent of a request for an Advance by means of an Interest
Notice or other notice acceptable to Agent, therein designating the amount
of the Advance requested and the date on which funding is requested. Each
request for an Advance shall be delivered to Agent (i) in the case of an
Advance designated to accrue interest at a Contract Rate according to the
Adjusted Base Rate, at least one (1) Business Day prior to the Business Day
on which funding of such Advance is requested and (ii) in the case of an
Advance designated to accrue interest at a Contract Rate according to the
Adjusted LIBOR Rate, at least two (2) LIBOR Business Days prior to the
Business Day on which funding of such Advance is requested. Such notice
may be made in writing, by telephone or by telecopy or other electronic
means and, unless otherwise agreed by Agent, shall be irrevocable upon
receipt by Agent. Each notice must be supported by a Compliance
Certificate which shall have been timely delivered to Agent as required by
Section 6.1(d).
(b) Agent shall promptly notify the Lenders of each notice received
from Borrower under Section 2.8(a). Not later than 10:00 a.m. (Dallas,
Texas time) on the date any Advance is to be made, each Lender shall
deliver to Agent, in accordance with its instructions, immediately
available funds in an amount equal to such Lender's Committed Percentage of
such Advance.
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(c) Subject to the terms and conditions of this Agreement, Agent shall
fund the requested Advance on behalf of the Lenders by disbursing to
Borrower the respective amounts delivered to Agent by the Lenders in
accordance with the terms of this Agreement.
Section 2.9 Manner of Payments; Application.
(a) All payments of principal, accrued interest, fees and other
amounts payable by Borrower under this Agreement and the other Loan
Documents shall be made to Agent at Agent's Principal Office for the
account of Agent and each Lender and in immediately available funds,
without setoff, deduction or counterclaim, on the date such payment is due.
Payments received on any day that is not a Business Day or after 1:00 p.m.
(Dallas, Texas time) on any Business Day shall be deemed made as of the
next succeeding Business Day.
(b) If less than the full amount payable by Borrower at any time is
received by Agent, Agent shall apply such amounts in the following order of
priority: (i) payment of expenses of Agent incurred on behalf of the
Lenders then due and payable, if any, (ii) payment of any fees, costs or
expenses for which Borrower is obligated under this Agreement (including,
without limitation, commitment fees, unused commitment fees or
administration fees due and payable under Section 2.12 and fees, costs and
expenses as provided by Section 12.9), (iii) payment of accrued interest
due and payable in respect of the Facility Balance, and (iv) payment of
principal due and payable in respect of the Facility Balance.
Notwithstanding the foregoing, during the existence and continuation of an
Event of Default, Agent may apply such amounts to the Obligations in such
order and manner as Agent may determine in its sole discretion subject to
Section 2.15.
(c) Whenever any payment under any of the Loan Documents shall be
stated to be due on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day. Any such extension of time for
payment shall be included in computing accrued interest or other amounts
due in connection with such payment.
(d) Collected funds received by Agent for the account of the Lenders
in respect of amounts due under the Loan Documents shall be delivered
promptly to the Lenders in immediately available funds by depositing same
to each such Lender's account with Agent or otherwise by mutual agreement
between Agent and each such Lender, provided that any such amounts
otherwise payable to any Lender that is in default of its obligation to
make funds available to Agent under Section 2.8(b) shall instead be
retained by Agent and applied to such obligations.
Section 2.10 Use of Proceeds. The initial Advance under the Facility
shall be used to renew and refinance the "Obligations" owing by Borrower under
the Original Loan Agreement, which initial Advance shall be deemed allocated
among the Lenders hereunder pro rata in accordance with their respective
Committed Percentage (and the proceeds of such Advance shall be paid to the
Lenders to whom such "Obligations" are owing to the extent necessary to achieve
such allocation). All proceeds of Advances after the initial Advance described
in this Section shall be used to finance Borrower's continuing operations,
including, equipment and real property purchases for Cancer Centers,
acquisitions permitted pursuant to Section 7.5, the development of oncology
treatment centers and
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practices and working capital for Borrower's general corporate purposes.
Proceeds of all such Advances shall be disbursed as directed by Borrower. None
of the proceeds of any Advance may be used by Borrower (i) to purchase or carry
any "margin stock" (as such term is defined in regulations of the Board of
Governors of the Federal Reserve System) or to acquire any security in any
transaction that is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended or (ii) for any purpose not directly related to the
development, ownership, management or operation of Cancer Centers and oncology
treatment centers and practices or the operations of Borrower in connection
with such operations.
Section 2.11 Reimbursements to the Lenders. In the event any Lender
shall sustain or incur any loss or reasonable expenses as a result of failure
by Borrower to borrow any Advance after having given notice of a request for
such Advance under Section 2.8(a) (whether by reason of election by Borrower
not to proceed or failure to satisfy any conditions required by Article 4),
Borrower agrees to pay to Agent for the benefit of such Lender, upon demand by
such Lender, an amount sufficient to compensate such Lender for such losses and
expenses. At the request of Borrower, such Lender shall provide a certificate
itemizing such losses and expenses.
Section 2.12 Facility Fees. Subject to Section 12.7, in consideration
of the Facility, Borrower agrees to pay:
(a) To Agent, for the account of the Lenders, an unused commitment fee
determined by multiplying the Unused Facility Commitment Fee Rate by the
amount by which the Credit Limit exceeds the average daily Facility
Balance, calculated for each complete fiscal quarter of Borrower (or
portion thereof beginning on the Contract Date or ending on the Maturity
Date) during the Contract Term and payable in arrears on the first day of
each January, April, July and October, and on the Maturity Date;
(b) To Agent, for the account of the Bank One as Agent and a Lender
the fees specified in the fee letter agreement between Agent and Borrower
dated April 4, 1997, which fees shall be payable in such amounts and on
such dates as are specified therein; and
(c) To each other Lender for its own account the fees (if any)
specified in any agreement between such Lender and Borrower, which fees
shall be payable in such amounts and on such dates as are specified in such
agreement.
Section 2.13 Funding/Booking Advances. Each Lender may book amounts in
respect of Advances made by such Lender at any office or branch office of such
Lender as such Lender shall determine in its discretion.
Section 2.14 Pro Rata Treatment Among the Lenders. Except to the
extent otherwise provided in this Agreement: (i) each Advance shall be made pro
rata among the Lenders according to their respective Committed Percentage; (ii)
all payments and prepayments of principal, interest and other amounts made by
Borrower under this Agreement and the other Loan Documents received by Agent
shall be for the account of the Lenders in accordance with their respective Pro
Rata Percentage (or in the event the Facility Balance is zero, the Committed
Percentage) as of the time of such payment or prepayment; (iii) the conversion
of one Type of Advance to another Type of Advance
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(other than conversions provided for by Section 2.17) and the continuation of
an Advance as the same Type of Advance shall be made pro rata among the Lenders
according to the amounts of their respective Committed Percentage; (iv)
Interest Periods for Advances of a particular Type shall be allocated among the
Lenders pro rata according to their respective Committed Percentages.
Section 2.15 Sharing of Payments. Any Lender that obtains any payment
of principal, interest or other amounts on the Obligations in excess of its Pro
Rata Percentage (or in the event the Facility Balance is zero, the Committed
Percentage) of all payments made by Borrower with respect to the Obligations
(whether such payment is received voluntarily or involuntarily, or due to the
exercise of any right of setoff, banker's lien, counterclaim or similar right,
or otherwise) shall hold such excess in trust for the benefit of all of the
other Lenders, and shall promptly deliver such excess amount to Agent for the
benefit of the other Lenders. Upon receipt of any such excess amount, Agent
shall distribute such amount ratably among the other Lenders to the end that
all such payments made by Borrower shall be shared among the Lenders according
to each Lender's respective Pro Rata Percentage (or in the event the Facility
Balance is zero, the Committed Percentage). Nothing contained herein shall
require any Lender to exercise any right or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right of
setoff, banker's lien, counterclaim or similar right with respect to any other
indebtedness, liability or obligation of Borrower.
Section 2.16 Non-Receipt of Funds By Agent. Unless Agent shall have
been notified in writing by a Lender that such Lender does not intend to make
its Committed Percentage of an Advance available to Agent as required by
Section 2.8(b) (which notice shall be effective only upon its actual receipt by
Agent in such manner and at such time as affords Agent a reasonable opportunity
to act on such notice prior to Agent's disbursement of such Advance), Agent may
assume (with no requirement to make or verify such assumption) that such Lender
has made such amount available to Agent as required by Section 2.8(b), and may
in reliance upon such assumption (but without any obligation to do so) disburse
such Advance to Borrower, including the applicable amount on behalf of such
Lender corresponding to its Committed Percentage. If such amount is not in
fact made available to Agent by such Lender prior to the time Agent disburses
such Advance to Borrower then, until such amount is received by Agent from such
Lender, such amount shall be payable to Agent by Borrower and such Lender,
jointly and severally, on demand, together with interest thereon for each day
during the period commencing on the date such amount was disbursed to Borrower
and continuing until such amount is paid in full to Agent, at a per annum rate
equal to (i) the rate prescribed by Section 2.3 in the case of Borrower and
(ii) the Federal Funds Rate in the case of such Lender, and in each case also
together with all losses, costs or expenses, if any, incurred by Agent as a
result of failure of such Lender to perform its obligations under Section
2.8(b). No Lender shall be liable for any other Lender's failure to fund an
Advance.
Section 2.17 Special Provisions for LIBOR Balance Pricing.
(a) Inadequacy of LIBOR Balance Pricing. If Agent determines that, by
reason of circumstances affecting the interbank Eurodollar market
generally, deposits in U.S. dollars (in the applicable amounts) are not
being offered to U.S. financial institutions in the interbank Eurodollar
market for an Interest Period requested by Borrower, or that the rate at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to Agent or the Lenders of making a LIBOR Rate Advance or
maintaining a LIBOR Balance for the
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applicable Interest Period, Agent shall give notice thereof to Borrower and
the Lenders, and the Lenders shall not be required to fund any Advance as a
LIBOR Rate Advance. Until Agent notifies Borrower and the Lenders that the
circumstances giving rise to such suspension no longer exist (i) the right
of Borrower to select an Interest Option based upon the LIBOR Rate shall be
suspended, and (ii) Borrower shall convert each LIBOR Rate Advance to the
Base Rate Balance in accordance with the provisions hereof on the last day
of the then-current Interest Period applicable to each such LIBOR Rate
Advance.
(b) Illegality. Notwithstanding any other provision of this
Agreement, if the adoption of any applicable law, rule or regulation, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Lender with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency shall make
it unlawful or impossible for any Lender to make a LIBOR Rate Advance or
maintain a LIBOR Balance, such Lender shall so notify Borrower and Agent.
Upon receipt of such notice, Borrower shall convert each LIBOR Rate Advance
outstanding to such Lender to the Base Rate Balance, on either (i) the last
day of the then-current Interest Period applicable to each such LIBOR Rate
Advance if such Lender may lawfully continue to maintain and fund the LIBOR
Balance to such day, or (ii) immediately, if such Lender may not lawfully
continue to maintain the LIBOR Balance to such day.
(c) Additional Costs. Borrower agrees to pay to Agent or any Lender
all LIBOR Additional Costs incurred by Agent or such Lender within ten (10)
days of receipt by Borrower from Agent or such Lender of a statement
setting forth the amount or amounts due and the basis for the determination
from time to time of such amount or amounts, which statement shall be
conclusive and binding upon Borrower absent manifest error. Failure on the
part of Agent or any Lender to demand compensation for any LIBOR Additional
Costs in any Interest Period shall not constitute a waiver of Agent's or
such Lender's right to demand compensation for any LIBOR Additional Costs
incurred during any such Interest Period or in any other subsequent or
prior Interest Period.
(d) Capital Adequacy. If at any time after the Closing Date, and from
time to time, Agent or any Lender determines that the adoption,
implementation or modification of any applicable law, rule or regulation
regarding taxation, required levels of reserves, deposits, insurance or
capital (including any allocation of capital requirements or conditions),
or similar requirements, or any interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with
the interpretation, administration or compliance of Agent or any Lender
with any of such requirements, has or would have the effect of (i)
increasing Agent's or any Lender's costs relating to the obligation
hereunder, or (ii) reducing the yield or rate of return of any Lender on
the Facility Balance to a level below that which such Lender could have
achieved but for the adoption, implementation or modification of any such
requirements, then (subject to Section 12.7) within fifteen (15) days of
any request by Agent or such Lender (with a copy to Agent), Borrower shall
pay to Agent, for the benefit of such Lender, such additional amount or
amounts as (in such Lender's sole judgment, after good faith and reasonable
computation) will compensate such Lender for such
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increase in costs or reduction in yield or rate of return. No failure by
Agent or Lender to immediately demand payment of any additional amounts
payable under this Section shall constitute a waiver of any right to demand
payment of such amount or amounts at any subsequent time. A certificate of
such Lender claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error, provided that the determination thereof is made on a
reasonable basis. In determining such amount or amounts, such Lender may
use any reasonable averaging and attribution methods. Nothing herein
contained shall be construed or so operate as to require Borrower to pay
any interest, fees, costs or charges in excess of the Maximum Rate.
Section 2.18 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Borrower nor any Guarantor may assign or transfer any of
their rights or obligations hereunder without the prior written consent of
Agent and the Lenders.
(a) Each of Borrower, Agent and the Lenders agree that any Lender, as
an Assigning Lender, may at any time assign to one or more Eligible
Assignees, as Assignees, all or a ratable portion of all of the Assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents with the prior written consent of Borrower (such consent to not
be unreasonably withheld) and Agent (such consent to not be unreasonably
withheld) and, provided that no consent shall be necessary if an Event of
Default exists at the time of such assignment) and payment by Assignee to
Agent, for its own account, of all out-of-pocket costs or expenses incurred
by Agent in connection with such assignment (including, without limitation,
attorneys' fees incurred in connection with negotiation, documentation and
closing same) plus a processing fee in the amount of $5,000; provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of the Assigning Lender's rights and obligations under
this Agreement and the other Loan Documents, (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this Agreement
and the other Loan Documents, the amount of the Committed Maximum of the
Assigning Lender being assigned pursuant to any such assignment (determined
as of the effective date of such assignment) shall in no event be less than
$10,000,000 and (iii) the Assigning Lender and the Assignee shall execute
and deliver to Agent, for its acceptance and recording, an Assignment and
Acceptance, together with the Assigning Lender's Revolving Note subject to
such assignment and the referenced processing fee. Any consent of Borrower
or Agent required in the foregoing sentence of this Section 2.18(a) shall
not be required if: (1) such assignment is to an Affiliate of the Assigning
Lender and otherwise complies with the terms and conditions hereof; or (2)
an Event of Default under the terms of this Agreement has occurred and is
continuing at the time of such assignment which otherwise complies with the
terms and conditions hereof. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment
and Acceptance (which effective date shall be at least five (5) Business
Days after the execution thereof or, if so specified in such Assignment and
Acceptance, the date of acceptance thereof by Agent), (A) the Assignee
thereunder shall be a party hereto as a "Lender" and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (B) the Assigning Lender
thereunder shall, to the extent that rights and
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obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of a
Lender's rights and obligations under the Loan Documents, such Assigning
Lender shall cease to be a party thereto, provided that the Assigning
Lender's rights under Article 2, Article 11 and Article 12 accrued through
the effective date of the Assignment and Acceptance shall continue).
(b) By executing and delivering an Assignment and Acceptance, the
Assigning Lender and the Assignee thereunder confirm to and agree with each
other and with Agent and each other Lender as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
the Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other
instrument or document furnished pursuant thereto; (ii) such Assigning
Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition or results of operation of
Borrower, any Guarantor or any of their Subsidiaries or the performance or
observance by Borrower, any Guarantor or any Pledging Subsidiary of its
obligations under the Loan Documents; (iii) such Assignee confirms that it
has received a copy of the Loan Documents, together with copies of the
latest financial statements delivered to Agent hereunder and such other
documents and information as it has deemed appropriate in order make its
own independent credit analysis and decision to enter into such Assignment
and Acceptance; (iv) such Assignee will, independently and without reliance
upon Agent or such Assigning Lender, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents; (v) such Assignee
appoints and authorizes Agent to take such action on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as
are delegated to Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; (vi) such Assignee agrees that
it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender; and (vii) such Assignee represents and confirms that it is an
Eligible Assignee.
(c) Agent shall maintain at its Principal Office 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
Committed Percentage and Committed Maximum of, and principal amount of the
Facility Balance owing to, each Lender from time to time. The entries in
such register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower, Agent and the Lenders may treat each Person
whose name is recorded in such register as a Lender hereunder for all
purposes under the Loan Documents. Such register shall be available for
inspection by Borrower or any Lender at any reasonable time, and from time
to time, upon reasonable prior notice, and Agent shall deliver a photocopy
of such register to any Lender from time to time upon the request of such
Lender.
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(d) Upon its receipt of an Assignment and Acceptance executed by the
Assigning Lender and the Assignee, representing that it is an Eligible
Assignee, together with the Revolving Note subject to such Assignment and
Acceptance and full payment of all out-of-pocket costs and expenses and the
processing fee tendered by the Assigning Lender and Assignee as herein
provided, Agent shall, if such Assignee is acceptable to Agent and such
Assignment and Acceptance has been properly completed and is in the form
prescribed by this Agreement, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein and (iii) give prompt written
notice thereof to Borrower. Promptly upon request of Agent and in any
event within five (5) Business Days after its receipt of such notice
Borrower, at its expense, shall execute and deliver to Agent, in exchange
for the surrendered Revolving Note, a new promissory note payable to the
order of the Assignee in an amount equal to the Committed Maximum assumed
by the Assignee pursuant to such Assignment and Acceptance and, if the
Assigning Lender has retained a portion of the Facility Balance, a new
promissory note payable to the order of the Assigning Lender in an amount
equal to the Committed Maximum retained by the Assigning Lender (each such
promissory note shall constitute a "Revolving Note" for purposes of the
Loan Documents). Such new Revolving Notes shall be in an aggregate face
amount of the surrendered Revolving Note, shall re-evidence the
indebtedness, liabilities and obligations previously evidenced by the
surrendered Revolving Note, shall be dated the effective date of such
Assignment and Acceptance, and shall otherwise be in the form of Exhibit A
hereto.
(e) Notwithstanding the requirements of clause (d) above, if Agent
shall be required by law to deduct and withhold taxes or other charges
imposed by any jurisdiction from any amounts payable to any Lender with
respect to the Facility Balance because such Lender is not an Exempt
Person, Agent shall be entitled to do so, with all such withheld amounts
nevertheless being deemed paid to such Lender. Each Lender agrees to
indemnify Agent against, defend and hold Agent harmless from any such
taxes, charges, interest, penalties and attorneys' fees arising from any
failure of Agent to deduct and withhold any such taxes or charges from
payments made to such Lender in reliance upon any representation or
document made or provided by such Lender to Agent, it being agreed that
Agent shall be absolutely and unconditionally entitled to accept any such
representation or document as being true and correct in all respects and to
fully rely thereon without any obligation or responsibility to investigate
the same. Each Lender party to this Agreement as of the Closing Date
represents to Agent that it is an Exempt Person and that Agent is not
obligated under applicable law to deduct and withhold any taxes or charges
on any sums paid to such Lender pursuant to this Agreement. Each Lender
(including any Assignee that becomes a Lender after the Closing Date)
agrees that upon request by Agent at any time it shall deliver to Agent
evidence reasonably satisfactory to Agent substantiating that such Lender
is an Exempt Person and that Agent is not obligated under applicable law to
deduct or withhold taxes or other charges on sums paid to such Lender with
respect to the Facility Balance or otherwise.
(f) Any Lender may sell participations to one or more banks or other
institutions in or to all or a portion of its rights under this Agreement
and the other Loan Documents, provided, however, that (i) such Lender's
obligations under this Agreement and the other Loan Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to Borrower for
the performance of such obligations, (iii) such Lender shall remain the
holder
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of its Revolving Note for all purposes, (iv) each of Borrower, the
Guarantors and the Pledging Subsidiaries shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v) such
Lender shall not sell a participation that conveys to the participant the
right to vote or give or withhold consents under this Agreement or any
other Loan Document, other than (if and to the extent that such Lender so
agrees) the right to vote upon or consent to (A) any increase of the
aggregate Committed Maximum of the Lenders, (B) any change in the rate of
interest to be paid on the Facility Balance or the terms of payment of
interest on the Facility Balance, (C) any change in the Maturity Date, and
(D) any release of Borrower, any Guarantor or any Pledging Subsidiary from
its liability and obligations under the Loan Documents to which it is a
party.
(g) Any Lender may assign and pledge the Revolving Note held by it to
any Federal Reserve lender or the U.S. Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
lender; provided that any payment made by Borrower for the benefit of such
assigning and/or pledging Lender in accordance with the terms of this
Agreement and the other Loan Documents shall satisfy Borrower's obligations
under this Agreement and the other Loan Documents in respect thereof to the
extent of such payment. No such assignment and/or pledge shall release the
assigning and/or pledging Lender from its obligations hereunder.
Section 2.19 Computations. Interest and fees payable by Borrower
hereunder and under the other Loan Documents shall be computed on the basis of
a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) occurring in the period for which payable
unless in the case of interest such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be. For the purpose of calculating the Facility
Balance in order to determine the Availability, payments of principal shall be
deemed to be paid by 1:00 p.m. (Dallas, Texas time) on the Business Day that
such payment is actually received by Agent, provided, however, for the purpose
of calculating interest payable by Borrower with respect to the Facility
Balance, payments from any source other than a wire transfer of immediately
available funds shall be deemed to be applied upon receipt of such payments in
good funds by Agent, and the amount of interest payable will be adjusted by
Agent from time to time accordingly, unless such calculation would result in an
interest rate in excess of the Maximum Rate. Notwithstanding any other
provision of this Agreement, if any item presented for collection by Agent is
not honored, Agent may reverse any provisional credit which has been given for
the item and make appropriate adjustments to the amount of interest and
principal due.
ARTICLE 3
Collateral
Section 3.1 Collateral. To secure the full and complete payment and
performance of the Obligations, Borrower will, and will cause each of its
Subsidiaries (as applicable) to, grant to Agent for the benefit of itself and
the Lenders according to their respective Pro Rata Percentage (or in the event
the Facility Balance is zero, the Committed Percentage) interests a continuing
security interest and lien in and to all of the Capital Stock, and the proceeds
of such Capital Stock, of each of
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Borrower's present or future Material Subsidiaries, Research and IMC pursuant
to the terms of the Pledge Agreements (the "Collateral").
Section 3.2 First Priority. Borrower represents to Agent and the Lenders
that, except as granted to Agent pursuant to the Pledge Agreements, no other
security interests, liens, assignments or other encumbrances exist with respect
to any of the Collateral. Agent's security interests, liens and assignments in
the Collateral are, and at all times shall be and remain, first, prior and
senior to any other interests therein, except as otherwise may be expressly
agreed by Agent and the Lenders in writing.
Section 3.3 Perfection and Protection of the Lenders' Interests. Borrower
shall perform, or shall cause any of its Subsidiaries to perform, at its
expense, all action reasonably requested by Agent at any time to perfect,
maintain, protect and enforce the security interests, liens and assignments
granted under the Pledge Agreements, including, without limitation, executing
and filing financing statements and amendments thereof, in form and substance
reasonably satisfactory to Agent, delivering to Agent the originals of all
items the possession of which is necessary for perfection of such security
interests, duly endorsed or assigned to Agent without restriction, and such
other steps as are deemed reasonably necessary by Agent to maintain such
security interests, and perfection thereof, in full force and effect. So long
as this Agreement is in effect and until all Obligations have been fully
satisfied, the security interests and liens in the Collateral under the Pledge
Agreements shall continue in full force and effect.
Section 3.4 Subsidiary Pledge Agreements and Guaranties. The Lenders have
determined that extensions of credit to Borrower under this Agreement are
conditioned upon additional credit support from the Guarantors and additional
security support from the owners of any of the Collateral. Accordingly,
Borrower shall cause (i) each of its present or future Material Subsidiaries,
Research and IMC to execute and deliver to Agent, for the ratable benefit of
the Lenders, a Guaranty (supported by appropriate authorizing resolutions and
certifications) pursuant to which such Guarantor shall guarantee the prompt
payment and performance of the Obligations and (ii) with respect to each Person
now or hereafter owning any Collateral, to execute and deliver to Agent, a
Pledge Agreement (supported by appropriate authorizing resolutions and
certifications) pursuant to which such Person shall grant to Agent, for the
ratable benefit of the Lenders, a continuing security interest and lien in and
to all of its right, title and interest in all Collateral owned by such Person
to secure the Obligations. Borrower acknowledges that the requirements of this
Section are in consideration of the availability of extensions of credit to
Borrower under this Agreement and are not required by Agent or any Lender as a
condition to the availability of any extension of credit to any Guarantor or
other Person.
Section 3.5 New Subsidiaries. After the Closing Date, contemporaneously
with the creation or acquisition of any Material Subsidiary by Borrower or any
of its Subsidiaries, or upon the occurrence of any Subsidiary of Borrower which
was not previously a Material Subsidiary becoming a Material Subsidiary,
Borrower shall (as applicable):
(a) grant or cause to be granted to Agent, for the ratable benefit of
itself and the Lenders, a perfected, first priority security interest in
all Capital Stock of such new Material
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Subsidiary (to the extent such Capital Stock or other ownership interests
are not already pledged to Agent) pursuant to a Pledge Agreement; and
(b) cause each such new Material Subsidiary to guarantee the payment
and performance of the Obligations by executing and delivering to Agent a
Guaranty.
ARTICLE 4
Conditions
Section 4.1 Items to Be Delivered By Borrower Upon Execution of this
Agreement. The obligation of each Lender to fund its Committed Percentage of
the initial Advance is subject to the conditions precedent that Agent shall
have received, on or before the Closing Date, all of the following in form and
substance satisfactory to Agent and, in the case of actions to be taken,
evidence to the satisfaction of Agent that the following required actions have
been taken:
(a) Governmental Certificates. For each of Borrower, the Guarantors
and any Pledging Subsidiary, each of the following, certified by the
respective secretary, assistant secretary or other authorized officer as
being true, correct and complete for such Person as of the Closing Date:
(i) a copy of the articles of incorporation, articles of formation,
articles of organization, limited partnership certificate or other similar
document and all amendments thereto, of each such Person, accompanied by a
certificate from the secretary of state of each such Person's respective
state of organization, bearing a date no more than thirty (30) days prior
to the Closing Date, to the effect that such copy is true, correct and
complete, (ii) a copy of a certificate from the secretary of state of each
such Person's respective state of organization, bearing a date no more than
thirty (30) days prior to the Closing Date, that such Person is duly
organized and validly existing in such state; (iii) a copy of a certificate
from the appropriate governmental officials of all other jurisdictions
where any such Person is qualified to transact business as a foreign
business entity, each bearing a date no more than thirty (30) days prior to
the Closing Date, that such Person is duly qualified to transact business
in such jurisdiction to the extent required by the laws of such state; and
(iv) a copy of a certificate from the appropriate governmental officials of
the state of each such Person's organization and all other jurisdictions
where any such Person is qualified to transact business as a foreign
business entity, each bearing a date no more than thirty (30) days prior to
the Closing Date, to the effect that such Person is in good standing with
respect to payment of franchise and similar taxes;
(b) Bylaws and Operating Agreements. A copy of the bylaws, operating
agreement, partnership agreement or other similar governing documents and
all amendments thereto, of Borrower, each of the Guarantors and any
Pledging Subsidiary, respectively, accompanied by certificates from their
respective secretary, assistant secretary or other authorized Person each
dated the Closing Date, to the effect that such copy is true, correct and
complete as of the Closing Date;
(c) Incumbency. A certificate of incumbency from each of Borrower,
the Guarantors and any Pledging Subsidiary, certified by such Person's
president, corporate
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secretary or other authorized Person, certifying the name of each officer
of such Person or other authorized individual (i) who is authorized to sign
the Loan Documents to which such Person is or is to be a party (including,
without limitation, any certificates contemplated therein), together with
specimen signatures of each such officer or other authorized Person, and
(ii) who will, until replaced by other officers or other authorized
individuals duly authorized for that purpose, act as its representative for
the purposes of signing documents and giving notices and other
communications in connection with the Loan Documents and the transactions
contemplated thereby;
(d) Resolutions. A copy of resolutions of each of Borrower, the
Guarantors and any Pledging Subsidiary, in form and substance satisfactory
to Agent and in each case approving the Loan Documents to be executed by
such Person, authorizing the transactions contemplated thereby and
authorizing and directing a named officer, officers or other authorized
individual to sign and deliver all such Loan Documents, duly adopted by
such Person's board of directors or other governing body, accompanied by a
certificate of the secretary, assistant secretary or other authorized
individual, dated the Closing Date, that such copy is a true, correct and
complete copy of such resolutions and that such resolutions have not been
amended, modified or revoked in any respect and are in full force and
effect as of the Closing Date;
(e) Credit Agreement. This Agreement, duly executed by the parties
hereto;
(f) Revolving Notes. The Revolving Notes, duly completed and executed
by Borrower;
(g) Guaranties. Each of the Guaranties, duly completed and executed
by the appropriate Guarantor;
(h) Pledge Agreements. Each of the Pledge Agreements, duly completed
and executed by Borrower or, if applicable, a Pledging Subsidiary;
(i) Stock Certificates. All certificates representing Capital Stock
required to be pledged as security for the Obligations pursuant to the
terms of this Agreement or any Pledge Agreement, in each case accompanied
by appropriate stock powers executed in blank;
(j) Financing Statements. All UCC-1 financing statements or UCC-3
statements of amendment, if any, required by Agent in connection with
perfection of the security interests granted to Agent under the Pledge
Agreements, duly executed by Borrower or, if applicable, a Pledging
Subsidiary, as the case may be, together with written acknowledgments from
the Secretary of State of Texas confirming filing of such financing
statements or amendments and, if requested by Agent, written results of a
search of the records of such office (performed by such office, or by a
Person acceptable to Agent) reflecting that no Person claims any prior
interest in any Collateral;
(k) Insurance. Evidence of insurance in compliance with the
requirements of Section 6.24 of this Agreement;
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(l) Payment of Fees and Expenses. Borrower shall have paid all fees
due on or before the Closing Date as specified in this Agreement or in any
letter agreement between Borrower and Agent or any Lender (including,
without limitation, the letter agreement between Borrower and Agent dated
as of April 4, 1997), and all fees and expenses of or incurred by Agent and
its counsel to the extent billed on or before the Closing Date and payable
pursuant to this Agreement;
(m) Regulatory Approvals. Evidence satisfactory to Agent that all
filings, consents or approvals with or of any governmental authority
necessary to consummate the transactions contemplated by the Loan Documents
have been obtained;
(n) Compliance with Laws. On the Closing Date, each Person that is a
party to this Agreement or any of the other Loan Documents shall have
complied in all material respects with all governmental requirements
necessary or appropriate to consummate the transactions contemplated by
this Agreement and the other Loan Documents;
(o) No Prohibitions. No governmental requirement shall prohibit the
consummation of the transactions contemplated by this Agreement or any
other Loan Document, and no order, judgment or decree of any governmental
authority or arbitrator, and no litigation or other proceeding, shall be
pending or threatened which would enjoin, prohibit, restrain or otherwise
adversely affect the consummation of the transactions contemplated by this
Agreement and the other Loan Documents or otherwise have a Material Adverse
Effect;
(p) No Material Adverse Change. As of the Closing Date, no material
adverse change shall have occurred with respect to the financial condition
or performance, businesses, operations, capitalization, liabilities or
prospects of Borrower or any of its Subsidiaries, taken as a whole, in each
case since March 31, 1997;
(q) Loan Disbursement. Loan disbursement instructions from Borrower
to Agent with respect to the disbursement of the proceeds of the initial
Advance on the Closing Date, which instructions shall provide that the
proceeds thereof necessary to pay Bank One and NationsBank of Texas, N.A.
in full, as contemplated by Section 2.10, shall be disbursed directly to
such creditors and lienholders;
(r) Opinions of Counsel. A favorable opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
counsel for Borrower, the Guarantors and the Pledging Subsidiaries, in form
and substance satisfactory to Agent;
(s) Proceedings Satisfactory. All matters and proceedings taken in
connection with this Agreement and the other Loan Documents shall be
reasonably satisfactory to Agent and its counsel; and
(t) Other Documents. Such other items as Agent or any Lender may
request in order to perfect or protect its interests and rights under the
Loan Documents.
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Borrower shall deliver, or cause to be delivered, to Agent sufficient
counterparts of each document (excluding the Revolving Notes) to be received by
Agent under this Section 4.1 to permit Agent to distribute an original
counterpart of each such document to each Person which is a Lender on the
Closing Date.
Section 4.2 Advances Under the Facility. The obligation of each Lender to
fund its Committed Percentage of any Advance (including the initial Advance) is
subject to the continued satisfaction of each of the following conditions which
must be satisfied in Agent's discretion:
(a) Borrower shall be current with respect to the delivery of all
items as required under Section 4.1, and otherwise by the Loan Documents;
(b) Agent shall have (i) received a current Compliance Certificate as
required by Section 6.1(d) and (ii) confirmed the Availability;
(c) The amount of such Advance shall not exceed the Availability, and
upon funding such Advance, the Facility Balance shall not exceed the
maximum amount allowed by the Loan Documents;
(d) All of the representations and warranties contained in the Loan
Documents shall be true, correct and complete in all material respects,
except as supplemented pursuant to Section 6.9; and
(e) No Event of Default shall have occurred and be continuing, or
would result from such Advance and no other event or condition which would
be the subject of a required notice under Section 6.11 shall be in
existence.
Each request for an Advance by Borrower under the Facility shall constitute a
representation and warranty by Borrower that the conditions precedent set forth
in this Section have been satisfied (both as of the date of such notice and,
unless Borrower otherwise notifies Agent prior to the date of such Advance, as
of the date of such Advance). Any request for funding under the Facility at a
time when any of the foregoing requirements is not satisfied may be declined by
Agent without prior notice.
ARTICLE 5
Representations and Warranties
Borrower hereby represents and warrants to Agent and the Lenders that each
of the following statements are and, after giving effect to the Advances
contemplated hereunder, will be true, correct and complete.
Section 5.1 Corporate Names; Trade Names. Borrower is conducting,
transacting and carrying on its business under its corporate name shown in
Article 1 and such other names, if any, as may be specified in Schedule 5.1,
and is not engaged in business under any other name. Except as provided in
Schedule 5.1, during the past five (5) years Borrower has not (i) done business
under any
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other name, (ii) been party to a merger or consolidation or (iii) acquired any
of the property included within the Collateral from any other Person.
Section 5.2 Chief Executive Office. Borrower's chief executive office is
located at the address specified for Borrower in Article 1.
Section 5.3 Existence. Each of Borrower and the Guarantors is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and is duly qualified or
licensed to transact business in each jurisdiction in which the failure to be
so qualified could reasonably be expected to cause a Material Adverse Effect.
Each Pledging Subsidiary is a corporation, partnership or other business
entity, duly incorporated, organized or formed, validly existing and in good
standing (as applicable) under the laws of the jurisdiction of its
incorporation, organization or formation, and is duly qualified or licensed to
transact business in each jurisdiction in which the failure to be so qualified
could reasonably be expected to cause a Material Adverse Effect.
Section 5.4 Power and Authority; Validity. Each of Borrower, the
Guarantors and the Pledging Subsidiaries possesses all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being or as proposed to be conducted, and has the power, authority and
legal right to execute, deliver and perform its obligations under the Loan
Documents to which it is or may become a party. Each of such Loan Documents
has been duly authorized by all necessary action by or on behalf of such Person
and has been duly executed and delivered by each of Borrower, the Guarantors
and the Pledging Subsidiaries, as applicable, and evidences valid and binding
obligations enforceable in accordance with its respective terms (except to the
extent, if any, that (i) such enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability).
Section 5.5 No Conflicting Agreements. The execution, delivery and
performance of the Loan Documents by Borrower, any Guarantor or any Pledging
Subsidiary will not violate the articles of incorporation or other organization
documents or bylaws, operating agreements or other governing agreements of any
such Person, nor constitute a default under, or result in a breach of, any
contract, agreement, indenture, document or other instrument to which such
Person is a party or which is applicable to its respective property. Neither
Borrower, any Guarantor nor any Pledging Subsidiary is a party to any
indenture, loan, credit agreement, stock purchase agreement or any lease or
other agreement, document or instrument, or subject to any charter, corporate
or other restriction, that would reasonably be expected to have a Material
Adverse Effect. Neither Borrower, any Guarantor nor any Pledging Subsidiary is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement, document or
instrument binding on it or its properties, except for instances of
noncompliance that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 5.6 Share Ownership. Each of Borrower's outstanding shares of
Capital Stock has been duly and validly issued and is fully paid and
nonassessable except as set forth in Schedule 5.6(a). To Borrower's knowledge,
each Person owning more than ten percent (10%) of Borrower's Capital Stock
(both legally and beneficially), whether individually or in connection with
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41
any agreement affecting the ownership or voting rights of such stock, is set
forth on Schedule 5.6(a). On and as of the Closing Date, the authorized
Capital Stock, and the outstanding shares thereof, of each Subsidiary of
Borrower are as set forth in Schedule 5.6(b). The respective ownership of
Borrower (and Borrower's Subsidiaries, as applicable) in the Capital Stock of
each of its Subsidiaries (both legally and beneficially) is set forth in
Schedule 5.6(b), and each Subsidiary which is a Material Subsidiary is
designated as such therein. All shares of Capital Stock of any Subsidiary
owned by Borrower or any of its Subsidiaries are owned free and clear of any
lien, pledge, security interest or other encumbrance (except as may be granted
to Agent pursuant to the Pledge Agreements).
Section 5.7 Financial Statements. Borrower has delivered to Agent and the
Lenders (i) consolidated audited balance sheets and statements of income,
retained earnings and cash flow of Borrower and its Subsidiaries as of and for
the fiscal years ended December 31, 1995 and 1996, as audited by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP and (ii) unaudited quarterly financial statements of Borrower and
its Subsidiaries as of and for the fiscal quarter ended March 31, 1997. Such
financial statements are true and correct, have been prepared in accordance
with GAAP (with respect to such quarterly financial statements, subject to
year-end audit adjustments) and fairly and accurately present in all material
respects the financial condition of Borrower and its Subsidiaries as of the
respective dates indicated therein and the results of operations of Borrower
and its Subsidiaries for the respective periods indicated therein. As of the
Closing Date, there has not been any material adverse change in the business,
condition (financial or otherwise), performance (financial or otherwise),
operations, prospects or properties of Borrower or any of its Subsidiaries
since the effective date of the most recent audited financial statements
referred to in this Section.
Section 5.8 Litigation and Judgments. Except as set forth in Schedule 5.8
hereto, neither Borrower nor any of its Subsidiaries is a party to any pending
lawsuits or proceedings before or by any state or federal court or governmental
agency or instrumentality, and Borrower is not aware of any threatened or
potential lawsuits, proceedings, claims or investigations against Borrower or
any of its Subsidiaries. As of the Closing Date, there are no outstanding or
unpaid judgments against Borrower or any of its Subsidiaries. Except as
specifically set forth therein, none of the items in Schedule 5.8, in the event
of any unfavorable or adverse determination, will result in or cause a Material
Adverse Effect, and neither Borrower nor any of its Subsidiaries is exposed to
any potential liability or adverse event or circumstance that would reasonably
be expected to have a Material Adverse Effect.
Section 5.9 Compliance With Laws. Neither Borrower nor any of its
Subsidiaries is in violation of any Applicable Laws, or any other laws,
regulations or orders in any respect which will result in or cause, or
reasonably would be expected to result in or cause, a Material Adverse Effect.
Section 5.10 Taxes. All tax returns or filings required to be filed
(federal, state or local), including, without limitation, income, franchise,
employment, property and sales tax returns, or extensions filed thereon, by
Borrower and each of its Subsidiaries respectively, have been filed, and taxes
imposed upon Borrower and each of its Subsidiaries which are due and payable
have been paid. Neither Borrower nor any of its Subsidiaries is aware of any
pending investigation of any such Person by any taxing authority or of any
pending but unassessed tax liability of any such Person other than with respect
to (a) ad valorem or other real property taxes not yet due and payable and (b)
other taxes in an aggregate amount as to any such Person which would not, if an
adverse determination were
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made with respect to such taxes, reasonably be expected to have a Material
Adverse Effect. No tax liens have been filed and no claims are being asserted
against Borrower or any of its Subsidiaries with respect to any taxes. As of
the Closing Date, none of the income tax returns of Borrower or any of its
Subsidiaries is under audit nor has Borrower or any of its Subsidiaries
received any notice from any governmental authority of any pending audit of any
of such tax returns. The charges, accruals and reserves on the books of
Borrower and its Subsidiaries in respect of taxes or other governmental charges
are in accordance with GAAP.
Section 5.11 Title to Property. Each of Borrower and its Subsidiaries
has good and indefeasible title to all property reflected in the financial
statements previously delivered to Agent or purported to have been acquired
since such date, except property sold or otherwise disposed of subsequent to
such date in the ordinary course of business. Each of Borrower and its
Subsidiaries possesses all patents, patent rights, licenses, trademarks,
trademark rights, trade names, trade name rights and copyrights which are
necessary, required or appropriate for the operation of their respective
businesses as now conducted and as proposed to be conducted without any known
infringement or conflict by or against the rights of any other Person.
Section 5.12 Service Agreements. Each of Borrower and its Subsidiaries
as applicable, is party to one or more Service Agreements as set forth in
Schedule 5.12 hereto. Each such Service Agreement is in compliance with
Applicable Laws in all material respects, is in full force and effect, to the
best of Borrower's knowledge has been duly authorized by all necessary action
on behalf of the Persons a party thereto and is valid and enforceable in
accordance with its terms.
Section 5.13 Consents. No governmental orders, permissions, consents,
approvals or authorizations, are required to be obtained and no registrations
or declarations are required to be filed in connection with the execution,
delivery and performance of the Loan Documents or for the validity or
enforceability thereof. Each of Borrower and its Subsidiaries has all required
governmental approvals, agreements, consents, franchises, licenses and permits,
if any, on account of its operations and activities and is in full compliance
with the terms and conditions thereof, and all such agreements, consents,
franchises, licenses and permits are in full force and effect. The operations
of each of Borrower and its Subsidiaries are in all material respects in
compliance with all Applicable Laws.
Section 5.14 Full Disclosure. Each of Borrower and its Subsidiaries
has disclosed to Agent and the Lenders all known material facts concerning the
financial condition and business operations of such Person. All information
furnished by Borrower or its Subsidiaries to Agent or any Lender was true and
complete in all material respects at the time of delivery thereof, and there
has been no material change in any such information except as may have been
disclosed by such Person to Agent and the Lenders in writing. There is no fact
known to Borrower or any of its Subsidiaries which would be reasonably expected
to result in a Material Adverse Effect during the term of this Agreement.
Section 5.15 Solvency. As of, and immediately following the Closing
Date: (i) the fair saleable value of all assets of Borrower exceeds the amount
of all of Borrower's existing debts and liabilities (including contingent
liabilities), (ii) in Borrower's opinion, the assets of Borrower do not
constitute an unreasonably small capital for the operation of Borrower's
business as now conducted and as intended to be conducted, taking into account
all known or projected capital requirements for
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such operations, (iii) Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature, and (iv) Borrower's cash flow is
sufficient to pay all existing debts and liabilities as they become due.
Section 5.16 Employee Relations. Neither Borrower nor any of its
Subsidiaries is aware of any contemplated, threatened or pending strike, work
stoppage or other labor dispute involving its employees or the employees of any
of its Affiliates.
Section 5.17 Employee Benefit Plan. Neither Borrower, any of its
Subsidiaries nor any of their ERISA Affiliates, nor any Plan, is in material
violation in form or in operation of any provision of ERISA or any other
applicable state or federal law, including, without limitation, the
requirements of the IRC. No Prohibited Transaction or Reportable Event has
occurred with respect to any Plan which reasonably would be expected to result
in a Material Adverse Effect. No notice of intent to terminate a Plan has been
filed within the 24-month period preceding the date hereof, nor has any Plan
been terminated under Section 4041(c) of ERISA since September 2, 1974. The
PBGC has not instituted proceedings to terminate or appoint a trustee to
administer a Plan, and no event has occurred and no condition exists which
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan. Neither Borrower, any of
its Subsidiaries nor any of their ERISA Affiliates has incurred or expects to
incur any withdrawal liability to any multiemployer plan within the meaning of
Section 3(37) or Section 3001(a)(3) of ERISA or Section 414 of the IRC.
Neither Borrower, any of its Subsidiaries nor any of their ERISA Affiliates has
any obligation to provide medical benefits or coverage to any former employee
other than as required under Section 4980B of the IRC or Part 6 of Title I of
ERISA. Each employee benefit plan subject to Section 4980B of the IRC has
satisfied the applicable requirements of Section 4980B of the IRC. Each Plan
meets the minimum funding requirements of IRC Section 412 and no waiver from
the minimum funding requirements has been applied for or approved pursuant to
Section 412(d) of the IRC. The reporting and disclosure requirements of each
Plan have been timely and completely satisfied. Neither Borrower, any of its
Subsidiaries, any of their ERISA Affiliates nor any fiduciary of any Plan has
engaged in conduct that would be a breach of any duty under Part 4, Subtitle B,
Title I of ERISA. There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of Borrower, any of its
Subsidiaries or any of their ERISA Affiliates, threatened against, or with
respect to, any Plan or its assets, if any. Each Plan which is a "welfare
benefit plan," as described in Section 3(1) of ERISA, may be unilaterally
amended or terminated in its entirety without liability except as to benefits
accrued prior to such amendment. Termination of employment of any employee of
Borrower, any of its Subsidiaries or any of their ERISA Affiliates would not
result in payments which, in the aggregate, would result in imposition of the
sanctions imposed under Section 280B or Section 4999 of the IRC.
Section 5.18 Environmental Matters. To the best of Borrower's
knowledge: (a) all of Borrower's and its Subsidiaries' activities and conduct
of business related to the use and handling of Hazardous Materials, comply and
have at all times complied with all Environmental Requirements in all material
respects; (b) there are no storage tanks, dump sites or other materials or
conditions on any real property owned or operated by Borrower or its
Subsidiaries, or on any property adjacent thereto, which are in violation of
Environmental Requirements; (c) neither Borrower, any of its Subsidiaries nor
any prior owner of any real property owned or operated by Borrower or any of
its Subsidiaries has received notice or other communication concerning any
alleged violation of
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Environmental Requirements, whether or not corrected to the satisfaction of the
appropriate authority, or notice or other communication concerning alleged
liability for Environmental Damages, and there exists no writ, injunction,
decree, order, judgment or lien, nor any lawsuit, claim, proceeding citation,
directive, summons or investigation, pending or threatened, relating to the
ownership, use, maintenance or operation of Borrower's or its Subsidiaries'
business or any associated real property, by any Person, or from alleged
violation of Environmental Requirements; (d) each of Borrower and its
Subsidiaries has all permits and licenses required to be issued to it by any
governmental authority on account of any or all of its activities, and is in
all material respects in compliance with the terms and conditions of all such
permits and licenses, and no change in the facts or circumstances reported or
assumed in the application for, or granting of, any such permits or licenses
exists, and such permits and licenses are in full force and effect.
Section 5.19 Debt. As of the Closing Date (and after giving effect to
the initial Advance made on the Closing Date and the use of proceeds thereof),
Borrower has no indebtedness for money borrowed or capital leases except for
(a) the Obligations and (b) the indebtedness (if any) disclosed on Schedule
5.19 hereto.
Section 5.20 Margin Securities. Neither Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.
Section 5.21 Investment Company Act. Neither Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 5.22 Public Utility Holding Company Act. Neither Borrower nor
any of its Subsidiaries is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 5.23 Outstanding Securities. To Borrower's knowledge, as of
the Closing Date, all outstanding securities (as defined in the Securities Act
of 1933, as amended, or any successor thereto, and the rules and regulations of
the Securities and Exchange Commission thereunder) of Borrower have been
offered, issued, sold and delivered in all material respects in compliance with
all Applicable Laws.
Section 5.24 Representations and Warranties Cumulative. The
representations and warranties contained in this Article 5 are in addition to
all other representations and warranties provided in the Loan Documents.
