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DEBTOR IN POSSESSION REVOLVING
CREDIT AND GUARANTY AGREEMENT
among
BMJ MEDICAL MANAGEMENT, INC.
as Borrower,
BMJ OF ▇▇▇▇▇▇▇▇, INC.
ORTHOPAEDIC MANAGEMENT NETWORK, INC.,
VALLEY SPORTS SURGEONS, INC.,
BMJ BROG, INC.,
and
BMJ OF NEVADA, INC.,
as Guarantors
THE LENDERS PARTY HERETO
FROM TIME TO TIME
and
PARIBAS
as Agent
Dated as of December 31, 1998
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DEBTOR-IN-POSSESSION REVOLVING CREDIT AND GUARANTY AGREEMENT, dated
as of December 31, 1998, among BMJ Medical Management, Inc., a Delaware
corporation, as debtor and debtor-in-possession in a case under chapter 11 of
the Bankruptcy Code (the "Borrower"), BMJ of ▇▇▇▇▇▇▇▇, Inc., a Delaware
corporation, Orthopaedic Management Network, Inc., an Arizona corporation,
Valley Sports Surgeons, Inc., a Pennsylvania corporation, BMJ BROG, Inc., a
Florida corporation, and BMJ of Nevada, Inc., a Delaware corporation (each a
"Guarantor" and, collectively, the "Guarantors"), each of which Guarantors is a
wholly-owned Subsidiary of the Borrower and a debtor-in-possession in a case
pending under chapter 11 of the Bankruptcy Code, Paribas, for itself, as a
Lender (as hereinafter defined), and acting in its capacity as agent for the
Lenders, and the other Lenders party hereto from time to time.
W I T N E S S E T H
WHEREAS, on December 17, 1998 (the "Petition Date"), the Borrower and
the Guarantors each filed voluntary petitions for relief commencing a
reorganization case under chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware;
WHEREAS, the Borrower and the Guarantors are continuing to operate
their respective businesses and manage their respective properties as debtors
and debtors-in-possession under sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, an immediate and ongoing need exists for the Borrower to
obtain additional funds in order to continue the operation of its business as
debtor-in-possession under the Bankruptcy Code and the businesses of the
Guarantors and, accordingly, the Borrower has requested that the Lenders extend
post-petition financing;
WHEREAS, the Lenders are willing to make funds available to the
Borrower pursuant to sections 364 of the Bankruptcy Code, but only for the
purposes and upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, each of the Borrower and the Guarantors has agreed to secure
its obligations to the Lenders in connection with such financing with, inter
alia, security interests in, and liens on, all of its property and assets,
whether real or personal, tangible or intangible, now owned or hereafter
acquired, as provided herein and in the Security Agreement;
WHEREAS, each Guarantor is engaged in a business related to the
business of the Borrower and each of the Guarantors will derive direct and
indirect economic benefits therefrom and from the financing provided hereunder;
and
WHEREAS, the Guarantors have agreed to guarantee all of the
obligations of the Borrower under this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular. All references to words such as "herein",
"hereof" and the like shall refer to this Agreement, unless otherwise specified,
as a whole and not to any particular article or section within this Agreement
and the term "include" and all variations thereon shall mean "include, without
limitation".
"Account" shall mean, with respect to any Person, any "account" as
such term is defined in the UCC, now or hereafter owned by such Person and any
proceeds arising therefrom, including, of such Person's rights to payment for
goods sold or leased or services performed by such Person, whether due or to
become due, whether now in existence or arising from time to time hereafter,
including, rights evidenced by an account, note, contract, security agreement,
chattel paper, instrument, document or other evidence of indebtedness or
security, together with (a) all security pledged, assigned, hypothecated or
granted to or held by such Person to secure the foregoing, (b) all of such
Person's right, title and interest in and to any goods, the sale of which gave
rise thereto, (c) all guarantees, endorsements and indemnifications on, or of,
any of the foregoing, (d) all powers of attorney for the execution of any
evidence of indebtedness or security or other writing in connection therewith,
(e) all books, records, ledger cards, customer lists and invoices relating
thereto, (f) all evidences of the filing of financing statements and other
statements and the registration of other instruments in connection therewith and
amendments thereto, notices to other creditors or secured parties, and
certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto, and (h) all other writings
related in any way to the foregoing.
"Account Debtor" shall mean any Person who is or may become obligated
to any Loan Party under, with respect to, or on account of, an Account,
including, any Insurer and any Medicaid/Medicare Account Debtor.