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ARTICLE 6
Affirmative Covenants
Borrower covenants and agrees that as long as the Obligations, or any part
thereof, are outstanding or any Lender has any obligation to Borrower
hereunder, subject to Section 11.1(c), unless otherwise allowed by prior
written consent of Agent, Borrower will perform and observe, or cause to be
performed and observed, the following covenants:
Section 6.1 Reporting Requirements. Borrower will furnish to Agent and
each Lender:
(a) Borrower's Annual Financial Statements. As soon as practicable
after the end of each fiscal year, and in any event within one hundred
twenty (120) days thereafter, (i) the unqualified audited consolidated, and
unaudited consolidating, balance sheet of Borrower and its Subsidiaries as
of the end of such fiscal year, and the related audited consolidated, and
unaudited consolidating, statement of income and retained earnings and
statements of cash flow, in reasonable detail and in each case setting
forth in comparative form the figures for the preceding fiscal year,
prepared in accordance with GAAP and certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
certified public accountants, or such other independent certified public
accounting firm of recognized standing acceptable to Agent, as fairly
presenting the financial condition and results of operations of Borrower
and its Subsidiaries, (ii) a certificate of such independent certified
public accounting firm to Agent and the Lenders stating that, to their
knowledge, no Event of Default has occurred and is continuing or, if in
their opinion an Event of Default has occurred and is continuing, stating
the nature thereof, and (iii) a copy of the report to management delivered
to Borrower by such accountants and also by a statement signed by the
president or chief financial officer of Borrower, respectively,
representing to Agent and the Lenders that such financial statements are
true and complete and fairly present the financial condition and results of
operation of Borrower and its Subsidiaries.
(b) TOPA's Annual Financial Statements. As soon as practicable after
the end of each fiscal year, and in any event within one hundred fifty
(150) days thereafter, (i) the unqualified audited consolidated, and
unaudited consolidating, balance sheet of TOPA and its Subsidiaries as of
the end of such fiscal year, and the related audited consolidated, and
unaudited consolidating, statement of income and retained earnings and
statements of cash flow, in reasonable detail and in each case setting
forth in comparative form the figures for the preceding fiscal year,
prepared in accordance with GAAP and certified by an independent certified
public accounting firm of recognized standing acceptable to Agent, as
fairly presenting the financial condition and results of operations of TOPA
and its Subsidiaries.
(c) Borrower's Interim Financial Statements. As soon as practicable
after the end of each fiscal quarter, and in any event within forty-five
(45) days thereafter, beginning with the fiscal quarter ending June 30,
1997, the Form 10-Q of Borrower and its Subsidiaries as of the end of such
fiscal quarter and for the period from the beginning of the current fiscal
year to the end of such fiscal quarter, containing on a consolidated and
consolidating basis, balance sheets and statements of income, retained
earnings and cash flow, in each case setting forth in comparative form the
figures for the corresponding period of the preceding fiscal
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year, all in reasonable detail and prepared in accordance with GAAP
(provided that notes shall not be required for such interim statements),
subject to year-end audit adjustments. Such financial statements shall be
accompanied by a statement signed by the president or chief financial
officer of Borrower representing to Agent and the Lenders that such
financial statements are true and complete and fairly present the financial
condition of Borrower and its Subsidiaries and their results of operations,
and that no event or condition that would be the subject of a required
notice under Section 6.9 or Section 6.11 is in existence as of the date of
delivery of such financial statements.
(d) Compliance Certificate. Concurrently with the delivery of the
information referred to in Section 6.1(a) or Section 6.1(c), Borrower shall
deliver to Agent and each Lender a certificate in the form of Exhibit D
attached hereto, signed by the president or chief financial officer of
Borrower certifying to Agent and the Lenders, that (i) no event or
condition that would be the subject of a required notice under Section 6.9
or Section 6.11 is in existence as of the date of such certificate, (ii)
showing in reasonable detail the calculations demonstrating compliance with
Article 8 and (iii) showing in reasonable detail the calculations required
to determine the Commitment Availability and the resulting Availability.
Such certificate shall be deemed to be a continuing representation and
warranty pending any subsequent certification or notification by Borrower
respecting its compliance or non-compliance with this Agreement, and
Borrower acknowledges that Agent and the Lenders may rely upon the same in
making Advances under the Facility.
Section 6.2 Authority. Immediately following any effective change thereof
(and at such other times, from time to time, at the request of Agent), Borrower
shall certify to Agent the names and signatures of all Persons authorized to
execute and deliver any documentation contemplated by or relating to any of the
Loan Documents.
Section 6.3 Books and Records. Borrower's and each Subsidiary's
accounting policies and practices shall conform to GAAP in all material
respects. Borrower shall keep and maintain proper, complete and consistent
books of record and account respecting the Collateral and Borrower's affairs
and financial condition in accordance with GAAP. If any changes in accounting
principles from those used in the preparation of the financial statements
referenced in Section 6.1 are hereafter required or permitted by GAAP and are
adopted by Borrower, any of its Subsidiaries or TOPA with the concurrence of
their respective independent certified public accountants and such changes in
GAAP result in a change in the method of calculation or the interpretation of
any of the financial covenants, standards or terms found in Section 6.1,
Article 8 or any other provision of this Agreement, Borrower and Determining
Lenders agree to amend any such affected terms and provisions so as to reflect
such changes in GAAP with the result that the criteria for evaluating
Borrower's or its Subsidiaries' financial condition shall be the same after
such changes in GAAP as if such changes in GAAP had not been made; provided
that, until any necessary amendments have been made, the compliance certificate
required to be delivered under Section 6.1(d) hereof demonstrating compliance
with Article 8 shall include calculations setting forth the adjustments from
the relevant items as shown in the current financial statements based on the
changes to GAAP to the corresponding items based on GAAP as used in the
financial statements referenced in Section 6.1 in order to demonstrate how such
financial covenant compliance was derived from the current financial
statements.
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Section 6.4 Corporate Existence. Each of Borrower and its Subsidiaries
will preserve and maintain its corporate existence (except for mergers of
Subsidiaries permitted by Section 7.5), good standing and authority to transact
business in all jurisdictions in which the failure to be so qualified would
cause a Material Adverse Effect, and shall maintain all of its properties,
rights, privileges, licenses, permits, franchises, qualifications and rights
that are necessary or desirable in the normal conduct of its business.
Section 6.5 Operating Budget. On or before the thirty-first (31st) day
of each fiscal year during the Contract Term, Borrower shall deliver to Agent
and the Lenders an operating budget for such fiscal year, including, without
limitation, projected statements of income and statements of cash flow, all in
form reasonably satisfactory to Agent and including all material assumptions
upon which such operating budget is based and such other information as is
reasonably required by Agent (it being understood, however, that Borrower makes
no representation or warranty that such operating budget will be met).
Section 6.6 Proxy Statements, Etc. As soon as available, Borrower shall
promptly furnish to Agent and the Lenders one copy of each financial statement,
report, notice or proxy statement sent by Borrower or any of its Subsidiaries
to its stockholders generally and one copy of each regular, periodic or special
report, registration statement or prospectus filed by any such Person with any
securities exchange or the Securities and Exchange Commission, or any successor
agency, and of all press releases and other statements made by any such Person
to the public concerning material developments in the business of such Person.
Section 6.7 Information. In addition to information and items
specifically required by the Loan Documents, Borrower shall promptly furnish to
Agent such other information, documentation or projections respecting its or
its Subsidiaries' business affairs, assets and liabilities as Agent may
reasonably request.
Section 6.8 Notification of Contingent Liabilities. Borrower shall notify
Agent promptly upon entering into any guaranty or surety agreement or capital
maintenance or cash flow support agreement or other contingent debt obligations
or upon receiving notice or otherwise becoming aware of any pending or
threatened lawsuit, claim, action, liability, investigation or proceeding
before any governmental authority or arbitrator affecting Borrower or any of
its Subsidiaries that would be treated as a contingent liability of such Person
under GAAP and which (i) is in an amount in excess of $500,000, (ii)
collectively during any twelve (12) month period is in an aggregate amount in
excess of $2,000,000, or (iii) is reasonably expected to result in a Material
Adverse Effect.
Section 6.9 Notification of Material Changes. Within five (5) Business
Days after becoming aware thereof, Borrower will notify Agent in writing of the
occurrence of any of the following with respect to Borrower or any of its
Subsidiaries: (i) change of such Person's corporate name, (ii) change of such
Person's address or principal place of business, (iii) change of the location
of such Person's books and records, or (iv) use of any trade name, fictitious
name or other assumed name by such Person. Borrower shall promptly notify
Agent of any change in any other material fact or circumstance represented or
warranted in any of the Loan Documents.
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Section 6.10 Notification of Acquisitions and New Subsidiaries.
Concurrently with the delivery of each of the financial statements referred to
in Section 6.1, or if sooner, within thirty (30) days of its occurrence,
Borrower shall; (i) deliver to Agent notice of the consummation or anticipated
consummation of any acquisition by Borrower of all of the assets or Capital
Stock (or substantially all of the assets or Capital Stock) of any Person not
previously reported to Agent; (ii) set forth in the notice referred to in
clause (i) information relating to such acquisition, including, without
limitation, (a) the Person acquired by Borrower or its Subsidiary, (b) all
locations of such Person's operations, (c) the number and names of any
physicians connected with or practicing in the acquired Person's operation, if
applicable, (d) the gross revenues and EBITDA of such Person for the
immediately preceding fiscal year and the most recent period to date since such
fiscal year, and (e) the total consideration paid by Borrower or its Subsidiary
as consideration for such acquisition; and (iii) deliver to Agent notice of the
creation of any Subsidiary after the Closing Date by Borrower or any of its
Subsidiaries.
Section 6.11 Notification Regarding Default. Borrower shall
immediately notify Agent in writing upon becoming aware of the existence of any
condition or event which constitutes an Event of Default or any condition or
event which, after notice, or lapse of time, or both, would constitute an Event
of Default, therein specifying the nature and period of existence thereof and
what action Borrower is taking or proposes to take with respect to such
condition or event. Borrower shall immediately notify Agent in writing if
Borrower knows, or reasonably expects, that an Event of Default will occur,
therein specifying the nature of the anticipated Event of Default. Without
limiting the foregoing, Borrower will also immediately notify Agent of any of
the following: (i) Borrower's, any Guarantor's or any Pledging Subsidiary's
board of directors or other governing body having authorized the filing by such
Person of a petition in bankruptcy, and (ii) Borrower becoming aware that any
covenant under this Agreement has been breached, or reasonably expects that any
such covenant will be breached.
Section 6.12 Payment of Taxes. Borrower shall promptly pay, or cause
to be paid, when due, any and all taxes except such taxes as may be contested
in good faith by appropriate proceedings being diligently pursued and for which
adequate reserves have been established according to GAAP. At Agent's request
pending resolution of any such contest and prior to the delinquency of such
tax, Borrower shall furnish to Agent a cash reserve, or a bond written by a
reputable surety acceptable to Agent, in the amount of the tax, together with a
reasonable additional sum to pay all projected costs, interest and penalties in
connection therewith, conditioned that such tax, together with applicable
interest, cost and penalties, if any, shall be timely paid to the extent
required upon resolution of such contest. Borrower agrees that it shall
immediately notify Agent of the initiation of any such contest and advise Agent
from time to time of the status thereof. Borrower shall promptly pay any
amounts adjudged to be due pursuant to any such contest, with all costs,
penalties and interest thereon, before such judgment becomes final or any writ
or order is issued under which the Collateral, or any portion thereof, may
become subject to any lien or encumbrance.
Section 6.13 Compliance With Laws. Borrower will, and will cause each
of its Subsidiaries to, comply in all material respects at all times with all
Applicable Laws and to maintain current all required governmental approvals,
agreements, permits or licenses necessary for the operation of their respective
businesses. At Agent's request, Borrower will, and will cause each of its
Subsidiaries to, allow Agent to review evidence of such Person's compliance
with Applicable Laws and allow Agent
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or any Lender to review all licenses, approvals, permits, agreements, orders,
applications, correspondence to and from governmental or regulatory agencies
and other documentation and records relevant to the status of such Person's
compliance with Applicable Laws.
Section 6.14 Compliance With Agreements. Borrower will, and will cause
each of its Subsidiaries to, comply in all material respects with all
agreements, indentures, mortgages or documents binding upon it or affecting its
properties or businesses.
Section 6.15 Service Agreements. Borrower will, and will cause each of
its Subsidiaries to, promptly notify Agent upon entering into any Service
Agreements other than those identified in Schedule 5.12 and identify the
Provider that is a party thereto with Borrower or such Subsidiary, and, at
Agent's request, Borrower will, and will cause each of its Subsidiaries to,
provide Agent with a copy thereof. Borrower will, and will cause each of its
Subsidiaries to, promptly notify Agent of any amendment, modification or other
revision to any Service Agreement; provided that, with respect to the TOPA
Service Agreement, Borrower will provide Agent with not less than ten (10)
Business Days prior notice, and such amendment, modification or other revision
shall not, in Agent's sole discretion, be materially adverse to Borrower.
Section 6.16 Agreements With Providers. All material agreements
between Borrower, or any of Borrower's Subsidiaries, and any Provider with whom
Borrower, or such Subsidiary, is a party to a Service Agreement shall at all
times be maintained in effect.
Section 6.17 Fees, Costs and Expenses. Borrower agrees to promptly pay
within fifteen (15) days after demand all costs, fees and expenses as provided
in Section 12.9.
Section 6.18 Affiliate Subordination Agreements. At Agent's request,
any present and future obligations due by Borrower to its officers, directors
or Affiliates (excluding certain ordinary course items such as normal
compensation and benefits, travel and expense reimbursements and other similar
ordinary course items determined by agreement) shall be subordinate in right of
payment and claim to the Obligations, pursuant to definitive subordination
agreements executed by Borrower and such other Persons in form satisfactory to
Agent.
Section 6.19 Change of Fiscal Year. Borrower shall notify Agent at
least ninety (90) days prior to the effective date of any change in Borrower's
fiscal year.
Section 6.20 Maintenance of Properties. Borrower will, and will cause
each of its Subsidiaries to, maintain, keep and preserve all of its material
properties necessary or appropriate in the proper conduct of its business in
good repair, working order and condition (ordinary wear and tear excepted) and
make all necessary repairs, renewals, replacements, betterments and
improvements thereof.
Section 6.21 Ownership, Management Change: Borrower. At all times
after the Closing Date, not less than fifteen percent (15%) of Borrower's
Voting Stock shall be owned, collectively or individually, by TOPA and the
physicians who own the Capital Stock of TOPA. Promptly upon receiving
knowledge thereof (and in any event within three (3) days of first receiving
such knowledge), Borrower shall notify Agent in writing of any change, or
pending change, in management
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of Borrower that does not include ▇▇▇▇▇▇▇ ▇▇▇▇▇ in an active executive
management capacity. In the event for any reason Borrower's management ceases
to include ▇▇▇▇▇▇▇ ▇▇▇▇▇ in an executive management capacity, then within
ninety (90) days thereafter Borrower shall present to Agent and the Lenders a
plan for staffing its executive management, and such plan shall be satisfactory
to Agent and the Lenders in their respective discretion.
Section 6.22 Ownership, Change: Subsidiaries. After the Closing Date,
Borrower shall continue to maintain not less than its present ownership of the
Capital Stock (legal and beneficial) of each of its Subsidiaries as set forth
on Schedule 5.6(b), and except as approved in writing by the Determining
Lenders, Borrower and its Subsidiaries, as applicable, shall own not less than
one hundred percent (100%) of the Capital Stock of any Subsidiary acquired or
created by Borrower or its Subsidiaries after the Closing Date.
Section 6.23 Employee Benefit Plans. Borrower shall timely deliver the
following to Agent: (i) a copy of any notice of noncompliance received by
Borrower, any of its Subsidiaries or any of their ERISA Affiliates from the
PBGC under Section 4041(b)(2)(c) of ERISA, within three (3) days after receipt
of such notice; (ii) a copy of any notice received by Borrower, any of its
Subsidiaries or any of their ERISA Affiliates, or the administrator of any
Plan, that the PBGC has instituted proceedings to terminate such Plan or to
appoint a trustee to administer such Plan, promptly upon receipt and in no
event more than three (3) days after the receipt of such notice; (iii) a copy
of any notice received by Borrower, any of its Subsidiaries or any of their
ERISA Affiliates concerning the imposition of any withdrawal liability under
Section 4202 of ERISA, within ten (10) days after receipt thereof by such
Person; (iv) a copy of any notification of intention to impose or assert
withdrawal liability under ERISA against Borrower, any of its Subsidiaries or
any of their ERISA Affiliates, promptly upon receipt thereof and in any event
within three (days) of receipt thereof; and (v) a copy of any notice from the
Internal Revenue Service regarding revocation or investigation of possible
revocation of the qualified status of any Plan under the IRC, promptly upon
receipt thereof and in any event within three (3) days after receipt thereof.
If requested by Agent, Borrower shall timely deliver the following to Agent:
(1) a copy of all materials required to be filed by Borrower, any of its
Subsidiaries or any of their ERISA Affiliates with the PBGC with respect to any
Reportable Event, within ten (10) days after the earlier of the filing or the
occurrence thereof; (2) a copy of any notice sent by Borrower, any of its
Subsidiaries or any of their ERISA Affiliates to participants of a Plan of such
Person's intent to terminate such Plan, no later than the date such notice is
required to be provided to participants under Section 4041(a)(2) of ERISA; (3)
a copy of each annual and other report with respect to each Plan or any trust
created thereunder, promptly after the filing thereof with the U.S. Secretary
of Labor or the PBGC by Borrower, any of its Subsidiaries or any of their ERISA
Affiliates; and (4) such additional information concerning any of Borrower's,
any of its Subsidiaries' or any of their ERISA Affiliates' employee benefit
plans as may be reasonably requested by Agent. Borrower shall make, and shall
cause each of its Subsidiaries or any of their ERISA Affiliates to make, prompt
payment of all contributions required under all Plans to the extent required to
meet the minimum funding standard set forth in ERISA with respect to such
Plans, but shall reduce contributions or benefits if and to the extent
necessary to avoid an Event of Default hereunder to the extent such reduction
is not prohibited by applicable provisions of ERISA.
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Section 6.24 Insurance. Borrower will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
property of a character usually insured by responsible corporations or other
entities engaged in the same or a similar business similarly situated against
loss or damage of the kinds and in the amounts customarily insured against by
such corporations or other entities and carry such other insurance as is
usually carried by such corporations or other entities. Within 60 days prior
to the end of each fiscal year of Borrower, Borrower shall deliver to Agent a
report in form and substance reasonably satisfactory to Agent summarizing all
material insurance coverage maintained by each of Borrower and its Subsidiaries
as of the date of such report and all material insurance coverage planned to be
maintained by such Persons in the subsequent fiscal year.
Section 6.25 Further Assurances. Borrower will, and will cause
each of its Subsidiaries to, execute and deliver such further agreements,
documents and instruments and take such further action as may be reasonably
requested by Agent to carry out the provisions and purposes of this Agreement
and the other Loan Documents, to evidence the Obligations and to create,
preserve, maintain and perfect the assignments, pledges, liens and security
interests in the Collateral in favor of Agent, for the benefit of itself and
the Lenders, and the required priority thereof.
ARTICLE 7
Negative Covenants
Borrower hereby covenants and agrees that as long as the Obligations,
or any part thereof, are outstanding or any Lender has any obligation to
Borrower hereunder, subject to Section 11.1(c), Borrower will perform and
observe, or cause to be performed and observed, the following covenants:
Section 7.1 Prohibition Against Liens On Collateral. Neither
Borrower nor any of its Subsidiaries shall grant, create or allow to exist any
security interest, assignment, lien, pledge or other encumbrance on any of such
Person's property which constitutes Collateral other than security interests,
assignments, liens, pledges or other encumbrances in favor of Agent, for the
benefit of the Lenders.
Section 7.2 Prohibition Against Liens On Assets. Neither
Borrower nor any of its Subsidiaries shall create, incur, assume or otherwise
suffer to exist any security interest, lien, pledge or other encumbrance,
whether contractual, statutory or otherwise, on any asset of such Person other
than (i) in favor of Agent for the benefit of the Lenders under this Agreement
or any of the other Loan Documents, (ii) purchase money security interests
granted by such Person to the transferor(s) of any property acquired by such
Person, provided, that the aggregate amount secured by all such security
interests shall not at any time exceed $10,000,000, (iii) as set forth in
Schedule 7.2, (iv) liens of mechanics, materialmen or other similar statutory
liens securing obligations that are not yet due and are incurred in the
ordinary course of Borrower's or its Subsidiaries' business or which are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property subject to such
liens and for which
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adequate reserves have been established according to GAAP, or (v) liens for
taxes, assessments or other governmental charges that are not delinquent or
which are being contested in good faith by appropriate proceedings which have
the effect of preventing the forfeiture or sale of the property subject to such
liens and for which adequate reserves have been established according to GAAP.
Neither Borrower nor any of its Subsidiaries will enter into or otherwise
become a party to any agreement (other than this Agreement) that prohibits or
otherwise restricts the right of Borrower or any of its Subsidiaries to create,
incur, assume or otherwise suffer to exist any security interest, lien, pledge
or other encumbrance in favor of Agent for the benefit of the Lenders on any of
its assets.
Section 7.3 Sale of Assets. Neither Borrower nor its
Subsidiaries will sell or dispose of any Collateral, nor will they sell or
dispose of any other property other than (i) any Cancer Center and associated
equipment located therein, provided that the aggregate book value (determined
as the depreciated cost of such assets as reflected on such Person's financial
statements according to GAAP) of all such Cancer Centers and associated
equipment disposed of by Borrower and its Subsidiaries during any period of
twelve (12) calendar months shall not exceed $10,000,000 and, provided further
that the proceeds of any such sale shall be paid to Agent as a prepayment in
accordance with Section 2.6 hereof and (ii) sales or dispositions in the
ordinary course of business. TOPA will not sell or dispose of any of TOPA's
property except to Borrower pursuant to a Service Agreement or otherwise in the
ordinary course of business of TOPA; provided that, subject to Section 6.21,
TOPA may sell or otherwise dispose of any of Borrower's Capital Stock owned by
TOPA.
Section 7.4 Continuity of Business. Neither Borrower nor any of
its Subsidiaries shall cease or discontinue the ordinary course operation of
its business, or enter into any new or different line of business not directly
related to the business of management and operation of, or providing facilities
for, physician practice groups and related ancillary operations.
Section 7.5 Dissolution, Liquidation, Merger. Borrower shall not
become a party to a merger or consolidation with another Person or acquire all
or substantially all of the assets of another Person, except for a merger,
consolidation or acquisition where (i) Borrower is the surviving entity, (ii)
the total price paid by Borrower (whether in Capital Stock, cash or other
property) as consideration for such merger, consolidation or acquisition does
not exceed six percent (6.0%) of Borrower's Consolidated Net Worth measured as
of the last day of the immediately preceding fiscal year end, (iii) the
aggregate price paid by Borrower (whether in Capital Stock, cash or other
property) as consideration for all such mergers, consolidations and
acquisitions during any fiscal year does not exceed fifteen percent (15.0%) of
Borrower's Consolidated Net Worth measured as of the last day of the
immediately preceding fiscal year end, and (iv) all Obligations survive such
merger or acquisition. Neither any of Borrower's Subsidiaries nor TOPA shall
discontinue the ordinary course operation of their respective business,
dissolve or liquidate, become a party to any merger or consolidation with any
Person (other than a merger pursuant to which a Subsidiary of Borrower's is
merged with and into Borrower as previously set forth in this Section or
pursuant to which TOPA is the surviving entity of a merger or consolidation
with another Person, excluding any of Borrower's Subsidiaries) or acquire all
or substantially all of the assets of another Person.
Section 7.6 Prohibition Against Certain Acquisition Indebtedness.
Neither Borrower nor any of its Subsidiaries shall incur any indebtedness in
connection with any acquisition, merger or consolidation, including, without
limitation, the acquisition of all or substantially all of the Capital Stock or
assets of any Person, other than indebtedness incurred in such a transaction
which is subordinate in right of payment and claim to the Obligations hereunder
and all rights of Agent and
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the Lenders under this Agreement and the other Loan Documents pursuant to a
subordination agreement in form and substance satisfactory to Agent.
Section 7.7 Transactions With Affiliates. Borrower will not
enter into any transaction with an Affiliate (other than a wholly-owned
Subsidiary) except in the ordinary course of business on terms no less
favorable to Borrower, nor more favorable to such Affiliate, than would be
obtainable in a comparable arm's length transaction with a Person who is not an
Affiliate. Except for the sale of its Capital Stock to the extent not
otherwise prohibited by this Agreement, Borrower will not enter into any
transaction with an Affiliate involving an amount in excess of $1,000,000
unless such transaction is specifically approved by Borrower's board of
directors as being an arm's length transaction on terms no less favorable to
Borrower, nor more favorable to such Affiliate, than would be obtainable in a
comparable arm's length transaction with a Person who is not an Affiliate.
Neither Borrower nor any Subsidiary will directly or indirectly purchase or
acquire any beneficial interest in, or any of the Capital Stock of, or evidence
of indebtedness of or other security issued by, or make any loan, advance,
extension of credit or contribution to the capital of, any Affiliate that is
not a Guarantor or the Capital Stock of which is pledged to Agent pursuant to a
Pledge Agreement, in excess of $5,000,000 at any time for any one of such
Affiliates or $10,000,000 at any time for all of such Affiliates.
Section 7.8 Dividends, Distributions. Borrower will not declare,
pay or issue any dividends or other distributions in respect of its Capital
Stock, except for dividends solely in the form of Capital Stock.
Section 7.9 Redemptions and Acquisitions of Shares. Borrower
will not make any payment on account of the purchase, redemption or other
acquisition or retirement of any shares of its Capital Stock.
Section 7.10 Loans to Officers, Directors and Shareholders.
Neither Borrower nor any Guarantor will make any loans or advances to or for
the benefit of any officer, director or shareholder except advances for routine
expense allowances in the ordinary course of business, and will not make any
loans, advances or extensions of credit to or for the benefit of any Affiliate
except working capital advances, subject to Section 7.7 in the usual and
ordinary course of business.
Section 7.11 Limitation on Non-Material Subsidiaries. Borrower
will not at any time permit more than five percent (5.0%) of either the assets
or gross revenue of Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, to be owned or generated (as applicable) by
Borrower's Subsidiaries which are not Material Subsidiaries; provided, however,
upon execution and delivery of all documents, information, instruments and
other items required to comply with Article 4 hereof by any Subsidiary of
Borrower which is not a Material Subsidiary, Borrower may designate such
Subsidiary as a Material Subsidiary for all purposes of this Agreement.
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ARTICLE 8
Financial Covenants
Borrower covenants and agrees that as long as the Obligations or any
part thereof, are outstanding or any Lender has any obligation to Borrower
hereunder, subject to Section 11.1(c), Borrower will perform and observe the
following covenants:
Section 8.1 Current Ratio. As of the end of each fiscal quarter,
Borrower will not permit its Current Ratio to be less than 1.5 to 1.0;
Section 8.2 Consolidated Net Worth. As of the end of each fiscal
quarter, Borrower will not permit its Consolidated Net Worth to be less than
$275,000,000, plus the Net Worth Adjustment;
Section 8.3 Fixed Charge Coverage Ratio. As of the end of each
fiscal quarter, and calculated for the four fiscal quarters then ended,
Borrower will not permit its Fixed Charge Coverage Ratio, to be less than 1.3
to 1.0;
Section 8.4 Leverage Ratio. As of the end of each fiscal
quarter, and calculated for the four fiscal quarters then ended, Borrower will
not permit its Leverage Ratio to exceed 3.0 to 1.0;
Section 8.5 Funded Debt to Capitalization. As of the end of each
fiscal quarter, Borrower will not permit its ratio of Funded Debt to
Capitalization to exceed 0.4 to 1.0; and
Section 8.6 Capital Expenditures. For each of its fiscal years
set forth in the table below, Borrower will not permit aggregate Capital
Expenditures for Borrower and its Subsidiaries to exceed the amount
corresponding to such fiscal year:
================================================================================
Fiscal Year End Maximum Capital Expenditures
================================================================================
December 31, 1997 $ 90,000,000
--------------------------------------------------------------------------------
December 31, 1998 $ 99,000,000
--------------------------------------------------------------------------------
December 31, 1999 $108,900,000
--------------------------------------------------------------------------------
December 31, 2000 $119,790,000
--------------------------------------------------------------------------------
December 31, 2001 $131,769,000
--------------------------------------------------------------------------------
December 31, 2002 $144,945,900
================================================================================
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ARTICLE 9
Event of Default
Section 9.1 Event of Default. Each of the following shall
constitute an "Event of Default" under this Agreement:
(a) The failure of timely payment of the Obligations, or
any part thereof, as they become due in accordance with the terms of
the Loan Documents;
(b) Any violation, breach or default of any covenant,
agreement or other obligation under this Agreement (excluding an Event
of Default under Section 9.1(a)) or any of the other Loan Documents,
provided that with respect to the occurrence of any such violation,
breach or default arising under Sections 6.1, 6.2, 6.5, 6.8, 6.13,
6.14, 7.1, or 7.2 hereof, ten (10) Business Days shall first have
passed after such occurrence, and with respect to any such violation,
breach or default arising under Section 6.4 or 6.12, thirty (30)
Business Days shall first have passed after such occurrence;
(c) Any representation or warranty made by Borrower,
TOPA, any Guarantor or any Pledging Subsidiary in any Loan Document or
in any certificate, report, notice or financial statement furnished at
any time in connection with this Agreement or any other Loan Document
shall be false, misleading or erroneous in any material respect when
made;
(d) Default or breach by Borrower, or any Subsidiary of
Borrower, or any Provider under a Service Agreement, or any other
material agreement between Borrower, or any Subsidiary of Borrower,
and such Provider that continues uncured or unwaived for a period
beyond any applicable cure or grace period, if such default or breach
could reasonably be expected to result in a Material Adverse Effect;
(e) Agent at any time believes, in accordance with the
standards prescribed by the Code, that the prospect for payment or
performance of the Obligations is materially impaired;
(f) The occurrence of any event or circumstance which the
Determining Lenders believe has or will result in a Material Adverse
Effect;
(g) The filing of any petition or proceeding by or
against Borrower, TOPA, any Guarantor or any Pledging Subsidiary under
the U.S. Bankruptcy Code, as amended from time to time, or any other
applicable state or federal law relating to bankruptcy reorganization
or other relief for debtors, or the appointment of a conservator,
receiver, trustee or liquidator of all or a substantial part of the
assets of Borrower, TOPA, any Guarantor or any Pledging Subsidiary
(and, in the case of any such petition filed against Borrower, TOPA,
any Guarantor or any Pledging Subsidiary, such petition or proceeding
is not dismissed within sixty (60) days after the filing or
commencement thereof);
(h) The use of any funds borrowed pursuant to this
Agreement for any purpose other than as permitted in this Agreement;
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(i) The filing or commencement of any attachment,
sequestration, garnishment, execution or other action against or with
respect to any of the Collateral;
(j) The filing or commencement of any attachment,
sequestration, garnishment, execution or other action against or with
respect to any property of Borrower, any Subsidiary of Borrower or
TOPA which is not included within the Collateral if the outcome,
pendency or effect thereof is reasonably expected to result in or
cause a Material Adverse Effect, provided that such filing or
commencement remains pending for thirty (30) or more days without
being dismissed or stayed;
(k) Any breach or default in the payment or performance
of any material obligation, or any defined event of default, under the
terms, provisions or conditions of any contract or instrument pursuant
to which Borrower, any of Borrower's Subsidiaries or TOPA has incurred
any indebtedness or obligation or other liability to any Person,
provided that such breach or default could reasonably be expected to
result in a Material Adverse Effect;
(l) The entry of any judgment against Borrower or any of
its Subsidiaries in an amount equal to or exceeding $500,000 which is
not covered by insurance;
(m) The dissolution or liquidation of Borrower, or the
taking of any action by the board of directors or shareholders of
Borrower to dissolve or liquidate;
(n) The dissolution or liquidation of TOPA, any Guarantor
or any Pledging Subsidiary or the taking of any action by the board of
directors or shareholders of TOPA, any Guarantor or any Pledging
Subsidiary to dissolve or liquidate;
(o) Repudiation or attempted termination or revocation by
any Guarantor of its obligations under its Guaranty;
(p) Repudiation or attempted termination or revocation by
any Pledging Subsidiary of its obligations under its Pledge Agreement
(if applicable);
(q) With respect to Borrower, its Subsidiaries or any of
their ERISA Affiliates, a Reportable Event or Prohibited Transaction
with respect to any Plan which could, in the opinion of Agent, result
in a Material Adverse Effect;
(r) With respect to Borrower, its Subsidiaries or any of
their ERISA Affiliates, the filing of a notice of intent to terminate
a Plan under a distress termination as described in section 4041(c) of
ERISA which could, in the opinion of Agent, result in a Material
Adverse Effect;
(s) With respect to Borrower, its Subsidiaries or any of
their ERISA Affiliates, the receipt of a notice by the plan
administrator of any Plan that the PBGC has instituted proceedings to
terminate such Plan or appoint a trustee to administer such Plan,
which could, in the opinion of Agent, result in a Material Adverse
Effect;
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(t) The withdrawal by Borrower, any of its Subsidiaries
or any of their ERISA Affiliates from a multiemployer plan as defined
in Section 3(37) or Section 4001(a)(3) of ERISA or Section 414 of the
IRC if such action could, in the opinion of Agent, result in a
Material Adverse Effect;
(u) The revocation by the Internal Revenue Service of the
qualified status of any employee benefit plan if such action could, in
the opinion of Agent, result in a Material Adverse Effect.
(v) Any qualification by a certified public accountant
relative to any financial statement delivered to Agent pursuant to
this Agreement that, viewed in the light of Borrower's operations as a
whole, is not acceptable to Agent in its discretion;
(w) Suspension, revocation, termination or limitation of
any required governmental approvals, agreements, permits or licenses
referenced in Section 5.13, if such suspension, revocation,
termination or limitation could, in the opinion of Agent or the
Determining Lenders, result in a Material Adverse Effect.
ARTICLE
Remedies
Section 10.1 Refusal of Funding. Neither Agent nor any Lender
shall be obligated to make any Advance available to Borrower (i) at any time
when any applicable condition for funding prescribed under this Agreement has
not been fulfilled to Agent's or Determining Lenders' satisfaction, (ii) at any
time when any Event of Default is in existence, or when any condition exists
which after notice or lapse of time, or both, would constitute an Event of
Default, (iii) if Agent has received any notice under Section 6.11 or if Agent
or any Lender has knowledge of any event or condition which would be the
subject of any notice required thereunder, or (iv) if Borrower, any Guarantor
or any Pledging Subsidiary has repudiated or made any anticipatory breach of
any of its obligations under the Loan Documents; and any Advance requested by
Borrower at any such time may be declined by Agent or the Lenders (subject at
all times, however, to Borrower's and the Lenders' obligations under Section
2.16), in whole or in part, in their sole discretion without prior notice.
Section 10.2 Remedies. Should an Event of Default under Section
9.1(g) or Section 9.1(n) occur at any time, the entire outstanding principal
amount and unpaid accrued interest of all Obligations shall automatically and
immediately become due and payable in full, and the Facility shall terminate,
without necessity of any notice, demand or any action by Agent. Should any
other Event of Default occur at any time, Agent may in its discretion take any
or all of the following actions: (i) declare the entire outstanding principal
amount and unpaid accrued interest of all or any part of the Obligations to be
immediately due and payable, (ii) terminate the Facility without notice to
Borrower; (iii) commence such actions against Borrower as may be necessary to
enforce the Obligations, or any part thereof; (iv) take such steps as Agent may
deem appropriate to foreclose and enforce any and all security interests, liens
and assignments now or hereafter granted to Agent to secure payment and
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performance of the Obligations, or any part thereof; or (v) exercise and avail
itself of any and all other remedies as may be available under any of the Loan
Documents or as otherwise may be available according to law. Agent at all
times shall have the rights and remedies of a secured party under the Code,
including, but not limited to, the right to take possession or enforce direct
payment of the Collateral. Agent may demand, collect, receipt for, settle,
compromise adjust, ▇▇▇ for, foreclose or otherwise realize upon Collateral as
it may determine. In taking possession of any Collateral, Agent is authorized
to enter upon any premises owned or leased by Borrower where any Collateral is
located. At its option, Agent may require Borrower to assemble the Collateral
and make it available to Agent at a place to be designated by Agent which is
reasonably convenient to both Agent and Borrower. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Agent will give Borrower reasonable
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
For this purpose, it is agreed that at least ten (10) Business Days notice of
the time of sale or other intended disposition of the Collateral delivered in
accordance with Section 12.2 shall be deemed to be reasonable notice in
conformity with the Code. Agent may adjourn or otherwise reschedule any public
sale by announcement at the time and place specified in the notice of such
public sale, and such sale may be made at the time and place as so announced
without necessity of further notice. Agent shall not be obligated to sell or
dispose of any Collateral, notwithstanding any prior notice of intended
disposition. With respect to any instruments or chattel paper at any time
included within any proceeds of the Collateral, Agent shall not have any duty
or obligation to take steps to preserve rights against prior parties. All
remedies exercised by Agent shall be deemed to be for the benefit of the
Lenders according to their respective Pro Rata Percentage (or in the event the
Facility Balance is zero, the Committed Percentage).
Section 10.3 Cash Collateral; Injunctive Relief. All cash
proceeds of Collateral from time to time existing, whether consisting of cash,
checks or other similar items, at all times shall be subject to an express
trust in favor of Agent for the benefit of the Lenders. All such proceeds
shall be subject to Agent's continuing security interests, liens and
assignments under this Agreement. Borrower is expressly prohibited from using,
spending, retaining or otherwise exercising any dominion over such proceeds in
any manner which is in breach of the provisions of this Agreement. Borrower
acknowledges that the continuing security interest, lien, assignment and trust
in favor of Agent, for the benefit of the Lenders, in the Collateral, and all
proceeds thereof is a material inducement to the extension of credit to
Borrower by the Lenders, without which the Lenders would not be willing to
enter into this Agreement or extend such credit. Borrower acknowledges that
any action by Borrower to hinder, delay or prohibit Agent from exercising the
rights and remedies with respect to such Collateral, or proceeds thereof,
granted by this Agreement would be wrongful to Agent and the Lenders, and would
cause them irreparable harm for which they would have no adequate remedy at
law. Accordingly, if Borrower should fail to comply with any request or demand
made by Agent during the existence of an Event of Default to deliver to Agent
any proceeds of Collateral, then, to the fullest extent allowed by law,
Borrower agrees that Agent shall be entitled to injunctive relief to restrain
any such action and require compliance with the requirements of this Agreement.
Section 10.4 Enforcement Costs; Injunctive Relief. Upon demand by
Agent or any Lender, Borrower shall pay any and all reasonable expenses,
including, without limitation, legal expenses, reasonable attorneys' fees,
court costs, collection costs and traveling expenses, incurred or paid by Agent
or any such Lender in protecting or enforcing any of its rights hereunder,
including its right
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to take possession, hold, store, prepare for sale, sell or otherwise dispose of
the Collateral and collect the proceeds of any Collateral. Until reimbursed or
otherwise paid, all such expenses shall be deemed to be included within the
Obligations. After deducting all of such expenses, any remaining proceeds of
collection or sale of the Collateral shall be applied in payment of the
Obligations in such manner as Agent may determine, and the excess, if any,
shall be disbursed by Agent in accordance with applicable law. Borrower
expressly agrees that it shall remain liable for any deficiency.
Section 10.5 Waiver of Notices. Except as otherwise expressly
provided in this Agreement, Borrower expressly waives presentment, demand,
notice of intention to accelerate, notice of acceleration, protest and any
other notices of any kind with respect to the Obligations.
Section 10.6 Setoff. Borrower irrevocably authorizes any Lender
or any of its Affiliates to charge any account of Borrower maintained with such
Lender or any of its Affiliates as may be necessary from time to time to pay
any matured portion of the Obligations. Borrower agrees that each Lender or
any of its Affiliates shall have a contractual right to setoff any and all
deposits or other sums at any time credited by or due from such Lender or any
of its Affiliates to Borrower against any part of the Obligations which are due
and payable. Such right of setoff may be exercised at any time without prior
notice, during any time when any Event of Default exists, whether or not Agent
has accelerated the Obligations. Upon the occurrence of an Event of Default
and for so long as the same shall remain in existence and not cured or waived,
any Lender or any of its Affiliates shall be entitled in its discretion to hold
any such deposits or other sums pending acceleration of the Obligations. Any
setoff or charge exercised by a Lender or any of its Affiliates under this
Section shall be subject to allocation or sharing among all the Lenders as
provided by Section 2.15.
Section 10.7 Performance By Agent. Should Borrower fail to
perform any covenant, duty or agreement required by the Loan Documents, Agent
may, at its sole option and election, perform or attempt to perform same on
behalf of Borrower at Borrower's cost and expense, provided that Agent shall
have no obligation or duty to take any such action. Borrower agrees to
reimburse Agent for the reasonable amount of such costs and expenses on demand.
Section 10.8 Non-Waiver. Forbearance or indulgence of any Event
of Default or any other event or condition which is or would be the subject of
a required notice under Section 6.11, at any time and from time to time, shall
not be deemed a waiver of any rights of Agent or the Lenders under the Loan
Documents. The acceptance by Agent at any time and from time to time of any
partial payment of the Obligations shall not be deemed to be a waiver of any
Event of Default then existing. No delay or omission by Lender in exercising
any right or remedy shall impair such right or remedy, or be construed as a
waiver thereof, nor shall any single or partial exercise of any such rights or
remedies preclude other or further exercise thereof. Agent shall not be
required or obligated to file suit or otherwise pursue any other Person for
enforcement or collection of any of the Obligations or to take any action to
realize upon any of the Collateral.
Section 10.9 Application of Payments. During the existence of any
Event of Default, all payments and proceeds of Collateral received by Agent
shall be applied to the Obligations in Agent's discretion, and, subject to
Section 2.14, Agent shall have the right to adjust or reapply in another manner
any such payments and proceeds as it may determine in its discretion.
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ARTICLE 11
Agent
Section 11.1 Agreements Among the Lenders. Agent, each Lender and
Borrower agree as follows:
(a) Agent: Appointment; Powers. Each Lender hereby
irrevocably, except as provided in clause (h) of this Section,
appoints and authorizes Agent to act as its nominee on its behalf, and
as the nominee on behalf of all the Lenders, in the name of Agent, the
Lenders or any Lender, to take any one or more of the following
actions: (i) administer the Facility in accordance with the Loan
Documents, and act or refrain from acting under the Loan Documents in
accordance with powers delegated to Agent under the Loan Documents and
such other powers as are reasonably incidental thereto; (ii) execute
and enter into the Loan Documents; (iii) hold the Loan Documents, and
hold and enforce the Obligations and the security interests, liens and
assignments in the Collateral granted under the Loan Documents; (iv)
receive all information, requests, documents and other items furnished
by Borrower under the Loan Documents and distribute such information,
requests, documents and other items in accordance with the provisions
of the Loan Documents; (v) take any actions as may be requested,
instructed or consented to by the Determining Lenders (provided that
unless the Loan Documents specifically provide for direction or
consent by the Determining Lenders, Agent shall not be obligated to
comply with any such instructions or seek any such consent); (vi) make
Advances available to Borrower on behalf of the Lenders; (vii)
distribute to each Lender its respective share of each payment
received from Borrower or any Guarantor in respect of Advances, fees,
reimbursements or other amounts payable under the Loan Documents
(upon, and to the extent of receipt of, collected funds); and (viii)
deliver to Borrower requests, demands, approvals and consents received
from the Lenders as required under the Loan Documents. Except as
otherwise expressly provided in this Agreement and the other Loan
Documents, each Lender irrevocably authorizes Agent to take or refrain
from taking such actions on the Lenders' behalf as Agent in its
discretion determines necessary or appropriate in administering the
Facility. Except as otherwise provided by this Agreement, Agent may
take such action, or refrain from taking such action, in respect of
the Obligations or the Collateral or in respect of administration of
the Facility, as it may deem in its discretion to be advisable and in
the best interests of the Lenders. Unless otherwise agreed by Agent,
any action taken by Agent with the consent or at the direction of the
Determining Lenders shall be deemed to have been taken for and on
behalf of all the Lenders, including any Lender who may not have so
consented or directed. Agent shall not be required to take action or
exercise any remedy except to the extent expressly required by this
Agreement upon direction of the Determining Lenders, provided that
Agent shall not be required to take any action which Agent believes
would expose it or the Lenders to personal liability, or which Agent
believes is contrary to any of the Loan Documents or applicable law.
Agent may (A) treat the payee of any Revolving Note as the owner and
holder thereof until Agent receives written notice of assignment or
transfer thereof signed by such payee and in form satisfactory to
Agent, (B) employ and consult with legal counsel, independent public
accountants and other experts and shall not be liable for any action
taken or omitted to be taken in good faith in accordance with the
advice of such counsel, accountants or experts, and (C) rely and act
upon
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any resolution, notice, consent, certificate, affidavit, letter or
other document or instrument or writing, or any telecopy, fax,
telegram, telex or teletype, or any court order, or any conversation,
which it believes to be genuine and correct and to have been signed or
made by the proper Person. Agent shall be fully protected in acting,
or in refraining from acting, under the Loan Documents in accordance
with instructions signed by the Determining Lenders, and such
instructions and any action or inaction by Agent pursuant thereto
shall be binding on all the Lenders. Neither Agent nor its
affiliates, officers, directors, employees, attorneys or agents shall
be liable for any action taken or omitted to be taken in connection
with the Loan Documents except for gross negligence or willful
misconduct. Agent may perform any of its duties under the Loan
Documents by or through officers, directors, employees, attorneys or
agents, and shall be entitled to seek and rely upon advice of counsel
concerning all matters pertaining to its duties in respect of such
performance. Agent shall have no duties or responsibilities except
those expressly set forth in the Loan Documents. Agent shall not be a
fiduciary or trustee on behalf of the Lenders or any Lender.
(b) Availability of Information. Agent will forward to
the Lenders copies of all financial statements and reports of a
material nature which are furnished by Borrower, TOPA or any
Subsidiary of Borrower to Agent, other than those, if any, which by
the terms of this Agreement are to be delivered directly to the
Lenders, provided that Agent shall not have any liability to any
Lender for failure to do so. Agent shall promptly notify the Lenders
upon becoming aware of any Event of Default, provided that Agent shall
not have any liability to the Lenders for failure to do so, and
provided further that Agent shall not be deemed to have knowledge or
notice of any Event of Default (other than failure of timely payment
of principal, accrued interest or fees as required by the Loan
Documents) unless it receives written notice from Borrower or any
Lender specifying an event or condition and designating the same as an
Event of Default. Upon request, Agent will make available to any
Lender any documents, reports or other items from time to time
received from Borrower and remaining in Agent's possession.
(c) Required Consent of the Lenders. Notwithstanding the
authority granted to Agent elsewhere in this Agreement:
(i) The written consent of Agent and all the
Lenders shall be required as a condition to the effectiveness
of any of the following actions:
(A) to extend the Maturity Date or
postpone the date on which any installment of
principal or interest is payable under this
Agreement;
(B) to change any interest rate payable
by Borrower under this Agreement or the Unused
Facility Commitment Fee Rate;
(C) to increase the stated maximum amount
which may be borrowed by Borrower under this
Agreement;
(D) to release any Collateral or to
consent to allow any security interests, liens or
encumbrances (other than as allowed by the Loan
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Documents) on any Collateral, or to consent to allow
the disposition (other than as expressly allowed by
the Loan Documents) of any Collateral; or
(E) to release or discharge Borrower or
any Guarantor from any obligation to make payments of
principal or accrued interest under the Loan
Documents (other than in consideration for full
payment and performance); and
(ii) The written consent of Agent and the
Determining Lenders shall be required as a condition to the
effectiveness of any of the following actions:
(A) any agreement to waive or modify any
covenants contained in Article 6, Article 7 or
Article 8 of this Agreement or any Event of Default
contained in Article 9 of this Agreement, paragraph 2
of the Guarantees or Article 4 of the Pledge
Agreements;
(B) to consent to any material amendment
of the TOPA Service Agreement;
(C) to grant any consent or make any
agreement which is expressly subject to the consent
of the Determining Lenders, as may be specifically
provided in any other Loan Document; or
(D) to foreclose or enforce any and all
security interests, liens and assignments in any
Collateral.
(iii) Subject to Section 11.1(a) and upon written
direction of any Lender, Agent agrees to request any
information from Borrower, any Guarantor or any Pledging
Subsidiary which may be requested by Agent under the Loan
Documents, provided that in each instance, such written
direction references this Section 11.1(c)(iii) and
specifically identifies the requested action; and
(iv) Notwithstanding the provisions of Section
11.1(a), Agent agrees to take any of the following actions
upon written direction of the Determining Lenders, provided
that in each instance, such written direction references this
Section 11.1(c)(iv) and specifically identifies the requested
action:
(A) apply payments received during the
existence and continuance of an Event of Default in
any manner except as provided by Section 2.9(b)
(provided that such exception shall not apply as to
any priority of payment regarding any amount due in
Section 2.9(b) which are owed exclusively to Agent,
and provided further that such exception shall be
subject to the provisions of Section 2.15 at all
times);
(B) request any Affiliate Subordination
Agreement, as provided by Section 6.18;
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(C) request or direct Borrower, any
Guarantor or any Pledging Subsidiary to take any
action which may be requested or directed by Agent
under the Loan Documents;
(D) pursue any remedies provided by the
Loan Documents;
(E) perform or take any action which may
be taken by Agent under the Loan Documents; and
(F) take action at the request of the
Determining Lenders, as may be specifically provided
in any other Loan Document.
Notwithstanding the foregoing, no consent of the Lenders or the Determining
Lenders shall be required if Agent should be required to take any such action
by court order or applicable law. Otherwise, except as provided or referenced
above, Agent may amend, modify or waive any of the terms of the Loan Documents,
consent to any action or failure to act by Borrower, or exercise or refrain
from exercising any powers or rights which it may have under the Loan Documents
or as a matter of law, without the requirement of prior notice to or consent of
the Lenders or the Determining Lenders. Any consent requested by Agent from
any Lender, and any directive, consent or refusal of consent given to Agent by
any Lender, shall be communicated as provided in Section 12.2. In the event
any action or consent requested by Agent or any Lender is not granted or
refused within ten (10) days after such request, such consent shall be deemed
to have been denied.
(d) Non-Receipt of Funds by Agent. Unless Agent shall
have been notified by Borrower that it does not intend to make any
payment required to be made by Borrower to Agent for the account of
the Lenders (which notification shall be effective only if actually
received by Agent prior to distributing funds to the Lenders in
respect of such anticipated payment), Agent may assume (with no
requirement to make or verify such assumption) that such payment has
been made by Borrower and may, in reliance upon such assumption (but
with no obligation to do so), distribute to each Lender an amount
equal to its Pro Rata Percentage (or in the event the Facility Balance
is zero, the Committed Percentage) thereof. If such payment is not in
fact made to Agent by Borrower, the amount that was distributed by
Agent to any Lender in respect thereof shall be returned to Agent on
demand, together with interest thereon for each day during the period
commencing on the date such amount was disbursed to such Lender and
continuing until such amount is returned to Agent, at a per annum rate
equal to the Federal Funds Rate.
(e) Limitation of Agent's Liability. Neither Agent nor
any of its officers, directors, employees, attorneys or agents shall
be liable for any action taken or omitted to be taken in connection
with the Loan Documents in conformity with instructions or consents of
the Determining Lenders, or based upon its belief that such action or
inaction is within the discretion or power conferred to Agent under
the Loan Documents, nor shall Agent or any of such officers,
directors, employees, attorneys or agents be liable for the
consequences of any error of judgment, except for gross negligence or
willful misconduct. No Lender, nor any of its officers, directors,
employees, attorneys or agents, shall be liable for any action taken
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or omitted to be taken by Agent in connection with the Loan Documents
or based upon its belief that such action or inaction is within the
discretion or power conferred to Agent under the Loan Documents, nor
shall such Lender or any of its officers, directors, employees,
attorneys or agents be liable for the consequences of any error of
judgment, except for gross negligence or willful misconduct. Agent
shall not be responsible to the Lenders for the due execution,
validity, effectiveness, enforceability or sufficiency of this
Agreement or any of the other Loan Documents, or for any recitals,
representations or warranties, reports or statements contained in the
Loan Documents or furnished in connection therewith, or for the
perfection or value of any Collateral or for any failure by any Person
to perform any obligations under the Loan Documents. Agent shall have
no liability to any Lender with respect to ascertaining or confirming
performance or observation by Borrower, any Guarantor or any Pledging
Subsidiary of any terms, covenants or conditions of any Loan
Documents.
(f) Expenses. Each Lender agrees to reimburse Agent
promptly upon demand for its pro rata share (calculated on the basis
of its respective Committed Percentage) of any and all out-of-pocket
expenses (including reasonable attorneys' fees) incurred by Agent in
connection with the preparation, execution, delivery, administration
(including, without limitation, amounts, if any, expended by Agent
under Section 10.7), modification, amendment or enforcement of the
Loan Documents, and legal advice in respect of rights or obligations
thereunder (whether in connection with negotiations, legal proceedings
or otherwise) to the extent that any such expenses are not paid or
reimbursed to Agent by Borrower or from other sources within 60 days
after request for payment or reimbursement is made to Borrower
(provided that any such payment by any Lender to Agent shall be
without prejudice to the right to contest such Lender's obligation to
make such payment). To the extent any such expenses are recovered by
Agent from Borrower or other sources after any such amounts have been
paid to Agent by any Lender, the amount so recovered shall be refunded
by Agent pro rata to each such paying Lender according to its
respective payments.
(g) Indemnification. Each Lender hereby jointly and
severally indemnifies and holds harmless Agent, pro rata according to
its Committed Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and/or disbursements of any kind or nature whatsoever
which may be imposed on, asserted against or incurred by Agent in any
way with respect to any Loan Documents or any action taken or omitted
by Agent under the Loan Documents, except to the extent the same is
caused by gross negligence or willful misconduct by Agent (it being
acknowledged that it is the express intention of the Lenders that such
indemnification and hold harmless obligations shall include any such
actions or inactions which are a result of negligence other than gross
negligence). Prior to compliance with any instructions by the
Determining Lenders under the Loan Documents, Agent shall be entitled
to request further assurance of indemnification from the Determining
Lenders in form satisfactory to Agent, and unless and until such
further assurance is provided to Agent, Agent shall have no obligation
to comply with such instructions and may disregard same.
(h) Replacement of Agent. Subject to the following,
Agent may resign as Agent at any time by giving notice of such
resignation to the Lenders and Borrower, and Agent may be removed for
cause upon determination by the Determining Lenders. Should Agent
resign
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as Agent, or be removed for cause upon determination of the
Determining Lenders, or cease to be a Lender, then the Determining
Lenders shall forthwith appoint another Lender to become Agent,
whereupon such newly appointed Lender shall thereafter be Agent, and
Borrower and the Lenders shall execute such documents as any Lender
may reasonably request to reflect such change. Any resignation or
removal of Agent shall become effective upon the appointment of a
successor Agent (provided that if the Lenders fail for any reason to
appoint a successor within sixty (60) days after such resignation or
removal, Agent shall thereafter have no obligation to act as Agent
hereunder). Any Lender appointed as successor Agent as provided above
shall be deemed to accept such appointment, and such successor Agent
shall thereupon succeed to and become vested with all rights, powers,
privileges, immunities and duties of the resigning or removed Agent,
and the resigning or removed Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents.
After any Agent's resignation or removal as Agent, the provisions of
this Article 11 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was Agent.
(i) Rights of Agent as Lender. With respect to its
Committed Percentage, its portion of Advances, and its Revolving Note,
any Lender who serves as Agent shall nonetheless continue to have the
same rights as a Lender, in its individual corporate capacity as a
Lender, as any other Lender and may exercise the same as though it
were not acting as Agent, and unless the context indicates otherwise,
the term "Lender" or "Lenders," wherever used in the Loan Documents
shall include Agent in its individual corporate capacity as a Lender.
(j) Independent Credit Decisions. Each Lender
represents, warrants and agrees that it has made its own credit
analysis of Borrower and the Guarantors, and its own evaluation and
valuation of the Collateral and has made its own decision to enter
into this Agreement independently and without reliance on Agent or any
other Lender and based on such documents and information as it has
deemed appropriate. Each Lender further acknowledges and agrees that
it will continue to make its own analysis and decisions in taking or
not taking action under this Agreement or any of the other Loan
Documents, independently and without reliance upon Agent or any other
Lender and based upon such documents and information as it shall deem
appropriate at the time. Each Lender acknowledges that it shall have
no right to rely upon Agent to keep it informed of the financial
condition or creditworthiness of Borrower or any Guarantor or the
condition, value, marketability or other conditions in respect of the
Collateral. Upon written request by any Lender, Agent will make any
documents, reports or other information received by Agent from
Borrower and designated in such request available to such Lender.
Otherwise, except as specifically provided in this Agreement, Agent
shall not have any duty or responsibility to provide any Lender with
any credit or other financial information concerning the affairs,
financial condition or business of Borrower or any Guarantor, or any
of their respective Affiliates.
(k) Several Commitments. No Lender shall be obligated to
fund any other Lender's portion of an Advance. In no event shall any
Lender be required to make any loan which would result in the
aggregate principal amount owing to such Lender under the Facility to
exceed the lesser of its Committed Maximum or its Committed Percentage
of the Credit
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Limit. Without its prior written consent, no Lender's Committed
Maximum or Committed Percentage may be increased by any amount. Agent
shall not be liable to Borrower or any other Lender for any act or
omission by any other Lender, and no Lender shall be responsible to
Borrower or any other Lender for any act or omission of any other
Lender.
(l) Benefits. Borrower expressly acknowledges and agrees
to the provisions of this Article 11, provided that none of the
provisions of this Article shall inure to the benefit of Borrower or
any Person other than Agent and the Lenders. Borrower shall not be
entitled to rely upon, or to raise as a defense, any failure of Agent
or any Lender to comply with such provisions. Subject to the
requirements of Section 11.1(c)(i) and Section 11.1(c)(ii), Borrower
shall be entitled to rely on actions, agreements and consents of Agent
in connection with administering the Loan Documents as the actions,
agreements and consents of all the Lenders.
(m) Limitation of Co-Agent's Obligations.
Notwithstanding any reference in this Agreement to NationsBank as
"Co-Agent," such designation shall not convey any of the obligations,
responsibilities, rights, powers or duties of Agent on NationsBank
unless such obligations, responsibilities, rights, powers or duties
are expressly assumed by NationsBank through appointment of
NationsBank as "Agent" pursuant to Section 11.1(h). As used in this
clause (m), "NationsBank" means NationsBank of Texas, N.A.
ARTICLE 12
Miscellaneous
Section 12.1 Effective Date; Termination. This Agreement shall be
effective as of the effective date specified in the preamble of this Agreement.
Notwithstanding any termination or notice of termination, the Obligations and
all rights and benefits of Agent and the Lenders under the Loan Documents shall
remain in full force and effect until the Obligations have been paid in full.
Section 12.2 Notices. Any consent, approval, notice, request or
demand from one party to another must be made in writing to be effective, and
shall be deemed to have been given on the third Business Day after its deposit
in the U.S. mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it
is actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as follows:
Borrower:
Physician Reliance Network, Inc.
Two Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.,
President and Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to:
Physician Reliance Network, Inc.
Two Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent:
Bank One, Texas, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on
the signature pages of this Agreement or the most recent Assignment
and Acceptance executed by such Lender or such other address as may
hereafter be designated and delivered in writing.
Section 12.3 Agent's Records; Account Statements. Agent's records
in respect of loans advanced, accrued interest, payments received and applied
and other matters in respect of calculation of the amount of the Obligations
shall be deemed conclusive absent demonstration of error. All statements of
account rendered by Agent to Borrower relating to principal, accrued interest
or costs owing by Borrower under this Agreement shall be presumed to be correct
and accurate unless, within thirty (30) days after receipt thereof, Borrower
shall notify Agent in writing of any claimed error therein.
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Section 12.4 Indemnity. BORROWER HEREBY INDEMNIFIES AND AGREES TO
HOLD HARMLESS AND DEFEND ALL INDEMNIFIED PERSONS FROM AND AGAINST ANY AND ALL
INDEMNIFIED CLAIMS. UPON NOTIFICATION AND DEMAND, BORROWER AGREES TO PROVIDE
DEFENSE OF ANY INDEMNIFIED CLAIM AND PAY ALL COSTS AND EXPENSES OF COUNSEL
SELECTED BY ANY INDEMNIFIED PERSON (AND REASONABLY ACCEPTABLE TO BORROWER) IN
RESPECT THEREOF. ANY INDEMNIFIED PERSON AGAINST WHOM ANY INDEMNIFIED CLAIM MAY
BE ASSERTED RESERVES THE RIGHT TO SETTLE OR COMPROMISE ANY SUCH INDEMNIFIED
CLAIM AS SUCH INDEMNIFIED PERSON MAY DETERMINE IN ITS/HIS/HER SOLE DISCRETION,
PROVIDED THAT THE OBLIGATIONS OF SUCH INDEMNIFIED PERSON, IF ANY, PURSUANT TO
ANY SUCH SETTLEMENT OR COMPROMISE SHALL NOT BE DEEMED INCLUDED WITHIN THE
INDEMNIFIED CLAIMS UNLESS BORROWER IS A PARTY TO, OR CONSENTS IN WRITING TO,
SUCH SETTLEMENT OR COMPROMISE. THE INDEMNIFICATION PROVIDED FOR IN THIS
SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND SHALL CONTINUE FOR
THE BENEFIT OF ALL INDEMNIFIED PERSONS. EACH INDEMNIFIED PERSON AGAINST WHOM
AN INDEMNIFIED CLAIM IS ASSERTED SHALL PROMPTLY NOTIFY BORROWER OF ANY SUCH
INDEMNIFIED CLAIM UPON RECEIVING KNOWLEDGE THEREOF, PROVIDED THAT FAILURE TO SO
NOTIFY BORROWER SHALL NOT IMPAIR BORROWER'S OBLIGATIONS HEREUNDER UNLESS SUCH
FAILURE PREJUDICES BORROWER'S DEFENSE OF SUCH INDEMNIFIED CLAIM.
Section 12.5 Non-applicability of Chapter 15 of the Texas Credit
Code. Chapter 15 of the Texas Credit Code shall not be applicable to this
Agreement or the Facility.
Section 12.6 Judgment Interest. It is agreed that any judgment
entered by a court against Borrower for payment of the Obligations, or any part
thereof, shall provide for post-judgment interest on the amount thereof at a
rate equal to the Maximum Rate.
Section 12.7 Interest Limitation. In no contingency or event
whatsoever shall the amount of interest under the Loan Documents paid by
Borrower, received by Agent or the Lenders, agreed to be paid by Borrower, or
requested or demanded to be paid by Agent, exceed the Maximum Rate. In the
event any such sums paid by Borrower would exceed the Maximum Rate, such excess
amount shall automatically be applied to any unpaid principal or, if the amount
of such excess exceeds said unpaid principal, such excess shall be paid to
Borrower. All sums paid, or agreed to be paid, by Borrower which are or
hereafter may be construed to be compensation for the use, forbearance or
detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
Loan Documents, or in any notes or other related documents executed pursuant
hereto, Agent and the Lenders shall never be entitled to receive, collect or
apply as interest any amount in excess of the Maximum Rate and, in the event
Agent or the Lenders ever receive, collect or apply any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid
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to Borrower. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Rate, Borrower and Agent shall, to
the maximum extent permitted under applicable law, (i) characterize any
non-principal payment as a standby fee, commitment fee, prepayment charge,
delinquency charge or reimbursement for a third-party expense rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread in equal parts throughout the entire
period during which the indebtedness was outstanding the total amount of
interest at any time contracted for, charged or received. Nothing herein
contained shall be construed or so operate as to require Borrower to pay any
interest, fees, costs or charges greater than is permitted by applicable law.
Subject to the foregoing, Borrower hereby agrees that the actual effective rate
of interest from time to time existing with respect to Advances under the
Facility, taking into account all amounts agreed to by Borrower or charged or
received by Agent under the Loan Documents which may be deemed to be interest
under applicable law, shall be deemed to be a rate which is agreed to and
stipulated by Borrower and Agent in accordance with applicable law.
Section 12.8 Continuing Rights of the Lenders In Respect of
Obligations. In the event any amount from time to time applied in reduction of
the Obligations is subsequently set aside, avoided, declared invalid or
recovered by Borrower or any trustee or in bankruptcy, or in the event any
Lender is otherwise required to refund or repay any such amount pursuant to any
applicable law, then the Obligations shall automatically be deemed to be
revived and increased to the extent of such amount and the same shall continue
to be secured by the Collateral as if such amount had not been so applied.
Section 12.9 Fees, Costs and Expenses. Borrower agrees to pay all
reasonable costs and expenses incurred by Agent and the Lenders in connection
with the Loan Documents, including, without limitation: (i) negotiation,
preparation and closing of the Loan Documents, including reasonable attorneys
fees and disbursements, appraisal fees, search fees, filing and recording fees,
transfer fees, documentation fees, taxes and all other similar fees and costs
incurred; (ii) ongoing administration of the Loan Documents, including, without
limitation, reasonable fees and costs incurred in consultation with attorneys,
accountants or appraisers or in connection with any factual investigation,
(iii) negotiation, preparation and closing of any amendment, waiver or consent
relating to the Loan Documents, including any fees or costs itemized in clause
(i) above, and (iv) enforcing any provision of the Loan Documents, collecting
the Obligations, exercising any rights or remedies or pursuing or defending any
claim arising out of, or in any way relating to the Loan Documents, including,
without limitation, fees and costs of attorneys, experts or other consultants
retained by Agent or any Lender in connection therewith and any other fees
pursuant to Section 10.4. Borrower will pay any applicable stamp,
registration, recordation and similar taxes, fees and charges in respect of the
Collateral or perfection or maintenance of Lender's rights under the Loan
Documents, and agrees to indemnify Agent and the Lenders against any
liabilities resulting from any delay, deferral or omission in payment of any
such taxes, fees or charges. All fees, costs and expenses for which Borrower
is obligated under the Loan Documents shall be payable to Agent (or in the case
of any costs or fees incurred by and payable to any Lender and recoverable by
such Lender under this Section, then to such Lender) on demand.
Section 12.10 Acceptance and Performance. This Agreement shall
become effective only upon acceptance by Agent at its offices in Dallas, Dallas
County, Texas. The Obligations are payable at Agent's Principal Office in
Dallas, Dallas County, Texas. BORROWER, AGENT AND THE
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LENDERS EACH AGREES THAT DALLAS COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR
LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THE LOAN
DOCUMENTS, AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY
SUCH DISPUTE. BORROWER, AGENT, AND THE LENDERS EACH CONSENTS TO THE PERSONAL
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS
FOR THE LITIGATION OF ANY SUCH DISPUTE OR CLAIM.
Section 12.11 Waiver of Trial By Jury. EACH OF THE PARTIES HERETO
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY
BE COMMENCED BY OR AGAINST BORROWER, AGENT OR ANY LENDER ARISING OUT OF OR
RELATING TO THIS AGREEMENT. EACH SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS
MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND
BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS
CHOOSING.
Section 12.12 Obligations. The rights of Agent and the Lenders in
respect of the Obligations shall not be impaired by reason that the amount
thereof at any time exceeds any stated maximum or other limitation provided
herein.
Section 12.13 Confidentiality. Agent and each Lender agrees to use
reasonable precautions to keep confidential all Confidential Information, in
accordance with its customary procedures for handling information of the nature
involved, provided that nothing herein shall prohibit or limit the disclosure
of any such information (i) to the extent authorized in writing by an officer
of Borrower, any Guarantor or any Pledging Subsidiary, (ii) to Agent, any
Lender (or any Affiliate of either), Borrower, any Guarantor, or any Pledging
Subsidiary, or their respective counsel or accountants, (iii) to federal or
state examiners, regulators or auditors, (iv) to the extent required by
statute, rule, regulation or judicial process (provided that Agent agrees to
make reasonable efforts to promptly advise Borrower of any request for such
disclosure), (v) in connection with any litigation to which Agent or any Lender
is a party (provided that Agent agrees to make reasonable efforts to promptly
advise Borrower of any request for such disclosure), (vi) to any prospective
Lender, or to any Assignee or participant, or prospective Assignee or
participant, provided that such Person agrees to maintain any such information
confidential to the extent required by this Section, (vii) which becomes public
through no violation of the provisions of this Section, (viii) to the extent
such information becomes available to Agent or any Lender through any Person
other than Borrower, any Guarantor or any Pledging Subsidiary, without
knowledge of violation of any confidentiality restrictions on such disclosure,
and Agent or such Lender has no knowledge or written notice of any such
violation at the time of Agent's or such Lender's disclosure thereof, or (ix)
to the extent that, at the time of disclosure to Agent or any Lender, such
information was already known by, or in the possession of, Agent or any Lender
from sources other than Borrower, any Guarantor or any Pledging Subsidiary,
without restriction on disclosure thereof.
Section 12.14 Agent for the Benefit of the Lenders. All references
in the Loan Documents to the security interests, liens and assignments granted,
or to be granted, by Borrower or any Pledging
63
71
Subsidiary to or for Agent under the Loan Documents shall be deemed to mean
such security interests, liens and assignments for the benefit of the Lenders,
whether or not the context expressly so provides.
Section 12.15 Further Assurance. Borrower agrees to execute and
deliver such additional documentation, and cooperate with Agent and take such
additional action as may be reasonably requested by Agent to create, maintain,
perfect and protect the interests of Agent and the Lenders created, or intended
to be created, under the Loan Documents. Borrower agrees to execute such
additional documentation and take such action as may be reasonably requested by
Agent to comply with any changes in laws, regulations or administrative rulings
affecting the interests (including, without limitation, the validity,
perfection or enforcement thereof) of Agent and the Lenders created, or
intended to be created, under the Loan Documents, to the end that Agent and the
Lenders shall maintain the rights and benefits intended for their benefit under
the Loan Documents.
Section 12.16 Governing Law. THIS AGREEMENT, AND ALL DOCUMENTS AND
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS, PROVIDED THAT TO THE EXTENT
FEDERAL LAW WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE
LAWS OF THE STATE OF TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW
WHICH PURPORT TO LIMIT THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR,
CHARGED OR RECEIVED IN CONNECTION WITH ANY OF THE OBLIGATIONS, SUCH FEDERAL LAW
SHALL APPLY.
Section 12.17 Entirety and Amendments. This Agreement, together
with the other Loan Documents, embodies the entire agreement between the
parties relating to the subject matter hereof, and may be modified or amended
only by an instrument in writing executed by an authorized officer of each
party hereto.
Section 12.18 Parties Bound. This Agreement shall be binding upon
and inure to the benefit of Borrower, Agent and the Lenders, and their
respective successors in interest and assigns. Borrower may not assign any
right, power, duty or obligation under this Agreement, or any document or
instrument executed in connection herewith, without the prior written consent
of Agent. This Agreement is intended for the benefit of Borrower, Agent and
the Lenders, and their respective successors in interest and assigns only, and
may not be relied upon by any other Person.
Section 12.19 Exhibits and Schedules. All Exhibits and Schedules
referenced herein, and attached hereto, are incorporated in this Agreement and
made a part hereof for all purposes.
Section 12.20 Cumulative Rights. All rights and remedies of Agent
under the Loan Documents are cumulative, and are in addition to rights and
remedies otherwise available by law. Such rights and remedies may be exercised
concurrently or successively, at such times as Agent may determine in its
discretion. Borrower waives any right to require marshaling.
Section 12.21 Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future laws
effective during the Contract Term, such provisions
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shall be fully severable, and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a part
of this Agreement. In such case, the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected thereby.
Section 12.22 Multiple Counterparts. This Agreement may be
executed simultaneously in one or more multiple originals, each of which shall
be deemed an original, but all of which together shall constitute one and the
same Agreement. A telecopy or other electronic transmission of a signature to
this Agreement shall be deemed valid as an original.
Section 12.23 Survival. All covenants, agreements, representations
and warranties made by Borrower herein shall survive the execution, delivery
and closing of this Agreement, and all documents executed in connection
herewith, and shall not be affected by any investigation made by any party.
Section 12.24 Covenants Cumulative. The covenants contained in
Agreement are in addition to all other covenants provided in the other Loan
Documents.
Section 12.25 Amendment and Restatement. This Agreement is entered
into for the purpose of amending and restating the Original Loan Agreement.
All rights, benefits, indebtedness, interest, liabilities and obligations of
the parties to the Original Loan Agreement are hereby amended and restated in
their entirety according to the terms and provisions set forth herein.
THIS WRITTEN AGREEMENT REPRESENTS 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.
EXECUTED as of the effective date specified in the preamble.
BORROWER:
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Ex. V.P.
---------------------------------
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AGENT:
BANK ONE, TEXAS, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: VP
---------------------------------
CO-AGENT:
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President
---------------------------------
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LENDERS:
Committed Maximum: $40,000,000 BANK ONE, TEXAS, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ------------------------------------
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
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75
Committed Maximum: $25,000,000 NATIONSBANK OF TEXAS, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ------------------------------------
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President
---------------------------------
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
76
Committed Maximum: $10,000,000 BANQUE PARIBAS
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ------------------------------------
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
69
77
Committed Maximum:$15,000,000 COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"Rabobank Nederland," NEW YORK BRANCH
One Galleria Tower By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
13355 ▇▇▇▇ Road, Suite 1000 ------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------------
Title: Vice President
---------------------------------
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President, Manager
---------------------------------
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Committed Maximum: $10,000,000 THE FUJI BANK LIMITED
1 Houston Center, Suite 4100 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
1221 ▇▇▇▇▇▇▇▇ ------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------------
Title: Vice President & Manager
---------------------------------
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79
Committed Maximum: $10,000,000 MELLON BANK, N.A.
2 Mellon Bank Center, Room 152-0270 By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ------------------------------------
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Banking Officer
---------------------------------
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80
Committed Maximum: $15,000,000 PNC BANK, NATIONAL
ASSOCIATION
1 PNC Plaza By: /s/ ▇▇▇▇▇▇ ▇. FIELD
249 Fifth Avenue, 5th Floor ------------------------------------
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. Field
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------------
Title: Corporate Banking Officer
---------------------------------
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Committed Maximum: $15,000,000 SUN TRUST BANK, CENTRAL FLORIDA, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Tower 10 By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Mail Code FL O-1101 ------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ ----------------------------------
Title: Vice President
---------------------------------
STATE OF GEORGIA
COUNTY OF ▇▇▇▇▇▇
On the 6th day of June, 1997, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
as the Vice President of SunTrust Bank, Central Florida, N.A., and before me
executed the attached Amended and Restated Credit Agreement dated as of June
__, 1997, between Physician Reliance Network, Inc., as "Borrower", Bank One,
Texas, N.A., as "Agent", and the other "Lenders" named herein, including
SunTrust Bank, Central Florida, National Association, as a "Lender".
IN WITNESS WHEREOF, I have hereunto set my hand and official seal, in
the state and county aforesaid.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Notary Public, ▇▇▇▇▇▇ County, Georgia
My Commission Expires Sept. 10, 1999
------------------------------------------------
Signature of Notary Public, State of Georgia
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------------
(Print, Type or Stamp Commissioned Name
of Notary Public)
Personally known [X]; OR Produced
---
Identification
----------------------------------
Type of Identification Produced
-----------------
------------------------------------------------
(Notary Seal)
74
82
Schedule 5.1
to the
Amended and Restated Credit Agreement
Trade Names, Mergers, Acquisitions
1. Borrower was incorporated as Physician Competitive Resource Corporation,
Inc. and in April 1994 changed its name to Physician Reliance Network,
Inc.
2. Borrower acquired the capital stock of TOPS Pharmacy Services, Inc. on
July 1, 1993.
3. In October ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Oncology Center, Inc. merged into Borrower.
83
Schedule 5.6(a)
to the
Amended and Restated Credit Agreement
1. Texas Oncology, P.A. owns in excess of 10% of Borrower's common stock.
84
Schedule 5.6(b)
to the
Amended and Restated Credit Agreement
Subsidiaries and Ownership of Subsidiaries
Subsidiaries % Owned Shares outstanding Material Subsidiaries
------------ ------- ------------------ ---------------------
TOPS Pharmacy
Services, Inc. 100 3,000 Yes
Innovative Medical
Communications, Inc. 80 1,000 No
PRN Research, Inc. 100 1,000 No
85
Schedule 5.8
to the
Amended and Restated Credit Agreement
Litigation and Judgements
In March 1996, Methodist Hospitals of Dallas ("Methodist") filed a lawsuit
in the District Court of Dallas County, Texas against the Company and TOPA.
This lawsuit asserts various claims, including claims of monopolization,
conspiracy to monopolize, attempted monopolization, unfair competition, and
tortious interference with actual and prospective contractual relationships.
Methodist is seeking both injunctive relief and unspecified monetary and
punitive damages. This matter is set for trial in February 1998. The Company
has denied each of Methodist's claims, believes this lawsuit is without merit,
and intends to vigorously defend itself. The Company is not aware of any
governmental actions to assert claims against TOPA or the Company similar to
those asserted by Methodist.
On or about September 12, 1996, the Company was named as a defendant in a
suit styled ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ On Behalf of Himself and All Others Similarly
Situated v. Physician Reliance Network, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., and ▇▇▇▇▇
& Company, in the 14th Judicial District Court, Dallas County, Texas
("Hinerfeld"). On or about September 17, 1996, the Company was named as a
defendant in a suit styled ▇▇▇▇▇ ▇▇▇▇▇▇▇ On Behalf of Herself and All Others
Similarly Situated v. Physician Reliance Network, Inc., Texas Oncology, P.A.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the United States District Court
for the Northern District of Texas, Dallas Division ("Kaufman"). On or about
October 15, 1996, the Company was named as a defendant in a suit styled ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇, On Behalf of Himself and All Others Similarly Situated v.
Physician Reliance Network, Inc., Texas Oncology, P.A., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇▇"). By order dated December 16, 1996, the ▇▇▇▇▇▇▇▇▇▇▇ case
was consolidated with the Hinerfeld action. On or about March 3, 1997, the
▇▇▇▇▇▇▇▇▇▇▇ state court suit was dismissed without prejudice, and on or about
March 11, 1997, plaintiff ▇▇▇▇▇▇▇▇▇▇▇ joined the ▇▇▇▇▇▇▇ Federal court suit.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is no longer a named defendant in the Kaufman action. ▇▇▇▇▇▇▇
seeks recovery on behalf of all persons who purchased shares of the Company's
common stock on the open market from February 12, 1996, to July 11, 1996, and
alleges claims under Sections 10b and 20(a) of the Federal Securities Exchange
Act of 1934, and under Rule 10b-5 promulgated thereunder. Hinerfeld seeks
recovery on behalf of persons who purchased stock between April 23, 1996, and
July 11, 1996, in the April 1996 public offering of the
86
Company's common stock and alleges claims under Sections 11, 12(a)(2) and 15 of
the Federal Securities Act of 1933 and the Texas Securities Revised Civil
Statutes Section 581-33. As relief, Kaufman asserts that, if a class is
certified, damages will exceed $64,482,458. Hinerfeld seeks unspecified
monetary damages.
On September 4, 1996, the Company was named as a defendant in a similar
suit styled ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ v. Physician Reliance Network, Inc., Texas
Oncology, P.A.; ▇▇▇▇▇ ▇▇▇▇▇▇, Inc.; ▇▇▇▇▇ & Co., Inc.; ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.; ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Individually;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., Individually; and J. ▇▇▇▇▇▇ ▇▇▇▇, Individually, in the
214th Judicial District Court, Nueces County, Texas ("▇▇▇▇▇▇▇"). Through an
amended pleading, ▇▇▇▇▇▇▇ purports to represent a class of all persons who
purchased and presently own shares of the Company's common stock from November
1994 through September 4, 1996. ▇▇▇▇▇▇▇ asserts claims under Sections 11 and 15
of the federal Securities Act and the Texas Securities Act. J. ▇▇▇▇▇▇ ▇▇▇▇ is
no longer a named defendant in the ▇▇▇▇▇▇▇ action, but ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ has
been named as a defendant. As relief, ▇▇▇▇▇▇▇ seeks $1,380 plus interest
thereon as his costs for purchasing the Company's common stock. ▇▇▇▇▇▇▇ seeks
unspecified monetary damages on behalf of the class. On or about April 15,
1997, ▇▇▇▇▇▇▇ was transferred to the 14th Judicial District Court, Dallas
County, Texas. Responsive pleadings have been filed, plaintiffs have moved for
class certification, and discovery has commenced in all three suits.
In general, Jackson, Kaufman, and Hinerfeld assert that the Company has
engaged in certain improper accounting practices, that the relationship between
the Company and certain of the Affiliated Physician Groups violates federal and
state law, and that certain of the Affiliated Physician Groups have charged the
Medicare program amounts in excess of the cost of delivering certain services.
The Company believes that the lawsuits are without merit and intends to
vigorously defend itself. The Company is not aware of any governmental actions
to assert claims against TOPA or the Company similar to those in this
litigation.
87
Schedule 5.12
to the
Amended and Restated Credit Agreement
Physician Reliance Network, Inc. is a party to the following Service
Agreements:
State Practice
----- --------
Arkansas - Oncology Associates, P.A. dated as of June 2, 1997
Illinois - Hematoloty-Oncology Associates of Illinois, L.L.C.
dated as of December 9, 1996
Iowa - Iowa Cancer Care, P.L.C. dated as of April 1, 1995
Maryland - (1) Central Maryland Oncology Group, P.A.
dated as of January 1, 1996
(2) ▇▇▇▇ ▇. ▇▇▇▇▇, M.D., P.A.
dated as of January 1, 1996
Minnesota - Minnesota Oncology Hematology, P.A.
dated as of July 12, 1996
Missouri - (1) Hematology-Oncology Associates of Columbia, Inc.
dated as of October 1, 1995
(2) ▇▇▇▇▇▇▇, Westgate & ▇▇▇▇▇, Inc.
dated as of December 29, 1995
(3) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Inc.
dated as of November 6, 1996
New York - (1) Capital District Oncology, P.C.
dated as of June 1, 1996
(2) Northeastern NY Regional Cancer Care, P.C.
dated as of September 16, 1996
Oregon - Oncology Associates of Oregon, P.C.
dated as of September 1, 1995
Texas - Texas Oncology, P.A. dated as of January 1, 1996
Washington - (1) Washington Cancer Center, P.C.
dated as of April 1, 1997
(2) Spokane Oncology Hematology Associates, P.S.
dated as of November 1, 1995
88
Schedule 5.19
to the
Amended and Restated Credit Agreement
Indebtedness and Capital Leases
Name Original Amt. 3/31/97 Amt. Mat. Date
---- ------------- ------------ ---------
Iowa $750,000.00 $ 455,201 3/l/99
Oregon $ 750,000 $ 499,985 9/1/99
Ft. Worth $ 2,120,000 $ 1,125,109 1/15/99
Medical City $ 937,930 $ 852,313 4/l/05
Missouri $ 1,767,500 $ 1,289,790 10/1/99
Spokane $ 1,000,000 $ 786,641 11/1/00
▇▇▇▇▇ & ▇▇▇▇▇ $ 150,000 $ 150,000 4/l/98
MOHPA $ 6,300,000 $ 5,623,227 7/l/00
ID Assoc. $ 1,700,000 $ 1,200,000 9/15/99
▇▇▇▇▇▇▇▇▇ $ 267,301 $ 267,301 11/6/99
Chicago-▇▇▇▇ $ 3,984,487 $ 3,984,487 12/8/00
Chicago-Dragon $ 996,000 $ 996,000 12/8/00
▇▇▇▇▇▇▇▇ $ 80,000 $ 65,897 5/1/00
▇▇▇▇▇▇▇▇ $ 180,000 $ 148,268 5/1/00
Gupta $ 180,000 $ 148,268 5/1/00
▇▇▇▇▇▇▇ Leasing $ 157,500 $ 121,180 4/l/01
89
Schedule 7.2
to the
Amended and Restated Credit Agreement
Permitted Liens
1. Liens arising by statute in respect of taxes which are not yet due and
payable (and which are fully paid on or before their due date).
2. Landlord's liens which are subordinated in favor of Agent for the benfit
of Lenders pursuant to a written subordination agreement in form
satisfactory to Agent.
3. Purchase money security interests in Equipment allowed in Section 7.2.
4. Credits in favor of Payors on Governmental Claims arising in the usual and
ordinary course of business.
90
EXHIBIT "A"
Form of Revolving Note
91
REVOLVING NOTE
$__________ _______, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of
________________, a ____________________________, with its principal office
located at ________________________________________________ ("Lender"), the
principal amount of _____________ DOLLARS ($__________) or such lesser amount
as may from time to time be advanced and remain unpaid and outstanding
hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
__, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
92
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
93
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
3
94
EXHIBIT "B"
Form of Assignment and Acceptance
95
ASSIGNMENT AND ACCEPTANCE
This Assignment and Acceptance is executed by ___________________________
("Assignor") and __________________________ ("Assignee"), effective as of
_________________________, ____ (the "Effective Date"), as follows:
RECITALS:
A. Assignor is a "Lender" pursuant to the certain Amended and Restated
Credit Agreement (the "Credit Agreement") dated June _, 1997, among Physician
Reliance Network, Inc. ("Borrower"), the lenders named therein (together with
their successors and assigns, the "Lenders"), Bank One, Texas, N.A., as agent
for itself and the other Lenders ("Agent"), and NationsBank of Texas, N.A., as
co-agent. Unless otherwise defined herein, all capitalized terms used in this
Agreement shall have the meanings ascribed to such terms in the Credit
Agreement.
B. Assignor and Assignee have agreed that Assignor shall transfer and
assign to Assignee, and Assignee shall purchase and accept from Assignor, all
or a portion of Assignor's right, title, interest and obligations under the
Credit Agreement as provided, and on the terms, specified hereinbelow.
NOW THEREFORE, for value received, Assignor and Assignee hereby agree as
follows:
1. Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, a __________ percent (_%) interest in and
to all of Assignor's right, title, interest and obligations under the Credit
Agreement and the other Loan Documents as of the Effective Date, including,
without limitation, such percentage interest in (i) the Committed Maximum of
Assignor under the Credit Agreement as of the Effective Date and (ii) all
Obligations owing to Assignor as of the Effective Date.
2. Assignor (i) represents that as of the date hereof, Assignor's
Committed Maximum is ___________ Dollars ($_______ ) and the outstanding
principal balance of Advances owing to Assignor as of the Effective Date is
$_______ , (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document
or the execution, legality, validity, enforceability or genuineness of the
Credit Agreement or any other Loan Document, or the sufficiency or value of any
Collateral, other than that it is the legal and beneficial owner of the
interest being assigned by Assignor hereunder and that such interest is free
and clear of any adverse claim, (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of Borrower,
any Guarantor or any Pledging Subsidiary or the performance or observance by
Borrower, any Guarantor or any Pledging Subsidiary of any of obligations under
the Credit Agreement or any other Loan Document, and (iv) attaches the
Revolving Note held by Assignor and requests that Agent exchange such Revolving
Note for a new Revolving Note payable to the order of (i) Assignee, in form
substantially the same, in a face amount equal to the Committed Maximum of
Assignee purchased and assumed by Assignee hereunder and (b) to Assignor in a
face amount equal to the Committed Maximum retained by Assignor, if any.
96
3. The Committed Maximum of each of Assignor and Assignee upon and
following the Effective Date is as follows, respectively:
Assignor's Committed Maximum as of Effective Date: $_____________
Percentage interest purchased by Assignee as of Effective Date: x _____________%
Resulting Committed Maximum of Assignee as of Effective Date: $_____________
Resulting Committed Maximum of Assignor as of Effective Date: $_____________
4. The Facility Balance owing to each of Assignor and Assignee upon and
following the Effective Date is as follows, respectively:
Facility Balance owing to Assignor as of Effective Date: $_____________
Percentage interest purchased by Assignee as of Effective Date: x _____________%
Resulting Facility Balance owing to Assignee as of Effective Date: $_____________
Resulting Facility Balance owing to Assignor as of Effective Date: $_____________
5. Assignee (i) represents and warrants that it is an Eligible Assignee
and has filed with Agent all forms, statements or other documentation, if any,
as may be required by the Credit Agreement in order to qualify as an Eligible
Assignee, (ii) represents and warrants that it is legally authorized to enter
in this Agreement, (iii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered by Borrower thereunder, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement, (iv) agrees that it will, independently and without
reliance upon Assignor and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents, (v) appoints and authorizes Agent to take such action on its behalf
and to exercise such powers under the Loan Documents as are delegated to Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto, and (vi) agrees that it will perform in accordance with their terms
all obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender.
6. This Agreement, following execution by Assignor and Assignee, will be
delivered to Agent for acceptance and recording. Upon such acceptance and
recording, from and after the Effective Date, (i) Assignee shall be deemed to
be a party to the Credit Agreement and all other Loan Documents to which a
Lender is a party, and to the extent of the rights and obligations assigned to
Assignee hereunder shall have all rights and obligations of a Lender thereunder
and under the other Loan Documents and (ii) Assignor shall, to the extent of
the rights and obligations assigned to Assignee hereunder, relinquish its
rights and be released from its obligations under the Credit Agreement and the
other Loan Documents. Upon such acceptance and recording, from and after the
Effective Date, Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest, fees and other
amounts) to Assignee. Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Revolving Note for
periods prior to the Effective Date directly between themselves.
2
97
7. This Agreement when signed by Assignor and Assignee and accepted by
Agent, (i) shall be governed by, and construed in accordance with, the laws of
the State of Texas and applicable laws of the United States of America, (ii)
shall be deemed effective prospectively as of the Effective Date and (iii) may
be executed by counterpart, all of which together shall constitute the same
agreement.
ASSIGNOR:
_____________________________ _______________________________________
_____________________________
_____________________________
_____________________________ By:____________________________________
Telecopy:____________________ Name:__________________________________
Title:_________________________________
ASSIGNEE:
_____________________________ _______________________________________
_____________________________
_____________________________
_____________________________ By:____________________________________
Telecopy:____________________ Name:__________________________________
Title:_________________________________
ACCEPTED BY:
BANK ONE, TEXAS, N.A.,
In its capacity as Agent
under the Credit Agreement
By:____________________________________
Name:__________________________________
Title:_________________________________
3
98
EXHIBIT "C"
Form of Interest Notice
99
NOTICE OF BORROWINGS, CONVERSIONS,
CONTINUATIONS OR PREPAYMENTS
Date:___________
Bank One, Texas, N.A., as Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Reference is made to the Amended and Restated Credit Agreement dated as of
June __, 1997 (as the same may be amended and in effect from time to time, the
"Credit Agreement"), among Physician Reliance Network, Inc. ("Borrower"), the
lenders named therein (the "Lenders"), NationsBank of Texas, N.A., as Co-Agent,
and Bank One, Texas, N.A., as Agent for the Lenders (in such capacity,
"Agent"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
Borrower hereby gives you this Notice, irrevocably, pursuant to Section
2.8 of the Credit Agreement. Borrower hereby notifies you of the following
(check and/or complete the applicable item):
__ (a) Advances.
(i) Borrower requests an Advance in the amount of $__________ on
_____________, ____.
(ii) The Advance will be of the following Type:_________________.
(iii) If the Advance will be a LIBOR Rate Advance, the Interest
Period will be ____ month(s).
__ (b) [Conversion] [Continuation] of Advances.
(i) Borrower requests [conversion] [continuation] of Advances in the
amount of $____ on ______________, _____.
(ii) The Type of Advances to be [converted] [continued] will be [Base
Rate Advances] [LIBOR Rate Advances].
(iii) The Advance resulting from the [conversion] [continuation] will
be a [Base Rate Advance] [LIBOR Rate Advance].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - Page 1
100
(iv) If the Advance resulting from the [conversion] [continuation]
will be a LIBOR Rate Advance, the Interest Period for such Advance will be
____ month(s).
__ (c) Prepayment.
(i) Borrower will make a prepayment of the principal of the Facility
Balance in the amount of $ ____ on _____________, ____.
(ii) The Advances to be prepaid will be of the following Type: [Base
Rate Advances] [LIBOR Rate Advances].
(iii) If the Advances to be prepaid are LIBOR Rate Advances, they
have an Interest Period of _____ month(s) that will end on _________,
____.
PHYSICIAN RELIANCE NETWORK, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - Page 2
101
EXHIBIT "D"
Form of Compliance Certificate
102
COMPLIANCE CERTIFICATE
The undersigned, duly appointed and acting Vice President or Chief
Financial Officer (as indicated below) of Physician Reliance Network, Inc., a
Texas corporation ("Borrower"), being duly authorized, hereby delivers this
Compliance Certificate ("Certificate") to Bank One Texas, N.A., in its capacity
as Agent ("Agent") for itself and the other Lenders (as defined below),
pursuant to Section 6.1 of the certain Amended and Restated Credit Agreement
dated June __, 1997, among Borrower, Agent, NationsBank of Texas, N.A. (as a
lender and co-agent) and the other lenders named therein (all such lenders
being referred to collectively herein as the "Lenders"), as such agreement may
be amended, restated, supplemented or otherwise modified from time to time (the
"Credit Agreement "), reference to which hereby is made. Terms defined in the
Credit Agreement, wherever used in this Certificate or the attachments hereto,
shall have the same meanings as are prescribed by the Credit Agreement.
1. Borrower hereby delivers to Agent the attached financial statements,
dated as of___________, ____, required pursuant to Section 6.1 of the Credit
Agreement. All of such financial statements are true and complete and fairly
present the financial condition of Borrower and its Subsidiaries and their
results of operations, and have been prepared in accordance with GAAP (except
for the omission of footnotes) applied consistently throughout the periods
reflected therein.
2. The undersigned hereby states that, to the best of her/his knowledge
and based on an examination sufficient to enable an informed statement [check
one, as applicable]:
____ No Default or Event of Default exists as of the date hereof.
____ One or more Defaults or Events of Default has/have occurred or
exist(s) as of the date hereof. Included within Exhibit "A" attached
hereto is a written description specifying each such Default or Event
of Default, its nature, when it occurred, whether it is continuing as
of the date hereof and actions, if any, being taken by Borrower with
respect thereto. Except as so specified, no Default or Event of
Default exists as of the date hereof
Except to the extent, if any, disclosed in this Certificate, no event or
condition has occurred or exists which would be the subject of a required
notice under either Section 6.8, Section 6.9, Section 6.10 or Section 6.11
of the Credit Agreement.
3. Exhibit "B" attached hereto sets forth true and complete calculations
(a) of the Commitment Availability and (b) necessary to disclose the status of
Borrower's compliance with the covenants contained in Article 8 ("Financial
Covenants") of the Credit Agreement as of the effective date of the financial
statements referenced in paragraph 1 above. No event or condition has occurred
after such date or otherwise presently exists which is reasonably expected to
cause or result in a Material Adverse Effect.
4. This Certificate is delivered to Agent for the benefit of the Lenders
under the Credit Agreement.
103
Signed this ___ day of ______________, ____.
By:____________________________________
Name:__________________________________
Title:_________________________________
104
EXHIBIT "A"
COMPLIANCE CERTIFICATE
DELIVERED TO
BANK ONE, TEXAS, N.A.
IN ITS CAPACITY AS AGENT
BY
PHYSICIAN RELIANCE NETWORK, INC.
EFFECTIVE DATE:__________, _______
Defaults and Events of Default
105
EXHIBIT "B"
COMPLIANCE CERTIFICATE
DELIVERED TO
BANK ONE, TEXAS, N.A.
IN ITS CAPACITY AS AGENT
BY
PHYSICIAN RELIANCE NETWORK, INC.
EFFECTIVE DATE: _____________, ____
The following is incorporated by reference as a part of the foregoing
Compliance Certificate:
1. Current Ratio. As of the end of each fiscal quarter, Borrower's Current
Ratio shall not be less than 1.5 to 1.0. [Section 8.11]
(a) Current assets $_____________
(b) Current liabilities _____________
(c) Current Ratio [1(a) divided by 1(b)] ______ to 1.0
(d) Compliance [ ]Yes [ ] No
2. Consolidated Net Worth. As of the end of each fiscal quarter, Borrower's
Consolidated Net Worth shall not be less than $275,000,000, plus the Net
Worth Adjustment. [Section 8.2]
(a) Required Consolidated Net Worth (as of Closing Date) $____________
(b) Net Worth Adjustment $____________
(c) Minimum required Consolidated Net Worth [2(a)+ 2(b)] $____________
(d) Actual Consolidated Net Worth $____________
(e) Compliance [ ]Yes [ ] No
3. Fixed Charge Coverage Ratio. As of the end of each of fiscal quarter,
Borrower's Fixed Charge Coverage Ratio shall not be less than 1.3 to 1.O.