"Acquisition" shall mean any transaction pursuant to which the
Borrower or any of its Subsidiaries acquired or otherwise affiliated with (i) a
Medical Group or (ii) an independent physician association or (iii) an Ancillary
Service Facility, in each case by purchase in cash, exchange of property or
securities, or by any other method, pursuant to a Management Services Agreement
and any asset purchase agreement, restricted stock agreement, stockholder
noncompetition agreement and any other agreements, instruments, schedules,
exhibits, opinions and documents executed and delivered in connection therewith
prior to the Closing Date.
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"Adjusted Cash Balance" shall mean, at any time, the cash and Cash
Equivalents held by the Borrower and the Guarantors at such time, including
amounts on deposit in the Concentration Account and the Collateral Account
(Collections), but excluding any Asset Sales Proceeds and Amounts Due From
Affiliated Physicians on deposit (or required to be on deposit) in the
Collateral Account (Extraordinary Proceeds) pursuant to Section 5.9(c).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to (i) vote 5% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliated Medical Entity" shall mean any Affiliated Medical Group
and any Ancillary Service Facility or independent physician association that has
become affiliated with the Borrower or any of its Subsidiaries pursuant to a
Management Services Agreement and any asset purchase agreement, restricted stock
agreement, stockholder noncompetition agreement and any other agreements,
instruments, schedules, exhibits, opinions and documents executed and delivered
in connection with any Acquisition prior to the Closing Date.
"Affiliated Medical Group" shall mean any Medical Group that has
become affiliated with the Borrower or any of its Subsidiaries pursuant to a
Management Services Agreement and any asset purchase agreement, restricted stock
agreement, stockholder noncompetition agreement and any other agreements,
instruments, schedules, exhibits, opinions and documents executed and delivered
in connection with any Acquisition prior to the Closing Date.
"Agent" shall mean Paribas acting in its capacity as sole agent for
the Lenders and any successor agent appointed in accordance with Section 10.9.
"Agent's Office" shall mean the office of the Agent located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other office as
the Agent may hereafter designate in writing as such to the other parties
hereto.
"Agreement" shall mean this Credit Agreement as the same may from
time to time hereafter be modified, supplemented or amended.
"Amounts Due From Affiliated Physicians" shall mean any amounts
overpaid to physicians in the monthly or bimonthly draw by the relevant
Affiliated Medical Group and owing by such physicians.
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"Ancillary Service Facility" shall mean an ancillary musculoskeletal
facility such as ambulatory surgery, physical therapy or magnetic resonance
imaging center or mobile unit.
"Applicable Margin" shall mean 2% per annum.
"Asset Sale Proceeds" shall mean all cash proceeds of each sale or
other disposition of assets by any Loan Party (other than sales of inventory in
the ordinary course of business) in respect of any transaction or series of
related transactions, in each case net of (i) reasonable expenses incurred or
reasonably expected to be incurred in connection with such sale or disposition,
(ii) any income, franchise, transfer or other tax payable by such Loan Party in
connection with such sale or disposition and (iii) the Disposition Incentive
Fee.
"Assignee" shall have the meaning provided in Section 11.4(c).
"Assignment and Acceptance" shall have the meaning provided in
Section 11.4(c).
"Auditors" shall mean Ernst & Young LLP or other independent
certified public accountants of recognized national standing reasonably
acceptable to the Required Lenders.
"Available Credit" shall mean, at any time, (i) the Maximum Revolving
Credit Amount less (ii) the sum of (x) the aggregate outstanding principal
amount of all Loans and (y) the aggregate Letter of Credit Liability at such
time.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware.
"Base Rate" shall mean, at any particular date, the higher of (x) the
rate which is ? of 1% plus the Federal Funds Effective Rate and (y) the Prime
Rate in effect from time to time.
"Blocked Account Agreement" shall mean the agreement, dated as of a
date prior to the date of entry of the Final Order, among First Union National
Bank, the Loan Parties and the Agent, substantially in the form of Exhibit D or
otherwise satisfactory to the Agent as such agreement may be modified,
supplemented or amended from time to time in accordance with the terms thereof.
"Blocking Notice" shall mean a notice from the Agent to the Borrower
pursuant
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to Section 5.9(e) notifying the Borrower that it is no longer authorized to
withdraw funds from the Collateral Accounts.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the incurrence of a Loan from all the Lenders
on a given date.
"Budget" shall mean the cash receipts and disbursements projections
of the Borrower and its Subsidiaries attached hereto as Exhibit A.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which shall be in California, New York or Florida a legal holiday or a day
on which banking institutions are authorized or required by law or other
government actions to close.