[Section 8.3]
(a) EBITDA
(i) Net income, plus $____________
(ii) Interest expense, plus $____________
(iii) Taxes, plus $____________
(iv) Depreciation and amortization $____________
(v) EBITDA [sum of 3(a)(i) through 3(a)(iv)], plus $____________
(b) Minority interests $____________
(c) Rental Expense $____________
(d) Adjusted EBITDA [3(a)(v) + 3(b) + 3(c)] $____________
(e) Fixed Charges
(i) Interest expense, plus $____________
(ii) Current maturities on long term debt, plus $__________
(iii) Current obligations on long term capital leases, plus $____________
(iv) Required dividends on preferred stock, plus $____________
(v) Taxes, plus $ $____________
(vi) Minority interests $____________
(vii) Fixed Charges [sum of 3(e)(i) through 3(e)(vi)] $____________
(f) Fixed Charge Coverage Ratio [3(d) divided by 3(e)(vii)] _____ to 1.0
(g) Compliance [ ]Yes [ ] No
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4. Leverage Ratio. As of the end of each of fiscal quarter, Borrower's
Leverage Ratio shall not exceed 3.0 to 1.O. [Section 8.4]
(a) Funded Debt
(i) Contractual Debt, plus $____________
(ii) Capital Stock redemption obligations, plus $____________
(iii) Unfunded letters of credit, plus $____________
(iv) Contingent obligations $____________
(v) Funded Debt [sum of 4(a)(i) through 4(a)(iv)] $____________
(b) EBITDA (excluding minority interests) [3(a)(v)] $____________
(c) Leverage Ratio [4(a)(v) divided by 4(b)] _____ to 1.0
(d) Compliance [ ]Yes [ ] No
5. Funded Debt to Capitalization. As of the end of each of fiscal quarter,
Borrower's Funded Debt to Capitalization Ratio shall not exceed 0.4 to
1.O. [Section 8.5]
(a) Funded Debt [4(a)(v)] $____________
(b) Capitalization
(i) Funded Debt 14(a)(v)] $____________
(ii) Consolidated Net Worth [2(d)] $____________
(iii) Capitalization [5(b)(i) + 5(b)(ii)] $____________
(c) Funded Debt to Capitalization [5(a) divided by 5(b)(iii)] _____ to 1.0
(d) Compliance [ ]Yes [ ] No
6. Capital Expenditures. For the fiscal year, Borrower's Capital Expenditures
are not to exceed $________________. [Section 8.6]
(a) Actual Capital Expenditures $____________
(b) Compliance [ ]Yes [ ] No
7. Commitment Availability Effective as of the first day of ___________, the
Commitment Availability is calculated as follows:
(a) EBITDA [3(a)(v)] $____________
x 3
(b) Commitment Availability [7(a) x 3] $____________
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EXHIBIT E
Form of Guaranty
108
GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty"), dated _____________, is
executed and delivered by ____________________________, a _________________
("Guarantor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Physician Reliance Network, Inc. ("Borrower"), the lenders
named therein (together with their successors and assigns, the "Lenders"),
Agent and NationsBank of Texas, N.A. (as a Lender and as co-agent) are,
concurrently herewith, entering into that certain Amended and Restated Credit
Agreement dated June ___, 1997 (as the same may be amended, renewed, extended,
restated, replaced, substituted, supplemented or otherwise modified from time
to time, the "Credit Agreement") and, in connection therewith, inter alia,
Borrower is executing and delivering to each of the Lenders a Revolving Note
(as defined in the Credit Agreement) which together with the other Revolving
Notes executed and delivered by Borrower to the Lenders on the Closing Date (as
defined in the Credit Agreement) in connection with the Credit Agreement are in
the aggregate principal amount of $140,000,000 (such Revolving Notes, as they
may be amended, renewed, extended, restated, replaced, substituted,
supplemented or otherwise modified from time to time, are hereinafter
individually called a "Note" and collectively called the "Notes"; the Credit
Agreement, the Notes and the other Loan Documents (as defined in the Credit
Agreement) and any and all amendments, modifications, renewals, extensions,
restatements and/or supplements thereto from time to time, are hereinafter
collectively called the "Loan Documents");
B. Guarantor has directly and indirectly benefitted and will
directly and indirectly benefit from the loans evidenced and governed by the
Credit Agreement, the Notes and the other Loan Documents and the other
transactions evidenced by and contemplated in the Loan Documents; and
C. Execution and delivery of this Guaranty is a condition to
Agent and the Lenders entering into the Credit Agreement and the funding of
Advances pursuant thereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Guaranty,
all capitalized terms used in this Guaranty shall have the meanings ascribed to
such terms in the Credit Agreement.
2. Guaranty of Indebtedness, Liabilities and Obligations.
Guarantor hereby irrevocably and unconditionally guarantees (a) payment to
Agent and the Lenders when due, whether at stated maturity, by acceleration or
otherwise, of any and all Obligations (as such term is defined in the Credit
Agreement), which Obligations include, without limitation, (i) any and all
interest, penalties, fees and expenses (specifically including, but not limited
to, attorneys' fees and expenses) which Borrower
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may now or at any time hereafter owe to Agent or any Lender (whether or not
such interest, penalties, fees and expenses were originally contracted with
Agent or any Lender or with another or others and whether or not such interest,
penalties, fees and expenses are enforceable against Borrower) pursuant to the
Credit Agreement, any Note or any other Loan Document plus (ii) the principal
amount of any and all indebtedness, liabilities and other obligations, whether
primary, absolute, secondary, direct, indirect, fixed, contingent, liquidated,
unliquidated, secured or unsecured, matured or unmatured, joint, several or
joint and several, due or to become due and whether arising by agreement, note,
discount, acceptance, overdraft or otherwise, which Borrower may now or at any
time hereafter owe to Agent or any Lender (whether or not such indebtedness,
liabilities and obligations were originally contracted with Agent or any Lender
or with another or others and whether or not such indebtedness, liabilities or
obligations are enforceable against Borrower) pursuant to the Credit Agreement,
any Note or any other Loan Document and (b) the faithful, prompt and complete
compliance by Borrower with all terms, conditions, covenants, agreements and
undertakings of Borrower under the Credit Agreement, any Note or any other Loan
Document (the Obligations and the interest, penalties, fees, expenses,
indebtedness, liabilities and obligations, etc. referred to in clauses (a) and
(b) preceding as to which payment, performance and compliance are guaranteed
pursuant to this Guaranty are hereinafter individually and collectively called
the "Guaranteed Obligations"); provided, however, notwithstanding anything to
the contrary contained in this paragraph 2, the Guaranteed Obligations of
Guarantor hereunder shall not exceed an aggregate amount equal to the greatest
amount that would not render Guarantor's obligations under this Guaranty
subject to avoidance under Sections 544, 548 or 550 of the Federal Bankruptcy
Code or subject to being set aside or annulled under any applicable state law
relating to fraud on creditors; provided further, however, that for purposes of
this proviso it shall be presumed that the Guaranteed Obligations of Guarantor
under this Guaranty do not equal or exceed any aggregate amount which would
render Guarantor's indebtedness, liabilities or obligations under this Guaranty
subject to being so avoided, set aside or annulled, and the burden of proof to
the contrary shall be on the party asserting to the contrary. Subject to, but
without limiting the generality of the foregoing proviso, the provisions of
this Guaranty are severable and, in any action or proceeding involving any
state corporate law or any bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights, if the
indebtedness, liabilities or obligations of Guarantor under this Guaranty would
otherwise be held or determined to be void, invalid or unenforceable on account
of the amount thereof under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount thereof shall, without
any further action by Guarantor, Agent, any Lender or any other Person, be
automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
Notwithstanding that Borrower may not be liable or obligated to Agent
or any Lender for interest and/or attorneys' fees and expenses on, or in
connection with, the Guaranteed Obligations from and after the Petition Date
(as hereinafter defined) as a result of the provisions of the federal
bankruptcy laws or otherwise, the Guaranteed Obligations for which Guarantor
shall be liable and obligated under this Guaranty shall include (to the extent
permitted by law or a court of competent jurisdiction) interest accruing on the
Guaranteed Obligations at the highest rate provided for in the Credit Agreement
from and after the date on which Borrower files for protection under the
federal bankruptcy laws or from and after the date on which an involuntary
proceeding is filed against Borrower under the federal bankruptcy laws (herein
collectively referred to as the "Petition Date")
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and all attorneys' fees and expenses incurred by Agent or any Lender from and
after the Petition Date in connection with the Guaranteed Obligations.
3. Continuing Guaranty of Payment. This Guaranty is and shall be
an absolute, irrevocable and continuing guaranty of payment, and not merely of
collection, and from time to time or at any time the Guaranteed Obligations may
be increased, reduced or paid in full without affecting the liability or
obligation of Guarantor with respect to indebtedness, liabilities and
obligations of Borrower to Agent or any Lender thereafter incurred. Guarantor
further agrees that this Guaranty shall continue to be effective or be
reinstated (if a release or discharge has occurred), as the case may be, if at
any time any payment (or any part thereof) to Agent or any Lender in respect of
the Guaranteed Obligations is rescinded or must otherwise be restored by Agent
or any Lender pursuant to any bankruptcy, insolvency, reorganization,
receivership or other debtor relief granted to Borrower or its successors or
assigns. In the event that Agent or any Lender must rescind or restore any
payment received by Agent or any Lender, respectively, in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge
from the terms of this Guaranty given to Guarantor by Agent or such Lender,
respectively, shall be without effect, and this Guaranty shall remain in full
force and effect. It is the intention of Agent, Lenders and Guarantor that
Guarantor's liabilities and obligations hereunder shall not be discharged
except by the full and complete payment and performance of the Guaranteed
Obligations and then only to the extent of such payment and performance. This
Guaranty is independent of, and in addition and without modification to, and
does not impair or in any way affect any other guaranty, endorsement or other
agreement executed in favor of Agent or any Lender, and this Guaranty and
Guarantor's liabilities and obligations under this Guaranty shall not be
impaired or otherwise affected by the execution, delivery or performance by
Guarantor or any other Person of any other guaranty, endorsement or other
agreement.
4. Absolute Guaranty. Guarantor's liabilities and obligations
under this Guaranty shall be absolute and unconditional irrespective of, shall
not be released, impaired, limited, reduced, conditioned upon or otherwise
affected by and shall continue in full force and effect notwithstanding the
occurrence of any event (other than an event consisting of payment and
performance of such liabilities and obligations as provided in paragraph 3
hereof) at any time or from time to time, including, without limitation, any
one or more of the following events specified in clauses (a) through (o) of
this paragraph 4 below, and neither Agent nor any Lender shall be obligated or
required to take or to refrain from taking any of such actions or inactions
specified below and shall not have any liability, obligation or duty whatsoever
with respect to such actions or inactions, it being acknowledged and agreed by
Guarantor that all of such liabilities, obligations and duties (if any) of
Agent or any Lender otherwise existing and all rights and remedies (if any) of
Guarantor with respect thereto (whether such liabilities, obligations, duties,
rights or remedies exist by virtue of agreement, common law, equity, statute or
otherwise), and each and every defense which, under principles of guaranty or
suretyship law, would otherwise operate to eliminate, impair, condition or
restrict the liabilities and obligations of Guarantor for the Guaranteed
Obligations, are hereby expressly waived by Guarantor:
(a) The taking or accepting of any security or other
guaranty for any or all of the Guaranteed Obligations, whether
heretofore, concurrently herewith or hereafter;
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(b) Any failure to create or perfect or properly create
or perfect any lien, security interest or assignment intended as
security, or any release, surrender, exchange, substitution,
subordination or loss of any security or guaranty at any time existing
in connection with any or all of the Guaranteed Obligations for any
reason;
(c) Any partial or full release of the liability or
obligation of Guarantor under any other guaranty whether or not
similar to this Guaranty;
(d) The entering into, delivery of, modification of,
amendment to or waiver of compliance with the Credit Agreement, any
Note or any other Loan Document, or any agreement, document or
instrument evidencing, securing or otherwise affecting all or part of
the Guaranteed Obligations, without the notification of Guarantor, the
right of such notification being hereby specifically waived by
Guarantor;
(e) The bankruptcy, insolvency, arrangement, adjustment,
composition, liquidation, disability, dissolution or lack of authority
(whether corporate, partnership or trust or relating to any other
entity or Person) of Borrower, Guarantor or any other Person at any
time liable or obligated for the payment of any or all of the
Guaranteed Obligations, whether now existing or hereafter arising;
(f) Any renewal, extension, modification, refunding
and/or rearrangement of the payment of any or all of the Guaranteed
Obligations at any time and from time to time, whether on one or more
occasions, either with or without notice to or consent of Guarantor,
or any adjustment, indulgence, forbearance or compromise that might be
granted or given by Agent or any Lender to Borrower or Guarantor;
(g) Any neglect, delay, omission, failure or refusal of
Agent or any Lender to (i) exercise or properly or diligently exercise
any right or remedy with respect to any or all of the Guaranteed
Obligations or the collection thereof or any collateral, security or
guaranty therefor, whether under the Credit Agreement, any Note or any
other Loan Document or otherwise, (ii) take or prosecute or properly
or diligently take or prosecute any action for the collection of any
or all of the Guaranteed Obligations against Borrower, Guarantor or
any other guarantor of any or all of the Guaranteed Obligations and/or
any other Person, (iii) foreclose or prosecute or properly or
diligently foreclose or prosecute any action in connection with any
agreement, document or instrument or arrangement evidencing, securing
or otherwise affecting all or any part of the Guaranteed Obligations,
or (iv) mitigate damages or take any other action to reduce, collect
or enforce the Guaranteed Obligations;
(h) Any failure of Agent or any Lender to give notice to
Borrower and/or Guarantor of, or obtain the consent of Borrower and/or
Guarantor with respect to, (i) demand, presentment, protest,
nonpayment, intention to accelerate, acceleration, lack of diligence
or delay in collection of all or any part of the Guaranteed
Obligations or any other matter, or the absence thereof, (ii) any
renewal, extension or assignment of the Guaranteed Obligations or any
part thereof, (iii) the disposition or release of all or any part of
any security for the Guaranteed Obligations (whether or not such
disposition is commercially reasonable) or (iv) any other action taken
or refrained from being taken by Agent or any Lender against
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Borrower, it being agreed that (except as may be expressly provided in
the other Loan Documents) that neither Agent nor any Lender shall be
required to give Borrower or Guarantor any notice of any kind or to
obtain Borrower's or Guarantor's consent under any circumstances
whatsoever with respect to or in connection with the Guaranteed
Obligations;
(i) The unenforceability, illegality or uncollectibility
of all or any part of the Guaranteed Obligations against Borrower by
reason of the fact that the interest contracted for, charged,
collected or received in respect of the Guaranteed Obligations exceeds
the maximum amount permitted by law, the act of creating the
Guaranteed Obligations or any part thereof is ultra ▇▇▇▇▇, the
officers, directors, partners, trustees or representatives creating
the Guaranteed Obligations acted in excess of their authority, the
Loan Agreement, any Note, or any other Loan Document evidencing the
Guaranteed Obligations has been forged or otherwise is irregular or is
not genuine or authentic, or expiration of the applicable statute of
limitations with respect to the Guaranteed Obligations;
(j) Any payment by Borrower to Agent or any Lender is
held to constitute a preferential transfer or a fraudulent conveyance
or transfer under any applicable law, or for any reason Agent or any
Lender is required to refund such payment or pay such amount to
Borrower or any other Person;
(k) Any merger, reorganization, consolidation or
dissolution of Borrower, any sale, lease or transfer of any or all of
the assets of Borrower, or any change in name, business, location,
composition, structure or any change in the shareholders, partners or
members (whether by accession, secession, death, dissolution, transfer
of assets or otherwise) of Borrower;
(l) Any failure of Agent or any Lender to notify
Guarantor of the acceptance of this Guaranty or of the funding of
Advances by any Lender in reliance on this Guaranty or of the failure
of Borrower to make any payment due by Borrower to Agent or any
Lender;
(m) Any existing or future offset, claim or defense of
Borrower against Agent or any Lender or against payment of all or any
part of the Guaranteed Obligations, whether such offset, claim or
defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise;
(n) Any full or partial release of the liability of
Borrower, any guarantor of all or any part of the Guaranteed
Obligations or any other Person for all or any part of the Guaranteed
Obligations, it being acknowledged and agreed by Guarantor that it may
be required to pay the Guaranteed Obligations in full without
assistance or support, whether from Borrower, any other guarantor or
any other Person; or
(o) Any other action taken or omitted to be taken with
respect to any of the Credit Agreement, any Note or any other Loan
Document, the Guaranteed Obligations or the security and collateral
therefor, whether or not such action or omission prejudices Guarantor
or increases the likelihood that Guarantor will be required to pay all
or any part of the Guaranteed Obligations pursuant to the terms
hereof.
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Without limiting the foregoing or Guarantor's liability under this Guaranty, to
the extent that Agent and the Lenders (or any of them) have advanced funds or
extended credit to Borrower and do not receive payments or benefits thereon in
the amounts and at the times required or provided by or in connection with the
Credit Agreement, any Notes or any other Loan Document, Guarantor is absolutely
liable to make such payments and to confer such benefits on the Lenders on a
timely basis.
5. Representations and Warranties. In connection with this
Guaranty, Guarantor hereby represents and warrants to Agent and the Lenders as
follows:
(a) Guarantor and Borrower are members of an affiliated
and integrated group of businesses and are engaged in related business
and supporting lines of business; Guarantor has received and will
receive a direct and indirect material benefit from the transactions
evidenced by and contemplated in the Credit Agreement, the Notes and
the other Loan Documents; this Guaranty is given by Guarantor in
furtherance of the direct and indirect business interests and purposes
of Guarantor, and is necessary to the conduct, promotion and
attainment of the business interests of Borrower and Guarantor; and
the value of the consideration received and to be received by
Guarantor is reasonably worth at least as much as the liability and
obligation of Guarantor hereunder;
(b) The execution and delivery of this Guaranty and the
performance of and compliance with the terms hereof will not
constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or result in the breach of,
any material contract, agreement or instrument to which Guarantor is a
party or which may be applicable to Guarantor or any of its assets;
(c) This Guaranty, when executed and delivered by
Guarantor, will constitute the legal, valid and binding obligation of
Guarantor enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights and general
principles of equity;
(d) As of the date of this Guaranty, and after giving
effect to this Guaranty and the contingent obligation evidenced by
this Guaranty, Guarantor is not, on either an unconsolidated basis or
a consolidated basis with Borrower and Guarantor's subsidiaries,
insolvent, as such term is used or defined in any applicable
bankruptcy, fraudulent conveyance, fraudulent transfer or similar law,
and Guarantor has and will have assets which, fairly valued, exceed
its indebtedness, liabilities and obligations; Guarantor is not
executing this Guaranty with any intention to hinder, delay or defraud
any present or future creditor or creditors of Guarantor; Guarantor is
not engaged in any business or transaction (including, without
limitation, the execution of this Guaranty) which will leave Guarantor
with unreasonably small capital or assets which are unreasonably small
in relation to the business or transactions engaged in by Guarantor,
and Guarantor does not intend to engage in any such business or
transaction; Guarantor does not intend to incur, nor does Guarantor
believe that it will incur, debts beyond Guarantor's ability to repay
such debts as they mature;
(e) All acts and conditions required to be performed and
satisfied prior to the creation and issuance of this Guaranty, and to
constitute this Guaranty as the legal, valid and
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binding obligation of Guarantor in accordance with its terms, have
been performed and satisfied in due and strict compliance with all
applicable laws;
(f) Guarantor is familiar with, and has independently
received and reviewed books and records regarding, the financial
condition of Borrower and is familiar with the value of any and all
collateral (if any) intended to secure the Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or any
such collateral (if any) as an inducement to enter into this Guaranty;
(g) Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or
agreement that any Person other than Guarantor will be liable to pay
the Guaranteed Obligations;
(h) Except for the execution of the Credit Agreement,
neither Agent, any Lender nor any other Person has made any
representation, warranty or statement to, or promise, covenant or
agreement with, Guarantor in order to induce Guarantor to execute this
Guaranty; and
(i) Guarantor is a Subsidiary of Borrower.
6. Default. Upon the occurrence and during the continuation of
an Event of Default, Guarantor shall, on demand by Agent and without further
notice of dishonor and without notice of any kind (including, without
limitation, notice of acceptance by Agent or any Lender of this Guaranty)
having been given to Borrower, Guarantor or any other Person previous to such
demand, promptly (i.e., not later than 1:00 p.m., Dallas, Texas time, on the
date of such demand or, if such demand is made after 12:00 noon, on the next
succeeding Business Day) pay, in immediately available funds, the full unpaid
amount of the Guaranteed Obligations, or such lesser amount, if any, as may be
specifically demanded by Agent from time to time, to Agent at Agent's Principal
Office located in Dallas, Texas or at such other place as Agent may specify to
Guarantor in writing. If acceleration of the time for payment of any amount
payable by Borrower under or with respect to any of the Guaranteed Obligations
is stayed or otherwise delayed upon the insolvency, bankruptcy or
reorganization of Borrower, all such amounts otherwise subject to acceleration
under the terms of the Guaranteed Obligations shall nonetheless be payable by
Guarantor hereunder promptly on demand by Agent.
7. Cumulative Remedies; No Election. If Guarantor is or becomes
liable or obligated for the Guaranteed Obligations, by endorsement or
otherwise, other than under this Guaranty, such liability or obligation shall
not be in any manner impaired or affected hereby, and the rights and remedies
of Agent or any Lender hereunder shall be cumulative of any and all other
rights and remedies that Agent or such Lender may ever have against Guarantor.
The exercise by Agent or any Lender of any right or remedy hereunder or under
any other agreement, document or instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
Without in any way limiting the generality of the foregoing, it is specifically
understood and agreed that this Guaranty is given by Guarantor as an additional
guaranty or security to any and all other guaranties or security heretofore,
concurrently herewith or hereafter executed and/or delivered by Guarantor to or
in favor of Agent or any Lender relating to the Guaranteed Obligations, and
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nothing herein shall ever be deemed to in any way negate or replace any such
other guaranties or security; provided, however, that Agent and the Lenders
shall have all of their rights and remedies under this Guaranty irrespective of
anything to the contrary contained in any such other guaranties or security.
This Guaranty may be enforced from time to time as often as occasion therefor
may arise, and it is agreed and understood that it shall not be necessary for
Agent or any Lender, in order to enforce this Guaranty against Guarantor, first
to exercise any rights or remedies against Borrower or any other Person or
institute suit or exhaust any available rights or remedies against security in
Agent's or any Lender's possession or under Agent's or any Lender's control, or
to resort to any other sources or means of obtaining payment of the Guaranteed
Obligations.
8. Joint and Several Obligation. Guarantor agrees that Agent and
the Lenders, in their sole discretion, may (a) bring suit against all
guarantors or other Persons liable or obligated to Agent or any Lender or
against any one or more of them, for interest, penalties, expenses, fees,
indebtedness, liabilities and obligations owed to Agent or any Lender and apply
any amounts obtained by Agent or any Lender in such a manner as Agent or any
Lender may elect, (b) bring suit against all guarantors of the Guaranteed
Obligations jointly and severally or against any one or more of them, (c)
settle fully or in part with any one or more of such guarantors for such
consideration as Agent or any Lender may deem proper, and (d) partially or
fully release one or more of such guarantors from liability under any guaranty
agreement, and that no such action shall impair the rights of Agent or any
Lender to collect the Guaranteed Obligations (or the unpaid balance thereof)
from other guarantors (including, without limitation, Guarantor), or any of
them, not so sued, settled with, or released.
9. Release of Collateral, etc. If all or any part of the
Guaranteed Obligations is at any time secured, Guarantor agrees that Agent or
any Lender may, at any time and from time to time in its discretion and with or
without valuable consideration, allow substitution or withdrawal of collateral
or other security and release collateral or other security without impairing or
diminishing the liabilities or obligations of Guarantor hereunder. Guarantor
further agrees that, if Borrower or any other Person executes in favor of Agent
or any Lender any collateral agreement, mortgage, deed of trust, collateral
assignment, security agreement or other security instrument, the exercise by
Agent or any Lender of any right or remedy thereby conferred on Agent or any
Lender shall be wholly discretionary with Agent and such Lender, respectively,
and that the exercise or failure to exercise any such right or remedy shall in
no way impair or diminish the obligation of Guarantor hereunder. Guarantor
further agrees that (except to the extent prohibited by applicable law
notwithstanding an agreement of the parties to the contrary) neither Agent nor
any Lender shall be liable for its failure to use diligence or care in the
collection of the Guaranteed Obligations, in the creation or perfection of any
lien, security interest or assignment intended as security or in preserving the
liability of any Person liable or obligated on the Guaranteed Obligations, and
Guarantor hereby waives presentment for payment, notice of nonpayment, protest
and notice thereof, and diligence in bringing suit against any Person liable on
the Guaranteed Obligations or any part thereof.
10. Binding Effect. This Guaranty is for the benefit of Agent and
the Lenders and their successors and assigns, and in the event of an assignment
by Agent or any Lender or its successors or assigns of the Guaranteed
Obligations, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness, liabilities and obligations so assigned,
may be transferred with such indebtedness, liabilities and obligations. This
Guaranty is binding, not only upon Guarantor, but upon its successors and
assigns.
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11. Waiver of Subrogation, Contribution and Other Rights. UPON
PAYMENT BY GUARANTOR OF ANY SUMS IN RESPECT OF THE GUARANTEED OBLIGATIONS
HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS ADVANCED TO BORROWER BY
GUARANTOR), ALL RIGHTS OF GUARANTOR AGAINST BORROWER OR ANY OTHER GUARANTOR OF
THE GUARANTEED OBLIGATIONS ARISING AS A RESULT THEREFROM BY WAY OF RIGHT OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR
OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT
AND ENFORCEMENT TO THE PRIOR INDEFEASIBLE PAYMENT AND ENFORCEMENT IN FULL OF
THE GUARANTEED OBLIGATIONS. GUARANTOR SHALL NOT HAVE, AND HEREBY IRREVOCABLY
WAIVES, ANY AND ALL RIGHTS AND REMEDIES OF SUBROGATION, REIMBURSEMENT,
EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR OTHERWISE AGAINST OR FROM
BORROWER UNLESS AND UNTIL ALL OF THE GUARANTEED OBLIGATIONS HAVE BEEN PAID AND
PERFORMED IN FULL. IN ADDITION TO THE FOREGOING, GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL CLAIMS OR OTHER RIGHTS AND REMEDIES IT MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST AGENT, ANY LENDER, BORROWER OR ANY OTHER PERSON
UNDER CHAPTER 34 OF THE TEXAS BUSINESS AND COMMERCE CODE, UNDER RULES 31 AND
163 OF THE TEXAS RULES OF CIVIL PROCEDURE, UNDER SECTION 17.001 OF THE TEXAS
CIVIL PRACTICE AND REMEDIES CODE AND UNDER ANY OTHER STATUTE OF ANY STATE OR
OTHER JURISDICTION REQUIRING RECOURSE AGAINST THE PRIMARY OBLIGOR OR IMPOSING
OTHER REQUIREMENTS AS A CONDITION TO RECOURSE AGAINST A GUARANTOR IF AND TO THE
EXTENT THAT THE SAME MAY BE APPLICABLE TO THIS GUARANTY. Except as expressly
otherwise provided in this paragraph 11, Guarantor shall have all rights of
subrogation, reimbursement, exoneration, contribution and indemnification that
may exist under currently applicable law.
12. Subordination of Indebtedness and Liens. The payment of any
and all principal of and interest on all indebtedness of Borrower, whether
primary, absolute, secondary, direct, indirect, fixed, contingent, liquidated,
unliquidated, secured or unsecured, matured or unmatured, joint, several or
joint and several, now or hereafter existing, due or to become due to Guarantor
(the "Guarantor Debt"), shall in all respects be subordinate and junior in
right of payment and enforcement to the prior payment and enforcement in full
of the Guaranteed Obligations as provided in this paragraph 12. Except as may
be expressly permitted by the Credit Agreement, no payment shall be made on or
with respect to the Guarantor Debt unless and until the Guaranteed Obligations
shall have been paid and performed in full. In the event that Guarantor or any
Affiliate of Guarantor shall receive any payment on account of the Guarantor
Debt in violation of this paragraph 12, Guarantor will hold, or cause to be
held (as the case may be), any amount so received in trust for the benefit of
Agent and the Lenders and will forthwith deliver, or cause to be delivered (as
the case may be), such payment to Agent, in the form received, to be applied to
the Guaranteed Obligations. All assignments, liens, pledges and security
interests (if any) securing payment of all or any part of the Guarantor Debt
(the "Subordinated Liens") shall be and remain inferior and subordinate to the
assignments, liens, pledges and security interests (if any) securing payment of
all or any part of the Guaranteed Obligations, regardless of whether such
Subordinated Liens presently exist or are hereafter created or when such
Subordinated Liens were created, perfected, filed or recorded. Guarantor shall
not exercise or
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enforce any creditors' rights or remedies that it may have against Borrower or
foreclose, repossess, sequester or otherwise institute any action or proceeding
(whether judicial or otherwise, including, without limitation, the commencement
of, or joinder in, any bankruptcy, insolvency, reorganization, liquidation,
receivership or other debtor relief law) to enforce any Subordinated Lien on
any assets of Borrower or any other Person unless and until the Guaranteed
Obligations shall have been irrevocably paid and performed in full. The terms
and provisions of this paragraph 12 are given by Guarantor as additional
rights, remedies and benefits to any and all other subordination agreements
heretofore, concurrently herewith or hereafter executed by Guarantor to or in
favor of Agent or any Lender, and nothing in this Guaranty shall ever be deemed
to in any way negate or replace any other such previous, concurrent or
subsequent subordination agreements. All promissory notes, accounts receivable
ledgers and other evidences of the Guarantor Debt, and all mortgages, deeds of
trust, security agreements, assignments and other security documents evidencing
the Subordinated Liens, shall contain a specific written notice that the
indebtedness and liens, evidenced thereby are subordinated as provided in this
paragraph 12.
13. Right of Setoff. Guarantor hereby grants to Agent and each
Lender a right of setoff upon any and all monies, securities or other property
of Guarantor, and the proceeds therefrom, now or hereafter held or received by
or in transit to Agent or any Lender from or for the account of Guarantor,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special) and credits
of Guarantor, and any and all claims of Guarantor against Agent or any Lender
at any time existing. The right of setoff granted pursuant to this paragraph
13 shall be cumulative of and in addition to Agent's and each Lender's common
law right of setoff.
14. Further Assurances. Upon the request of Agent or any Lender,
Guarantor will, at any time and from time to time, duly execute and deliver to
Agent any and all such further agreements, documents and instruments, and
supply such additional information, as may be necessary or advisable, in the
reasonable opinion of Agent or any Lender, to obtain the full benefits of this
Guaranty.
15. Invalid Provisions. If any provision of this Guaranty is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance here from.
Furthermore, in lieu of such illegal, invalid or unenforceable provision there
shall be added automatically as a part of this Guaranty a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable. No provision herein or in any other Loan
Document evidencing the Guaranteed Obligations shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
16. Modification in Writing. No modification, consent, amendment
or waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor herefrom, shall be effective unless the same shall be in writing and
signed by a duly authorized officer of Agent and Guarantor and then shall be
effective only in the specific instance and for the specific purpose for which
given.
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17. No Waiver, Etc. No notice to or demand on Guarantor or Agent
in any case shall entitle Guarantor or Agent, respectively, to any other or
further notice or demand in similar or other circumstances. No delay or
omission by Agent, any Lender or Guarantor in exercising any right or remedy
hereunder shall impair any such right or remedy or be construed as a waiver
thereof or any acquiescence therein, and no single or partial exercise of any
such right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy hereunder.
18. Cumulative Rights. All rights and remedies of Agent and the
Lenders hereunder are cumulative of each other and of every other right or
remedy which Agent or any Lender may otherwise have at law or in equity or
under any other contract or document, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
19. Expenses. Guarantor agrees to pay on demand by Agent all
costs and expenses incurred by Agent or any Lender in connection with the
negotiation, preparation, execution and performance of the terms and provisions
of this Guaranty and any and all amendments, modifications, renewals,
restatements and/or supplements hereto from time to time, including, without
limitation, the reasonable fees and expenses of legal counsel to Agent. If
Guarantor should breach or fail to perform any provision of this Guaranty,
Guarantor agrees to pay to Agent all costs and expenses incurred by Agent or
any Lender in the enforcement of this Guaranty from time to time, including,
without limitation, the reasonable fees and expenses of all legal counsel to
Agent and the Lenders.
20. Applicable Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES).
21. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST GUARANTOR, AGENT OR ANY LENDER ARISING OUT OF OR
RELATING TO THIS GUARANTY. EACH SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS
MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND
BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS
CHOOSING.
22. Notices. All notices and other communications required or
permitted to be given under this Guaranty shall be given or made in writing and
shall be deemed to have been given on the third Business Day after its deposit
in the U.S. mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it
is actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as follows:
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Guarantor: With a copy to:
Physician Reliance Network, Inc.
------------------------------------- Two Lincoln Centre
------------------------------------- ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
------------------------------------- ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------- Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attention: Assistant Secretary
--------------------
--------------------
Telecopy: Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------
Agent: With a copy to:
Bank One, Texas, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Healthcare Finance Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on
the signature pages of the Credit Agreement or the most recent
Assignment and Acceptance with respect to a Lender, or such other
address as may hereafter be designated and delivered in writing.
23. Survival. All representations, warranties, covenants and
agreements of Guarantor in this Guaranty shall survive the execution of this
Guaranty.
24. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same Guaranty.
25. Limitation on Interest. Notwithstanding anything to the
contrary contained or referred to in this Guaranty, none of the terms and
provisions of this Guaranty, the Credit Agreement, the Notes or any other Loan
Document shall ever be construed to create a contract or obligation to pay
interest at a rate in excess of the Maximum Rate, and neither Agent nor any
Lender shall ever charge, receive, take, collect, reserve or apply, as interest
on the Obligations or the Guaranteed Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other indebtedness, liability or obligation provided for in this Guaranty,
the Credit Agreement, the Notes or any other Loan Document which constitutes
interest under applicable law shall be, ipso facto and under any and all
circumstances, limited or reduced to an amount equal to the lesser of (a) the
amount of such interest, charge, fee, expense or other indebtedness, liability
or obligation that would be payable in the absence of this paragraph 25 or (b)
an amount, which when
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added to all other interest payable under this Guaranty, the Credit Agreement,
the Notes and any other Loan Document, equals the Maximum Rate. If,
notwithstanding the foregoing, Agent or any Lender ever contracts for, charges,
receives, takes, collects, reserves or applies as interest any amount in excess
of the Maximum Rate, such amount which would be deemed excessive interest shall
be deemed a partial payment or prepayment of principal of the Obligations and
the Guaranteed Obligations and treated hereunder as such, and if the
Obligations and the Guaranteed Obligations, or applicable portions thereof, are
paid in full, any remaining excess shall promptly be paid to Borrower,
Guarantor or such other Person (as appropriate). In determining whether the
interest paid or payable, under any specific contingency, exceeds the Maximum
Rate, Guarantor, Borrower, Agent and the Lenders shall, to the maximum extent
permitted by applicable law, (i) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations and the Guaranteed Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations and the Guaranteed
Obligations; provided that if the unpaid principal balance is paid and
performed in full prior to the end of the full contemplated term thereof, and
if the interest received for the actual period of existence thereof exceeds the
Maximum Rate, Agent and the Lenders shall refund to Borrower, Guarantor or such
other Person (as appropriate) the amount of such excess and, in such event,
neither Agent nor any Lender shall be subject to any penalties provided by any
laws for contracting for, charging, receiving, taking, collecting, receiving or
applying interest in excess of the Maximum Rate.
26. Irrevocable Nature of Guaranty. This Guaranty may not be
revoked by Guarantor; provided, however, in the event it shall be determined
that Guarantor shall have the right, in accordance with applicable law and
notwithstanding its express agreement herein to the contrary, to revoke this
Guaranty, Guarantor may deliver to Agent, at its address for notices set forth
in the Credit Agreement, written notice of Guarantor's intention not to be
liable hereunder for any Guaranteed Obligations arising, created or incurred
after Agent's receipt of such notice, whereupon such notice shall be effective
to the extent (but only to the extent) provided hereinbelow as to Guarantor
from and after (but not before) the time when such notice is actually delivered
to and received by and receipted for in writing by Agent (the "Effective
Revocation Time"); provided, further, however, that such notice shall not be
effective as to, and shall not in any way restrict, limit, impair, release or
otherwise affect, the indebtedness, liabilities or obligations of Guarantor
under this Guaranty with respect to (a) any Guaranteed Obligations consisting
of indebtedness, liabilities or obligations under the Credit Agreement, the
Notes or any other Loan Document, whether incurred before or after the
Effective Revocation Time (including, without limitation, any loans, advances
or extensions of credit at any time made or created under the Credit Agreement,
whether or not agreed, committed or contemplated to be made by Agent or any
Lender and whether or not discretionary with Agent or any Lender), (b) any
Guaranteed Obligations arising, created or incurred prior to the Effective
Revocation Time, (c) any amendments, modifications, renewals, extensions,
restatements and/or supplements to or of the indebtedness, liabilities or
obligations referred to in clauses (a) and (b) preceding, whether occurring
before or after the Effective Revocation Time, or (d) any interest or costs of
collection with respect to any of the indebtedness, liabilities or obligations
referred to in clauses (a), (b) or (c) preceding.
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THIS WRITTEN AGREEMENT REPRESENTS 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.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the date first written above.
GUARANTOR:
----------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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The undersigned has executed this Guaranty solely for the purpose of
confirming receipt of this Guaranty and reliance on this Guaranty by Agent and
the Lenders as of the date first written above.
BANK ONE, TEXAS, N.A., as Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT "F"
Form of Borrower Pledge Agreement
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PLEDGE AGREEMENT
(Borrower)
This PLEDGE AGREEMENT (this "Agreement"), dated June __, 1997, is
executed and delivered by PHYSICIAN RELIANCE NETWORK, INC., a Texas corporation
("Pledgor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Pledgor, the lenders named therein (together with their
successors and assigns, the "Lenders"), NationsBank of Texas, N.A. (as a Lender
and co-agent ("Co-Agent")) and Agent are, concurrently herewith, entering into
that certain Amended and Restated Credit Agreement (as the same may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time, the "Credit Agreement"), and, in connection
therewith, inter alia, Pledgor is executing and delivering to each of the
Lenders a Revolving Note (as defined in the Credit Agreement) which together
with the other Revolving Notes executed and delivered by Pledgor to the Lenders
on the Closing Date (as defined in the Credit Agreement) in connection with the
Credit Agreement are in the aggregate principal amount of $140,000,000 (such
Revolving Notes, as they may be amended, renewed, extended, restated, replaced,
substituted, supplemented or otherwise modified from time to time, are
hereinafter individually called a "Note" and collectively called the "Notes";
the Credit Agreement, the Notes and the other Loan Documents (as defined in the
Credit Agreement) and any and all amendments, modifications, renewals,
extensions, restatements and/or supplements thereto from time to time, are
hereinafter collectively called the "Loan Documents");
B. Execution and delivery of this Agreement is a condition to
Agent and the Lenders entering into the Credit Agreement and the funding of
Advances pursuant thereto;
C. Pledgor is the owner of the Pledged Shares (as such term is
defined below). Pursuant to the terms of the Credit Agreement, and in
consideration of the benefits provided to Pledgor thereunder, Pledgor has
agreed to grant to Agent a continuing security interest, collateral assignment,
lien and pledge in and to all right, title and interest of Pledgor in the
Collateral (as such term is defined below), as security for the Secured
Obligations (as such term is defined below), on the terms prescribed below.
THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor and Agent each hereby agrees
as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Agreement, all
capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in the Credit Agreement.
"Agent" has the meaning set forth in the introductory
paragraph of this Agreement.
"Collateral" has the meaning set forth in paragraph 2.
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"Event of Default" means any Event of Default defined in
paragraph 7.
"Lender" means each of the "Lenders" as such term is defined
in the Credit Agreement, and "Lenders" means all of such Lenders,
collectively.
"Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated of even date herewith, among Pledgor, the
Lenders, Co-Agent and Agent, as the same may be renewed, extended,
modified, supplemented, amended or restated from time to time.
"Equity Rights" has the meaning set forth in paragraph 5.
"Pledge Amendment" has the meaning set forth in paragraph 4.
"Pledged Shares" has the meaning set forth in paragraph 2.
"Pledgor" has the meaning set forth in the introductory
paragraph of this Agreement.
"Secured Obligations" means all "Obligations" as defined in
the Credit Agreement, all costs, fees and expenses incurred by Secured
Party in enforcing this Agreement, and any and all renewals,
extensions, increases, amendments, modifications, supplements or
restatements thereof.
"Secured Party" means Agent and its successors and assigns,
and includes any person to whom Agent, or its successors or assigns,
may assign its rights and interests under this Agreement.
"UCC" means the Texas Uniform Commercial Code.
Unless expressly provided otherwise, all terms defined in the Credit Agreement,
wherever used in this Agreement, shall have the same meanings as are prescribed
by the Credit Agreement, and all terms defined by the UCC, wherever used
herein, shall have the same meanings as are prescribed by the UCC.
2. Security Interest and Pledge. As collateral security for the
prompt payment in full when due of the Secured Obligations, Pledgor hereby
pledges and grants to Secured Party a first priority security interest in all
of Pledgor's right, title and interest in and to the following property (such
property being hereinafter sometimes called the "Collateral"):
(a) all the Capital Stock issued by, and all other
ownership interest in, the Persons described on Schedule 1 hereof and
all Material Subsidiaries hereafter created or acquired and owned by
Pledgor, whether any of the foregoing are now owned or hereafter
acquired, including, without limitation, the Capital Stock or other
ownership interests described on Schedule 1 (the "Pledged Shares");
and
(b) all products, proceeds, revenues, distributions,
dividends, stock dividends, securities and other property, rights,
interests and other general intangibles that Pledgor
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receives or is at any time entitled to receive on account of the
property described in clause (a) preceding.
3. Representations and Warranties. Pledgor hereby represents and
warrants the following to Secured Party: (a) Pledgor has the power and
authority to execute and perform this Agreement; (b) this Agreement constitutes
legal, valid and binding obligations of Pledgor, enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights generally;
(c) Pledgor has good and transferable title to the Collateral free and clear of
all liens, security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement; (d) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral; (e) the execution and performance of this Agreement by Pledgor will
not conflict with any agreement, law or regulation, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting the
Collateral; (f) no consent, approval, authorization or order of, and no notice
to or filing with, any court, governmental authority or third party is required
in connection with the execution and performance of this Agreement; (g) all of
Pledgor's records concerning the Collateral shall be maintained at the
principal office of Pledgor which, as of the date hereof, is located at the
address for notice specified herein for Pledgor; and (h) the Pledged Shares are
wholly comprised of unrestricted assets of the Pledgor.
4. Covenants. So long as any of the Secured Obligations remain
unpaid, Pledgor covenants and agrees with Secured Party as follows:
(a) Delivery. Prior to or concurrently with the execution
and delivery of this Agreement, Pledgor shall deliver to Secured Party
each certificate identified on Schedule 1 hereof, accompanied by
undated stock powers or assignments, as applicable, duly executed in
blank. Each time Schedule 1 hereto is amended in accordance with
paragraph 4(f) hereof or otherwise, Pledgor shall deliver to Secured
Party each new certificate identified thereon, accompanied by undated
stock powers or assignments, as applicable, duly executed in blank.
(b) Disposition of Pledged Shares. Pledgor shall not
sell, transfer, deliver or otherwise dispose of any of the Collateral
or any interest therein without the express written permission of
Secured Party.
(c) Ownership and Liens. Pledgor will maintain good and
defensible title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement. Pledgor will not permit
any dispute, right of setoff, counterclaim or defense to exist with
respect to the Collateral. At its sole expense, Pledgor will defend
Secured Party's right, title and security interest in and to the
Collateral against the claims of any third party.
(d) Possession of Pledged Shares. The Pledged Shares are
certificated and are evidenced by share certificates issued by the
issuer thereof in the name of Pledgor. Promptly upon execution of
this Agreement, Pledgor shall deliver, or cause to be delivered, to
Lender each certificate evidencing the Pledged Shares, together with
stock powers duly executed in blank with respect to all such
certificates. Promptly upon issuance or receipt thereof, Pledgor
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shall deliver, or cause to be delivered, to Secured Party, all other
share certificates and other instruments or documents from time to
time evidencing any of the Pledged Shares or any stock, stock
dividends, stock splits, non-cash distributions, warrants and rights
received with respect to any of the Pledged Shares, together with
stock powers duly executed in blank with respect to all share
certificates. Secured Party hereby is appointed to retain physical
possession of the certificates and instruments representing or
evidencing Pledged Shares in accordance with the provisions of this
Agreement. Any and all certificates or other property or items
referenced in this paragraph 4(d)from time to time coming within the
possession of Pledgor, and any and all proceeds thereof, shall be held
in trust for the benefit of Secured Party and forthwith delivered to
Secured Party in the form received.
(e) Inspection of Books and Records. Pledgor will keep
adequate records concerning the Collateral. Secured Party and its
representatives and agents shall have the right to inspect and copy
such records at any time during normal business hours.
(f) Additional Pledged Collateral. Pledgor shall pledge
hereunder, immediately upon its acquisition thereof, any and all
additional Pledged Shares evidencing Collateral, including any and all
shares of Capital Stock of any Person whose Capital Stock is required
to be pledged pursuant to Article 3 of the Credit Agreement. Pledgor
agrees that it will, upon obtaining any additional Capital Stock
required to be pledged hereunder as provided in this paragraph 4
promptly (and in any event within fifteen (15) Business Days) deliver
to Secured Party a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule 2 annexed hereto (a "Pledge
Amendment"), in respect of the additional property to be pledged
pursuant to this Agreement. Pledgor hereby authorizes Secured Party
to attach each Pledge Amendment to this Agreement and agrees that all
property listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Collateral; provided
that the failure of Pledgor to execute a Pledge Amendment with respect
to any additional property pledged pursuant to this Agreement shall
not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
(g) Margin Shares. Pledgor represents to Secured Party
that none of the Pledged Shares constitute "margin stock" as defined
by Regulation "U" of the Board of Governors of the Federal Reserve
Board.
(h) Further Assurances. Pledgor will from time to time,
at its sole expense, promptly execute and deliver all further
instruments, financing statements and documents and take all further
action necessary or appropriate or that Secured Party may request in
order to achieve and maintain perfection and priority of Secured
Party's security interests under this Agreement and otherwise effect
the purposes of this Agreement. Without limiting the foregoing,
Pledgor will take all action necessary to enable Secured Party to
comply with Chapter 8 and Chapter 9 of the UCC relative to perfection
of the security interests in the Collateral under this Agreement.
5. Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of Capital Stock of
the issuer of any Pledged Shares, or any securities
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convertible into, or exchangeable for, any such shares or ownership interest or
any warrants, options, rights or other commitments entitling any Person to
purchase or otherwise acquire any such shares or any additional ownership
interest (any of the foregoing herein an "Equity Right"); provided however,
Pledgor may consent to or approve the issuance of any Equity Right if such
Equity Right is granted to Pledgor and is delivered to Secured Party as
additional Collateral in accordance with the terms hereof to secure the Secured
Obligations.
6. Performance By Secured Party. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may take such action as
may be deemed necessary by Secured Party to protect its interest in the
Collateral, and expenses of Secured Party incurred in connection therewith
shall be a part of the Secured Obligations secured by the Collateral and
payable by Pledgor to Secured Party on demand.
7. Power of Attorney. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, such power being coupled with an
interest, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action authorized under paragraph 4(f) and
to take any other action or execute and deliver any notice, demand or
instrument which Secured Party may from time to time in Secured Party's
discretion deem necessary or appropriate to perfect its interests, rights and
benefits under this Agreement or, upon and during the continuation of any Event
of Default to dispose of and transfer any Collateral or otherwise protect or
enforce its rights under this Agreement. Pledgor irrevocably authorizes any
other person to rely upon and comply with any notice, demand, stock power or
other document signed by Secured Party, whether in the name of Secured Party or
Pledgor, the same as if such notice or demand were executed and delivered by
Pledgor, and Pledgor agrees to indemnify and hold Secured Party and any such
other person harmless from any and all claims resulting from such compliance.
Unless an Event of Default has occurred and is continuing, the right to vote
the Pledged Shares and other rights in respect of ownership thereof (excluding
the right to dispose of or encumber the Collateral) shall remain vested in
Pledgor subject to Secured Party's rights under this Agreement
8. Notification to Issuers. Secured Party shall be entitled at
any time to take such action as it deems necessary in order to register its
security interest, collateral assignment, lien and pledge in the Pledged Shares
with the issuer thereof or otherwise notify such issuer of Secured Party's
interests in the Pledged Shares.
9. Default. An Event of Default ("Event of Default") shall exist
under this Agreement upon the occurrence of any one or more of the following
events: (a) default by Pledgor in the performance or observance of any of the
covenants, terms or conditions herein; (b) any "Event of Default" as defined by
the Credit Agreement; (c) any representation or warranty contained herein or
made or furnished by Pledgor in connection herewith shall be false or
misleading in any material respect as of the date made or deemed to have been
made; (d) the filing of any petition in bankruptcy, or any other insolvency
proceeding, by or against Pledgor under the United States Bankruptcy Code or
any other applicable law; or (e) any repudiation by Pledgor, or impairment of,
Secured Party's rights under this Agreement.
10. Remedies. Upon the occurrence and at any time during the
continuance of an Event of Default, Secured Party may from time to time in its
discretion, without limitation and without
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notice, except as expressly provided in the Credit Agreement: (a) exercise in
respect of the Collateral all the rights and remedies of a secured party under
the UCC; (b) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest, pledge and lien granted hereunder by
any available judicial procedure; (c) sell or otherwise dispose of, at Secured
Party's office, or on the premises of Pledgor, or elsewhere, the Collateral, in
whole or in part, by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of any part of
the Collateral shall not exhaust Secured Party's power of sale, but sales or
other dispositions may be made from time to time until all of the Collateral
has been sold or disposed of or until the Secured Obligations have been paid
and performed in full); (d) buy the Collateral, or any portion thereof, at any
public sale; (e) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard price
quotations; or (f) apply for the appointment of a receiver for the Collateral.
Pledgor agrees that in the event Pledgor is entitled to receive any notice of
the sale or other disposition of any Collateral, notice shall be deemed
reasonable if deposited in the United States Mail, postage prepaid, or courier
delivered or telecopied, addressed to Pledgor's address for notice specified
herein, five (5) days prior to the date of any public sale, or the date after
which a private sale, of any of such Collateral is to be held. Secured Party
shall not be obligated to proceed with any such sale, regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned.
11. Disposition of the Pledged Shares Upon Default. Pledgor
recognizes that Secured Party may be unable to effect a public sale of all or
any part of the securities pledged as Collateral because of restrictions in
applicable federal and state securities laws (including, without limitation,
the Securities Act of 1933, the Securities Exchange Act of 1944 and state "Blue
Sky" laws) and that Secured Party may determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that each such private sale may be at prices and
other terms less favorable than what might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay the sale of any such securities for the
period of time necessary to permit the issuer to register such securities for
public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
made privately in the manner described above to not less than five (5) bona
fide offerees shall be deemed to involve a "public sale" for the purposes of
Section 9.504(c) of the UCC, notwithstanding that such sale may not constitute
a "public offering" under any federal or state securities laws, and in such
event, Secured Party may bid for the purchase of such securities. Any
purchaser at a sale conducted pursuant to the terms of this Agreement shall
hold the property sold absolutely, free from any claim or right on the part of
Pledgor. Each and every purchaser of any of the Pledged Shares shall be vested
with all shareholder's ownership rights including, without limitation, all
voting, dividend and distribution rights. Pledgor agrees that Secured Party
may purchase the Pledged Shares or any part thereof at any sale conducted in
accordance herewith provided that at least five (5) days prior notice of such
sale has been furnished to Pledgor.
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12. Interest Payments and Collateral Substitution. Upon the
occurrence and during the continuance of an Event of Default, all rights, if
any, of Pledgor to receive and retain interest payments, dividends and other
distributions on the Collateral shall automatically be suspended, and all such
rights shall thereupon become vested with Secured Party, until such time as may
be agreed otherwise by Secured Party in writing. All interest payments,
dividends or other distributions which may be received by Pledgor at any time
when the receipt of same by Pledgor is prohibited by this Agreement shall be
received by Pledgor and held in trust for the benefit of Secured Party and
shall be segregated from other property of Pledgor and forthwith delivered to
Secured Party in the form received (properly endorsed or assigned if requested
by Secured Party), to be held by Secured Party as Collateral.
13. Indemnity. WITHOUT LIMITATION OF THE APPLICABILITY OF ANY
OTHER PROVISION OF THE LOAN DOCUMENTS, THE PROVISIONS OF SECTION 12.4
("INDEMNITY") OF THE CREDIT AGREEMENT HEREBY ARE INCORPORATED HEREIN BY
REFERENCE AND PLEDGOR ACKNOWLEDGES THAT ITS OBLIGATIONS THEREUNDER SHALL HAVE
FULL APPLICABILITY TO ANY INDEMNIFIED CLAIMS RELATING TO OR IN CONNECTION WITH
THIS AGREEMENT AS FULLY AS IF SET FORTH HEREIN AT LENGTH. THE INDEMNIFICATION
PROVIDED FOR IN THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR
HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER. IT IS AGREED THAT
SECURED PARTY SHALL HAVE NO OBLIGATION TO TAKE NECESSARY STEPS TO PRESERVE
RIGHTS AGAINST PRIOR PARTIES, IF ANY.
14. Costs and Expenses. Pledgor will upon demand pay to Secured
Party the amount of any and all costs, fees and expenses (including, without
limitation, reasonable attorneys' fees and expenses), which Secured Party may
incur in connection with the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, the Collateral, or the
exercise or enforcement of any of the rights of Secured Party under this
Agreement.
15. No Commitment. Nothing in this Agreement shall be construed
as an obligation on the part of Secured Party to extend or continue to extend
credit for the benefit of Pledgor.
16. Notices. Except as otherwise provided in this Agreement, all
notices, requests, demands or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and given in accordance
with the terms of Section 12.2 ("Notices") of the Credit Agreement, the
provisions of which are incorporated herein by reference.
17. Waivers. In connection with all matters pertaining to this
Agreement:
(a) Pledgor hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of presentment for payment, demand,
protest and notice thereof as to any promissory notes or other
instruments among the Loan Documents; (iii) all other notices and
demands except to the extent otherwise expressly provided herein; and
(iv) any defense arising by reason of any defense of any other Person
obligated for payment for all or any portion of the Secured
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131
Obligations or by reason of the release or other termination of the
liability of any such Person in respect thereof.
(b) Pledgor hereby waives and agrees not to assert against
Secured Party: (i) any defense (legal or equitable), setoff,
counterclaim or claim which it may now or at any time hereafter have
against any other party liable to Secured Party; (ii) any defense,
setoff, counterclaim or claim of any kind or nature available to any
other Person against Secured Party, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity
or enforceability of the Secured Obligations or any security therefor;
(iii) any right or defense arising by reason of any claim or defense
based upon an election of remedies by Secured Party under any
applicable law; and (iv) the benefit of any statute of limitations
affecting any other Person's liability hereunder.
(c) Pledgor hereby consents and agrees that, without
notice or consent and without affecting or impairing its obligations
hereunder, Secured Party may, by action or inaction: (i) compromise,
settle, extend the duration or the time for the payment of, discharge
the performance of or refuse to or otherwise not enforce the Loan
Documents; (ii) release all or any one or more parties to any one or
more of the Loan Documents or grant other indulgences to any other
Person in respect thereof; (iii) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; and (iv)
release or substitute any Guarantor of the Obligations, or enforce,
exchange, release or waive any security for the Obligations or any
Guaranty of the Obligations, or any portion thereof.
18. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST PLEDGOR OR SECURED PARTY ARISING OUT OF OR RELATING TO
THIS AGREEMENT. EACH SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
19. Non-Impairment; Non-Waiver. The lien, security interest and
other security rights of Secured Party hereunder shall not be impaired by (i)
any renewal, extension, increase or modification with respect to the
Obligations, (ii) any surrender, compromise, release, renewal, extension,
exchange or substitution which Secured Party may grant with respect to the
Collateral or any other "Collateral" as defined in the Credit Agreement, or
(iii) any release or indulgence granted to any endorser, Guarantor or surety of
the Obligations. The taking of additional security by Secured Party shall not
release or impair the lien, security interest or other security rights of
Secured Party hereunder or affect the obligations of Pledgor hereunder. Secured
Party may waive any Event of Default of Pledgor without waiving any other prior
or subsequent Event of Default of Pledgor. Secured Party may remedy any
default without waiving the Event of Default of Pledgor remedied. Neither the
failure by Secured Party to exercise, nor the delay by Secured Party in
exercising, any right or remedy upon any Event of Default of Pledgor shall be
construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No single or partial
exercise
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132
by Secured Party of any right or remedy hereunder shall exhaust the same or
shall preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any provision
hereof nor consent to any departure by Pledgor therefrom shall be effective
unless the same shall be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific instances, for the
purpose for which given and to the extent therein specified. No notice to, nor
demand on, Pledgor in any case shall of itself entitle Pledgor to any other or
further notice or demand in similar or other circumstances. Pledgor consents
and agrees that, without notice to or by Pledgor and without affecting or
impairing the obligations of Pledgor hereunder, Secured Party may, by action or
inaction: (a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce the Credit Agreement or any other Loan Document; (b) release all or any
one or more parties to the Credit Agreement or any other Loan Document or grant
other indulgences to Pledgor, and such other parties in respect thereof; (c)
amend or modify in any manner and at any time (or from time to time) the Credit
Agreement or any other Loan Document; or (d) release or substitute any other
Person, if any, liable for payment or performance of the Obligations, or
enforce, exchange, release or waive any security for the Obligations or any
Guaranty of the Obligations, or any portion thereof.
20. Benefit; Equivalent Value. Pledgor represents to Secured
Party that execution and performance of this Agreement is in the best interest
of Pledgor and that any extension of credit under the Credit Agreement is
reasonably expected to directly benefit Pledgor and that such benefits are of
reasonably equivalent value to Pledgor, and Pledgor acknowledges that the
execution and delivery of this Agreement is a condition precedent to the
extension of any such credit. Execution, delivery and performance by Pledgor
of this Agreement does not, and will not, violate or contravene any provision
of Pledgor's articles of incorporation, bylaws or any other agreement governing
or affecting Pledgor.
21. No Election. Secured Party shall have the right to seek
recourse under this Agreement to the fullest extent provided for herein, and no
election by Secured Party to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of Secured
Party's right to proceed in any other form of action or proceeding or against
other parties unless Secured Party has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action
or proceeding by Secured Party under any document or instrument evidencing the
Secured Obligations shall serve to diminish the obligations of Pledgor under
this Agreement, except to the extent that Secured Party finally and
unconditionally shall have realized in full, indefeasible payment of all of the
Secured Obligations by such action or proceeding.
22. Successors and Assigns. This Agreement shall be binding on
Pledgor and its successors and assigns, and shall inure to the benefit of
Secured Party and its successors and assigns. Secured Party's rights under
this Agreement may be transferred in connection with any transfer of the
Secured Obligations, or any part thereof, to the extent not otherwise
prohibited by the Credit Agreement. Pledgor's rights and obligations hereunder
may not be assigned or otherwise transferred without the prior written consent
of Secured Party.
23. Cumulative Rights. All rights and remedies of Secured Party
hereunder are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or
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133
in equity or under the Credit Agreement, and the exercise of one or more of
such rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
24. Entire Agreement. This Agreement embodies the entire
agreement between the parties relating to the subject matter hereof, and may be
modified or amended only by an instrument in writing executed by an authorized
officer of both Secured Party and Pledgor. It is expressly agreed that no
conversations, statements, negotiations or other verbal communications between
Secured Party and Pledgor, nor any purported modification or amendment, or
waiver, shall be binding unless the same is evidenced in writing, executed by
an authorized officer of Secured Party and Pledgor.
25. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF TEXAS.
26. Copies Valid as Financing Statements. Pledgor grants to
Secured Party a special power of attorney to sign its name, on its behalf, to
any financing statement describing the Collateral, or any part thereof, or to
any amendment of any financing statement filed pursuant to this Agreement, and
to file such financing statement or amendment in any jurisdiction deemed
necessary by Secured Party to perfect Secured Party's interests under this
Agreement. A carbon, photographic or other reproduction, including photocopy,
telecopy or electronic transmission, of this Agreement or any financing
statement shall be sufficient as a financing statement and may be filed as an
original.
27. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future laws effective
during the term of the Credit Agreement, such provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement. In such case, the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected thereby.
28. Multiple Counterparts. This Agreement may be executed
simultaneously in one or more multiple originals, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement.
29. Survival. All covenants, agreements, representations and
warranties made by Pledgor herein shall survive the execution, delivery and
closing of this Agreement, and all documents executed in connection herewith,
and shall not be affected by any investigation made by any party.
THIS WRITTEN AGREEMENT REPRESENTS 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.
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EXECUTED as of the effective date specified in the preamble.
PHYSICIAN RELIANCE NETWORK, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
BANK ONE, TEXAS, N.A., as Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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Schedule 1
to
Pledge Agreement
----------------------------------------------------------------------------------------------
Person Ownership Number of Certificate Par Value
and Interest Shares Number
Type of Entity Units or %
Interest
----------------------------------------------------------------------------------------------
1. TOPS Pharmacy Services, Inc. common stock
----------------------------------------------------------------------------------------------
2. Innovative Medical Communications, Inc. common stock 800 1
----------------------------------------------------------------------------------------------
3. PRN Research, Inc. common stock
----------------------------------------------------------------------------------------------
4.
----------------------------------------------------------------------------------------------
5.
----------------------------------------------------------------------------------------------
6.
----------------------------------------------------------------------------------------------
7.
----------------------------------------------------------------------------------------------
8.
----------------------------------------------------------------------------------------------
9.
----------------------------------------------------------------------------------------------
10.
----------------------------------------------------------------------------------------------
11.
----------------------------------------------------------------------------------------------
12.
----------------------------------------------------------------------------------------------
13.
----------------------------------------------------------------------------------------------
14.
----------------------------------------------------------------------------------------------
15.
----------------------------------------------------------------------------------------------
16.
----------------------------------------------------------------------------------------------
Schedule 1 - Solo Page
136
Schedule 2
to
Pledge Agreement
Pledge Amendment
This Pledge Amendment, dated _____________, ____, is delivered
pursuant to paragraph 4(f) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated June 11, 1997, among the undersigned and Bank One,
Texas, N.A., as agent, as Secured Party (the "Pledge Agreement", capitalized
terms defined therein being used herein as therein defined), Schedule 1 to the
Pledge Agreement is hereby amended to add the property described below and the
property listed on this Pledge Amendment shall be part of the Collateral and
shall secure all Secured Obligations.
PHYSICIAN RELIANCE NETWORK, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
================================================================================
Person Ownership Number of Certificate Par
Interest Shares, Number Value
Units or %
Interest
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Schedule 2 - Solo Page
137
EXHIBIT "G"
Form of Pledging Subsidiary Pledge Agreement
138
Draft Dated
06/10/97
PLEDGE AGREEMENT
(Pledging Subsidiary)
This PLEDGE AGREEMENT (this "Agreement"), dated ____________, 1997, is
executed and delivered by __________________, a ___________________
("Pledgor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Physician Reliance Network, Inc. ("Borrower"), the lenders named
therein (together with their successors and assigns, the "Lenders"),
NationsBank of Texas, N.A., (as a Lender and co-agent ("Co-Agent")) and Agent
are, concurrently herewith, entering into that certain Amended and Restated
Credit Agreement dated June __, 1997 (as the same may be amended, renewed,
extended, restated, replaced, substituted, supplemented or otherwise modified
from time to time, the "Credit Agreement "), and, in connection therewith,
inter alia Borrower is executing and delivering to each of the Lenders a
Revolving Note (as defined in the Credit Agreement) which together with the
other Revolving Notes executed and delivered by Borrower to the Lenders on the
Closing Date (as defined in the Credit Agreement) in connection with the Credit
Agreement are in the aggregate principal amount of $140,000,000 (such Revolving
Notes, as they may be amended, renewed, extended, restated, replaced,
substituted, supplemented or otherwise modified from time to time, are
hereinafter individually called a "Note" and collectively called the "Notes";
the Credit Agreement, the Notes and the other Loan Documents (as defined in the
Credit Agreement) and any and all amendments, modifications, renewals,
extensions, restatements and/or supplements thereto from time to time, are
hereinafter collectively called the "Loan Documents");
B. Execution and delivery of this Agreement is a condition to Agent and
the Lenders entering into the Credit Agreement and the funding of Advances
pursuant thereto;
C. Pledgor is the owner of the Pledged Shares (as such term is defined
below). Pursuant to the terms of the Credit Agreement, and has determined that
availability of extensions of credit by the Lenders to Borrower under the Notes
and pursuant to the Credit Agreement provides direct and indirect benefits to
Pledgor.
D. Pledgor is the owner of the Pledged Shares, and in consideration of the
benefits provided to Pledgor under the Credit Agreement, Pledgor has agreed to
grant to Agent a continuing security interest, collateral assignment, lien and
pledge in and to all right, title and interest of Pledgor in the Collateral (as
such term is defined below), as security for the Secured Obligations (as such
term is defined below), on the terms prescribed below.
THEREFORE, for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Pledgor and Agent each hereby agrees as
follows:
139
AGREEMENT:
1. Definitions. Unless otherwise defined in this Agreement, all
capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in the Credit Agreement.
"Agent" has the meaning set forth in the introductory paragraph of
this Agreement.
"Borrower" has the meaning set forth in Recital A of this Agreement.
"Collateral" has the meaning set forth in paragraph 2.
"Event of Default" means any Event of Default defined in paragraph 7.
"Lender" means each of the "Lenders" as such term is defined in the
Credit Agreement, and "Lenders" means all of such Lenders, collectively.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement dated as of June , 1997, among Borrower, the Lenders, Co-Agent
and Agent, as the same may be renewed, extended, modified, supplemented,
amended or restated from time to time.
"Equity Rights" has the meaning set forth in paragraph 5.
"Pledge Amendment" has the meaning set forth in paragraph 4.
"Pledged Shares" has the meaning set forth in paragraph 2.
"Pledgor" has the meaning set forth in the introductory paragraph of
this Agreement.
"Secured Obligations" means all "Obligations" as defined in the
Credit Agreement, all costs, fees and expenses incurred by Secured Party
in enforcing this Agreement, and any and all renewals, extensions,
increases, amendments, modifications, supplements or restatements thereof.
"Secured Party" means Agent and its successors and assigns, and
includes any person to whom Agent, or its successors or assigns, may
assign its rights and interests under this Agreement.
"UCC" means the Texas Uniform Commercial Code.
Unless expressly provided otherwise, all terms defined in the Credit Agreement,
wherever used in this Agreement, shall have the same meanings as are prescribed
by the Credit Agreement, and all terms defined by the UCC, wherever used
herein, shall have the same meanings as are prescribed by the UCC.
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140
2. Security Interest and Pledge. As collateral security for the
prompt payment in full when due of the Secured Obligations, Pledgor hereby
pledges and grants to Secured Party a first priority security interest in all
of Pledgor's right, title and interest in and to the following property (such
property being hereinafter sometimes called the "Collateral"):
(a) all the Capital Stock issued by, and all other
ownership interest in, the Persons described on Schedule I hereof and
all Material Subsidiaries hereafter created or acquired and owned by
Pledgor, whether any of the foregoing are now owned or hereafter
acquired, including, without limitation, the Capital Stock or other
ownership interests described on Schedule 1 (the "Pledged Shares");
and
(b) all products, proceeds, revenues, distributions,
dividends, stock dividends, securities and other property, rights,
interests and other general intangibles that Pledgor receives or is
at any time entitled to receive on account of the property described
in clause (a) preceding.
Anything contained in this Agreement or in any other Loan Document to the
contrary notwithstanding, the indebtedness, liabilities and obligations of
Pledgor hereunder shall not exceed an aggregate amount equal to the greatest
amount that would not render Pledgor's obligations under this Agreement subject
to avoidance under Sections 544, 548 or 550 of the Federal Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided however, that for purposes of this proviso it
shall be presumed that the Secured Obligations of Pledgor under this Agreement
do not equal or exceed any aggregate amount which would render Pledgor's
indebtedness, liabilities or obligations under this Agreement subject to being
so avoided, set aside or annulled, and the burden of proof to the contrary
shall be on the party asserting to the contrary. Subject to, but without
limiting the generality of the foregoing proviso, the provisions of this
Agreement are severable and, in any action or proceeding involving any state
corporate law or any bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights, if the
indebtedness, liabilities or obligations of Pledgor under this Agreement would
otherwise be held or determined to be void, invalid or unenforceable on account
of the amount thereof under this Agreement, then, notwithstanding any other
provision of this Agreement to the contrary, the amount thereof shall, without
any further action by Pledgor, Agent, any Lender or any other Person, be
automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
3. Representations and Warranties. Pledgor hereby represents and
warrants the following to Secured Party: (a) Pledgor has the power and
authority to execute and perform this Agreement; (b) this Agreement constitutes
legal, valid and binding obligations of Pledgor, enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights generally;
(c) Pledgor has good and transferable title to the Collateral free and clear of
all liens, security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement; (d) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral: (e) the execution and performance of this Agreement by Pledgor will
not conflict with any agreement, law or regulation, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting the
Collateral; (f) no consent, approval, authorization or order of, and no notice
to or filing
3
141
with, any court, governmental authority or third party is required in
connection with the execution and performance of this Agreement; (g) all of
Pledgor's records concerning the Collateral shall be maintained at the
principal office of Pledgor which, as of the date hereof, is located at the
address for notice specified herein for Pledgor; and (h) the Pledged Shares are
wholly comprised of unrestricted assets of the Pledgor.
4. Covenants. So long as any of the Secured Obligations remain unpaid,
Pledgor covenants and agrees with Secured Party as follows:
(a) Delivery. Prior to or concurrently with the execution and
delivery of this Agreement, Pledgor shall deliver to Secured Party
each certificate identified on Schedule 1 hereof, accompanied by
undated stock powers or assignments, as applicable, duly executed in
blank. Each time Schedule 1 hereto is amended in accordance with
paragraph 4(f) hereof or otherwise, Pledgor shall deliver to Secured
Party each new certificate identified thereon, accompanied by undated
stock powers or assignments, as applicable, duly executed in blank.
(b) Disposition of Pledged Shares. Pledgor shall not sell,
transfer, deliver or otherwise dispose of any of the Collateral or
any interest therein without the express written permission of
Secured Party.
(c) Ownership and Liens. Pledgor will maintain good and
defensible title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement. Pledgor will not permit
any dispute, right of setoff, counterclaim or defense to exist with
respect to the Collateral. At its sole expense, Pledgor will defend
Secured Party's right, title and security interest in and to the
Collateral against the claims of any third party.
(d) Possession of Pledged Shares. The Pledged Shares are
certificated and are evidenced by share certificates issued by the
issuer thereof in the name of Pledgor. Promptly upon execution of
this Agreement, Pledgor shall deliver, or cause to be delivered, to
Lender each certificate evidencing the Pledged Shares, together with
stock powers duly executed in blank with respect to all such
certificates. Promptly upon issuance or receipt thereof, Pledgor
shall deliver, or cause to be delivered, to Secured Party, all other
share certificates and other instruments or documents from time to
time evidencing any of the Pledged Shares or any stock, stock
dividends, stock splits, non-cash distributions, warrants and rights
received with respect to any of the Pledged Shares, together with
stock powers duly executed in blank with respect to all such share
certificates. Secured Party hereby is appointed to retain physical
possession of the certificates and instruments representing or
evidencing Pledged Shares in accordance with the provisions of this
Agreement. Any and all certificates or other property or items
referenced in this paragraph 4(d) from time to time coming within the
possession of Pledgor, and any and all proceeds thereof, shall be
held in trust for the benefit of Secured Party and forthwith
delivered to Secured Party in the form received.
(e) Inspection of Books and Records. Pledgor will keep adequate
records concerning the Collateral. Secured Party and its
representatives and agents shall have the right to inspect and copy
such records at any time during normal business hours.
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(f) Additional Pledged Collateral. Pledgor shall pledge
hereunder, immediately upon its acquisition thereof, any and all
additional Pledged Shares evidencing Collateral, including any and
all shares of Capital Stock of any Person whose Capital Stock is
required to be pledged pursuant to Article 3 of the Credit Agreement.
Pledgor agrees that it will, upon obtaining any additional Capital
Stock required to be pledged hereunder as provided in this paragraph
4 promptly (and in any event within fifteen (15) Business Days)
deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule 2 annexed hereto (a
"Pledge Amendment"), in respect of the additional property to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured
Party to attach each Pledge Amendment to this Agreement and agrees
that all property listed on any Pledge Amendment delivered to Secured
Party shall for all purposes hereunder be considered Collateral;
provided that the failure of Pledgor to execute a Pledge Amendment
with respect to any additional property pledged pursuant to this
Agreement shall not impair the security interest of Secured Party
therein or otherwise adversely affect the rights and remedies of
Secured Party hereunder with respect thereto.
(g) Margin Shares. Pledgor represents to Secured Party that none
of the Pledged Shares constitute "margin stock" as defined by
Regulation "U" of the Board of Governors of the Federal Reserve
Board.
(h) Further Assurances. Pledgor will from time to time, at its
sole expense, promptly execute and deliver all further instruments,
financing statements and documents and take all further action
necessary or appropriate or that Secured Party may request in order
to achieve and maintain perfection and priority of Secured Party's
security interests under this Agreement and otherwise effect the
purposes of this Agreement. Without limiting the foregoing, Pledgor
will take all action necessary to enable Secured Party to comply with
Chapter 8 and Chapter 9 of the UCC relative to perfection of the
security interests in the Collateral under this Agreement.
5. Additional Securities. Pledgor shall not consent to or approve the
issuance of any additional shares of any class of Capital Stock of the issuer
of any Pledged Shares, or any securities convertible into, or exchangeable for,
any such shares or ownership interest or any warrants, options, rights or other
commitments entitling any Person to purchase or otherwise acquire any such
shares or any additional ownership interest (any of the foregoing herein an
"Equity Right"); provided however, Pledgor may consent to or approve the
issuance of any Equity Right if such Equity Right is granted to Pledgor and is
delivered to Secured Party as additional Collateral in accordance with the
terms hereof to secure the Secured Obligations.
6. Performance By Secured Party. If Pledgor fails to perform any agreement
or obligation provided herein, Secured Party may take such action as may be
deemed necessary by Secured Party to protect its interest in the Collateral,
and expenses of Secured Party incurred in connection therewith shall be a part
of the Secured Obligations secured by the Collateral and payable by Pledgor to
Secured Party on demand.
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7. Power of Attorney. Pledgor hereby irrevocably appoints Secured Party as
Pledgor's attorney-in-fact, such power being coupled with an interest, with
full authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, to take any action authorized under paragraph 4(f) and to take any
other action or execute and deliver any notice, demand or instrument which
Secured Party may from time to time in Secured Party's discretion deem
necessary or appropriate to perfect its interests, rights and benefits under
this Agreement or, upon and during the continuation of any Event of Default to
dispose of and transfer any Collateral or otherwise protect or enforce its
rights under this Agreement. Pledgor irrevocably authorizes any other person to
rely upon and comply with any notice, demand, stock power or other document
signed by Secured Party, whether in the name of Secured Party or Pledgor, the
same as if such notice or demand were executed and delivered by Pledgor, and
Pledgor agrees to indemnify and hold Secured Party and any such other person
harmless from any and all claims resulting from such compliance. Unless an
Event of Default has occurred and is continuing, the right to vote the Pledged
Shares and other rights in respect of ownership thereof (excluding the right to
dispose of or encumber the Collateral) shall remain vested in Pledgor subject
to Secured Party's rights under this Agreement
8. Notification to Issuers. Secured Party shall be entitled at any time to
take such action as it deems necessary in order to register its security
interest, collateral assignment, lien and pledge in the Pledged Shares with the
issuer thereof or otherwise notify such issuer of Secured Party's interests in
the Pledged Shares.
9. Default. An Event of Default ("Event of Default") shall exist under
this Agreement upon the occurrence of any one or more of the following events:
(a) default by Pledgor in the performance or observance of any of the
covenants, terms or conditions herein; (b) any "Event of Default" as defined by
the Credit Agreement; (c) any representation or warranty contained herein or
made or furnished by Pledgor in connection herewith shall be false or
misleading in any material respect as of the date made or deemed to have been
made; (d) the filing of any petition in bankruptcy, or any other insolvency
proceeding, by or against Pledgor or Borrower under the United States
Bankruptcy Code or any other applicable law; or (e) any repudiation by Pledgor,
or impairment of, Secured Party's rights under this Agreement.
10. Remedies. Upon the occurrence and at any time during the continuance
of an Event of Default, Secured Party may from time to time in its discretion,
without limitation and without notice, except as expressly provided in the
Credit Agreement: (a) exercise in respect of the Collateral all the rights and
remedies of a secured party under the UCC; (b) reduce its claim to judgment or
foreclose or otherwise enforce, in whole or in part, the security interest,
pledge and lien granted hereunder by any available judicial procedure; (c) sell
or otherwise dispose of, at Secured Party's office, or on the premises of
Pledgor, or elsewhere, the Collateral, in whole or in part, by public or
private proceedings, and by way of one or more contracts (it being agreed that
the sale or other disposition of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or disposed of or until
the Secured Obligations have been paid and performed in full); (d) buy the
Collateral, or any portion thereof, at any public sale; (e) buy the Collateral,
or any portion thereof, at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations; or (f) apply for the appointment
of a receiver for the Collateral. Pledgor agrees that in the event Pledgor is
entitled to receive any notice of the sale
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or other disposition of any Collateral, notice shall be deemed reasonable if
deposited in the United States Mail, postage prepaid, or courier delivered or
telecopied, addressed to Pledgor's address for notice specified herein, five
(5) days prior to the date of any public sale, or the date after which a
private sale, of any of such Collateral is to be held. Secured Party shall not
be obligated to proceed with any such sale, regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
11. Disposition of the Pledged Shares Upon Default. Pledgor recognizes
that Secured Party may be unable to effect a public sale of all or any part of
the securities pledged as Collateral because of restrictions in applicable
federal and state securities laws (including, without limitation, the
Securities Act of 1933, the Securities Exchange Act of 1944 and state "Blue
Sky" laws) and that Secured Party may determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale
thereof Pledgor acknowledges that each such private sale may be at prices and
other terms less favorable than what might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay the sale of any such securities for the
period of time necessary to permit the issuer to register such securities for
public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
made privately in the manner described above to not less than five (5) bonafide
offerees shall be deemed to involve a "public sale" for the purposes of Section
9.504(c) of the UCC, notwithstanding that such sale may not constitute a
"public offering" under any federal or state securities laws, and in such
event, Secured Party may bid for the purchase of such securities. Any purchaser
at a sale conducted pursuant to the terms of this Agreement shall hold the
property sold absolutely, free from any claim or right on the part of Pledgor.
Each and every purchaser of any of the Pledged Shares shall be vested with all
shareholder's ownership rights including, without limitation, all voting,
dividend and distribution rights. Pledgor agrees that Secured Party may
purchase the Pledged Shares or any part thereof at any sale conducted in
accordance herewith provided that at least five (5) days prior notice of such
sale has been furnished to Pledgor.
12. Interest Payments and Collateral Substitution. Upon the occurrence and
during the continuance of an Event of Default, all rights, if any, of Pledgor
to receive and retain interest payments, dividends and other distributions on
the Collateral shall automatically be suspended, and all such rights shall
thereupon become vested with Secured Party, until such time as may be agreed
otherwise by Secured Party in writing. All interest payments, dividends or
other distributions which may be received by Pledgor at any time when the
receipt of same by Pledgor is prohibited by this Agreement shall be received by
Pledgor and held in trust for the benefit of Secured Party and shall be
segregated from other property of Pledgor and forthwith delivered to Secured
Party in the form received (properly endorsed or assigned if requested by
Secured Party), to be held by Secured Party as Collateral.
13. Indemnity. WITHOUT LIMITATION OF THE APPLICABILITY OF ANY OTHER
PROVISION OF THE LOAN DOCUMENTS, THE PROVISIONS OF SECTION 12.4 ("INDEMNITY")
OF THE CREDIT AGREEMENT HEREBY ARE
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145
INCORPORATED HEREIN BY REFERENCE AND PLEDGOR ACKNOWLEDGES THAT THE OBLIGATIONS
OF BORROWER REFERENCED THEREIN SHALL HAVE FULL APPLICABILITY TO PLEDGOR
HEREUNDER AND ANY INDEMNIFIED CLAIMS RELATING TO OR IN CONNECTION WITH THIS
AGREEMENT AS FULLY AS IF SET FORTH HEREIN AT LENGTH. THE INDEMNIFICATION
PROVIDED FOR IN THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR
HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER. IT IS AGREED THAT SECURED
PARTY SHALL HAVE NO OBLIGATION TO TAKE NECESSARY STEPS TO PRESERVE RIGHTS
AGAINST PRIOR PARTIES, IF ANY.
14. Costs and Expenses. Subject to the limitations of paragraph 2, Pledgor
will upon demand pay to Secured Party the amount of any and all costs, fees and
expenses (including, without limitation, reasonable attorneys' fees and
expenses), which Secured Party may incur in connection with the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, the Collateral, or the exercise or enforcement of any of the
rights of Secured Party under this Agreement.
15. No Commitment. Nothing in this Agreement shall be construed as an
obligation on the part of Secured Party to extend or continue to extend credit
for the benefit of Borrower or Pledgor.
16. Notices. Except as otherwise provided in this Agreement, all notices,
requests, demands or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and given to the parties hereto,
at the addresses set forth below, in accordance with the terms of Section 12.2
("Notices") of the Credit Agreement, the provisions of which are incorporated
herein by reference.
Pledgor: With a copy to:
________________________________ Physician Reliance Network, Inc.
________________________________ Two Lincoln Centre
________________________________ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
________________________________ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attention:______________________ Assistant Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: ______________________
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146
Agent: With a copy to:
Bank One, Texas, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Healthcare Finance Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on the
signature pages of the Credit Agreement or the most recent Assignment and
Acceptance with respect to a Lender, or such other address as may hereafter be
designated and delivered in writing.
17. Waivers. In connection with all matters pertaining to this Agreement:
(a) Pledgor hereby waives: (i) notice of acceptance of this Agreement;
(ii) notice of any loans or other financial accommodations made or extended
under the Loan Documents or the creation or existence of any Obligations
thereunder; (iii) notice of the amount of the Secured Obligations, subject,
however, to the right to make inquiry of Secured Party to ascertain the amount
of the Secured Obligations at any reasonable time; (iv) notice of any adverse
change in the financial condition of Borrower or of any other fact that might
increase the risk with respect to Borrower under this Agreement; (v) notice of
presentment for payment, demand, protest and notice thereof as to any
promissory notes or other instruments among the Loan Documents; (vi) all other
notices and demands except to the extent otherwise expressly provided herein;
(vii) any right by statute or otherwise to require Secured Party to institute
suit against Borrower or to exhaust any rights and remedies which Secured Party
has or may have against Borrower; (viii) any defense arising by reason of any
defense of any other Person obligated for payment for all or any portion of the
Secured Obligations or by reason of the release or other termination of the
liability of any such Person in respect thereof.
(b) Pledgor hereby waives and agrees not to assert against Secured Party:
(i) any defense (legal or equitable), setoff, counterclaim or claim which it
may now or at any time hereafter have against Borrower or any other party
liable to Secured Party; (ii) any defense, setoff, counterclaim or claim of any
kind or nature available to any other Person against Secured Party, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of the Secured Obligations or any
security therefor; (iii) any right or defense arising by reason of any claim or
defense based upon an election of remedies by Secured Party under any
applicable law; (iv) the benefit of any statute of limitations affecting other
Person's liability hereunder.
(c) Pledgor hereby waives: (i) any right it has or may have against
Borrower with respect to the Secured Obligations; (ii) any right to proceed
against Borrower, now or hereafter, for contribution, indemnity, reimbursement
and any other suretyship rights and
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147
claims, whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law,
which it may now have or hereafter have as against Borrower with
respect to the Secured Obligations; and (iii) any rights of recourse
to or with respect to any property of Borrower.
(d) Pledgor hereby consents and agrees that, without notice or
consent and without affecting or impairing its obligations hereunder,
Secured Party may, by action or inaction: (i) compromise, settle,
extend the duration or the time for the payment of, discharge the
performance of or refuse to or otherwise not enforce the Loan
Documents; (ii) release all or any one or more parties to any one or
more of the Loan Documents or grant other indulgences to any other
Person in respect thereof; (iii) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; or (iv)
release or substitute any Guarantor, if any, of the Obligations (as
defined in the Credit Agreement), or enforce, exchange, release or
waive any security for the Obligations or any Guaranty of the
Obligations, or any portion thereof.
18. Financial Condition of Borrower. Pledgor represents and warrants to
Secured Party that Pledgor is currently informed of the financial condition of
Borrower and has had the opportunity to make a diligent inquiry with respect to
facts and circumstances which bear upon the risk of nonpayment of the
Obligations. Pledgor further represents and warrants to Secured Party that
Pledgor has read and understands the terms and conditions of the Credit
Agreement and the other Loan Documents. Pledgor hereby covenants that Pledgor
(without reliance upon Secured Party) will continue to keep informed of
Borrower's financial condition, the financial condition of any other Persons
ever liable for payment or performance of the Obligations and the Secured
Obligations and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations and the Secured Obligations
without requirement of notice by Secured Party.
19. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING
OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST PLEDGOR OR SECURED PARTY ARISING OUT OF OR RELATING TO THIS AGREEMENT.
EACH SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH FULL KNOWLEDGE AND
UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH
THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
20. Non-Impairment; Non-Waiver. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by (i) any
renewal, extension, increase or modification with respect to the Obligations,
(ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Secured Party may grant with respect to the Collateral or
any other "Collateral" as defined in the Credit Agreement, or (iii) any release
or indulgence granted to Borrower or any endorser, Guarantor or surety of the
Obligations. The taking of additional security by Secured Party shall not
release or impair the lien, security interest or other security rights of
Secured Party hereunder or affect the obligations of Pledgor hereunder. Secured
Party may waive any Event of Default of Borrower or Pledgor without waiving any
other prior or subsequent Event of Default of
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Borrower or Pledgor. Secured Party may remedy any default without waiving the
Event of Default of Borrower or Pledgor remedied. Neither the failure by
Secured Party to exercise, nor the delay by Secured Party in exercising, any
right or remedy upon any Event of Default of Borrower or Pledgor shall be
construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No single or partial
exercise by Secured Party of any right or remedy hereunder shall exhaust the
same or shall preclude any other or further exercise thereof, and every such
right or remedy hereunder may be exercised at any time. No waiver of any
provision hereof nor consent to any departure by Pledgor therefrom shall be
effective unless the same shall be in writing and signed by Secured Party and
then such waiver or consent shall be effective only in the specific instances,
for the purpose for which given and to the extent therein specified. No notice
to, nor demand on, Pledgor in any case shall of itself entitle Pledgor to any
other or further notice or demand in similar or other circumstances. Pledgor
consents and agrees that, without notice to or by Pledgor and without affecting
or impairing the obligations of Pledgor hereunder, Secured Party may, by action
or inaction: (a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce the Credit Agreement or any other Loan Document, (b) release all or any
one or more parties to the Credit Agreement or any other Loan Document or grant
other indulgences to Borrower, and such other parties in respect thereof, (c)
amend or modify in any manner and at any time (or from time to time) the Credit
Agreement or any other Loan Document; or (d) release or substitute any other
Person, if any, liable for payment or performance of the Obligations, or
enforce, exchange, release or waive any security for the Obligations or any
Guaranty of the Obligations, or any portion thereof.
21. Benefit; Equivalent Value. Pledgor represents to Secured Party that
execution and performance of this Agreement is in the best interest of Pledgor
and that any extension of credit under the Credit Agreement is reasonably
expected to directly and indirectly benefit Pledgor and that such benefits are
of reasonably equivalent value to Pledgor, and Pledgor acknowledges that the
execution and delivery of this Agreement is a condition precedent to the
extension of any such credit. Execution, delivery and performance by Pledgor of
this Agreement does not, and will not, violate or contravene any provision of
Pledgor's articles of incorporation, partnership agreement, bylaws, operating
agreement (as applicable) or any other agreement governing or affecting
Pledgor.
22. No Election. Secured Party shall have the right to seek recourse under
this Agreement to the fullest extent provided for herein, and no election by
Secured Party to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Secured Party's right
to proceed in any other form of action or proceeding or against other parties
unless Secured Party has expressly waived such right in writing. Specifically,
but without limiting the generality of the foregoing, no action or proceeding
by Secured Party under any document or instrument evidencing the Secured
Obligations shall serve to diminish the obligations of Pledgor under this
Agreement, except to the extent that Secured Party finally and unconditionally
shall have realized in full, indefeasible payment of all of the Secured
Obligations by such action or proceeding.
23. Successors and Assigns. This Agreement shall be binding on Pledgor and
its successors and assigns, and shall inure to the benefit of Secured Party and
its successors and assigns. Secured Party's rights under this Agreement may be
transferred in connection with any transfer of the Secured Obligations, or any
part thereof, to the extent not otherwise prohibited by the Credit
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Agreement. Pledgor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured Party.
24. Cumulative Rights. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which Secured
Party may otherwise have at law or in equity or under the Credit Agreement, and
the exercise of one or more of such rights or remedies shall not prejudice or
impair the concurrent or subsequent exercise of any other rights or remedies.
25. Entire Agreement. This Agreement embodies the entire agreement between
the parties relating to the subject matter hereof, and may be modified or
amended only by an instrument in writing executed by an authorized officer of
both Secured Party and Pledgor. It is expressly agreed that no conversations,
statements, negotiations or other verbal communications between Secured Party
and Pledgor, nor any purported modification or amendment, or waiver, shall be
binding unless the same is evidenced in writing, executed by an authorized
officer of Secured Party and Pledgor.
26. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF TEXAS.
27. Copies Valid as Financing Statements. Pledgor grants to Secured Party
a special power of attorney to sign its name, on its behalf, to any financing
statement describing the Collateral, or any part thereof, or to any amendment
of any financing statement filed pursuant to this Agreement, and to file such
financing statement or amendment in any Jurisdiction deemed necessary by
Secured Party to perfect Secured Party's interests under this Agreement. A
carbon, photographic or other reproduction, including photocopy, telecopy or
electronic transmission, of this Agreement or any financing statement shall be
sufficient as a financing statement and may be filed as an original.
28. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future laws effective
during the term of the Credit Agreement, such provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement. In such case, the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected thereby.
29. Multiple Counterparts. This Agreement may be executed simultaneously
in one or more multiple originals, each of which shall be deemed an original,
but all of which together shall constitute one and the same Agreement.
30. Survival. All covenants, agreements, representations and warranties
made by Pledgor herein shall survive the execution, delivery and closing of
this Agreement, and all documents executed in connection herewith, and shall
not be affected by any investigation made by any party.
THIS WRITTEN AGREEMENT REPRESENTS 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.
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EXECUTED as of the effective date specified in the preamble.
[PLEDGING SUBSIDIARY]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
BANK ONE, TEXAS, N.A., as Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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Schedule 1
to
Pledge Agreement
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Person Ownership Number of Certificate Par Value
and Interest Shares Number
Type of Entity Units or %
Interest
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1.
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2.
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3.
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4.
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5.
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6.
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7.
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8.
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9.
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10.
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11.
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12.
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13.
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14.
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15.
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16.
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Schedule 1 - Solo Page
152
Schedule 2
to
Pledge Agreement
Pledge Amendment
This Pledge Amendment, dated _____________, ____, is delivered
pursuant to paragraph 4(f) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated _______, 1997, among the undersigned and Bank One,
Texas, N.A., as agent, as Secured Party (the "Pledge Agreement", capitalized
terms defined therein being used herein as therein defined), Schedule 1 to the
Pledge Agreement is hereby amended to add the property described below and the
property listed on this Pledge Amendment shall be part of the Collateral and
shall secure all Secured Obligations.
[PLEDGING SUBSIDIARY]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
================================================================================
Person Ownership Number of Certificate Par
Interest Shares, Number Value
Units or %
Interest
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Schedule 2 - Solo Page
153
Schedule 5.1
to the
Amended and Restated Credit Agreement
Trade Names, Mergers, Acquisitions
1. Borrower was incorporated as Physician Competitive Resource Corporation,
Inc. and in April 1994 changed its name to Physician Reliance Network,
Inc.
2. Borrower acquired the capital stock of TOPS Pharmacy Services, Inc. on
July 1, 1993.
3. In October ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Oncology Center, Inc. merged into Borrower.
154
Schedule 5.6(a)
to the
Amended and Restated Credit Agreement
1. Texas Oncology, P.A. owns in excess of 10% of Borrower's common stock.
155
Schedule 5.6(b)
to the
Amended and Restated Credit Agreement
Subsidiaries and Ownership of Subsidiaries
Subsidiaries % Owned Shares outstanding Material Subsidiaries
------------ ------- ------------------ ---------------------
TOPS Pharmacy
Services, Inc. 100 3,000 Yes
Innovative Medical
Communications, Inc. 80 1,000 No
PRN Research, Inc. 100 1,000 No
156
Schedule 5.8
to the
Amended and Restated Credit Agreement
Litigation and Judgements
In March 1996, Methodist Hospitals of Dallas ("Methodist") filed a lawsuit
in the District Court of Dallas County, Texas against the Company and TOPA.
This lawsuit asserts various claims, including claims of monopolization,
conspiracy to monopolize, attempted monopolization, unfair competition, and
tortious interference with actual and prospective contractual relationships.
Methodist is seeking both injunctive relief and unspecified monetary and
punitive damages. This matter is set for trial in February 1998. The Company
has denied each of Methodist's claims, believes this lawsuit is without merit,
and intends to vigorously defend itself. The Company is not aware of any
governmental actions to assert claims against TOPA or the Company similar to
those asserted by Methodist.
On or about September 12, 1996, the Company was named as a defendant in a
suit styled ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ On Behalf of Himself and All Others Similarly
Situated v. Physician Reliance Network, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ , Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., and ▇▇▇▇▇
& Company, in the 14th Judicial District Court, Dallas County, Texas
("Hinerfeld"). On or about September 17, 1996, the Company was named as a
defendant in a suit styled ▇▇▇▇▇ ▇▇▇▇▇▇▇ On Behalf of Herself and All Others
Similarly Situated v. Physician Reliance Network, Inc., Texas Oncology, P.A.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the United States District Court
for the Northern District of Texas, Dallas Division ("Kaufman"). On or about
October 15, 1996, the Company was named as a defendant in a suit styled ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇, On Behalf of Himself and All Others Similarly Situated v.
Physician Reliance Network, Inc., Texas Oncology, P.A., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇▇"). By order dated December 16, 1996, the ▇▇▇▇▇▇▇▇▇▇▇ case
was consolidated with the Hinerfeld action. On or about March 3, 1997, the
▇▇▇▇▇▇▇▇▇▇▇ state court suit was dismissed without prejudice, and on or about
March 11, 1997, plaintiff ▇▇▇▇▇▇▇▇▇▇▇ joined the ▇▇▇▇▇▇▇ Federal court suit.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is no longer a named defendant in the Kaufman action. ▇▇▇▇▇▇▇
seeks recovery on behalf of all persons who purchased shares of the Company's
common stock on the open market from February 12, 1996, to July 11, 1996, and
alleges claims under Sections 10b and 20(a) of the Federal Securities Exchange
Act of 1934, and under Rule 10b-5 promulgated thereunder. Hinerfeld seeks
recovery on behalf of persons who purchased stock between April 23, 1996, and
July 11, 1996, in the April 1996 public offering of the
157
Company's common stock and alleges claims under Sections 11, 12(a)(2) and 15 of
the Federal Securities Act of 1933 and the Texas Securities Revised Civil
Statutes Section 581-33. As relief, Kaufman asserts that, if a class is
certified, damages will exceed $64,482,458. Hinerfeld seeks unspecified
monetary damages.