"Capital Expenditures" shall mean, for any Person for any period,
without duplication, the aggregate of (i) all expenditures by such Person,
except interest capitalized during construction, during such period for
property, plant or equipment, including, renewals, improvements, replacements,
and capitalized repairs, that would be reflected as additions to property, plant
or equipment on a balance sheet of such Person prepared in conformity with GAAP
and (ii) the principal amount of all Indebtedness incurred or assumed in
connection with any such additions to property, plant and equipment. For the
purpose of this definition, the purchase price of equipment which is acquired
simultaneously with the trade-in of existing equipment owned by such person or
with insurance proceeds shall be included in Capital Expenditures only to the
extent of the gross amount for such purchase price less the credit granted by
the seller of such equipment being traded in at such time or the amount of such
proceeds, as the case may be.
"Capitalized Lease" shall mean (i) any lease of property, real or
personal, the obligations under which are capitalized on the consolidated
balance sheet of the Loan Parties, and (ii) any other such lease to the extent
that the then present value of the minimum rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean all obligations of the
Loan Parties under or in respect of Capitalized Leases.
"Carve-Out" shall have the meaning set forth in Section 2.16(b).
"Case" shall mean the chapter 11 case concerning the Borrower or a
Guarantor commenced on the Petition Date and pending in the Bankruptcy Court.
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"Cash Collateral" shall have the meaning set forth in section 363(a)
of the Bankruptcy Code.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 90 days from the date of acquisition, (ii) time deposits and certificates
of deposit of any Lender or any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 with maturities of not more
than 90 days from the date of acquisition, (iii) fully secured repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
the parent corporation of any Lender or any domestic commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 and
commercial paper rated at least A-2 or the equivalent thereof by Standard &
Poor's Corporation or at least P-2 or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc. and in each case maturing within 90 days after the date
of acquisition and (v) money market accounts or funds with or issued by a
commercial bank meeting the standards set forth in clause (iv) that invest
substantially in investments described in clauses (i) through (iv).
"Change of Control" shall be deemed to have occurred (i) with respect
to the Borrower, at such time as a "person" or "group" (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of more than 25% of the total voting power of
all classes of stock then outstanding of such Loan Party or its Subsidiaries
entitled to vote in the election of directors or (ii) with respect to any
Guarantor, at such time as the Borrower shall cease to own and control, directly
or indirectly, 100% of all classes of stock then outstanding of such Guarantor.
"Closing Date" shall mean the date on which the initial Loans are
advanced hereunder.
"Collateral" shall mean all properties, interests in properties and
assets of each of the Loan Parties and their estates of every kind or type
whatsoever, tangible, intangible, real, personal and mixed, whether now owned or
hereafter acquired or arising and regardless of where located, and all products
and proceeds of all of the foregoing.
"Collateral Account (Extraordinary Proceeds)" shall mean the account
(which may be a securities account) established and maintained pursuant to this
Agreement by and in the name of the Agent, entitled "BMJ Medical Management,
Inc., Collateral Account (Extraordinary Proceeds), Paribas, secured party", and
all funds and instruments or other items from time to time credited to such
account and all interest thereon.
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"Collateral Account (Collections)" shall mean the account (which may
be a securities account) established by the Borrower and maintained pursuant to
this Agreement by and in the name of the Agent, entitled "BMJ Medical
Management, Inc., Collateral Account (Collections), Paribas, secured party", and
all funds and instruments or other items from time to time credited to such
account and all interest thereon.
"Collateral Accounts" shall mean the Collateral Account (Collections)
and the Collateral Account (Extraordinary Proceeds).
"Commitment Fee" shall have the meaning set forth in Section 2.10(b).
"Compliance Certificate" shall mean a certificate signed by the chief
financial officer of the Borrower setting forth a reasonably detailed
calculation of the covenants set forth in Section 6.1 and attesting to the
compliance of the Borrower with the requirements of the Agreement in respect of
such ratios, substantially in the form of Exhibit B.
"Concentration Account" shall mean that certain concentration account
maintained in the name of the Borrower at First Union National Bank in
Charlotte, North Carolina, Account No. 2090002757000.
"Confirmation Order" shall mean an order entered by the Bankruptcy
Court under section 1129 of the Bankruptcy Code confirming a Plan of
Reorganization in a Case.