On September 4, 1996, the Company was named as a defendant in a similar
suit styled ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ v. Physician Reliance Network, Inc., Texas
Oncology, P.A.; ▇▇▇▇▇ ▇▇▇▇▇▇, Inc.; ▇▇▇▇▇ & Co., Inc.; ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.; ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Individually;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., Individually; and J. ▇▇▇▇▇▇ ▇▇▇▇, Individually, in the
214th Judicial District Court, Nueces County, Texas ("▇▇▇▇▇▇▇"). Through an
amended pleading, ▇▇▇▇▇▇▇ purports to represent a class of all persons who
purchased and presently own shares of the Company's common stock from November
1994 through September 4, 1996. ▇▇▇▇▇▇▇ asserts claims under Sections 11 and 15
of the federal Securities Act and the Texas Securities Act. J. ▇▇▇▇▇▇ ▇▇▇▇ is
no longer a named defendant in the ▇▇▇▇▇▇▇ action, but ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ has
been named as a defendant. As relief, ▇▇▇▇▇▇▇ seeks $1,380 plus interest
thereon as his costs for purchasing the Company's common stock. ▇▇▇▇▇▇▇ seeks
unspecified monetary damages on behalf of the class. On or about April 15,
1997, ▇▇▇▇▇▇▇ was transferred to the 14th Judicial District Court, Dallas
County, Texas. Responsive pleadings have been filed, plaintiffs have moved for
class certification, and discovery has commenced in all three suits.
In general, Jackson, Kaufman, and Hinerfeld assert that the Company has
engaged in certain improper accounting practices, that the relationship between
the Company and certain of the Affiliated Physician Groups violates federal and
state law, and that certain of the Affiliated Physician Groups have charged the
Medicare program amounts in excess of the cost of delivering certain services.
The Company believes that the lawsuits are without merit and intends to
vigorously defend itself. The Company is not aware of any governmental actions
to assert claims against TOPA or the Company similar to those in this
litigation.
158
Schedule 5.12
to the
Amended and Restated Credit Agreement
Physician Reliance Network, Inc. is a party to the following Service
Agreements:
State Practice
----- --------
Arkansas - Oncology Associates, P.A. dated as of June 2, 1997
Illinois - Hematoloty-Oncology Associates of Illinois, L.L.C.
dated as of December 9, 1996
Iowa - Iowa Cancer Care, P.L.C. dated as of April 1, 1995
Maryland - (1) Central Maryland Oncology Group, P.A.
dated as of January 1, 1996
(2) ▇▇▇▇ ▇. ▇▇▇▇▇, M.D., P.A.
dated as of January 1, 1996
Minnesota - Minnesota Oncology Hematology, P.A.
dated as of July 12, 1996
Missouri - (1) Hematology-Oncology Associates of Columbia, Inc.
dated as of October 1, 1995
(2) ▇▇▇▇▇▇▇, Westgate & ▇▇▇▇▇, Inc.
dated as of December 29, 1995
(3) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Inc.
dated as of November 6, 1996
New York - (1) Capital District Oncology, P.C.
dated as of June 1, 1996
(2) Northeastern NY Regional Cancer Care, P.C.
dated as of September 16, 1996
Oregon - Oncology Associates of Oregon, P.C.
dated as of September 1, 1995
Texas - Texas Oncology, P.A. dated as of January 1, 1996
Washington - (1) Washington Cancer Center, P.C.
dated as of April 1, 1997
(2) Spokane Oncology Hematology Associates, P.S.
dated as of November 1, 1995
159
Schedule 5.19
to the
Amended and Restated Credit Agreement
Indebtedness and Capital Leases
Name Original Amt. 3/31/97 Amt. Mat. Date
---- ------------- ------------ ---------
Iowa $750,000.00 $ 455,201 3/l/99
Oregon $ 750,000 $ 499,985 9/1/99
Ft. Worth $ 2,120,000 $ 1,125,109 1/15/99
Medical City $ 937,930 $ 852,313 4/l/05
Missouri $ 1,767,500 $ 1,289,790 10/1/99
Spokane $ 1,000,000 $ 786,641 11/1/00
▇▇▇▇▇ & ▇▇▇▇▇ $ 150,000 $ 150,000 4/l/98
MOHPA $ 6,300,000 $ 5,623,227 7/l/00
ID Assoc $ 1,700,000 $ 1,200,000 9/15/99
▇▇▇▇▇▇▇▇▇ $ 267,301 $ 267,301 11/6/99
Chicago-▇▇▇▇ $ 3,984,487 $ 3,984,487 12/8/00
Chicago-Dragon $ 996,000 $ 996,000 12/8/00
▇▇▇▇▇▇▇▇ $ 80,000 $ 65,897 5/1/00
▇▇▇▇▇▇▇▇ $ 180,000 $ 148,268 5/1/00
Gupta $ 180,000 $ 148,268 5/1/00
▇▇▇▇▇▇▇ Leasing $ 157,500 $ 121,180 4/l/01
160
Schedule 7.2
to the
Amended and Restated Credit Agreement
Permitted Liens
1. Liens arising by statute in respect of taxes which are not yet due and
payable (and which are fully paid on or before their due date).
2. Landlord's liens which are subordinated in favor of Agent for the benefit
of Lenders pursuant to a written subordination agreement in form
satisfactory to Agent.
3. Purchase money security interests in Equipment allowed in Section 7.2.
4. Credits in favor of Payors on Governmental Claims arising in the usual and
ordinary course of business.
161
REVOLVING NOTE
$40,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of BANK
ONE, TEXAS, N.A., a national banking association, with its principal office
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), the
principal amount of FORTY MILLION DOLLARS ($40,000,000) or such lesser amount
as may from time to time be advanced and remain unpaid and outstanding
hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
162
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
163
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
164
REVOLVING NOTE
$25,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of
NATIONSBANK OF TEXAS, N.A., a national banking association, with its principal
office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), the
principal amount of TWENTY-FIVE MILLION DOLLARS ($25,000,000) or such lesser
amount as may from time to time be advanced and remain unpaid and outstanding
hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
165
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
166
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
167
REVOLVING NOTE
$10,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of BANQUE
PARIBAS, a bank organized under the laws of France acting through its Houston
agency, with its principal office located at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), the principal amount of TEN MILLION DOLLARS
($10,000,000) or such lesser amount as may from time to time be advanced and
remain unpaid and outstanding hereunder, together with accrued interest as
provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
168
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
169
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
170
REVOLVING NOTE
$15,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of
COOPERATIVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", a
banking organization organized and existing under the laws of the Nederlands,
acting through its New York Branch, with its principal office located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender"), the principal amount of
FIFTEEN MILLION DOLLARS ($15,000,000) or such lesser amount as may from time to
time be advanced and remain unpaid and outstanding hereunder, together with
accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
171
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
172
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
173
REVOLVING NOTE
$10,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of THE FUJI
BANK LIMITED, a Japanese corporation operating under the banking laws of Japan,
with its principal office located at 1 Houston Center, Suite 4100, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), the principal amount of TEN MILLION
DOLLARS ($10,000,000) or such lesser amount as may from time to time be
advanced and remain unpaid and outstanding hereunder, together with accrued
interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
174
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
175
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
176
REVOLVING NOTE
$10,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of MELLON
BANK, N.A., a national banking association, with its principal office located
at 2 Mellon Bank Center, Room 152-0270, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
("Lender"), the principal amount of TEN MILLION DOLLARS ($10,000,000) or such
lesser amount as may from time to time be advanced and remain unpaid and
outstanding hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
177
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
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178
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
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179
REVOLVING NOTE
$15,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of PNC
BANK, NATIONAL ASSOCIATION, a national banking association, with its principal
office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
("Lender"), the principal amount of FIFTEEN MILLION DOLLARS ($15,000,000) or
such lesser amount as may from time to time be advanced and remain unpaid and
outstanding hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
180
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
181
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
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182
REVOLVING NOTE
$15,000,000 June 11, 1997
FOR VALUE RECEIVED, the undersigned, PHYSICIAN RELIANCE NETWORK, INC., a
Texas corporation ("Borrower"), hereby promises to pay to the order of SUNTRUST
BANK, CENTRAL FLORIDA, N.A., a national banking association, with its principal
office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Lender"), the principal amount of FIFTEEN MILLION DOLLARS ($15,000,000) or
such lesser amount as may from time to time be advanced and remain unpaid and
outstanding hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("Note") is executed and delivered by Borrower
pursuant to the certain Amended and Restated Credit Agreement dated as of June
11, 1997 (the "Credit Agreement"), among Borrower, the "Lenders" referenced
therein (the "Lenders"), Bank One, Texas, N.A., in its capacity as agent for
the Lenders ("Agent") and NationsBank of Texas, N.A., in its capacity as
co-agent, and is one of the Revolving Notes referenced therein. Each
capitalized term used herein, and not otherwise defined herein, shall have the
meaning set forth for such term in the Credit Agreement.
All loans from time to time requested by Borrower hereunder are subject to
the terms and provisions of the Credit Agreement. Principal may be borrowed,
repaid and reborrowed, from time to time during the Funding Period, subject to
all terms and provisions of the Credit Agreement, provided that the maximum
principal amount at any time outstanding under this Note shall not at any time
exceed an amount equal to the lesser of Lender's Committed Maximum (the face
amount hereof) or Lender's Committed Percentage of the Credit Limit. The unpaid
principal from day to day outstanding under this Note shall bear interest at
the applicable rate prescribed for the Facility as provided by the Credit
Agreement. Lender's records shall be conclusive proof of loans, payments and
interest accruals hereunder, absent proof by Borrower of manifest error.
All unpaid principal and accrued interest under this Note shall be payable
as provided in the Credit Agreement. Notwithstanding the foregoing, to the
extent that any accrued interest is not paid prior to the fifth day following
its due date as specified above, Agent may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrower under the Facility, in which event the aggregate
amount thereof shall be treated as an Advance under the Facility and Lender's
Committed Percentage thereof shall be deemed to be outstanding under this Note.
If at any time, from time to time, the aggregate unpaid principal amount
outstanding under this Note exceeds the maximum amount allowed to be
outstanding hereunder, Borrower shall make an immediate payment of principal in
an amount not less than the amount of such excess. All such amounts, if any,
payable by Borrower shall be deemed to be payable on demand, and may be offset
by Lender against any amount owing by Lender to Borrower, without prior notice
to Borrower.
Subject to the terms of the Credit Agreement, Borrower shall have the
right to prepay this Note in full at any time without penalty.
183
This Note in all respects is subject to the Credit Agreement, and Lender
shall have all rights and remedies as provided therein (including, without
limitation, the right to have Agent suspend or cease funding hereunder, or to
accelerate this Note, on the conditions specified therein). All indebtedness,
liabilities and obligations from time to time evidenced hereby are secured by
continuing security interests and liens in all Collateral. Proceeds of the
Collateral shall be subject to the provisions of the Credit Agreement.
No delay by Agent or any Lender in the exercise of any power or right
hereunder shall operate as a waiver or impair Lender's rights and remedies
under this Note or the other Loan Documents. Borrower and each other party ever
liable hereunder severally hereby expressly waives presentment, demand, notice
of intention to demand, notice of intention to accelerate, notice of
acceleration, protest, notice of protest and any other notice of any kind, and
agrees that its liability hereunder shall not be affected by any renewals,
extensions or modifications, from time to time, of the time or manner of
payment hereof, or by any release or modification of any security for the
indebtedness, liabilities and obligations evidenced hereby.
Borrower hereby promises to pay to Lender all reasonable fees, costs and
expenses incurred by Lender in enforcement and collection of any amounts under
this Note, including, without limitation, reasonable attorneys' fees.
In no contingency or event whatsoever shall the amount of interest under
this Note paid by Borrower, received by Lender, agreed to be paid by Borrower,
or requested or demanded to be paid by Lender, exceed the Maximum Rate. In the
event any such sums paid to Lender by Borrower would exceed the Maximum Rate,
Lender shall automatically apply such excess to any unpaid principal or, if the
amount of such excess exceeds said unpaid principal, such excess shall be paid
to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which
are or hereafter may be construed to be compensation for the use, forbearance
or detention of money shall be amortized, prorated, spread and allocated in
respect of the Obligations throughout the full Contract Term until the
Obligations are paid in full. Notwithstanding any provisions contained in the
other Loan Documents or herein, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the Maximum Rate and, in
the event Lender ever receives, collects or applies any amount that otherwise
would be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the
Obligations and, if such principal balance is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrower and Lender shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment as a standby fee,
commitment fee, prepayment charge, delinquency charge or reimbursement for a
third-party expense rather than as interest, (ii) exclude voluntary prepayments
and the effect thereof, and (iii) amortize, prorate, allocate and spread in
equal parts throughout the entire period during which the indebtedness was
outstanding the total amount of interest at any time contracted for, charged or
received. Nothing herein contained shall be construed or so operate as to
require Borrower to pay any interest, fees, costs or charges greater than is
permitted by applicable law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to loans made by Lender to Borrower hereunder, including all amounts
agreed to by Borrower or charged or received by Lender, which may
2
184
be deemed to be interest under applicable law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and Lender in accordance with
applicable law.
This Note may not be changed, amended or modified except in writing
executed by Lender and Borrower and with the written consent of Agent.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR LENDER ARISING OUT OF
OR RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS, EXCEPT AS TO PROVISIONS RELATING TO THE RATE OF INTEREST TO BE
CHARGED ON THE UNPAID PRINCIPAL HEREOF, IN WHICH CASE, TO THE EXTENT FEDERAL
LAW OTHERWISE WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY
THE LAWS OF THE STATE OF TEXAS, SUCH FEDERAL LAW SHALL APPLY.
PHYSICIAN RELIANCE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Ex. Vice President
--------------------------
3
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PLEDGE AGREEMENT
(Borrower)
This PLEDGE AGREEMENT (this "Agreement"), dated June 11, 1997, is
executed and delivered by PHYSICIAN RELIANCE NETWORK, INC., a Texas corporation
("Pledgor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Pledgor, the lenders named therein (together with their
successors and assigns, the "Lenders"), NationsBank of Texas, N.A. (as a Lender
and co-agent ("Co-Agent")) and Agent are, concurrently herewith, entering into
that certain Amended and Restated Credit Agreement (as the same may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time, the "Credit Agreement"), and, in connection
therewith, inter alia, Pledgor is executing and delivering to each of the
Lenders a Revolving Note (as defined in the Credit Agreement) which together
with the other Revolving Notes executed and delivered by Pledgor to the Lenders
on the Closing Date (as defined in the Credit Agreement) in connection with the
Credit Agreement are in the aggregate principal amount of $140,000,000 (such
Revolving Notes, as they may be amended, renewed, extended, restated, replaced,
substituted, supplemented or otherwise modified from time to time, are
hereinafter individually called a "Note" and collectively called the "Notes";
the Credit Agreement, the Notes and the other Loan Documents (as defined in the
Credit Agreement) and any and all amendments, modifications, renewals,
extensions, restatements and/or supplements thereto from time to time, are
hereinafter collectively called the "Loan Documents");
B. Execution and delivery of this Agreement is a condition to
Agent and the Lenders entering into the Credit Agreement and the funding of
Advances pursuant thereto;
C. Pledgor is the owner of the Pledged Shares (as such term is
defined below). Pursuant to the terms of the Credit Agreement, and in
consideration of the benefits provided to Pledgor thereunder, Pledgor has
agreed to grant to Agent a continuing security interest, collateral assignment,
lien and pledge in and to all right, title and interest of Pledgor in the
Collateral (as such term is defined below), as security for the Secured
Obligations (as such term is defined below), on the terms prescribed below.
THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor and Agent each hereby agrees
as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Agreement, all
capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in the Credit Agreement.
"Agent" has the meaning set forth in the introductory
paragraph of this Agreement.
"Collateral" has the meaning set forth in paragraph 2.
186
"Event of Default" means any Event of Default defined in
paragraph 7.
"Lender" means each of the "Lenders" as such term is defined
in the Credit Agreement, and "Lenders" means all of such Lenders,
collectively.
"Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated of even date herewith, among Pledgor, the
Lenders, Co-Agent and Agent, as the same may be renewed, extended,
modified, supplemented, amended or restated from time to time.
"Equity Rights" has the meaning set forth in paragraph 5.
"Pledge Amendment" has the meaning set forth in paragraph 4.
"Pledged Shares" has the meaning set forth in paragraph 2.
"Pledgor" has the meaning set forth in the introductory
paragraph of this Agreement.
"Secured Obligations" means all "Obligations" as defined in
the Credit Agreement, all costs, fees and expenses incurred by Secured
Party in enforcing this Agreement, and any and all renewals,
extensions, increases, amendments, modifications, supplements or
restatements thereof.
"Secured Party" means Agent and its successors and assigns,
and includes any person to whom Agent, or its successors or assigns,
may assign its rights and interests under this Agreement.
"UCC" means the Texas Uniform Commercial Code.
Unless expressly provided otherwise, all terms defined in the Credit Agreement,
wherever used in this Agreement, shall have the same meanings as are prescribed
by the Credit Agreement, and all terms defined by the UCC, wherever used
herein, shall have the same meanings as are prescribed by the UCC.
2. Security Interest and Pledge. As collateral security for the
prompt payment in full when due of the Secured Obligations, Pledgor hereby
pledges and grants to Secured Party a first priority security interest in all
of Pledgor's right, title and interest in and to the following property (such
property being hereinafter sometimes called the "Collateral"):
(a) all the Capital Stock issued by, and all other
ownership interest in, the Persons described on Schedule 1 hereof and
all Material Subsidiaries hereafter created or acquired and owned by
Pledgor, whether any of the foregoing are now owned or hereafter
acquired, including, without limitation, the Capital Stock or other
ownership interests described on Schedule 1 (the "Pledged Shares");
and
(b) all products, proceeds, revenues, distributions,
dividends, stock dividends, securities and other property, rights,
interests and other general intangibles that Pledgor
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187
receives or is at any time entitled to receive on account of the
property described in clause (a) preceding.
3. Representations and Warranties. Pledgor hereby represents and
warrants the following to Secured Party: (a) Pledgor has the power and
authority to execute and perform this Agreement; (b) this Agreement constitutes
legal, valid and binding obligations of Pledgor, enforceable in accordance with
its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights generally;
(c) Pledgor has good and transferable title to the Collateral free and clear of
all liens, security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement; (d) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral; (e) the execution and performance of this Agreement by Pledgor will
not conflict with any agreement, law or regulation, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting the
Collateral; (f) no consent, approval, authorization or order of, and no notice
to or filing with, any court, governmental authority or third party is required
in connection with the execution and performance of this Agreement; (g) all of
Pledgor's records concerning the Collateral shall be maintained at the
principal office of Pledgor which, as of the date hereof, is located at the
address for notice specified herein for Pledgor; and (h) the Pledged Shares are
wholly comprised of unrestricted assets of the Pledgor.
4. Covenants. So long as any of the Secured Obligations remain
unpaid, Pledgor covenants and agrees with Secured Party as follows:
(a) Delivery. Prior to or concurrently with the execution
and delivery of this Agreement, Pledgor shall deliver to Secured Party
each certificate identified on Schedule 1 hereof, accompanied by
undated stock powers or assignments, as applicable, duly executed in
blank. Each time Schedule 1 hereto is amended in accordance with
paragraph 4(f) hereof or otherwise, Pledgor shall deliver to Secured
Party each new certificate identified thereon, accompanied by undated
stock powers or assignments, as applicable, duly executed in blank.
(b) Disposition of Pledged Shares. Pledgor shall not
sell, transfer, deliver or otherwise dispose of any of the Collateral
or any interest therein without the express written permission of
Secured Party.
(c) Ownership and Liens. Pledgor will maintain good and
defensible title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement. Pledgor will not permit
any dispute, right of setoff, counterclaim or defense to exist with
respect to the Collateral. At its sole expense, Pledgor will defend
Secured Party's right, title and security interest in and to the
Collateral against the claims of any third party.
(d) Possession of Pledged Shares. The Pledged Shares are
certificated and are evidenced by share certificates issued by the
issuer thereof in the name of Pledgor. Promptly upon execution of
this Agreement, Pledgor shall deliver, or cause to be delivered, to
Lender each certificate evidencing the Pledged Shares, together with
stock powers duly executed in blank with respect to all such
certificates. Promptly upon issuance or receipt thereof, Pledgor
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188
shall deliver, or cause to be delivered, to Secured Party, all other
share certificates and other instruments or documents from time to
time evidencing any of the Pledged Shares or any stock, stock
dividends, stock splits, non-cash distributions, warrants and rights
received with respect to any of the Pledged Shares, together with
stock powers duly executed in blank with respect to all share
certificates. Secured Party hereby is appointed to retain physical
possession of the certificates and instruments representing or
evidencing Pledged Shares in accordance with the provisions of this
Agreement. Any and all certificates or other property or items
referenced in this paragraph 4(d)from time to time coming within the
possession of Pledgor, and any and all proceeds thereof, shall be held
in trust for the benefit of Secured Party and forthwith delivered to
Secured Party in the form received.
(e) Inspection of Books and Records. Pledgor will keep
adequate records concerning the Collateral. Secured Party and its
representatives and agents shall have the right to inspect and copy
such records at any time during normal business hours.
(f) Additional Pledged Collateral. Pledgor shall pledge
hereunder, immediately upon its acquisition thereof, any and all
additional Pledged Shares evidencing Collateral, including any and all
shares of Capital Stock of any Person whose Capital Stock is required
to be pledged pursuant to Article 3 of the Credit Agreement. Pledgor
agrees that it will, upon obtaining any additional Capital Stock
required to be pledged hereunder as provided in this paragraph 4
promptly (and in any event within fifteen (15) Business Days) deliver
to Secured Party a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Schedule 2 annexed hereto (a "Pledge
Amendment"), in respect of the additional property to be pledged
pursuant to this Agreement. Pledgor hereby authorizes Secured Party
to attach each Pledge Amendment to this Agreement and agrees that all
property listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Collateral; provided
that the failure of Pledgor to execute a Pledge Amendment with respect
to any additional property pledged pursuant to this Agreement shall
not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
(g) Margin Shares. Pledgor represents to Secured Party
that none of the Pledged Shares constitute "margin stock" as defined
by Regulation "U" of the Board of Governors of the Federal Reserve
Board.
(h) Further Assurances. Pledgor will from time to time,
at its sole expense, promptly execute and deliver all further
instruments, financing statements and documents and take all further
action necessary or appropriate or that Secured Party may request in
order to achieve and maintain perfection and priority of Secured
Party's security interests under this Agreement and otherwise effect
the purposes of this Agreement. Without limiting the foregoing,
Pledgor will take all action necessary to enable Secured Party to
comply with Chapter 8 and Chapter 9 of the UCC relative to perfection
of the security interests in the Collateral under this Agreement.
5. Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of Capital Stock of
the issuer of any Pledged Shares, or any securities
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189
convertible into, or exchangeable for, any such shares or ownership interest or
any warrants, options, rights or other commitments entitling any Person to
purchase or otherwise acquire any such shares or any additional ownership
interest (any of the foregoing herein an "Equity Right"); provided however,
Pledgor may consent to or approve the issuance of any Equity Right if such
Equity Right is granted to Pledgor and is delivered to Secured Party as
additional Collateral in accordance with the terms hereof to secure the Secured
Obligations.
6. Performance By Secured Party. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may take such action as
may be deemed necessary by Secured Party to protect its interest in the
Collateral, and expenses of Secured Party incurred in connection therewith
shall be a part of the Secured Obligations secured by the Collateral and
payable by Pledgor to Secured Party on demand.
7. Power of Attorney. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, such power being coupled with an
interest, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action authorized under paragraph 4(f) and
to take any other action or execute and deliver any notice, demand or
instrument which Secured Party may from time to time in Secured Party's
discretion deem necessary or appropriate to perfect its interests, rights and
benefits under this Agreement or, upon and during the continuation of any Event
of Default to dispose of and transfer any Collateral or otherwise protect or
enforce its rights under this Agreement. Pledgor irrevocably authorizes any
other person to rely upon and comply with any notice, demand, stock power or
other document signed by Secured Party, whether in the name of Secured Party or
Pledgor, the same as if such notice or demand were executed and delivered by
Pledgor, and Pledgor agrees to indemnify and hold Secured Party and any such
other person harmless from any and all claims resulting from such compliance.
Unless an Event of Default has occurred and is continuing, the right to vote
the Pledged Shares and other rights in respect of ownership thereof (excluding
the right to dispose of or encumber the Collateral) shall remain vested in
Pledgor subject to Secured Party's rights under this Agreement
8. Notification to Issuers. Secured Party shall be entitled at
any time to take such action as it deems necessary in order to register its
security interest, collateral assignment, lien and pledge in the Pledged Shares
with the issuer thereof or otherwise notify such issuer of Secured Party's
interests in the Pledged Shares.
9. Default. An Event of Default ("Event of Default") shall exist
under this Agreement upon the occurrence of any one or more of the following
events: (a) default by Pledgor in the performance or observance of any of the
covenants, terms or conditions herein; (b) any "Event of Default" as defined by
the Credit Agreement; (c) any representation or warranty contained herein or
made or furnished by Pledgor in connection herewith shall be false or
misleading in any material respect as of the date made or deemed to have been
made; (d) the filing of any petition in bankruptcy, or any other insolvency
proceeding, by or against Pledgor under the United States Bankruptcy Code or
any other applicable law; or (e) any repudiation by Pledgor, or impairment of,
Secured Party's rights under this Agreement.
10. Remedies. Upon the occurrence and at any time during the
continuance of an Event of Default, Secured Party may from time to time in its
discretion, without limitation and without
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190
notice, except as expressly provided in the Credit Agreement: (a) exercise in
respect of the Collateral all the rights and remedies of a secured party under
the UCC; (b) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest, pledge and lien granted hereunder by
any available judicial procedure; (c) sell or otherwise dispose of, at Secured
Party's office, or on the premises of Pledgor, or elsewhere, the Collateral, in
whole or in part, by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of any part of
the Collateral shall not exhaust Secured Party's power of sale, but sales or
other dispositions may be made from time to time until all of the Collateral
has been sold or disposed of or until the Secured Obligations have been paid
and performed in full); (d) buy the Collateral, or any portion thereof, at any
public sale; (e) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard price
quotations; or (f) apply for the appointment of a receiver for the Collateral.
Pledgor agrees that in the event Pledgor is entitled to receive any notice of
the sale or other disposition of any Collateral, notice shall be deemed
reasonable if deposited in the United States Mail, postage prepaid, or courier
delivered or telecopied, addressed to Pledgor's address for notice specified
herein, five (5) days prior to the date of any public sale, or the date after
which a private sale, of any of such Collateral is to be held. Secured Party
shall not be obligated to proceed with any such sale, regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned.
11. Disposition of the Pledged Shares Upon Default. Pledgor
recognizes that Secured Party may be unable to effect a public sale of all or
any part of the securities pledged as Collateral because of restrictions in
applicable federal and state securities laws (including, without limitation,
the Securities Act of 1933, the Securities Exchange Act of 1944 and state "Blue
Sky" laws) and that Secured Party may determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that each such private sale may be at prices and
other terms less favorable than what might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay the sale of any such securities for the
period of time necessary to permit the issuer to register such securities for
public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
made privately in the manner described above to not less than five (5) bona
fide offerees shall be deemed to involve a "public sale" for the purposes of
Section 9.504(c) of the UCC, notwithstanding that such sale may not constitute
a "public offering" under any federal or state securities laws, and in such
event, Secured Party may bid for the purchase of such securities. Any
purchaser at a sale conducted pursuant to the terms of this Agreement shall
hold the property sold absolutely, free from any claim or right on the part of
Pledgor. Each and every purchaser of any of the Pledged Shares shall be vested
with all shareholder's ownership rights including, without limitation, all
voting, dividend and distribution rights. Pledgor agrees that Secured Party
may purchase the Pledged Shares or any part thereof at any sale conducted in
accordance herewith provided that at least five (5) days prior notice of such
sale has been furnished to Pledgor.
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191
12. Interest Payments and Collateral Substitution. Upon the
occurrence and during the continuance of an Event of Default, all rights, if
any, of Pledgor to receive and retain interest payments, dividends and other
distributions on the Collateral shall automatically be suspended, and all such
rights shall thereupon become vested with Secured Party, until such time as may
be agreed otherwise by Secured Party in writing. All interest payments,
dividends or other distributions which may be received by Pledgor at any time
when the receipt of same by Pledgor is prohibited by this Agreement shall be
received by Pledgor and held in trust for the benefit of Secured Party and
shall be segregated from other property of Pledgor and forthwith delivered to
Secured Party in the form received (properly endorsed or assigned if requested
by Secured Party), to be held by Secured Party as Collateral.
13. Indemnity. WITHOUT LIMITATION OF THE APPLICABILITY OF ANY
OTHER PROVISION OF THE LOAN DOCUMENTS, THE PROVISIONS OF SECTION 12.4
("INDEMNITY") OF THE CREDIT AGREEMENT HEREBY ARE INCORPORATED HEREIN BY
REFERENCE AND PLEDGOR ACKNOWLEDGES THAT ITS OBLIGATIONS THEREUNDER SHALL HAVE
FULL APPLICABILITY TO ANY INDEMNIFIED CLAIMS RELATING TO OR IN CONNECTION WITH
THIS AGREEMENT AS FULLY AS IF SET FORTH HEREIN AT LENGTH. THE INDEMNIFICATION
PROVIDED FOR IN THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR
HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER. IT IS AGREED THAT
SECURED PARTY SHALL HAVE NO OBLIGATION TO TAKE NECESSARY STEPS TO PRESERVE
RIGHTS AGAINST PRIOR PARTIES, IF ANY.
14. Costs and Expenses. Pledgor will upon demand pay to Secured
Party the amount of any and all costs, fees and expenses (including, without
limitation, reasonable attorneys' fees and expenses), which Secured Party may
incur in connection with the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, the Collateral, or the
exercise or enforcement of any of the rights of Secured Party under this
Agreement.
15. No Commitment. Nothing in this Agreement shall be construed
as an obligation on the part of Secured Party to extend or continue to extend
credit for the benefit of Pledgor.
16. Notices. Except as otherwise provided in this Agreement, all
notices, requests, demands or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and given in accordance
with the terms of Section 12.2 ("Notices") of the Credit Agreement, the
provisions of which are incorporated herein by reference.
17. Waivers. In connection with all matters pertaining to this
Agreement:
(a) Pledgor hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of presentment for payment, demand,
protest and notice thereof as to any promissory notes or other
instruments among the Loan Documents; (iii) all other notices and
demands except to the extent otherwise expressly provided herein; and
(iv) any defense arising by reason of any defense of any other Person
obligated for payment for all or any portion of the Secured
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192
Obligations or by reason of the release or other termination of the
liability of any such Person in respect thereof.
(b) Pledgor hereby waives and agrees not to assert against
Secured Party: (i) any defense (legal or equitable), setoff,
counterclaim or claim which it may now or at any time hereafter have
against any other party liable to Secured Party; (ii) any defense,
setoff, counterclaim or claim of any kind or nature available to any
other Person against Secured Party, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity
or enforceability of the Secured Obligations or any security therefor;
(iii) any right or defense arising by reason of any claim or defense
based upon an election of remedies by Secured Party under any
applicable law; and (iv) the benefit of any statute of limitations
affecting any other Person's liability hereunder.
(c) Pledgor hereby consents and agrees that, without
notice or consent and without affecting or impairing its obligations
hereunder, Secured Party may, by action or inaction: (i) compromise,
settle, extend the duration or the time for the payment of, discharge
the performance of or refuse to or otherwise not enforce the Loan
Documents; (ii) release all or any one or more parties to any one or
more of the Loan Documents or grant other indulgences to any other
Person in respect thereof; (iii) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; and (iv)
release or substitute any Guarantor of the Obligations, or enforce,
exchange, release or waive any security for the Obligations or any
Guaranty of the Obligations, or any portion thereof.
18. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST PLEDGOR OR SECURED PARTY ARISING OUT OF OR RELATING TO
THIS AGREEMENT. EACH SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS
WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
19. Non-Impairment; Non-Waiver. The lien, security interest and
other security rights of Secured Party hereunder shall not be impaired by (i)
any renewal, extension, increase or modification with respect to the
Obligations, (ii) any surrender, compromise, release, renewal, extension,
exchange or substitution which Secured Party may grant with respect to the
Collateral or any other "Collateral" as defined in the Credit Agreement, or
(iii) any release or indulgence granted to any endorser, Guarantor or surety of
the Obligations. The taking of additional security by Secured Party shall not
release or impair the lien, security interest or other security rights of
Secured Party hereunder or affect the obligations of Pledgor hereunder. Secured
Party may waive any Event of Default of Pledgor without waiving any other prior
or subsequent Event of Default of Pledgor. Secured Party may remedy any
default without waiving the Event of Default of Pledgor remedied. Neither the
failure by Secured Party to exercise, nor the delay by Secured Party in
exercising, any right or remedy upon any Event of Default of Pledgor shall be
construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No single or partial
exercise
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193
by Secured Party of any right or remedy hereunder shall exhaust the same or
shall preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any provision
hereof nor consent to any departure by Pledgor therefrom shall be effective
unless the same shall be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific instances, for the
purpose for which given and to the extent therein specified. No notice to, nor
demand on, Pledgor in any case shall of itself entitle Pledgor to any other or
further notice or demand in similar or other circumstances. Pledgor consents
and agrees that, without notice to or by Pledgor and without affecting or
impairing the obligations of Pledgor hereunder, Secured Party may, by action or
inaction: (a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce the Credit Agreement or any other Loan Document; (b) release all or any
one or more parties to the Credit Agreement or any other Loan Document or grant
other indulgences to Pledgor, and such other parties in respect thereof; (c)
amend or modify in any manner and at any time (or from time to time) the Credit
Agreement or any other Loan Document; or (d) release or substitute any other
Person, if any, liable for payment or performance of the Obligations, or
enforce, exchange, release or waive any security for the Obligations or any
Guaranty of the Obligations, or any portion thereof.
20. Benefit; Equivalent Value. Pledgor represents to Secured
Party that execution and performance of this Agreement is in the best interest
of Pledgor and that any extension of credit under the Credit Agreement is
reasonably expected to directly benefit Pledgor and that such benefits are of
reasonably equivalent value to Pledgor, and Pledgor acknowledges that the
execution and delivery of this Agreement is a condition precedent to the
extension of any such credit. Execution, delivery and performance by Pledgor
of this Agreement does not, and will not, violate or contravene any provision
of Pledgor's articles of incorporation, bylaws or any other agreement governing
or affecting Pledgor.
21. No Election. Secured Party shall have the right to seek
recourse under this Agreement to the fullest extent provided for herein, and no
election by Secured Party to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of Secured
Party's right to proceed in any other form of action or proceeding or against
other parties unless Secured Party has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action
or proceeding by Secured Party under any document or instrument evidencing the
Secured Obligations shall serve to diminish the obligations of Pledgor under
this Agreement, except to the extent that Secured Party finally and
unconditionally shall have realized in full, indefeasible payment of all of the
Secured Obligations by such action or proceeding.
22. Successors and Assigns. This Agreement shall be binding on
Pledgor and its successors and assigns, and shall inure to the benefit of
Secured Party and its successors and assigns. Secured Party's rights under
this Agreement may be transferred in connection with any transfer of the
Secured Obligations, or any part thereof, to the extent not otherwise
prohibited by the Credit Agreement. Pledgor's rights and obligations hereunder
may not be assigned or otherwise transferred without the prior written consent
of Secured Party.
23. Cumulative Rights. All rights and remedies of Secured Party
hereunder are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or
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194
in equity or under the Credit Agreement, and the exercise of one or more of
such rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
24. Entire Agreement. This Agreement embodies the entire
agreement between the parties relating to the subject matter hereof, and may be
modified or amended only by an instrument in writing executed by an authorized
officer of both Secured Party and Pledgor. It is expressly agreed that no
conversations, statements, negotiations or other verbal communications between
Secured Party and Pledgor, nor any purported modification or amendment, or
waiver, shall be binding unless the same is evidenced in writing, executed by
an authorized officer of Secured Party and Pledgor.
25. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF TEXAS.
26. Copies Valid as Financing Statements. Pledgor grants to
Secured Party a special power of attorney to sign its name, on its behalf, to
any financing statement describing the Collateral, or any part thereof, or to
any amendment of any financing statement filed pursuant to this Agreement, and
to file such financing statement or amendment in any jurisdiction deemed
necessary by Secured Party to perfect Secured Party's interests under this
Agreement. A carbon, photographic or other reproduction, including photocopy,
telecopy or electronic transmission, of this Agreement or any financing
statement shall be sufficient as a financing statement and may be filed as an
original.
27. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future laws effective
during the term of the Credit Agreement, such provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement. In such case, the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected thereby.
28. Multiple Counterparts. This Agreement may be executed
simultaneously in one or more multiple originals, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement.
29. Survival. All covenants, agreements, representations and
warranties made by Pledgor herein shall survive the execution, delivery and
closing of this Agreement, and all documents executed in connection herewith,
and shall not be affected by any investigation made by any party.
THIS WRITTEN AGREEMENT REPRESENTS 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.
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EXECUTED as of the effective date specified in the preamble.
PHYSICIAN RELIANCE NETWORK, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Ex. V.P.
-----------------------------
BANK ONE, TEXAS, N.A., as Agent
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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Schedule 1
to
Pledge Agreement
----------------------------------------------------------------------------------------------------------------------
Person Ownership Number of Certificate Par Value
and Interest Shares Number
Type of Entity Units or %
Interest
----------------------------------------------------------------------------------------------------------------------
1. TOPS Pharmacy Services, Inc., formerly known as and common stock 3000 3 no
issued by Texas Oncology Pharmacy Services, Inc. to
Pledgor in its former name of Physician Competitive
Resource Corporation
----------------------------------------------------------------------------------------------------------------------
2. Innovative Medical Communications, Inc., formerly common stock 800 1 no
known as and issued to Pledgor by PRN
Communications, Inc.
----------------------------------------------------------------------------------------------------------------------
3. PRN Research, Inc. common stock 1000 1 no
----------------------------------------------------------------------------------------------------------------------
Schedule 1 - Solo Page
197
Schedule 2
to
Pledge Agreement
Pledge Amendment
This Pledge Amendment, dated _____________, ____, is delivered
pursuant to paragraph 4(f) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated June 11, 1997, among the undersigned and Bank One,
Texas, N.A., as agent, as Secured Party (the "Pledge Agreement", capitalized
terms defined therein being used herein as therein defined), Schedule 1 to the
Pledge Agreement is hereby amended to add the property described below and the
property listed on this Pledge Amendment shall be part of the Collateral and
shall secure all Secured Obligations.
PHYSICIAN RELIANCE NETWORK, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
================================================================================
Person Ownership Number of Certificate Par
Interest Shares, Number Value
Units or %
Interest
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Schedule 2 - Solo Page
198
CONSENT AND ACKNOWLEDGEMENT
Each of the undersigned hereby consents to Pledgor's execution and
delivery of the foregoing Agreement and consents, acknowledges and agrees that
the pledge and security interest created by the Agreement does not violate or
conflict with any restriction in respect of its Capital Stock which comprises
any of the Pledged Shares pursuant to this Agreement. Each of the undersigned
agrees that upon Agent's exercise of its remedies pursuant to paragraph 10 of
such Agreement, it will, at its sole cost and expense, provide Agent, or any of
Agent's successors or assigns pursuant to the Borrower Pledge Agreement or the
Credit Agreement, with all registrations or opinions reasonably required in
order to comply with any applicable restriction on transfer of such Pledged
Shares.
TOPS PHARMACY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Vice President
INNOVATIVE MEDICAL COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Vice President
PRN RESEARCH, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Secretary
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199
GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty"), dated June 11, 1997, is
executed and delivered by TOPS PHARMACY SERVICES, INC., a Texas corporation
("Guarantor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Physician Reliance Network, Inc. ("Borrower"), the lenders
named therein (together with their successors and assigns, the "Lenders"),
Agent and NationsBank of Texas, N.A. (as a Lender and as co-agent) are,
concurrently herewith, entering into that certain Amended and Restated Credit
Agreement (as the same may be amended, renewed, extended, restated, replaced,
substituted, supplemented or otherwise modified from time to time, the "Credit
Agreement") and, in connection therewith, inter alia, Borrower is executing and
delivering to each of the Lenders a Revolving Note (as defined in the Credit
Agreement) which together with the other Revolving Notes executed and delivered
by Borrower to the Lenders on the Closing Date (as defined in the Credit
Agreement) in connection with the Credit Agreement are in the aggregate
principal amount of $140,000,000 (such Revolving Notes, as they may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time, are hereinafter individually called a "Note" and
collectively called the "Notes"; the Credit Agreement, the Notes and the other
Loan Documents (as defined in the Credit Agreement) and any and all amendments,
modifications, renewals, extensions, restatements and/or supplements thereto
from time to time, are hereinafter collectively called the "Loan Documents");
B. Guarantor has directly and indirectly benefitted and will
directly and indirectly benefit from the loans evidenced and governed by the
Credit Agreement, the Notes and the other Loan Documents and the other
transactions evidenced by and contemplated in the Loan Documents; and
C. Execution and delivery of this Guaranty is a condition to
Agent and the Lenders entering into the Credit Agreement and the funding of
Advances pursuant thereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Guaranty,
all capitalized terms used in this Guaranty shall have the meanings ascribed to
such terms in the Credit Agreement.
2. Guaranty of Indebtedness, Liabilities and Obligations.
Guarantor hereby irrevocably and unconditionally guarantees (a) payment to
Agent and the Lenders when due, whether at stated maturity, by acceleration or
otherwise, of any and all Obligations (as such term is defined in the Credit
Agreement), which Obligations include, without limitation, (i) any and all
interest, penalties, fees and expenses (specifically including, but not limited
to, attorneys' fees and expenses) which
200
Borrower may now or at any time hereafter owe to Agent or any Lender (whether
or not such interest, penalties, fees and expenses were originally contracted
with Agent or any Lender or with another or others and whether or not such
interest, penalties, fees and expenses are enforceable against Borrower)
pursuant to the Credit Agreement, any Note or any other Loan Document plus (ii)
the principal amount of any and all indebtedness, liabilities and other
obligations, whether primary, absolute, secondary, direct, indirect, fixed,
contingent, liquidated, unliquidated, secured or unsecured, matured or
unmatured, joint, several or joint and several, due or to become due and
whether arising by agreement, note, discount, acceptance, overdraft or
otherwise, which Borrower may now or at any time hereafter owe to Agent or any
Lender (whether or not such indebtedness, liabilities and obligations were
originally contracted with Agent or any Lender or with another or others and
whether or not such indebtedness, liabilities or obligations are enforceable
against Borrower) pursuant to the Credit Agreement, any Note or any other Loan
Document and (b) the faithful, prompt and complete compliance by Borrower with
all terms, conditions, covenants, agreements and undertakings of Borrower under
the Credit Agreement, any Note or any other Loan Document (the Obligations and
the interest, penalties, fees, expenses, indebtedness, liabilities and
obligations, etc. referred to in clauses (a) and (b) preceding as to which
payment, performance and compliance are guaranteed pursuant to this Guaranty
are hereinafter individually and collectively called the "Guaranteed
Obligations"); provided, however, notwithstanding anything to the contrary
contained in this paragraph 2, the Guaranteed Obligations of Guarantor
hereunder shall not exceed an aggregate amount equal to the greatest amount
that would not render Guarantor's obligations under this Guaranty subject to
avoidance under Sections 544, 548 or 550 of the Federal Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided further, however, that for purposes of this
proviso it shall be presumed that the Guaranteed Obligations of Guarantor under
this Guaranty do not equal or exceed any aggregate amount which would render
Guarantor's indebtedness, liabilities or obligations under this Guaranty
subject to being so avoided, set aside or annulled, and the burden of proof to
the contrary shall be on the party asserting to the contrary. Subject to, but
without limiting the generality of the foregoing proviso, the provisions of
this Guaranty are severable and, in any action or proceeding involving any
state corporate law or any bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights, if the
indebtedness, liabilities or obligations of Guarantor under this Guaranty would
otherwise be held or determined to be void, invalid or unenforceable on account
of the amount thereof under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount thereof shall, without
any further action by Guarantor, Agent, any Lender or any other Person, be
automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
Notwithstanding that Borrower may not be liable or obligated to Agent
or any Lender for interest and/or attorneys' fees and expenses on, or in
connection with, the Guaranteed Obligations from and after the Petition Date
(as hereinafter defined) as a result of the provisions of the federal
bankruptcy laws or otherwise, the Guaranteed Obligations for which Guarantor
shall be liable and obligated under this Guaranty shall include (to the extent
permitted by law or a court of competent jurisdiction) interest accruing on the
Guaranteed Obligations at the highest rate provided for in the Credit Agreement
from and after the date on which Borrower files for protection under the
federal bankruptcy laws or from and after the date on which an involuntary
proceeding is filed against Borrower under the federal bankruptcy laws (herein
collectively referred to as the "Petition Date")
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and all attorneys' fees and expenses incurred by Agent or any Lender from and
after the Petition Date in connection with the Guaranteed Obligations.
3. Continuing Guaranty of Payment. This Guaranty is and shall be
an absolute, irrevocable and continuing guaranty of payment, and not merely of
collection, and from time to time or at any time the Guaranteed Obligations may
be increased, reduced or paid in full without affecting the liability or
obligation of Guarantor with respect to indebtedness, liabilities and
obligations of Borrower to Agent or any Lender thereafter incurred. Guarantor
further agrees that this Guaranty shall continue to be effective or be
reinstated (if a release or discharge has occurred), as the case may be, if at
any time any payment (or any part thereof) to Agent or any Lender in respect of
the Guaranteed Obligations is rescinded or must otherwise be restored by Agent
or any Lender pursuant to any bankruptcy, insolvency, reorganization,
receivership or other debtor relief granted to Borrower or its successors or
assigns. In the event that Agent or any Lender must rescind or restore any
payment received by Agent or any Lender, respectively, in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge
from the terms of this Guaranty given to Guarantor by Agent or such Lender,
respectively, shall be without effect, and this Guaranty shall remain in full
force and effect. It is the intention of Agent, Lenders and Guarantor that
Guarantor's liabilities and obligations hereunder shall not be discharged
except by the full and complete payment and performance of the Guaranteed
Obligations and then only to the extent of such payment and performance. This
Guaranty is independent of, and in addition and without modification to, and
does not impair or in any way affect any other guaranty, endorsement or other
agreement executed in favor of Agent or any Lender, and this Guaranty and
Guarantor's liabilities and obligations under this Guaranty shall not be
impaired or otherwise affected by the execution, delivery or performance by
Guarantor or any other Person of any other guaranty, endorsement or other
agreement.
4. Absolute Guaranty. Guarantor's liabilities and obligations
under this Guaranty shall be absolute and unconditional irrespective of, shall
not be released, impaired, limited, reduced, conditioned upon or otherwise
affected by and shall continue in full force and effect notwithstanding the
occurrence of any event (other than an event consisting of payment and
performance of such liabilities and obligations as provided in paragraph 3
hereof) at any time or from time to time, including, without limitation, any
one or more of the following events specified in clauses (a) through (o) of
this paragraph 4 below, and neither Agent nor any Lender shall be obligated or
required to take or to refrain from taking any of such actions or inactions
specified below and shall not have any liability, obligation or duty whatsoever
with respect to such actions or inactions, it being acknowledged and agreed by
Guarantor that all of such liabilities, obligations and duties (if any) of
Agent or any Lender otherwise existing and all rights and remedies (if any) of
Guarantor with respect thereto (whether such liabilities, obligations, duties,
rights or remedies exist by virtue of agreement, common law, equity, statute or
otherwise), and each and every defense which, under principles of guaranty or
suretyship law, would otherwise operate to eliminate, impair, condition or
restrict the liabilities and obligations of Guarantor for the Guaranteed
Obligations, are hereby expressly waived by Guarantor:
(a) The taking or accepting of any security or other
guaranty for any or all of the Guaranteed Obligations, whether
heretofore, concurrently herewith or hereafter;
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(b) Any failure to create or perfect or properly create
or perfect any lien, security interest or assignment intended as
security, or any release, surrender, exchange, substitution,
subordination or loss of any security or guaranty at any time existing
in connection with any or all of the Guaranteed Obligations for any
reason;
(c) Any partial or full release of the liability or
obligation of Guarantor under any other guaranty whether or not
similar to this Guaranty;
(d) The entering into, delivery of, modification of,
amendment to or waiver of compliance with the Credit Agreement, any
Note or any other Loan Document, or any agreement, document or
instrument evidencing, securing or otherwise affecting all or part of
the Guaranteed Obligations, without the notification of Guarantor, the
right of such notification being hereby specifically waived by
Guarantor;
(e) The bankruptcy, insolvency, arrangement, adjustment,
composition, liquidation, disability, dissolution or lack of authority
(whether corporate, partnership or trust or relating to any other
entity or Person) of Borrower, Guarantor or any other Person at any
time liable or obligated for the payment of any or all of the
Guaranteed Obligations, whether now existing or hereafter arising;
(f) Any renewal, extension, modification, refunding
and/or rearrangement of the payment of any or all of the Guaranteed
Obligations at any time and from time to time, whether on one or more
occasions, either with or without notice to or consent of Guarantor,
or any adjustment, indulgence, forbearance or compromise that might be
granted or given by Agent or any Lender to Borrower or Guarantor;
(g) Any neglect, delay, omission, failure or refusal of
Agent or any Lender to (i) exercise or properly or diligently exercise
any right or remedy with respect to any or all of the Guaranteed
Obligations or the collection thereof or any collateral, security or
guaranty therefor, whether under the Credit Agreement, any Note or any
other Loan Document or otherwise, (ii) take or prosecute or properly
or diligently take or prosecute any action for the collection of any
or all of the Guaranteed Obligations against Borrower, Guarantor or
any other guarantor of any or all of the Guaranteed Obligations and/or
any other Person, (iii) foreclose or prosecute or properly or
diligently foreclose or prosecute any action in connection with any
agreement, document or instrument or arrangement evidencing, securing
or otherwise affecting all or any part of the Guaranteed Obligations,
or (iv) mitigate damages or take any other action to reduce, collect
or enforce the Guaranteed Obligations;
(h) Any failure of Agent or any Lender to give notice to
Borrower and/or Guarantor of, or obtain the consent of Borrower and/or
Guarantor with respect to, (i) demand, presentment, protest,
nonpayment, intention to accelerate, acceleration, lack of diligence
or delay in collection of all or any part of the Guaranteed
Obligations or any other matter, or the absence thereof, (ii) any
renewal, extension or assignment of the Guaranteed Obligations or any
part thereof, (iii) the disposition or release of all or any part of
any security for the Guaranteed Obligations (whether or not such
disposition is commercially
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reasonable) or (iv) any other action taken or refrained from being
taken by Agent or any Lender against Borrower, it being agreed that
(except as may be expressly provided in the other Loan Documents) that
neither Agent nor any Lender shall be required to give Borrower or
Guarantor any notice of any kind or to obtain Borrower's or
Guarantor's consent under any circumstances whatsoever with respect to
or in connection with the Guaranteed Obligations;
(i) The unenforceability, illegality or uncollectibility
of all or any part of the Guaranteed Obligations against Borrower by
reason of the fact that the interest contracted for, charged,
collected or received in respect of the Guaranteed Obligations exceeds
the maximum amount permitted by law, the act of creating the
Guaranteed Obligations or any part thereof is ultra ▇▇▇▇▇, the
officers, directors, partners, trustees or representatives creating
the Guaranteed Obligations acted in excess of their authority, the
Loan Agreement, any Note, or any other Loan Document evidencing the
Guaranteed Obligations has been forged or otherwise is irregular or is
not genuine or authentic, or expiration of the applicable statute of
limitations with respect to the Guaranteed Obligations;
(j) Any payment by Borrower to Agent or any Lender is
held to constitute a preferential transfer or a fraudulent conveyance
or transfer under any applicable law, or for any reason Agent or any
Lender is required to refund such payment or pay such amount to
Borrower or any other Person;
(k) Any merger, reorganization, consolidation or
dissolution of Borrower, any sale, lease or transfer of any or all of
the assets of Borrower, or any change in name, business, location,
composition, structure or any change in the shareholders, partners or
members (whether by accession, secession, death, dissolution, transfer
of assets or otherwise) of Borrower;
(l) Any failure of Agent or any Lender to notify
Guarantor of the acceptance of this Guaranty or of the funding of
Advances by any Lender in reliance on this Guaranty or of the failure
of Borrower to make any payment due by Borrower to Agent or any
Lender;
(m) Any existing or future offset, claim or defense of
Borrower against Agent or any Lender or against payment of all or any
part of the Guaranteed Obligations, whether such offset, claim or
defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise;
(n) Any full or partial release of the liability of
Borrower, any guarantor of all or any part of the Guaranteed
Obligations or any other Person for all or any part of the Guaranteed
Obligations, it being acknowledged and agreed by Guarantor that it may
be required to pay the Guaranteed Obligations in full without
assistance or support, whether from Borrower, any other guarantor or
any other Person; or
(o) Any other action taken or omitted to be taken with
respect to any of the Credit Agreement, any Note or any other Loan
Document, the Guaranteed Obligations or the
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security and collateral therefor, whether or not such action or
omission prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay all or any part of the Guaranteed
Obligations pursuant to the terms hereof.
Without limiting the foregoing or Guarantor's liability under this Guaranty, to
the extent that Agent and the Lenders (or any of them) have advanced funds or
extended credit to Borrower and do not receive payments or benefits thereon in
the amounts and at the times required or provided by or in connection with the
Credit Agreement, any Notes or any other Loan Document, Guarantor is absolutely
liable to make such payments and to confer such benefits on the Lenders on a
timely basis.
5. Representations and Warranties. In connection with this
Guaranty, Guarantor hereby represents and warrants to Agent and the Lenders as
follows:
(a) Guarantor and Borrower are members of an affiliated
and integrated group of businesses and are engaged in related business
and supporting lines of business; Guarantor has received and will
receive a direct and indirect material benefit from the transactions
evidenced by and contemplated in the Credit Agreement, the Notes and
the other Loan Documents; this Guaranty is given by Guarantor in
furtherance of the direct and indirect business interests and purposes
of Guarantor, and is necessary to the conduct, promotion and
attainment of the business interests of Borrower and Guarantor; and
the value of the consideration received and to be received by
Guarantor is reasonably worth at least as much as the liability and
obligation of Guarantor hereunder;
(b) The execution and delivery of this Guaranty and the
performance of and compliance with the terms hereof will not
constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or result in the breach of,
any material contract, agreement or instrument to which Guarantor is a
party or which may be applicable to Guarantor or any of its assets;
(c) This Guaranty, when executed and delivered by
Guarantor, will constitute the legal, valid and binding obligation of
Guarantor enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights and general
principles of equity;
(d) As of the date of this Guaranty, and after giving
effect to this Guaranty and the contingent obligation evidenced by
this Guaranty, Guarantor is not, on either an unconsolidated basis or
a consolidated basis with Borrower and Guarantor's subsidiaries,
insolvent, as such term is used or defined in any applicable
bankruptcy, fraudulent conveyance, fraudulent transfer or similar law,
and Guarantor has and will have assets which, fairly valued, exceed
its indebtedness, liabilities and obligations; Guarantor is not
executing this Guaranty with any intention to hinder, delay or defraud
any present or future creditor or creditors of Guarantor; Guarantor is
not engaged in any business or transaction (including, without
limitation, the execution of this Guaranty) which will leave Guarantor
with unreasonably small capital or assets which are unreasonably small
in relation to the business
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or transactions engaged in by Guarantor, and Guarantor does not intend
to engage in any such business or transaction; Guarantor does not
intend to incur, nor does Guarantor believe that it will incur, debts
beyond Guarantor's ability to repay such debts as they mature;
(e) All acts and conditions required to be performed and
satisfied prior to the creation and issuance of this Guaranty, and to
constitute this Guaranty as the legal, valid and binding obligation of
Guarantor in accordance with its terms, have been performed and
satisfied in due and strict compliance with all applicable laws;
(f) Guarantor is familiar with, and has independently
received and reviewed books and records regarding, the financial
condition of Borrower and is familiar with the value of any and all
collateral (if any) intended to secure the Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or any
such collateral (if any) as an inducement to enter into this Guaranty;
(g) Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or
agreement that any Person other than Guarantor will be liable to pay
the Guaranteed Obligations;
(h) Except for the execution of the Credit Agreement,
neither Agent, any Lender nor any other Person has made any
representation, warranty or statement to, or promise, covenant or
agreement with, Guarantor in order to induce Guarantor to execute this
Guaranty; and
(i) Guarantor is a Subsidiary of Borrower.
6. Default. Upon the occurrence and during the continuation of
an Event of Default, Guarantor shall, on demand by Agent and without further
notice of dishonor and without notice of any kind (including, without
limitation, notice of acceptance by Agent or any Lender of this Guaranty)
having been given to Borrower, Guarantor or any other Person previous to such
demand, promptly (i.e., not later than 1:00 p.m., Dallas, Texas time, on the
date of such demand or, if such demand is made after 12:00 noon, on the next
succeeding Business Day) pay, in immediately available funds, the full unpaid
amount of the Guaranteed Obligations, or such lesser amount, if any, as may be
specifically demanded by Agent from time to time, to Agent at Agent's Principal
Office located in Dallas, Texas or at such other place as Agent may specify to
Guarantor in writing. If acceleration of the time for payment of any amount
payable by Borrower under or with respect to any of the Guaranteed Obligations
is stayed or otherwise delayed upon the insolvency, bankruptcy or
reorganization of Borrower, all such amounts otherwise subject to acceleration
under the terms of the Guaranteed Obligations shall nonetheless be payable by
Guarantor hereunder promptly on demand by Agent.
7. Cumulative Remedies; No Election. If Guarantor is or becomes
liable or obligated for the Guaranteed Obligations, by endorsement or
otherwise, other than under this Guaranty, such liability or obligation shall
not be in any manner impaired or affected hereby, and the rights and remedies
of Agent or any Lender hereunder shall be cumulative of any and all other
rights and
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remedies that Agent or such Lender may ever have against Guarantor. The
exercise by Agent or any Lender of any right or remedy hereunder or under any
other agreement, document or instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
Without in any way limiting the generality of the foregoing, it is specifically
understood and agreed that this Guaranty is given by Guarantor as an additional
guaranty or security to any and all other guaranties or security heretofore,
concurrently herewith or hereafter executed and/or delivered by Guarantor to or
in favor of Agent or any Lender relating to the Guaranteed Obligations, and
nothing herein shall ever be deemed to in any way negate or replace any such
other guaranties or security; provided, however, that Agent and the Lenders
shall have all of their rights and remedies under this Guaranty irrespective of
anything to the contrary contained in any such other guaranties or security.
This Guaranty may be enforced from time to time as often as occasion therefor
may arise, and it is agreed and understood that it shall not be necessary for
Agent or any Lender, in order to enforce this Guaranty against Guarantor, first
to exercise any rights or remedies against Borrower or any other Person or
institute suit or exhaust any available rights or remedies against security in
Agent's or any Lender's possession or under Agent's or any Lender's control, or
to resort to any other sources or means of obtaining payment of the Guaranteed
Obligations.
8. Joint and Several Obligation. Guarantor agrees that Agent and
the Lenders, in their sole discretion, may (a) bring suit against all
guarantors or other Persons liable or obligated to Agent or any Lender or
against any one or more of them, for interest, penalties, expenses, fees,
indebtedness, liabilities and obligations owed to Agent or any Lender and apply
any amounts obtained by Agent or any Lender in such a manner as Agent or any
Lender may elect, (b) bring suit against all guarantors of the Guaranteed
Obligations jointly and severally or against any one or more of them, (c)
settle fully or in part with any one or more of such guarantors for such
consideration as Agent or any Lender may deem proper, and (d) partially or
fully release one or more of such guarantors from liability under any guaranty
agreement, and that no such action shall impair the rights of Agent or any
Lender to collect the Guaranteed Obligations (or the unpaid balance thereof)
from other guarantors (including, without limitation, Guarantor), or any of
them, not so sued, settled with, or released.
9. Release of Collateral, etc. If all or any part of the
Guaranteed Obligations is at any time secured, Guarantor agrees that Agent or
any Lender may, at any time and from time to time in its discretion and with or
without valuable consideration, allow substitution or withdrawal of collateral
or other security and release collateral or other security without impairing or
diminishing the liabilities or obligations of Guarantor hereunder. Guarantor
further agrees that, if Borrower or any other Person executes in favor of Agent
or any Lender any collateral agreement, mortgage, deed of trust, collateral
assignment, security agreement or other security instrument, the exercise by
Agent or any Lender of any right or remedy thereby conferred on Agent or any
Lender shall be wholly discretionary with Agent and such Lender, respectively,
and that the exercise or failure to exercise any such right or remedy shall in
no way impair or diminish the obligation of Guarantor hereunder. Guarantor
further agrees that (except to the extent prohibited by applicable law
notwithstanding an agreement of the parties to the contrary) neither Agent nor
any Lender shall be liable for its failure to use diligence or care in the
collection of the Guaranteed Obligations, in the creation or perfection of any
lien, security interest or assignment intended as security or in preserving the
liability of any Person liable or obligated on the Guaranteed Obligations, and
Guarantor hereby waives presentment
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for payment, notice of nonpayment, protest and notice thereof, and diligence in
bringing suit against any Person liable on the Guaranteed Obligations or any
part thereof.
10. Binding Effect. This Guaranty is for the benefit of Agent and
the Lenders and their successors and assigns, and in the event of an assignment
by Agent or any Lender or its successors or assigns of the Guaranteed
Obligations, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness, liabilities and obligations so assigned,
may be transferred with such indebtedness, liabilities and obligations. This
Guaranty is binding, not only upon Guarantor, but upon its successors and
assigns.
11. Waiver of Subrogation, Contribution and Other Rights. UPON
PAYMENT BY GUARANTOR OF ANY SUMS IN RESPECT OF THE GUARANTEED OBLIGATIONS
HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS ADVANCED TO BORROWER BY
GUARANTOR), ALL RIGHTS OF GUARANTOR AGAINST BORROWER OR ANY OTHER GUARANTOR OF
THE GUARANTEED OBLIGATIONS ARISING AS A RESULT THEREFROM BY WAY OF RIGHT OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR
OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT
AND ENFORCEMENT TO THE PRIOR INDEFEASIBLE PAYMENT AND ENFORCEMENT IN FULL OF
THE GUARANTEED OBLIGATIONS. GUARANTOR SHALL NOT HAVE, AND HEREBY IRREVOCABLY
WAIVES, ANY AND ALL RIGHTS AND REMEDIES OF SUBROGATION, REIMBURSEMENT,
EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR OTHERWISE AGAINST OR FROM
BORROWER UNLESS AND UNTIL ALL OF THE GUARANTEED OBLIGATIONS HAVE BEEN PAID AND
PERFORMED IN FULL. IN ADDITION TO THE FOREGOING, GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL CLAIMS OR OTHER RIGHTS AND REMEDIES IT MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST AGENT, ANY LENDER, BORROWER OR ANY OTHER PERSON
UNDER CHAPTER 34 OF THE TEXAS BUSINESS AND COMMERCE CODE, UNDER RULES 31 AND
163 OF THE TEXAS RULES OF CIVIL PROCEDURE, UNDER SECTION 17.001 OF THE TEXAS
CIVIL PRACTICE AND REMEDIES CODE AND UNDER ANY OTHER STATUTE OF ANY STATE OR
OTHER JURISDICTION REQUIRING RECOURSE AGAINST THE PRIMARY OBLIGOR OR IMPOSING
OTHER REQUIREMENTS AS A CONDITION TO RECOURSE AGAINST A GUARANTOR IF AND TO THE
EXTENT THAT THE SAME MAY BE APPLICABLE TO THIS GUARANTY. Except as expressly
otherwise provided in this paragraph 11, Guarantor shall have all rights of
subrogation, reimbursement, exoneration, contribution and indemnification that
may exist under currently applicable law.
12. Subordination of Indebtedness and Liens. The payment of any
and all principal of and interest on all indebtedness of Borrower, whether
primary, absolute, secondary, direct, indirect, fixed, contingent, liquidated,
unliquidated, secured or unsecured, matured or unmatured, joint, several or
joint and several, now or hereafter existing, due or to become due to Guarantor
(the "Guarantor Debt"), shall in all respects be subordinate and junior in
right of payment and enforcement to the prior payment and enforcement in full
of the Guaranteed Obligations as provided in this paragraph 12. Except as may
be expressly permitted by the Credit Agreement, no payment
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shall be made on or with respect to the Guarantor Debt unless and until the
Guaranteed Obligations shall have been paid and performed in full. In the
event that Guarantor or any Affiliate of Guarantor shall receive any payment on
account of the Guarantor Debt in violation of this paragraph 12, Guarantor will
hold, or cause to be held (as the case may be), any amount so received in trust
for the benefit of Agent and the Lenders and will forthwith deliver, or cause
to be delivered (as the case may be), such payment to Agent, in the form
received, to be applied to the Guaranteed Obligations. All assignments, liens,
pledges and security interests (if any) securing payment of all or any part of
the Guarantor Debt (the "Subordinated Liens") shall be and remain inferior and
subordinate to the assignments, liens, pledges and security interests (if any)
securing payment of all or any part of the Guaranteed Obligations, regardless
of whether such Subordinated Liens presently exist or are hereafter created or
when such Subordinated Liens were created, perfected, filed or recorded.
Guarantor shall not exercise or enforce any creditors' rights or remedies that
it may have against Borrower or foreclose, repossess, sequester or otherwise
institute any action or proceeding (whether judicial or otherwise, including,
without limitation, the commencement of, or joinder in, any bankruptcy,
insolvency, reorganization, liquidation, receivership or other debtor relief
law) to enforce any Subordinated Lien on any assets of Borrower or any other
Person unless and until the Guaranteed Obligations shall have been irrevocably
paid and performed in full. The terms and provisions of this paragraph 12 are
given by Guarantor as additional rights, remedies and benefits to any and all
other subordination agreements heretofore, concurrently herewith or hereafter
executed by Guarantor to or in favor of Agent or any Lender, and nothing in
this Guaranty shall ever be deemed to in any way negate or replace any other
such previous, concurrent or subsequent subordination agreements. All
promissory notes, accounts receivable ledgers and other evidences of the
Guarantor Debt, and all mortgages, deeds of trust, security agreements,
assignments and other security documents evidencing the Subordinated Liens,
shall contain a specific written notice that the indebtedness and liens,
evidenced thereby are subordinated as provided in this paragraph 12.
13. Right of Setoff. Guarantor hereby grants to Agent and each
Lender a right of setoff upon any and all monies, securities or other property
of Guarantor, and the proceeds therefrom, now or hereafter held or received by
or in transit to Agent or any Lender from or for the account of Guarantor,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special) and credits
of Guarantor, and any and all claims of Guarantor against Agent or any Lender
at any time existing. The right of setoff granted pursuant to this paragraph
13 shall be cumulative of and in addition to Agent's and each Lender's common
law right of setoff.
14. Further Assurances. Upon the request of Agent or any Lender,
Guarantor will, at any time and from time to time, duly execute and deliver to
Agent any and all such further agreements, documents and instruments, and
supply such additional information, as may be necessary or advisable, in the
reasonable opinion of Agent or any Lender, to obtain the full benefits of this
Guaranty.
15. Invalid Provisions. If any provision of this Guaranty is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions
hereof
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shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. No provision herein or in any other Loan
Document evidencing the Guaranteed Obligations shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
16. Modification in Writing. No modification, consent, amendment
or waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor herefrom, shall be effective unless the same shall be in writing and
signed by a duly authorized officer of Agent and Guarantor and then shall be
effective only in the specific instance and for the specific purpose for which
given.
17. No Waiver, Etc. No notice to or demand on Guarantor or Agent
in any case shall entitle Guarantor or Agent, respectively, to any other or
further notice or demand in similar or other circumstances. No delay or
omission by Agent, any Lender or Guarantor in exercising any right or remedy
hereunder shall impair any such right or remedy or be construed as a waiver
thereof or any acquiescence therein, and no single or partial exercise of any
such right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy hereunder.
18. Cumulative Rights. All rights and remedies of Agent and the
Lenders hereunder are cumulative of each other and of every other right or
remedy which Agent or any Lender may otherwise have at law or in equity or
under any other contract or document, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
19. Expenses. Guarantor agrees to pay on demand by Agent all
costs and expenses incurred by Agent or any Lender in connection with the
negotiation, preparation, execution and performance of the terms and provisions
of this Guaranty and any and all amendments, modifications, renewals,
restatements and/or supplements hereto from time to time, including, without
limitation, the reasonable fees and expenses of legal counsel to Agent. If
Guarantor should breach or fail to perform any provision of this Guaranty,
Guarantor agrees to pay to Agent all costs and expenses incurred by Agent or
any Lender in the enforcement of this Guaranty from time to time, including,
without limitation, the reasonable fees and expenses of all legal counsel to
Agent and the Lenders.
20. Applicable Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES).
21. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST GUARANTOR, AGENT OR ANY LENDER ARISING OUT OF OR
RELATING TO THIS GUARANTY. EACH
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SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH FULL KNOWLEDGE AND
UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH
THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
22. Notices. All notices and other communications required or
permitted to be given under this Guaranty shall be given or made in writing and
shall be deemed to have been given on the third Business Day after its deposit
in the U.S. mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it
is actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as follows:
Guarantor: With a copy to:
TOPS Pharmacy Services, Inc. Physician Reliance Network, Inc.
c/o Physician Reliance Network, Inc. Two Lincoln Centre
Two Lincoln Centre 5420 LBJ Freeway, Suite ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
Assistant Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: With a copy to:
Bank One, Texas, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Healthcare Finance Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on
the signature pages of the Credit Agreement or the most recent
Assignment and Acceptance with respect to a Lender, or such other
address as may hereafter be designated and delivered in writing.
23. Survival. All representations, warranties, covenants and
agreements of Guarantor in this Guaranty shall survive the execution of this
Guaranty.
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24. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same Guaranty.
25. Limitation on Interest. Notwithstanding anything to the
contrary contained or referred to in this Guaranty, none of the terms and
provisions of this Guaranty, the Credit Agreement, the Notes or any other Loan
Document shall ever be construed to create a contract or obligation to pay
interest at a rate in excess of the Maximum Rate, and neither Agent nor any
Lender shall ever charge, receive, take, collect, reserve or apply, as interest
on the Obligations or the Guaranteed Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other indebtedness, liability or obligation provided for in this Guaranty,
the Credit Agreement, the Notes or any other Loan Document which constitutes
interest under applicable law shall be, ipso facto and under any and all
circumstances, limited or reduced to an amount equal to the lesser of (a) the
amount of such interest, charge, fee, expense or other indebtedness, liability
or obligation that would be payable in the absence of this paragraph 25 or (b)
an amount, which when added to all other interest payable under this Guaranty,
the Credit Agreement, the Notes and any other Loan Document, equals the Maximum
Rate. If, notwithstanding the foregoing, Agent or any Lender ever contracts
for, charges, receives, takes, collects, reserves or applies as interest any
amount in excess of the Maximum Rate, such amount which would be deemed
excessive interest shall be deemed a partial payment or prepayment of principal
of the Obligations and the Guaranteed Obligations and treated hereunder as
such, and if the Obligations and the Guaranteed Obligations, or applicable
portions thereof, are paid in full, any remaining excess shall promptly be paid
to Borrower, Guarantor or such other Person (as appropriate). In determining
whether the interest paid or payable, under any specific contingency, exceeds
the Maximum Rate, Guarantor, Borrower, Agent and the Lenders shall, to the
maximum extent permitted by applicable law, (i) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
allocate and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the Obligations and the Guaranteed
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Rate at any time during the term of the Obligations and the
Guaranteed Obligations; provided that if the unpaid principal balance is paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
the Maximum Rate, Agent and the Lenders shall refund to Borrower, Guarantor or
such other Person (as appropriate) the amount of such excess and, in such
event, neither Agent nor any Lender shall be subject to any penalties provided
by any laws for contracting for, charging, receiving, taking, collecting,
receiving or applying interest in excess of the Maximum Rate.
26. Irrevocable Nature of Guaranty. This Guaranty may not be
revoked by Guarantor; provided, however, in the event it shall be determined
that Guarantor shall have the right, in accordance with applicable law and
notwithstanding its express agreement herein to the contrary, to revoke this
Guaranty, Guarantor may deliver to Agent, at its address for notices set forth
in the Credit Agreement, written notice of Guarantor's intention not to be
liable hereunder for any Guaranteed Obligations arising, created or incurred
after Agent's receipt of such notice, whereupon such notice shall be effective
to the extent (but only to the extent) provided hereinbelow as to
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Guarantor from and after (but not before) the time when such notice is actually
delivered to and received by and receipted for in writing by Agent (the
"Effective Revocation Time"); provided, further, however, that such notice
shall not be effective as to, and shall not in any way restrict, limit, impair,
release or otherwise affect, the indebtedness, liabilities or obligations of
Guarantor under this Guaranty with respect to (a) any Guaranteed Obligations
consisting of indebtedness, liabilities or obligations under the Credit
Agreement, the Notes or any other Loan Document, whether incurred before or
after the Effective Revocation Time (including, without limitation, any loans,
advances or extensions of credit at any time made or created under the Credit
Agreement, whether or not agreed, committed or contemplated to be made by Agent
or any Lender and whether or not discretionary with Agent or any Lender), (b)
any Guaranteed Obligations arising, created or incurred prior to the Effective
Revocation Time, (c) any amendments, modifications, renewals, extensions,
restatements and/or supplements to or of the indebtedness, liabilities or
obligations referred to in clauses (a) and (b) preceding, whether occurring
before or after the Effective Revocation Time, or (d) any interest or costs of
collection with respect to any of the indebtedness, liabilities or obligations
referred to in clauses (a), (b) or (c) preceding.
THIS WRITTEN AGREEMENT REPRESENTS 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.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the date first written above.
GUARANTOR:
TOPS PHARMACY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
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The undersigned has executed this Guaranty solely for the purpose of
confirming receipt of this Guaranty and reliance on this Guaranty by Agent and
the Lenders as of the date first written above.
BANK ONE, TEXAS, N.A., as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
----------------------------------
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GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty"), dated June 11, 1997, is
executed and delivered by INNOVATIVE MEDICAL COMMUNICATIONS, INC., a Texas
corporation ("Guarantor"), to and in favor of BANK ONE, TEXAS, N.A., a national
banking association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Physician Reliance Network, Inc. ("Borrower"), the lenders
named therein (together with their successors and assigns, the "Lenders"),
Agent and NationsBank of Texas, N.A. (as a Lender and as co-agent) are,
concurrently herewith, entering into that certain Amended and Restated Credit
Agreement (as the same may be amended, renewed, extended, restated, replaced,
substituted, supplemented or otherwise modified from time to time, the "Credit
Agreement") and, in connection therewith, inter alia, Borrower is executing and
delivering to each of the Lenders a Revolving Note (as defined in the Credit
Agreement) which together with the other Revolving Notes executed and delivered
by Borrower to the Lenders on the Closing Date (as defined in the Credit
Agreement) in connection with the Credit Agreement are in the aggregate
principal amount of $140,000,000 (such Revolving Notes, as they may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time, are hereinafter individually called a "Note" and
collectively called the "Notes"; the Credit Agreement, the Notes and the other
Loan Documents (as defined in the Credit Agreement) and any and all amendments,
modifications, renewals, extensions, restatements and/or supplements thereto
from time to time, are hereinafter collectively called the "Loan Documents");
B. Guarantor has directly and indirectly benefitted and will
directly and indirectly benefit from the loans evidenced and governed by the
Credit Agreement, the Notes and the other Loan Documents and the other
transactions evidenced by and contemplated in the Loan Documents; and
C. Execution and delivery of this Guaranty is a condition to
Agent and the Lenders entering into the Credit Agreement and the funding of
Advances pursuant thereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Guaranty,
all capitalized terms used in this Guaranty shall have the meanings ascribed to
such terms in the Credit Agreement.
2. Guaranty of Indebtedness, Liabilities and Obligations.
Guarantor hereby irrevocably and unconditionally guarantees (a) payment to
Agent and the Lenders when due, whether at stated maturity, by acceleration or
otherwise, of any and all Obligations (as such term is defined in the Credit
Agreement), which Obligations include, without limitation, (i) any and all
interest, penalties, fees and expenses (specifically including, but not limited
to, attorneys' fees and expenses) which
215
Borrower may now or at any time hereafter owe to Agent or any Lender (whether
or not such interest, penalties, fees and expenses were originally contracted
with Agent or any Lender or with another or others and whether or not such
interest, penalties, fees and expenses are enforceable against Borrower)
pursuant to the Credit Agreement, any Note or any other Loan Document plus (ii)
the principal amount of any and all indebtedness, liabilities and other
obligations, whether primary, absolute, secondary, direct, indirect, fixed,
contingent, liquidated, unliquidated, secured or unsecured, matured or
unmatured, joint, several or joint and several, due or to become due and
whether arising by agreement, note, discount, acceptance, overdraft or
otherwise, which Borrower may now or at any time hereafter owe to Agent or any
Lender (whether or not such indebtedness, liabilities and obligations were
originally contracted with Agent or any Lender or with another or others and
whether or not such indebtedness, liabilities or obligations are enforceable
against Borrower) pursuant to the Credit Agreement, any Note or any other Loan
Document and (b) the faithful, prompt and complete compliance by Borrower with
all terms, conditions, covenants, agreements and undertakings of Borrower under
the Credit Agreement, any Note or any other Loan Document (the Obligations and
the interest, penalties, fees, expenses, indebtedness, liabilities and
obligations, etc. referred to in clauses (a) and (b) preceding as to which
payment, performance and compliance are guaranteed pursuant to this Guaranty
are hereinafter individually and collectively called the "Guaranteed
Obligations"); provided, however, notwithstanding anything to the contrary
contained in this paragraph 2, the Guaranteed Obligations of Guarantor
hereunder shall not exceed an aggregate amount equal to the greatest amount
that would not render Guarantor's obligations under this Guaranty subject to
avoidance under Sections 544, 548 or 550 of the Federal Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided further, however, that for purposes of this
proviso it shall be presumed that the Guaranteed Obligations of Guarantor under
this Guaranty do not equal or exceed any aggregate amount which would render
Guarantor's indebtedness, liabilities or obligations under this Guaranty
subject to being so avoided, set aside or annulled, and the burden of proof to
the contrary shall be on the party asserting to the contrary. Subject to, but
without limiting the generality of the foregoing proviso, the provisions of
this Guaranty are severable and, in any action or proceeding involving any
state corporate law or any bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights, if the
indebtedness, liabilities or obligations of Guarantor under this Guaranty would
otherwise be held or determined to be void, invalid or unenforceable on account
of the amount thereof under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount thereof shall, without
any further action by Guarantor, Agent, any Lender or any other Person, be
automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
Notwithstanding that Borrower may not be liable or obligated to Agent
or any Lender for interest and/or attorneys' fees and expenses on, or in
connection with, the Guaranteed Obligations from and after the Petition Date
(as hereinafter defined) as a result of the provisions of the federal
bankruptcy laws or otherwise, the Guaranteed Obligations for which Guarantor
shall be liable and obligated under this Guaranty shall include (to the extent
permitted by law or a court of competent jurisdiction) interest accruing on the
Guaranteed Obligations at the highest rate provided for in the Credit Agreement
from and after the date on which Borrower files for protection under the
federal bankruptcy laws or from and after the date on which an involuntary
proceeding is filed against Borrower under the federal bankruptcy laws (herein
collectively referred to as the "Petition Date")
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and all attorneys' fees and expenses incurred by Agent or any Lender from and
after the Petition Date in connection with the Guaranteed Obligations.
3. Continuing Guaranty of Payment. This Guaranty is and shall be
an absolute, irrevocable and continuing guaranty of payment, and not merely of
collection, and from time to time or at any time the Guaranteed Obligations may
be increased, reduced or paid in full without affecting the liability or
obligation of Guarantor with respect to indebtedness, liabilities and
obligations of Borrower to Agent or any Lender thereafter incurred. Guarantor
further agrees that this Guaranty shall continue to be effective or be
reinstated (if a release or discharge has occurred), as the case may be, if at
any time any payment (or any part thereof) to Agent or any Lender in respect of
the Guaranteed Obligations is rescinded or must otherwise be restored by Agent
or any Lender pursuant to any bankruptcy, insolvency, reorganization,
receivership or other debtor relief granted to Borrower or its successors or
assigns. In the event that Agent or any Lender must rescind or restore any
payment received by Agent or any Lender, respectively, in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge
from the terms of this Guaranty given to Guarantor by Agent or such Lender,
respectively, shall be without effect, and this Guaranty shall remain in full
force and effect. It is the intention of Agent, Lenders and Guarantor that
Guarantor's liabilities and obligations hereunder shall not be discharged
except by the full and complete payment and performance of the Guaranteed
Obligations and then only to the extent of such payment and performance. This
Guaranty is independent of, and in addition and without modification to, and
does not impair or in any way affect any other guaranty, endorsement or other
agreement executed in favor of Agent or any Lender, and this Guaranty and
Guarantor's liabilities and obligations under this Guaranty shall not be
impaired or otherwise affected by the execution, delivery or performance by
Guarantor or any other Person of any other guaranty, endorsement or other
agreement.
4. Absolute Guaranty. Guarantor's liabilities and obligations
under this Guaranty shall be absolute and unconditional irrespective of, shall
not be released, impaired, limited, reduced, conditioned upon or otherwise
affected by and shall continue in full force and effect notwithstanding the
occurrence of any event (other than an event consisting of payment and
performance of such liabilities and obligations as provided in paragraph 3
hereof) at any time or from time to time, including, without limitation, any
one or more of the following events specified in clauses (a) through (o) of
this paragraph 4 below, and neither Agent nor any Lender shall be obligated or
required to take or to refrain from taking any of such actions or inactions
specified below and shall not have any liability, obligation or duty whatsoever
with respect to such actions or inactions, it being acknowledged and agreed by
Guarantor that all of such liabilities, obligations and duties (if any) of
Agent or any Lender otherwise existing and all rights and remedies (if any) of
Guarantor with respect thereto (whether such liabilities, obligations, duties,
rights or remedies exist by virtue of agreement, common law, equity, statute or
otherwise), and each and every defense which, under principles of guaranty or
suretyship law, would otherwise operate to eliminate, impair, condition or
restrict the liabilities and obligations of Guarantor for the Guaranteed
Obligations, are hereby expressly waived by Guarantor:
(a) The taking or accepting of any security or other
guaranty for any or all of the Guaranteed Obligations, whether
heretofore, concurrently herewith or hereafter;
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(b) Any failure to create or perfect or properly create
or perfect any lien, security interest or assignment intended as
security, or any release, surrender, exchange, substitution,
subordination or loss of any security or guaranty at any time existing
in connection with any or all of the Guaranteed Obligations for any
reason;
(c) Any partial or full release of the liability or
obligation of Guarantor under any other guaranty whether or not
similar to this Guaranty;
(d) The entering into, delivery of, modification of,
amendment to or waiver of compliance with the Credit Agreement, any
Note or any other Loan Document, or any agreement, document or
instrument evidencing, securing or otherwise affecting all or part of
the Guaranteed Obligations, without the notification of Guarantor, the
right of such notification being hereby specifically waived by
Guarantor;
(e) The bankruptcy, insolvency, arrangement, adjustment,
composition, liquidation, disability, dissolution or lack of authority
(whether corporate, partnership or trust or relating to any other
entity or Person) of Borrower, Guarantor or any other Person at any
time liable or obligated for the payment of any or all of the
Guaranteed Obligations, whether now existing or hereafter arising;
(f) Any renewal, extension, modification, refunding
and/or rearrangement of the payment of any or all of the Guaranteed
Obligations at any time and from time to time, whether on one or more
occasions, either with or without notice to or consent of Guarantor,
or any adjustment, indulgence, forbearance or compromise that might be
granted or given by Agent or any Lender to Borrower or Guarantor;
(g) Any neglect, delay, omission, failure or refusal of
Agent or any Lender to (i) exercise or properly or diligently exercise
any right or remedy with respect to any or all of the Guaranteed
Obligations or the collection thereof or any collateral, security or
guaranty therefor, whether under the Credit Agreement, any Note or any
other Loan Document or otherwise, (ii) take or prosecute or properly
or diligently take or prosecute any action for the collection of any
or all of the Guaranteed Obligations against Borrower, Guarantor or
any other guarantor of any or all of the Guaranteed Obligations and/or
any other Person, (iii) foreclose or prosecute or properly or
diligently foreclose or prosecute any action in connection with any
agreement, document or instrument or arrangement evidencing, securing
or otherwise affecting all or any part of the Guaranteed Obligations,
or (iv) mitigate damages or take any other action to reduce, collect
or enforce the Guaranteed Obligations;
(h) Any failure of Agent or any Lender to give notice to
Borrower and/or Guarantor of, or obtain the consent of Borrower and/or
Guarantor with respect to, (i) demand, presentment, protest,
nonpayment, intention to accelerate, acceleration, lack of diligence
or delay in collection of all or any part of the Guaranteed
Obligations or any other matter, or the absence thereof, (ii) any
renewal, extension or assignment of the Guaranteed Obligations or any
part thereof, (iii) the disposition or release of all or any part of
any security for the Guaranteed Obligations (whether or not such
disposition is commercially
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reasonable) or (iv) any other action taken or refrained from being
taken by Agent or any Lender against Borrower, it being agreed that
(except as may be expressly provided in the other Loan Documents) that
neither Agent nor any Lender shall be required to give Borrower or
Guarantor any notice of any kind or to obtain Borrower's or
Guarantor's consent under any circumstances whatsoever with respect to
or in connection with the Guaranteed Obligations;
(i) The unenforceability, illegality or uncollectibility
of all or any part of the Guaranteed Obligations against Borrower by
reason of the fact that the interest contracted for, charged,
collected or received in respect of the Guaranteed Obligations exceeds
the maximum amount permitted by law, the act of creating the
Guaranteed Obligations or any part thereof is ultra ▇▇▇▇▇, the
officers, directors, partners, trustees or representatives creating
the Guaranteed Obligations acted in excess of their authority, the
Loan Agreement, any Note, or any other Loan Document evidencing the
Guaranteed Obligations has been forged or otherwise is irregular or is
not genuine or authentic, or expiration of the applicable statute of
limitations with respect to the Guaranteed Obligations;
(j) Any payment by Borrower to Agent or any Lender is
held to constitute a preferential transfer or a fraudulent conveyance
or transfer under any applicable law, or for any reason Agent or any
Lender is required to refund such payment or pay such amount to
Borrower or any other Person;
(k) Any merger, reorganization, consolidation or
dissolution of Borrower, any sale, lease or transfer of any or all of
the assets of Borrower, or any change in name, business, location,
composition, structure or any change in the shareholders, partners or
members (whether by accession, secession, death, dissolution, transfer
of assets or otherwise) of Borrower;
(l) Any failure of Agent or any Lender to notify
Guarantor of the acceptance of this Guaranty or of the funding of
Advances by any Lender in reliance on this Guaranty or of the failure
of Borrower to make any payment due by Borrower to Agent or any
Lender;
(m) Any existing or future offset, claim or defense of
Borrower against Agent or any Lender or against payment of all or any
part of the Guaranteed Obligations, whether such offset, claim or
defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise;
(n) Any full or partial release of the liability of
Borrower, any guarantor of all or any part of the Guaranteed
Obligations or any other Person for all or any part of the Guaranteed
Obligations, it being acknowledged and agreed by Guarantor that it may
be required to pay the Guaranteed Obligations in full without
assistance or support, whether from Borrower, any other guarantor or
any other Person; or
(o) Any other action taken or omitted to be taken with
respect to any of the Credit Agreement, any Note or any other Loan
Document, the Guaranteed Obligations or the
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security and collateral therefor, whether or not such action or
omission prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay all or any part of the Guaranteed
Obligations pursuant to the terms hereof.
Without limiting the foregoing or Guarantor's liability under this Guaranty, to
the extent that Agent and the Lenders (or any of them) have advanced funds or
extended credit to Borrower and do not receive payments or benefits thereon in
the amounts and at the times required or provided by or in connection with the
Credit Agreement, any Notes or any other Loan Document, Guarantor is absolutely
liable to make such payments and to confer such benefits on the Lenders on a
timely basis.
5. Representations and Warranties. In connection with this
Guaranty, Guarantor hereby represents and warrants to Agent and the Lenders as
follows:
(a) Guarantor and Borrower are members of an affiliated
and integrated group of businesses and are engaged in related business
and supporting lines of business; Guarantor has received and will
receive a direct and indirect material benefit from the transactions
evidenced by and contemplated in the Credit Agreement, the Notes and
the other Loan Documents; this Guaranty is given by Guarantor in
furtherance of the direct and indirect business interests and purposes
of Guarantor, and is necessary to the conduct, promotion and
attainment of the business interests of Borrower and Guarantor; and
the value of the consideration received and to be received by
Guarantor is reasonably worth at least as much as the liability and
obligation of Guarantor hereunder;
(b) The execution and delivery of this Guaranty and the
performance of and compliance with the terms hereof will not
constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or result in the breach of,
any material contract, agreement or instrument to which Guarantor is a
party or which may be applicable to Guarantor or any of its assets;
(c) This Guaranty, when executed and delivered by
Guarantor, will constitute the legal, valid and binding obligation of
Guarantor enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights and general
principles of equity;
(d) As of the date of this Guaranty, and after giving
effect to this Guaranty and the contingent obligation evidenced by
this Guaranty, Guarantor is not, on either an unconsolidated basis or
a consolidated basis with Borrower and Guarantor's subsidiaries,
insolvent, as such term is used or defined in any applicable
bankruptcy, fraudulent conveyance, fraudulent transfer or similar law,
and Guarantor has and will have assets which, fairly valued, exceed
its indebtedness, liabilities and obligations; Guarantor is not
executing this Guaranty with any intention to hinder, delay or defraud
any present or future creditor or creditors of Guarantor; Guarantor is
not engaged in any business or transaction (including, without
limitation, the execution of this Guaranty) which will leave Guarantor
with unreasonably small capital or assets which are unreasonably small
in relation to the business
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or transactions engaged in by Guarantor, and Guarantor does not intend
to engage in any such business or transaction; Guarantor does not
intend to incur, nor does Guarantor believe that it will incur, debts
beyond Guarantor's ability to repay such debts as they mature;
(e) All acts and conditions required to be performed and
satisfied prior to the creation and issuance of this Guaranty, and to
constitute this Guaranty as the legal, valid and binding obligation of
Guarantor in accordance with its terms, have been performed and
satisfied in due and strict compliance with all applicable laws;
(f) Guarantor is familiar with, and has independently
received and reviewed books and records regarding, the financial
condition of Borrower and is familiar with the value of any and all
collateral (if any) intended to secure the Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or any
such collateral (if any) as an inducement to enter into this Guaranty;
(g) Guarantor has not been induced to enter into this
Guaranty on the basis of a contemplation, belief, understanding or
agreement that any Person other than Guarantor will be liable to pay
the Guaranteed Obligations;
(h) Except for the execution of the Credit Agreement,
neither Agent, any Lender nor any other Person has made any
representation, warranty or statement to, or promise, covenant or
agreement with, Guarantor in order to induce Guarantor to execute this
Guaranty; and
(i) Guarantor is a Subsidiary of Borrower.
6. Default. Upon the occurrence and during the continuation of
an Event of Default, Guarantor shall, on demand by Agent and without further
notice of dishonor and without notice of any kind (including, without
limitation, notice of acceptance by Agent or any Lender of this Guaranty)
having been given to Borrower, Guarantor or any other Person previous to such
demand, promptly (i.e., not later than 1:00 p.m., Dallas, Texas time, on the
date of such demand or, if such demand is made after 12:00 noon, on the next
succeeding Business Day) pay, in immediately available funds, the full unpaid
amount of the Guaranteed Obligations, or such lesser amount, if any, as may be
specifically demanded by Agent from time to time, to Agent at Agent's Principal
Office located in Dallas, Texas or at such other place as Agent may specify to
Guarantor in writing. If acceleration of the time for payment of any amount
payable by Borrower under or with respect to any of the Guaranteed Obligations
is stayed or otherwise delayed upon the insolvency, bankruptcy or
reorganization of Borrower, all such amounts otherwise subject to acceleration
under the terms of the Guaranteed Obligations shall nonetheless be payable by
Guarantor hereunder promptly on demand by Agent.
7. Cumulative Remedies; No Election. If Guarantor is or becomes
liable or obligated for the Guaranteed Obligations, by endorsement or
otherwise, other than under this Guaranty, such liability or obligation shall
not be in any manner impaired or affected hereby, and the rights and remedies
of Agent or any Lender hereunder shall be cumulative of any and all other
rights and
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remedies that Agent or such Lender may ever have against Guarantor. The
exercise by Agent or any Lender of any right or remedy hereunder or under any
other agreement, document or instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
Without in any way limiting the generality of the foregoing, it is specifically
understood and agreed that this Guaranty is given by Guarantor as an additional
guaranty or security to any and all other guaranties or security heretofore,
concurrently herewith or hereafter executed and/or delivered by Guarantor to or
in favor of Agent or any Lender relating to the Guaranteed Obligations, and
nothing herein shall ever be deemed to in any way negate or replace any such
other guaranties or security; provided, however, that Agent and the Lenders
shall have all of their rights and remedies under this Guaranty irrespective of
anything to the contrary contained in any such other guaranties or security.
This Guaranty may be enforced from time to time as often as occasion therefor
may arise, and it is agreed and understood that it shall not be necessary for
Agent or any Lender, in order to enforce this Guaranty against Guarantor, first
to exercise any rights or remedies against Borrower or any other Person or
institute suit or exhaust any available rights or remedies against security in
Agent's or any Lender's possession or under Agent's or any Lender's control, or
to resort to any other sources or means of obtaining payment of the Guaranteed
Obligations.
8. Joint and Several Obligation. Guarantor agrees that Agent and
the Lenders, in their sole discretion, may (a) bring suit against all
guarantors or other Persons liable or obligated to Agent or any Lender or
against any one or more of them, for interest, penalties, expenses, fees,
indebtedness, liabilities and obligations owed to Agent or any Lender and apply
any amounts obtained by Agent or any Lender in such a manner as Agent or any
Lender may elect, (b) bring suit against all guarantors of the Guaranteed
Obligations jointly and severally or against any one or more of them, (c)
settle fully or in part with any one or more of such guarantors for such
consideration as Agent or any Lender may deem proper, and (d) partially or
fully release one or more of such guarantors from liability under any guaranty
agreement, and that no such action shall impair the rights of Agent or any
Lender to collect the Guaranteed Obligations (or the unpaid balance thereof)
from other guarantors (including, without limitation, Guarantor), or any of
them, not so sued, settled with, or released.
9. Release of Collateral, etc. If all or any part of the
Guaranteed Obligations is at any time secured, Guarantor agrees that Agent or
any Lender may, at any time and from time to time in its discretion and with or
without valuable consideration, allow substitution or withdrawal of collateral
or other security and release collateral or other security without impairing or
diminishing the liabilities or obligations of Guarantor hereunder. Guarantor
further agrees that, if Borrower or any other Person executes in favor of Agent
or any Lender any collateral agreement, mortgage, deed of trust, collateral
assignment, security agreement or other security instrument, the exercise by
Agent or any Lender of any right or remedy thereby conferred on Agent or any
Lender shall be wholly discretionary with Agent and such Lender, respectively,
and that the exercise or failure to exercise any such right or remedy shall in
no way impair or diminish the obligation of Guarantor hereunder. Guarantor
further agrees that (except to the extent prohibited by applicable law
notwithstanding an agreement of the parties to the contrary) neither Agent nor
any Lender shall be liable for its failure to use diligence or care in the
collection of the Guaranteed Obligations, in the creation or perfection of any
lien, security interest or assignment intended as security or in preserving the
liability of any Person liable or obligated on the Guaranteed Obligations, and
Guarantor hereby waives presentment
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for payment, notice of nonpayment, protest and notice thereof, and diligence in
bringing suit against any Person liable on the Guaranteed Obligations or any
part thereof.
10. Binding Effect. This Guaranty is for the benefit of Agent and
the Lenders and their successors and assigns, and in the event of an assignment
by Agent or any Lender or its successors or assigns of the Guaranteed
Obligations, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness, liabilities and obligations so assigned,
may be transferred with such indebtedness, liabilities and obligations. This
Guaranty is binding, not only upon Guarantor, but upon its successors and
assigns.