"Consolidated EBITDA" shall mean, with respect to any Person, for any
period, the Consolidated Net Income of such Person and its Subsidiaries for such
period adjusted to add thereto (to the extent deducted from revenues in
determining Consolidated Net Income) (i) consolidated tax expense, (ii)
depreciation and amortization expense, (iii) Consolidated Interest Expense, (iv)
any extraordinary or non-recurring cash expenses (including, the cash expense
portion of Transaction Costs), and (v) any non-cash charges (including, charges
associated with compensation and stock options), in each case determined for
such period on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP, and net of the greater of minority interests (as defined
by GAAP) and cash distributions paid by Partnership Subsidiaries.
"Consolidated Interest Expense" shall mean, for any fiscal period of
the Borrower, the total interest expense (including, interest expense
attributable to Capitalized Leases in accordance with GAAP, amortization or
write-off of debt discount and debt issuance costs and commissions, other
discounts and other fees associated with Indebtedness (including the Loans) and
the net amount payable (or plus the net amount receivable) under interest rate
protection agreements) of the Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss)
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of the Borrower and its Subsidiaries on a consolidated basis for such period
(taken as a single accounting period) determined in accordance with GAAP.
"Consummation Date" shall mean the date of the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code and which for
purposes of this Agreement shall be no later than the effective date) of a
Reorganization Plan of the Borrower or any of the Guarantors which is confirmed
pursuant to an order of the Bankruptcy Court.
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("Primary Obligations") of any other Person (the
"Primary Obligor") (but excluding any Subsidiary of the first Person) in any
manner, whether directly or indirectly, including, any obligation of such
Person, whether or not contingent, (i) to purchase any such Primary Obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of any such Primary
Obligation or (y) to maintain working capital or equity capital of the Primary
Obligor or otherwise to maintain the net worth or solvency of the Primary
Obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such Primary Obligation of the ability of
the Primary Obligor to make payment of such Primary Obligation or (iv) otherwise
to assure or hold harmless the owner of such Primary Obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the Primary
Obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Credit Exposure" shall have the meaning provided in Section 11.4(b).
"Default" shall mean any event, act or condition which, with notice
or lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.6(b).
"Disposition Incentive Fee" means the fee payable by the Borrower to
▇▇▇▇▇, ▇▇▇▇▇ & White LLC in connection with any disposition of assets by any
Loan Party (other than sales of inventory in the ordinary course of business)
which is equal to 1% of (x) the cash and Indebtedness received by such Loan
Party, (y) the value of the Indebtedness for borrowed money of such Loan Party
reduced as a result of such disposition and (z) the stock redeemed, as
applicable and, in each case prior to deducting any non-cash adjustments.
"Domestic Lending Office" shall mean, as to any Lender, the office of
such
8
Lender designated as such on Schedule 1, or such other office designated by such
Lender from time to time by written notice to the Agent and the Borrower.
"Environmental Affiliate" shall mean, with respect to any Person, any
other Person whose liability for any Environmental Claim such Person has or may
have retained, assumed or otherwise become liable for (contingently or
otherwise), either contractually or by operation of law.
"Environmental Approvals" shall mean any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, ambient air, surface water, ground water, land surface
or subsurface strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" shall mean a group consisting of any ERISA
Person and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.
"ERISA Person" shall have the meaning set forth in Section 3(9) of
ERISA for the term "person."
"ERISA Plan" shall mean (i) any Plan that (x) is not a Multiemployer
Plan and (y) has Unfunded Benefit Liabilities in excess of $50,000 and (ii) any
Plan that is a Multiemployer Plan.
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"Event of Default" shall have the meaning provided in Section 9.1.
"Existing Indebtedness" shall mean Indebtedness outstanding on the
Petition Date and described (which description shall include the maturity date
of such Indebtedness and its nature as senior or subordinated, and such other
information as the Agent shall require) on Schedule 6.2 delivered in accordance
with Section 3.4(a).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fees" shall mean all amounts payable pursuant to Section 2.10.
"Final Order" shall mean an order of the Bankruptcy Court entered in
each of the Cases by the clerk of the Bankruptcy Court after a final hearing
under Bankruptcy Rule 4001(c)(2) granting final approval of this Agreement and
the Loan Documents and granting the Liens and Super-Priority Claims described in
this Agreement in favor of the Agent and the Lenders, substantially in the form
of, and containing substantially similar provisions to, the Interim Order and
otherwise in form and substance reasonably satisfactory to the Agent.