11. Waiver of Subrogation, Contribution and Other Rights. UPON
PAYMENT BY GUARANTOR OF ANY SUMS IN RESPECT OF THE GUARANTEED OBLIGATIONS
HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS ADVANCED TO BORROWER BY
GUARANTOR), ALL RIGHTS OF GUARANTOR AGAINST BORROWER OR ANY OTHER GUARANTOR OF
THE GUARANTEED OBLIGATIONS ARISING AS A RESULT THEREFROM BY WAY OF RIGHT OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR
OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT
AND ENFORCEMENT TO THE PRIOR INDEFEASIBLE PAYMENT AND ENFORCEMENT IN FULL OF
THE GUARANTEED OBLIGATIONS. GUARANTOR SHALL NOT HAVE, AND HEREBY IRREVOCABLY
WAIVES, ANY AND ALL RIGHTS AND REMEDIES OF SUBROGATION, REIMBURSEMENT,
EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR OTHERWISE AGAINST OR FROM
BORROWER UNLESS AND UNTIL ALL OF THE GUARANTEED OBLIGATIONS HAVE BEEN PAID AND
PERFORMED IN FULL. IN ADDITION TO THE FOREGOING, GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL CLAIMS OR OTHER RIGHTS AND REMEDIES IT MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST AGENT, ANY LENDER, BORROWER OR ANY OTHER PERSON
UNDER CHAPTER 34 OF THE TEXAS BUSINESS AND COMMERCE CODE, UNDER RULES 31 AND
163 OF THE TEXAS RULES OF CIVIL PROCEDURE, UNDER SECTION 17.001 OF THE TEXAS
CIVIL PRACTICE AND REMEDIES CODE AND UNDER ANY OTHER STATUTE OF ANY STATE OR
OTHER JURISDICTION REQUIRING RECOURSE AGAINST THE PRIMARY OBLIGOR OR IMPOSING
OTHER REQUIREMENTS AS A CONDITION TO RECOURSE AGAINST A GUARANTOR IF AND TO THE
EXTENT THAT THE SAME MAY BE APPLICABLE TO THIS GUARANTY. Except as expressly
otherwise provided in this paragraph 11, Guarantor shall have all rights of
subrogation, reimbursement, exoneration, contribution and indemnification that
may exist under currently applicable law.
12. Subordination of Indebtedness and Liens. The payment of any
and all principal of and interest on all indebtedness of Borrower, whether
primary, absolute, secondary, direct, indirect, fixed, contingent, liquidated,
unliquidated, secured or unsecured, matured or unmatured, joint, several or
joint and several, now or hereafter existing, due or to become due to Guarantor
(the "Guarantor Debt"), shall in all respects be subordinate and junior in
right of payment and enforcement to the prior payment and enforcement in full
of the Guaranteed Obligations as provided in this paragraph 12. Except as may
be expressly permitted by the Credit Agreement, no payment
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shall be made on or with respect to the Guarantor Debt unless and until the
Guaranteed Obligations shall have been paid and performed in full. In the
event that Guarantor or any Affiliate of Guarantor shall receive any payment on
account of the Guarantor Debt in violation of this paragraph 12, Guarantor will
hold, or cause to be held (as the case may be), any amount so received in trust
for the benefit of Agent and the Lenders and will forthwith deliver, or cause
to be delivered (as the case may be), such payment to Agent, in the form
received, to be applied to the Guaranteed Obligations. All assignments, liens,
pledges and security interests (if any) securing payment of all or any part of
the Guarantor Debt (the "Subordinated Liens") shall be and remain inferior and
subordinate to the assignments, liens, pledges and security interests (if any)
securing payment of all or any part of the Guaranteed Obligations, regardless
of whether such Subordinated Liens presently exist or are hereafter created or
when such Subordinated Liens were created, perfected, filed or recorded.
Guarantor shall not exercise or enforce any creditors' rights or remedies that
it may have against Borrower or foreclose, repossess, sequester or otherwise
institute any action or proceeding (whether judicial or otherwise, including,
without limitation, the commencement of, or joinder in, any bankruptcy,
insolvency, reorganization, liquidation, receivership or other debtor relief
law) to enforce any Subordinated Lien on any assets of Borrower or any other
Person unless and until the Guaranteed Obligations shall have been irrevocably
paid and performed in full. The terms and provisions of this paragraph 12 are
given by Guarantor as additional rights, remedies and benefits to any and all
other subordination agreements heretofore, concurrently herewith or hereafter
executed by Guarantor to or in favor of Agent or any Lender, and nothing in
this Guaranty shall ever be deemed to in any way negate or replace any other
such previous, concurrent or subsequent subordination agreements. All
promissory notes, accounts receivable ledgers and other evidences of the
Guarantor Debt, and all mortgages, deeds of trust, security agreements,
assignments and other security documents evidencing the Subordinated Liens,
shall contain a specific written notice that the indebtedness and liens,
evidenced thereby are subordinated as provided in this paragraph 12.
13. Right of Setoff. Guarantor hereby grants to Agent and each
Lender a right of setoff upon any and all monies, securities or other property
of Guarantor, and the proceeds therefrom, now or hereafter held or received by
or in transit to Agent or any Lender from or for the account of Guarantor,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special) and credits
of Guarantor, and any and all claims of Guarantor against Agent or any Lender
at any time existing. The right of setoff granted pursuant to this paragraph
13 shall be cumulative of and in addition to Agent's and each Lender's common
law right of setoff.
14. Further Assurances. Upon the request of Agent or any Lender,
Guarantor will, at any time and from time to time, duly execute and deliver to
Agent any and all such further agreements, documents and instruments, and
supply such additional information, as may be necessary or advisable, in the
reasonable opinion of Agent or any Lender, to obtain the full benefits of this
Guaranty.
15. Invalid Provisions. If any provision of this Guaranty is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions
hereof
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shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. No provision herein or in any other Loan
Document evidencing the Guaranteed Obligations shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
16. Modification in Writing. No modification, consent, amendment
or waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor herefrom, shall be effective unless the same shall be in writing and
signed by a duly authorized officer of Agent and Guarantor and then shall be
effective only in the specific instance and for the specific purpose for which
given.
17. No Waiver, Etc. No notice to or demand on Guarantor or Agent
in any case shall entitle Guarantor or Agent, respectively, to any other or
further notice or demand in similar or other circumstances. No delay or
omission by Agent, any Lender or Guarantor in exercising any right or remedy
hereunder shall impair any such right or remedy or be construed as a waiver
thereof or any acquiescence therein, and no single or partial exercise of any
such right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy hereunder.
18. Cumulative Rights. All rights and remedies of Agent and the
Lenders hereunder are cumulative of each other and of every other right or
remedy which Agent or any Lender may otherwise have at law or in equity or
under any other contract or document, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
19. Expenses. Guarantor agrees to pay on demand by Agent all
costs and expenses incurred by Agent or any Lender in connection with the
negotiation, preparation, execution and performance of the terms and provisions
of this Guaranty and any and all amendments, modifications, renewals,
restatements and/or supplements hereto from time to time, including, without
limitation, the reasonable fees and expenses of legal counsel to Agent. If
Guarantor should breach or fail to perform any provision of this Guaranty,
Guarantor agrees to pay to Agent all costs and expenses incurred by Agent or
any Lender in the enforcement of this Guaranty from time to time, including,
without limitation, the reasonable fees and expenses of all legal counsel to
Agent and the Lenders.
20. Applicable Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES).
21. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST GUARANTOR, AGENT OR ANY LENDER ARISING OUT OF OR
RELATING TO THIS GUARANTY. EACH
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SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH FULL KNOWLEDGE AND
UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH
THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
22. Notices. All notices and other communications required or
permitted to be given under this Guaranty shall be given or made in writing and
shall be deemed to have been given on the third Business Day after its deposit
in the U.S. mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it
is actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as follows:
Guarantor: With a copy to:
Innovative Medical Communications, Inc. Physician Reliance Network, Inc.
c/o Physician Reliance Network, Inc. Two Lincoln Centre
Two Lincoln Centre ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
Assistant Secretary Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: With a copy to:
Bank One, Texas, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Healthcare Finance Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on
the signature pages of the Credit Agreement or the most recent
Assignment and Acceptance with respect to a Lender, or such other
address as may hereafter be designated and delivered in writing.
23. Survival. All representations, warranties, covenants and
agreements of Guarantor in this Guaranty shall survive the execution of this
Guaranty.
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24. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same Guaranty.
25. Limitation on Interest. Notwithstanding anything to the
contrary contained or referred to in this Guaranty, none of the terms and
provisions of this Guaranty, the Credit Agreement, the Notes or any other Loan
Document shall ever be construed to create a contract or obligation to pay
interest at a rate in excess of the Maximum Rate, and neither Agent nor any
Lender shall ever charge, receive, take, collect, reserve or apply, as interest
on the Obligations or the Guaranteed Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other indebtedness, liability or obligation provided for in this Guaranty,
the Credit Agreement, the Notes or any other Loan Document which constitutes
interest under applicable law shall be, ipso facto and under any and all
circumstances, limited or reduced to an amount equal to the lesser of (a) the
amount of such interest, charge, fee, expense or other indebtedness, liability
or obligation that would be payable in the absence of this paragraph 25 or (b)
an amount, which when added to all other interest payable under this Guaranty,
the Credit Agreement, the Notes and any other Loan Document, equals the Maximum
Rate. If, notwithstanding the foregoing, Agent or any Lender ever contracts
for, charges, receives, takes, collects, reserves or applies as interest any
amount in excess of the Maximum Rate, such amount which would be deemed
excessive interest shall be deemed a partial payment or prepayment of principal
of the Obligations and the Guaranteed Obligations and treated hereunder as
such, and if the Obligations and the Guaranteed Obligations, or applicable
portions thereof, are paid in full, any remaining excess shall promptly be paid
to Borrower, Guarantor or such other Person (as appropriate). In determining
whether the interest paid or payable, under any specific contingency, exceeds
the Maximum Rate, Guarantor, Borrower, Agent and the Lenders shall, to the
maximum extent permitted by applicable law, (i) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
allocate and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the Obligations and the Guaranteed
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Rate at any time during the term of the Obligations and the
Guaranteed Obligations; provided that if the unpaid principal balance is paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
the Maximum Rate, Agent and the Lenders shall refund to Borrower, Guarantor or
such other Person (as appropriate) the amount of such excess and, in such
event, neither Agent nor any Lender shall be subject to any penalties provided
by any laws for contracting for, charging, receiving, taking, collecting,
receiving or applying interest in excess of the Maximum Rate.
26. Irrevocable Nature of Guaranty. This Guaranty may not be
revoked by Guarantor; provided, however, in the event it shall be determined
that Guarantor shall have the right, in accordance with applicable law and
notwithstanding its express agreement herein to the contrary, to revoke this
Guaranty, Guarantor may deliver to Agent, at its address for notices set forth
in the Credit Agreement, written notice of Guarantor's intention not to be
liable hereunder for any Guaranteed Obligations arising, created or incurred
after Agent's receipt of such notice, whereupon such notice shall be effective
to the extent (but only to the extent) provided hereinbelow as to
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Guarantor from and after (but not before) the time when such notice is actually
delivered to and received by and receipted for in writing by Agent (the
"Effective Revocation Time"); provided, further, however, that such notice
shall not be effective as to, and shall not in any way restrict, limit, impair,
release or otherwise affect, the indebtedness, liabilities or obligations of
Guarantor under this Guaranty with respect to (a) any Guaranteed Obligations
consisting of indebtedness, liabilities or obligations under the Credit
Agreement, the Notes or any other Loan Document, whether incurred before or
after the Effective Revocation Time (including, without limitation, any loans,
advances or extensions of credit at any time made or created under the Credit
Agreement, whether or not agreed, committed or contemplated to be made by Agent
or any Lender and whether or not discretionary with Agent or any Lender), (b)
any Guaranteed Obligations arising, created or incurred prior to the Effective
Revocation Time, (c) any amendments, modifications, renewals, extensions,
restatements
and/or supplements to or of the indebtedness, liabilities or obligations
referred to in clauses (a) and (b) preceding, whether occurring before or after
the Effective Revocation Time, or (d) any interest or costs of collection with
respect to any of the indebtedness, liabilities or obligations referred to in
clauses (a), (b) or (c) preceding.
THIS WRITTEN AGREEMENT REPRESENTS 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.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the date first written above.
GUARANTOR:
INNOVATIVE MEDICAL COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
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The undersigned has executed this Guaranty solely for the purpose of
confirming receipt of this Guaranty and reliance on this Guaranty by Agent and
the Lenders as of the date first written above.
BANK ONE, TEXAS, N.A., as Agent
By: /s/ [ILLEGIBLE]
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty"), dated June 11, 1997, is
executed and delivered by PRN RESEARCH, INC., a Texas corporation
("Guarantor"), to and in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for itself and the other Lenders (as such term is
hereinafter defined) (in such capacity, together with its successors and
assigns in such capacity, "Agent").
RECITALS:
A. Physician Reliance Network, Inc. ("Borrower"), the lenders named
therein (together with their successors and assigns, the "Lenders"), Agent and
NationsBank of Texas, N.A. (as a Lender and as co-agent) are, concurrently
herewith, entering into that certain Amended and Restated Credit Agreement (as
the same may be amended, renewed, extended, restated, replaced, substituted,
supplemented or otherwise modified from time to time, the "Credit Agreement")
and, in connection therewith, inter alia, Borrower is executing and delivering
to each of the Lenders a Revolving Note (as defined in the Credit Agreement)
which together with the other Revolving Notes executed and delivered by
Borrower to the Lenders on the Closing Date (as defined in the Credit
Agreement) in connection with the Credit Agreement are in the aggregate
principal amount of $140,000,000 (such Revolving Notes, as they may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time, are hereinafter individually called a "Note" and
collectively called the "Notes"; the Credit Agreement, the Notes and the other
Loan Documents (as defined in the Credit Agreement) and any and all amendments,
modifications, renewals, extensions, restatements and/or supplements thereto
from time to time, are hereinafter collectively called the "Loan Documents");
B. Guarantor has directly and indirectly benefitted and will directly and
indirectly benefit from the loans evidenced and governed by the Credit
Agreement, the Notes and the other Loan Documents and the other transactions
evidenced by and contemplated in the Loan Documents; and
C. Execution and delivery of this Guaranty is a condition to Agent and the
Lenders entering into the Credit Agreement and the funding of Advances pursuant
thereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
AGREEMENT:
1. Definitions. Unless otherwise defined in this Guaranty, all capitalized
terms used in this Guaranty shall have the meanings ascribed to such terms in
the Credit Agreement.
2. Guaranty of Indebtedness, Liabilities and Obligations. Guarantor hereby
irrevocably and unconditionally guarantees (a) payment to Agent and the Lenders
when due, whether at stated maturity, by acceleration or otherwise, of any and
all Obligations (as such term is defined in the Credit Agreement), which
Obligations include, without limitation, (i) any and all interest, penalties,
fees and expenses (specifically including, but not limited to, attorneys' fees
and expenses) which
230
Borrower may now or at any time hereafter owe to Agent or any Lender (whether
or not such interest, penalties, fees and expenses were originally contracted
with Agent or any Lender or with another or others and whether or not such
interest, penalties, fees and expenses are enforceable against Borrower)
pursuant to the Credit Agreement, any Note or any other Loan Document plus (ii)
the principal amount of any and all indebtedness, liabilities and other
obligations, whether primary, absolute, secondary, direct, indirect, fixed,
contingent, liquidated, unliquidated, secured or unsecured, matured or
unmatured, joint, several or joint and several, due or to become due and
whether arising by agreement, note, discount, acceptance, overdraft or
otherwise, which Borrower may now or at any time hereafter owe to Agent or any
Lender (whether or not such indebtedness, liabilities and obligations were
originally contracted with Agent or any Lender or with another or others and
whether or not such indebtedness, liabilities or obligations are enforceable
against Borrower) pursuant to the Credit Agreement, any Note or any other Loan
Document and (b) the faithful, prompt and complete compliance by Borrower with
all terms, conditions, covenants, agreements and undertakings of Borrower under
the Credit Agreement, any Note or any other Loan Document (the Obligations and
the interest, penalties, fees, expenses, indebtedness, liabilities and
obligations, etc. referred to in clauses (a) and (b) preceding as to which
payment, performance and compliance are guaranteed pursuant to this Guaranty
are hereinafter individually and collectively called the "Guaranteed
Obligations"); provided, however, notwithstanding anything to the contrary
contained in this paragraph 2, the Guaranteed Obligations of Guarantor
hereunder shall not exceed an aggregate amount equal to the greatest amount
that would not render Guarantor's obligations under this Guaranty subject to
avoidance under Sections 544, 548 or 550 of the Federal Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided further, however, that for purposes of this
proviso it shall be presumed that the Guaranteed Obligations of Guarantor under
this Guaranty do not equal or exceed any aggregate amount which would render
Guarantor's indebtedness, liabilities or obligations under this Guaranty
subject to being so avoided, set aside or annulled, and the burden of proof to
the contrary shall be on the party asserting to the contrary. Subject to, but
without limiting the generality of the foregoing proviso, the provisions of
this Guaranty are severable and, in any action or proceeding involving any
state corporate law or any bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights, if the
indebtedness, liabilities or obligations of Guarantor under this Guaranty would
otherwise be held or determined to be void, invalid or unenforceable on account
of the amount thereof under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount thereof shall, without
any further action by Guarantor, Agent, any Lender or any other Person, be
automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
Notwithstanding that Borrower may not be liable or obligated to Agent or
any Lender for interest and/or attorneys' fees and expenses on, or in
connection with, the Guaranteed Obligations from and after the Petition Date
(as hereinafter defined) as a result of the provisions of the federal
bankruptcy laws or otherwise, the Guaranteed Obligations for which Guarantor
shall be liable and obligated under this Guaranty shall include (to the extent
permitted by law or a court of competent jurisdiction) interest accruing on the
Guaranteed Obligations at the highest rate provided for in the Credit Agreement
from and after the date on which Borrower files for protection under the
federal bankruptcy laws or from and after the date on which an involuntary
proceeding is filed against Borrower under the federal bankruptcy laws (herein
collectively referred to as the "Petition Date")
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and all attorneys' fees and expenses incurred by Agent or any Lender from and
after the Petition Date in connection with the Guaranteed Obligations.
3. Continuing Guaranty of Payment. This Guaranty is and shall be an
absolute, irrevocable and continuing guaranty of payment, and not merely of
collection, and from time to time or at any time the Guaranteed Obligations may
be increased, reduced or paid in full without affecting the liability or
obligation of Guarantor with respect to indebtedness, liabilities and
obligations of Borrower to Agent or any Lender thereafter incurred. Guarantor
further agrees that this Guaranty shall continue to be effective or be
reinstated (if a release or discharge has occurred), as the case may be, if at
any time any payment (or any part thereof) to Agent or any Lender in respect of
the Guaranteed Obligations is rescinded or must otherwise be restored by Agent
or any Lender pursuant to any bankruptcy, insolvency, reorganization,
receivership or other debtor relief granted to Borrower or its successors or
assigns. In the event that Agent or any Lender must rescind or restore any
payment received by Agent or any Lender, respectively, in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge
from the terms of this Guaranty given to Guarantor by Agent or such Lender,
respectively, shall be without effect, and this Guaranty shall remain in full
force and effect. It is the intention of Agent, Lenders and Guarantor that
Guarantor's liabilities and obligations hereunder shall not be discharged
except by the full and complete payment and performance of the Guaranteed
Obligations and then only to the extent of such payment and performance. This
Guaranty is independent of, and in addition and without modification to, and
does not impair or in any way affect any other guaranty, endorsement or other
agreement executed in favor of Agent or any Lender, and this Guaranty and
Guarantor's liabilities and obligations under this Guaranty shall not be
impaired or otherwise affected by the execution, delivery or performance by
Guarantor or any other Person of any other guaranty, endorsement or other
agreement.
4. Absolute Guaranty. Guarantor's liabilities and obligations under this
Guaranty shall be absolute and unconditional irrespective of, shall not be
released, impaired, limited, reduced, conditioned upon or otherwise affected by
and shall continue in full force and effect notwithstanding the occurrence of
any event (other than an event consisting of payment and performance of such
liabilities and obligations as provided in paragraph 3 hereof) at any time or
from time to time, including, without limitation, any one or more of the
following events specified in clauses (a) through (o) of this paragraph 4
below, and neither Agent nor any Lender shall be obligated or required to take
or to refrain from taking any of such actions or inactions specified below and
shall not have any liability, obligation or duty whatsoever with respect to
such actions or inactions, it being acknowledged and agreed by Guarantor that
all of such liabilities, obligations and duties (if any) of Agent or any Lender
otherwise existing and all rights and remedies (if any) of Guarantor with
respect thereto (whether such liabilities, obligations, duties, rights or
remedies exist by virtue of agreement, common law, equity, statute or
otherwise), and each and every defense which, under principles of guaranty or
suretyship law, would otherwise operate to eliminate, impair, condition or
restrict the liabilities and obligations of Guarantor for the Guaranteed
Obligations, are hereby expressly waived by Guarantor:
(a) The taking or accepting of any security or other guaranty for any
or all of the Guaranteed Obligations, whether heretofore, concurrently
herewith or hereafter;
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(b) Any failure to create or perfect or properly create or perfect
any lien, security interest or assignment intended as security, or any
release, surrender, exchange, substitution, subordination or loss of any
security or guaranty at any time existing in connection with any or all of
the Guaranteed Obligations for any reason;
(c) Any partial or full release of the liability or obligation of
Guarantor under any other guaranty whether or not similar to this
Guaranty;
(d) The entering into, delivery of, modification of, amendment to or
waiver of compliance with the Credit Agreement, any Note or any other Loan
Document, or any agreement, document or instrument evidencing, securing or
otherwise affecting all or part of the Guaranteed Obligations, without the
notification of Guarantor, the right of such notification being hereby
specifically waived by Guarantor;
(e) The bankruptcy, insolvency, arrangement, adjustment, composition,
liquidation, disability, dissolution or lack of authority (whether
corporate, partnership or trust or relating to any other entity or Person)
of Borrower, Guarantor or any other Person at any time liable or obligated
for the payment of any or all of the Guaranteed Obligations, whether now
existing or hereafter arising;
(f) Any renewal, extension, modification, refunding and/or
rearrangement of the payment of any or all of the Guaranteed Obligations
at any time and from time to time, whether on one or more occasions,
either with or without notice to or consent of Guarantor, or any
adjustment, indulgence, forbearance or compromise that might be granted or
given by Agent or any Lender to Borrower or Guarantor;
(g) Any neglect, delay, omission, failure or refusal of Agent or any
Lender to (i) exercise or properly or diligently exercise any right or
remedy with respect to any or all of the Guaranteed Obligations or the
collection thereof or any collateral, security or guaranty therefor,
whether under the Credit Agreement, any Note or any other Loan Document or
otherwise, (ii) take or prosecute or properly or diligently take or
prosecute any action for the collection of any or all of the Guaranteed
Obligations against Borrower, Guarantor or any other guarantor of any or
all of the Guaranteed Obligations and/or any other Person, (iii) foreclose
or prosecute or properly or diligently foreclose or prosecute any action
in connection with any agreement, document or instrument or arrangement
evidencing, securing or otherwise affecting all or any part of the
Guaranteed Obligations, or (iv) mitigate damages or take any other action
to reduce, collect or enforce the Guaranteed Obligations;
(h) Any failure of Agent or any Lender to give notice to Borrower
and/or Guarantor of, or obtain the consent of Borrower and/or Guarantor
with respect to, (i) demand, presentment, protest, nonpayment, intention
to accelerate, acceleration, lack of diligence or delay in collection of
all or any part of the Guaranteed Obligations or any other matter, or the
absence thereof, (ii) any renewal, extension or assignment of the
Guaranteed Obligations or any part thereof, (iii) the disposition or
release of all or any part of any security for the Guaranteed Obligations
(whether or not such disposition is commercially
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reasonable) or (iv) any other action taken or refrained from being taken
by Agent or any Lender against Borrower, it being agreed that (except as
may be expressly provided in the other Loan Documents) that neither Agent
nor any Lender shall be required to give Borrower or Guarantor any notice
of any kind or to obtain Borrower's or Guarantor's consent under any
circumstances whatsoever with respect to or in connection with the
Guaranteed Obligations;
(i) The unenforceability, illegality or uncollectibility of all or any
part of the Guaranteed Obligations against Borrower by reason of the fact
that the interest contracted for, charged, collected or received in
respect of the Guaranteed Obligations exceeds the maximum amount permitted
by law, the act of creating the Guaranteed Obligations or any part thereof
is ultra ▇▇▇▇▇, the officers, directors, partners, trustees or
representatives creating the Guaranteed Obligations acted in excess of
their authority, the Loan Agreement, any Note, or any other Loan Document
evidencing the Guaranteed Obligations has been forged or otherwise is
irregular or is not genuine or authentic, or expiration of the applicable
statute of limitations with respect to the Guaranteed Obligations;
(j) Any payment by Borrower to Agent or any Lender is held to
constitute a preferential transfer or a fraudulent conveyance or transfer
under any applicable law, or for any reason Agent or any Lender is
required to refund such payment or pay such amount to Borrower or any
other Person;
(k) Any merger, reorganization, consolidation or dissolution of
Borrower, any sale, lease or transfer of any or all of the assets of
Borrower, or any change in name, business, location, composition,
structure or any change in the shareholders, partners or members (whether
by accession, secession, death, dissolution, transfer of assets or
otherwise) of Borrower;
(l) Any failure of Agent or any Lender to notify Guarantor of the
acceptance of this Guaranty or of the funding of Advances by any Lender in
reliance on this Guaranty or of the failure of Borrower to make any
payment due by Borrower to Agent or any Lender;
(m) Any existing or future offset, claim or defense of Borrower
against Agent or any Lender or against payment of all or any part of the
Guaranteed Obligations, whether such offset, claim or defense arises in
connection with the Guaranteed Obligations (or the transactions creating
the Guaranteed Obligations) or otherwise;
(n) Any full or partial release of the liability of Borrower, any
guarantor of all or any part of the Guaranteed Obligations or any other
Person for all or any part of the Guaranteed Obligations, it being
acknowledged and agreed by Guarantor that it may be required to pay the
Guaranteed Obligations in full without assistance or support, whether from
Borrower, any other guarantor or any other Person; or
(o) Any other action taken or omitted to be taken with respect to any
of the Credit Agreement, any Note or any other Loan Document, the
Guaranteed Obligations or the
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security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be
required to pay all or any part of the Guaranteed Obligations pursuant to
the terms hereof.
Without limiting the foregoing or Guarantor's liability under this Guaranty, to
the extent that Agent and the Lenders (or any of them) have advanced funds or
extended credit to Borrower and do not receive payments or benefits thereon in
the amounts and at the times required or provided by or in connection with the
Credit Agreement, any Notes or any other Loan Document, Guarantor is absolutely
liable to make such payments and to confer such benefits on the Lenders on a
timely basis.
5. Representations and Warranties. In connection with this Guaranty,
Guarantor hereby represents and warrants to Agent and the Lenders as follows:
(a) Guarantor and Borrower are members of an affiliated and
integrated group of businesses and are engaged in related business and
supporting lines of business; Guarantor has received and will receive a
direct and indirect material benefit from the transactions evidenced by
and contemplated in the Credit Agreement, the Notes and the other Loan
Documents; this Guaranty is given by Guarantor in furtherance of the
direct and indirect business interests and purposes of Guarantor, and is
necessary to the conduct, promotion and attainment of the business
interests of Borrower and Guarantor; and the value of the consideration
received and to be received by Guarantor is reasonably worth at least as
much as the liability and obligation of Guarantor hereunder;
(b) The execution and delivery of this Guaranty and the performance
of and compliance with the terms hereof will not constitute a default (or
an event which with notice or lapse of time or both would constitute a
default) under, or result in the breach of, any material contract,
agreement or instrument to which Guarantor is a party or which may be
applicable to Guarantor or any of its assets;
(c) This Guaranty, when executed and delivered by Guarantor, will
constitute the legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the
enforcement of creditors' rights and general principles of equity;
(d) As of the date of this Guaranty, and after giving effect to this
Guaranty and the contingent obligation evidenced by this Guaranty,
Guarantor is not, on either an unconsolidated basis or a consolidated
basis with Borrower and Guarantor's subsidiaries, insolvent, as such term
is used or defined in any applicable bankruptcy, fraudulent conveyance,
fraudulent transfer or similar law, and Guarantor has and will have assets
which, fairly valued, exceed its indebtedness, liabilities and
obligations; Guarantor is not executing this Guaranty with any intention
to hinder, delay or defraud any present or future creditor or creditors of
Guarantor; Guarantor is not engaged in any business or transaction
(including, without limitation, the execution of this Guaranty) which will
leave Guarantor with unreasonably small capital or assets which are
unreasonably small in relation to the business
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or transactions engaged in by Guarantor, and Guarantor does not intend to
engage in any such business or transaction; Guarantor does not intend to
incur, nor does Guarantor believe that it will incur, debts beyond
Guarantor's ability to repay such debts as they mature;
(e) All acts and conditions required to be performed and satisfied
prior to the creation and issuance of this Guaranty, and to constitute
this Guaranty as the legal, valid and binding obligation of Guarantor in
accordance with its terms, have been performed and satisfied in due and
strict compliance with all applicable laws;
(f) Guarantor is familiar with, and has independently received and
reviewed books and records regarding, the financial condition of Borrower
and is familiar with the value of any and all collateral (if any) intended
to secure the Guaranteed Obligations; however, Guarantor is not relying on
such financial condition or any such collateral (if any) as an inducement
to enter into this Guaranty;
(g) Guarantor has not been induced to enter into this Guaranty on the
basis of a contemplation, belief, understanding or agreement that any
Person other than Guarantor will be liable to pay the Guaranteed
Obligations;
(h) Except for the execution of the Credit Agreement, neither Agent,
any Lender nor any other Person has made any representation, warranty or
statement to, or promise, covenant or agreement with, Guarantor in order
to induce Guarantor to execute this Guaranty; and
(i) Guarantor is a Subsidiary of Borrower.
6. Default. Upon the occurrence and during the continuation of an Event of
Default, Guarantor shall, on demand by Agent and without further notice of
dishonor and without notice of any kind (including, without limitation, notice
of acceptance by Agent or any Lender of this Guaranty) having been given to
Borrower, Guarantor or any other Person previous to such demand, promptly
(i.e., not later than 1:00 p.m., Dallas, Texas time, on the date of such demand
or, if such demand is made after 12:00 noon, on the next succeeding Business
Day) pay, in immediately available funds, the full unpaid amount of the
Guaranteed Obligations, or such lesser amount, if any, as may be specifically
demanded by Agent from time to time, to Agent at Agent's Principal Office
located in Dallas, Texas or at such other place as Agent may specify to
Guarantor in writing. If acceleration of the time for payment of any amount
payable by Borrower under or with respect to any of the Guaranteed Obligations
is stayed or otherwise delayed upon the insolvency, bankruptcy or
reorganization of Borrower, all such amounts otherwise subject to acceleration
under the terms of the Guaranteed Obligations shall nonetheless be payable by
Guarantor hereunder promptly on demand by Agent.
7. Cumulative Remedies; No Election. If Guarantor is or becomes liable or
obligated for the Guaranteed Obligations, by endorsement or otherwise, other
than under this Guaranty, such liability or obligation shall not be in any
manner impaired or affected hereby, and the rights and remedies of Agent or any
Lender hereunder shall be cumulative of any and all other rights and
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remedies that Agent or such Lender may ever have against Guarantor. The
exercise by Agent or any Lender of any right or remedy hereunder or under any
other agreement, document or instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
Without in any way limiting the generality of the foregoing, it is specifically
understood and agreed that this Guaranty is given by Guarantor as an additional
guaranty or security to any and all other guaranties or security heretofore,
concurrently herewith or hereafter executed and/or delivered by Guarantor to or
in favor of Agent or any Lender relating to the Guaranteed Obligations, and
nothing herein shall ever be deemed to in any way negate or replace any such
other guaranties or security; provided, however, that Agent and the Lenders
shall have all of their rights and remedies under this Guaranty irrespective of
anything to the contrary contained in any such other guaranties or security.
This Guaranty may be enforced from time to time as often as occasion therefor
may arise, and it is agreed and understood that it shall not be necessary for
Agent or any Lender, in order to enforce this Guaranty against Guarantor, first
to exercise any rights or remedies against Borrower or any other Person or
institute suit or exhaust any available rights or remedies against security in
Agent's or any Lender's possession or under Agent's or any Lender's control, or
to resort to any other sources or means of obtaining payment of the Guaranteed
Obligations.
8. Joint and Several Obligation. Guarantor agrees that Agent and the
Lenders, in their sole discretion, may (a) bring suit against all guarantors or
other Persons liable or obligated to Agent or any Lender or against any one or
more of them, for interest, penalties, expenses, fees, indebtedness,
liabilities and obligations owed to Agent or any Lender and apply any amounts
obtained by Agent or any Lender in such a manner as Agent or any Lender may
elect, (b) bring suit against all guarantors of the Guaranteed Obligations
jointly and severally or against any one or more of them, (c) settle fully or
in part with any one or more of such guarantors for such consideration as Agent
or any Lender may deem proper, and (d) partially or fully release one or more
of such guarantors from liability under any guaranty agreement, and that no
such action shall impair the rights of Agent or any Lender to collect the
Guaranteed Obligations (or the unpaid balance thereof) from other guarantors
(including, without limitation, Guarantor), or any of them, not so sued,
settled with, or released.
9. Release of Collateral, etc. If all or any part of the Guaranteed
Obligations is at any time secured, Guarantor agrees that Agent or any Lender
may, at any time and from time to time in its discretion and with or without
valuable consideration, allow substitution or withdrawal of collateral or other
security and release collateral or other security without impairing or
diminishing the liabilities or obligations of Guarantor hereunder. Guarantor
further agrees that, if Borrower or any other Person executes in favor of Agent
or any Lender any collateral agreement, mortgage, deed of trust, collateral
assignment, security agreement or other security instrument, the exercise by
Agent or any Lender of any right or remedy thereby conferred on Agent or any
Lender shall be wholly discretionary with Agent and such Lender, respectively,
and that the exercise or failure to exercise any such right or remedy shall in
no way impair or diminish the obligation of Guarantor hereunder. Guarantor
further agrees that (except to the extent prohibited by applicable law
notwithstanding an agreement of the parties to the contrary) neither Agent nor
any Lender shall be liable for its failure to use diligence or care in the
collection of the Guaranteed Obligations, in the creation or perfection of any
lien, security interest or assignment intended as security or in preserving the
liability of any Person liable or obligated on the Guaranteed Obligations, and
Guarantor hereby waives presentment
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for payment, notice of nonpayment, protest and notice thereof, and diligence in
bringing suit against any Person liable on the Guaranteed Obligations or any
part thereof.
10. Binding Effect. This Guaranty is for the benefit of Agent and the
Lenders and their successors and assigns, and in the event of an assignment by
Agent or any Lender or its successors or assigns of the Guaranteed Obligations,
or any part thereof, the rights and benefits hereunder, to the extent
applicable to the indebtedness, liabilities and obligations so assigned, may be
transferred with such indebtedness, liabilities and obligations. This Guaranty
is binding, not only upon Guarantor, but upon its successors and assigns.
11. Waiver of Subrogation, Contribution and Other Rights. UPON PAYMENT BY
GUARANTOR OF ANY SUMS IN RESPECT OF THE GUARANTEED OBLIGATIONS HEREUNDER
(INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS ADVANCED TO BORROWER BY GUARANTOR),
ALL RIGHTS OF GUARANTOR AGAINST BORROWER OR ANY OTHER GUARANTOR OF THE
GUARANTEED OBLIGATIONS ARISING AS A RESULT THEREFROM BY WAY OF RIGHT OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR
OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT
AND ENFORCEMENT TO THE PRIOR INDEFEASIBLE PAYMENT AND ENFORCEMENT IN FULL OF
THE GUARANTEED OBLIGATIONS. GUARANTOR SHALL NOT HAVE, AND HEREBY IRREVOCABLY
WAIVES, ANY AND ALL RIGHTS AND REMEDIES OF SUBROGATION, REIMBURSEMENT,
EXONERATION, CONTRIBUTION, INDEMNIFICATION AND/OR OTHERWISE AGAINST OR FROM
BORROWER UNLESS AND UNTIL ALL OF THE GUARANTEED OBLIGATIONS HAVE BEEN PAID AND
PERFORMED IN FULL. IN ADDITION TO THE FOREGOING, GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY AND ALL CLAIMS OR OTHER RIGHTS AND REMEDIES IT MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST AGENT, ANY LENDER, BORROWER OR ANY OTHER PERSON UNDER
CHAPTER 34 OF THE TEXAS BUSINESS AND COMMERCE CODE, UNDER RULES 31 AND 163 OF
THE TEXAS RULES OF CIVIL PROCEDURE, UNDER SECTION 17.001 OF THE TEXAS CIVIL
PRACTICE AND REMEDIES CODE AND UNDER ANY OTHER STATUTE OF ANY STATE OR OTHER
JURISDICTION REQUIRING RECOURSE AGAINST THE PRIMARY OBLIGOR OR IMPOSING OTHER
REQUIREMENTS AS A CONDITION TO RECOURSE AGAINST A GUARANTOR IF AND TO THE
EXTENT THAT THE SAME MAY BE APPLICABLE TO THIS GUARANTY. Except as expressly
otherwise provided in this paragraph 11, Guarantor shall have all rights of
subrogation, reimbursement, exoneration, contribution and indemnification that
may exist under currently applicable law.
12. Subordination of Indebtedness and Liens. The payment of any and all
principal of and interest on all indebtedness of Borrower, whether primary,
absolute, secondary, direct, indirect, fixed, contingent, liquidated,
unliquidated, secured or unsecured, matured or unmatured, joint, several or
joint and several, now or hereafter existing, due or to become due to Guarantor
(the "Guarantor Debt"), shall in all respects be subordinate and junior in
right of payment and enforcement to the prior payment and enforcement in full
of the Guaranteed Obligations as provided in this paragraph 12. Except as may
be expressly permitted by the Credit Agreement, no payment
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shall be made on or with respect to the Guarantor Debt unless and until the
Guaranteed Obligations shall have been paid and performed in full. In the
event that Guarantor or any Affiliate of Guarantor shall receive any payment on
account of the Guarantor Debt in violation of this paragraph 12, Guarantor will
hold, or cause to be held (as the case may be), any amount so received in trust
for the benefit of Agent and the Lenders and will forthwith deliver, or cause
to be delivered (as the case may be), such payment to Agent, in the form
received, to be applied to the Guaranteed Obligations. All assignments, liens,
pledges and security interests (if any) securing payment of all or any part of
the Guarantor Debt (the "Subordinated Liens") shall be and remain inferior and
subordinate to the assignments, liens, pledges and security interests (if any)
securing payment of all or any part of the Guaranteed Obligations, regardless
of whether such Subordinated Liens presently exist or are hereafter created or
when such Subordinated Liens were created, perfected, filed or recorded.
Guarantor shall not exercise or enforce any creditors' rights or remedies that
it may have against Borrower or foreclose, repossess, sequester or otherwise
institute any action or proceeding (whether judicial or otherwise, including,
without limitation, the commencement of, or joinder in, any bankruptcy,
insolvency, reorganization, liquidation, receivership or other debtor relief
law) to enforce any Subordinated Lien on any assets of Borrower or any other
Person unless and until the Guaranteed Obligations shall have been irrevocably
paid and performed in full. The terms and provisions of this paragraph 12 are
given by Guarantor as additional rights, remedies and benefits to any and all
other subordination agreements heretofore, concurrently herewith or hereafter
executed by Guarantor to or in favor of Agent or any Lender, and nothing in
this Guaranty shall ever be deemed to in any way negate or replace any other
such previous, concurrent or subsequent subordination agreements. All
promissory notes, accounts receivable ledgers and other evidences of the
Guarantor Debt, and all mortgages, deeds of trust, security agreements,
assignments and other security documents evidencing the Subordinated Liens,
shall contain a specific written notice that the indebtedness and liens,
evidenced thereby are subordinated as provided in this paragraph 12.
13. Right of Setoff. Guarantor hereby grants to Agent and each Lender a
right of setoff upon any and all monies, securities or other property of
Guarantor, and the proceeds therefrom, now or hereafter held or received by or
in transit to Agent or any Lender from or for the account of Guarantor, whether
for safekeeping, custody, pledge, transmission, collection or otherwise, and
also upon any and all deposits (general or special) and credits of Guarantor,
and any and all claims of Guarantor against Agent or any Lender at any time
existing. The right of setoff granted pursuant to this paragraph 13 shall be
cumulative of and in addition to Agent's and each Lender's common law right of
setoff.
14. Further Assurances. Upon the request of Agent or any Lender, Guarantor
will, at any time and from time to time, duly execute and deliver to Agent any
and all such further agreements, documents and instruments, and supply such
additional information, as may be necessary or advisable, in the reasonable
opinion of Agent or any Lender, to obtain the full benefits of this Guaranty.
15. Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable, this Guaranty shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions
hereof
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shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable. No provision herein or in any other Loan
Document evidencing the Guaranteed Obligations shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
16. Modification in Writing. No modification, consent, amendment or waiver
of any provision of this Guaranty, and no consent to any departure by Guarantor
herefrom, shall be effective unless the same shall be in writing and signed by
a duly authorized officer of Agent and Guarantor and then shall be effective
only in the specific instance and for the specific purpose for which given.
17. No Waiver, Etc. No notice to or demand on Guarantor or Agent in any
case shall entitle Guarantor or Agent, respectively, to any other or further
notice or demand in similar or other circumstances. No delay or omission by
Agent, any Lender or Guarantor in exercising any right or remedy hereunder
shall impair any such right or remedy or be construed as a waiver thereof or
any acquiescence therein, and no single or partial exercise of any such right
or remedy shall preclude other or further exercise thereof or the exercise of
any other right or remedy hereunder.
18. Cumulative Rights. All rights and remedies of Agent and the Lenders
hereunder are cumulative of each other and of every other right or remedy which
Agent or any Lender may otherwise have at law or in equity or under any other
contract or document, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of other rights
or remedies.
19. Expenses. Guarantor agrees to pay on demand by Agent all costs and
expenses incurred by Agent or any Lender in connection with the negotiation,
preparation, execution and performance of the terms and provisions of this
Guaranty and any and all amendments, modifications, renewals, restatements
and/or supplements hereto from time to time, including, without limitation, the
reasonable fees and expenses of legal counsel to Agent. If Guarantor should
breach or fail to perform any provision of this Guaranty, Guarantor agrees to
pay to Agent all costs and expenses incurred by Agent or any Lender in the
enforcement of this Guaranty from time to time, including, without limitation,
the reasonable fees and expenses of all legal counsel to Agent and the Lenders.
20. Applicable Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES).
21. Waiver of Trial By Jury. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING
OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST GUARANTOR, AGENT OR ANY LENDER ARISING OUT OF OR RELATING TO THIS
GUARANTY. EACH
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SUCH PARTY ACKNOWLEDGES THAT THIS WAIVER IS MADE WITH FULL KNOWLEDGE AND
UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH
THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
22. Notices. All notices and other communications required or permitted to
be given under this Guaranty shall be given or made in writing and shall be
deemed to have been given on the third Business Day after its deposit in the
U.S. mail, postage prepaid and properly addressed, by certified or registered
mail, return receipt requested, or on the Business Day on which it is actually
delivered by messenger delivery, telecopy or other electronic transmission,
whichever is earlier. The address of each party for the purposes hereof is as
follows:
Guarantor: With a copy to:
PRN Research, Inc. Physician Reliance Network, Inc.
c/o Physician Reliance Network, Inc. Two Lincoln Centre
Two Lincoln Centre ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
Assistant Secretary Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: With a copy to:
Bank One, Texas, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Healthcare Finance Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Group: URGENT
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders:
At the respective addresses shown adjacent to each Lender's name on the
signature pages of the Credit Agreement or the most recent Assignment and
Acceptance with respect to a Lender, or such other address as may
hereafter be designated and delivered in writing.
23. Survival. All representations, warranties, covenants and agreements of
Guarantor in this Guaranty shall survive the execution of this Guaranty.
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24. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same Guaranty.
25. Limitation on Interest. Notwithstanding anything to the contrary
contained or referred to in this Guaranty, none of the terms and provisions of
this Guaranty, the Credit Agreement, the Notes or any other Loan Document shall
ever be construed to create a contract or obligation to pay interest at a rate
in excess of the Maximum Rate, and neither Agent nor any Lender shall ever
charge, receive, take, collect, reserve or apply, as interest on the
Obligations or the Guaranteed Obligations, any amount in excess of the Maximum
Rate. The parties hereto agree that any interest, charge, fee, expense or other
indebtedness, liability or obligation provided for in this Guaranty, the Credit
Agreement, the Notes or any other Loan Document which constitutes interest
under applicable law shall be, ipso facto and under any and all circumstances,
limited or reduced to an amount equal to the lesser of (a) the amount of such
interest, charge, fee, expense or other indebtedness, liability or obligation
that would be payable in the absence of this paragraph 25 or (b) an amount,
which when added to all other interest payable under this Guaranty, the Credit
Agreement, the Notes and any other Loan Document, equals the Maximum Rate. If,
notwithstanding the foregoing, Agent or any Lender ever contracts for, charges,
receives, takes, collects, reserves or applies as interest any amount in excess
of the Maximum Rate, such amount which would be deemed excessive interest shall
be deemed a partial payment or prepayment of principal of the Obligations and
the Guaranteed Obligations and treated hereunder as such, and if the
Obligations and the Guaranteed Obligations, or applicable portions thereof, are
paid in full, any remaining excess shall promptly be paid to Borrower,
Guarantor or such other Person (as appropriate). In determining whether the
interest paid or payable, under any specific contingency, exceeds the Maximum
Rate, Guarantor, Borrower, Agent and the Lenders shall, to the maximum extent
permitted by applicable law, (i) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations and the Guaranteed Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations and the Guaranteed
Obligations; provided that if the unpaid principal balance is paid and
performed in full prior to the end of the full contemplated term thereof, and
if the interest received for the actual period of existence thereof exceeds the
Maximum Rate, Agent and the Lenders shall refund to Borrower, Guarantor or such
other Person (as appropriate) the amount of such excess and, in such event,
neither Agent nor any Lender shall be subject to any penalties provided by any
laws for contracting for, charging, receiving, taking, collecting, receiving or
applying interest in excess of the Maximum Rate.
26. Irrevocable Nature of Guaranty. This Guaranty may not be revoked by
Guarantor; provided, however, in the event it shall be determined that
Guarantor shall have the right, in accordance with applicable law and
notwithstanding its express agreement herein to the contrary, to revoke this
Guaranty, Guarantor may deliver to Agent, at its address for notices set forth
in the Credit Agreement, written notice of Guarantor's intention not to be
liable hereunder for any Guaranteed Obligations arising, created or incurred
after Agent's receipt of such notice, whereupon such notice shall be effective
to the extent (but only to the extent) provided hereinbelow as to
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Guarantor from and after (but not before) the time when such notice is actually
delivered to and received by and receipted for in writing by Agent (the
"Effective Revocation Time"); provided, further, however, that such notice
shall not be effective as to, and shall not in any way restrict, limit, impair,
release or otherwise affect, the indebtedness, liabilities or obligations of
Guarantor under this Guaranty with respect to (a) any Guaranteed Obligations
consisting of indebtedness, liabilities or obligations under the Credit
Agreement, the Notes or any other Loan Document, whether incurred before or
after the Effective Revocation Time (including, without limitation, any loans,
advances or extensions of credit at any time made or created under the Credit
Agreement, whether or not agreed, committed or contemplated to be made by Agent
or any Lender and whether or not discretionary with Agent or any Lender), (b)
any Guaranteed Obligations arising, created or incurred prior to the Effective
Revocation Time, (c) any amendments, modifications, renewals, extensions,
restatements
and/or supplements to or of the indebtedness, liabilities or obligations
referred to in clauses (a) and (b) preceding, whether occurring before or after
the Effective Revocation Time, or (d) any interest or costs of collection with
respect to any of the indebtedness, liabilities or obligations referred to in
clauses (a), (b) or (c) preceding.
THIS WRITTEN AGREEMENT REPRESENTS 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.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
date first written above.
GUARANTOR:
PRN RESEARCH, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Secretary
---------------------------------
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The undersigned has executed this Guaranty solely for the purpose of
confirming receipt of this Guaranty and reliance on this Guaranty by Agent and
the Lenders as of the date first written above.
BANK ONE, TEXAS, N.A., as Agent
By: /s/ [ILLEGIBLE]
---------------------------
Name:
-------------------------
Title:
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