"First Day Orders" shall mean those orders entered by the Bankruptcy
Court in connection with motions filed by the Loan Parties with the Bankruptcy
Court on the Petition Date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the United
States accounting profession, which are applicable to the circumstances of the
Borrower as of the date of determination, except that for the purposes of
Section 6.1 (including the accounting terms used therein and defined herein)
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the
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preparation of the audited financial statements of the Borrower in respect of
the fiscal year ended December 31, 1997. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or constructed as if such Accounting
Changes had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants (or successor thereto or agencies with similar
functions), the Securities and Exchange Commission or any other qualified,
authoritative agency or organization.
"Governmental Authority" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States or
foreign.
"Guarantor or "Guarantors" shall have the meaning set forth in the
Preamble.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables incurred in the
ordinary course of business of such Person), (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument, (iii) the
principal component of all Capitalized Lease Obligations of such Person, (iv)
the face amount of all letters of credit issued for the account of such Person
and, without duplication, all unreimbursed amounts drawn thereunder, (v) all
indebtedness of any other Person secured by any Lien on any property owned by
such Person, whether or not such indebtedness has been assumed, to the extent
secured by such Lien, (vi) all Contingent Obligations of such Person, and (vii)
all payment obligations of such Person under any interest rate protection
agreement (including, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps and similar agreements.
"Indemnitee" shall have the meaning provided in Section 11.1(c).
"Insurer" shall mean any Person that insures a Patient against
certain of the costs incurred in the receipt by such Patient of Medical
Services, or that has an agreement with an Affiliated Medical Group to
compensate such Affiliated Medical Group for providing services to a Patient.
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"Interim Order" shall mean the order of the Bankruptcy Court, dated
December 18, 1998, issued after notice and a hearing conducted in accordance
with Bankruptcy Rule 4001(c), and entered by the clerk of the Bankruptcy Court,
authorizing and approving the transactions contemplated by this Agreement and
the other Loan Documents and granting the Liens and Super-Priority Claims
described in this Agreement in favor of the Agent and the Lenders, a copy of
which is attached as Exhibit C hereto.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"Issuing Lender" shall mean Paribas or any other Lender which shall
be designated in writing from time to time by the Agent as the issuing bank
hereunder and shall consent in writing to such designation.
"Lenders" shall mean , collectively, (i) the Persons listed on
Schedule 1 hereto, (ii) the persons which from time to time become a party
hereto in accordance with Sections 11.4(c) or 11.4(f) and (iii) each Issuing
Lender.
"Letter of Credit" shall mean any standby letter of credit issued
pursuant hereto by the Issuing Lender for the account of the Borrower.
"Letter of Credit Liability" shall mean, as of any date of
determination, the aggregate face amount of all drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit then
outstanding plus, without duplication, the face amount of all drafts which have
been presented under Letters of Credit but have not yet been honored.
"Letter of Credit Request" shall have the meaning provided in Section
2.2(b).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement of any kind or nature whatsoever,
including, any conditional sale or other title retention agreement, any
financing lease having substantially the same effect as any of the foregoing and
the filing of any financing statement or similar instrument under the UCC or
comparable law of any jurisdiction, domestic or foreign.
"Loan Commitment" shall mean at any time, with respect to any Lender,
the obligation of such Lender to make Loans and to participate in Letters of
Credit pursuant to the terms and conditions hereof, and which shall not exceed
the principal amount set forth opposite such Lender's name under the heading
"Commitment" on Schedule 1 hereto, as such schedule may be amended, supplemented
or modified from time to time pursuant to the terms hereof or to give effect to
any applicable Assignment and Acceptance, in each case, as such amount may be
reduced from time to time pursuant to Section 2.7 or 11.4(c).
12
"Loan Documents" shall mean this Agreement, the Notes, Security
Agreement, the Blocked Account Agreement, each Letter of Credit, each Letter of
Credit Request, each Compliance Certificate, each Notice of Borrowing and any
other document executed and delivered in connection herewith.
"Loan Party" shall mean the Borrower and each of the Guarantors.
"Loan Period" shall mean the period from the Closing Date to the
Maturity Date.
"Loans" shall have the meaning assigned in Section 2.1.
"Management Services Agreement" shall mean any management services
agreement entered into between any Loan Party and a Medical Group or Ancillary
Service Facility, as the same may from time to time hereafter be modified,
supplemented or amended in accordance with the terms thereof.
"Margin Stock" shall have the meaning provided such term in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect upon
(i) the rights or remedies of the Lenders under any of the Loan Documents, (ii)
the ability of any Loan Party to perform its respective obligations under any
Loan Document to the Lenders or (iii) the performance, business, properties,
prospects, operations or condition (financial or otherwise) of the Borrower or
of the Loan Parties taken as a whole.
"Materials of Environmental Concern" shall mean and include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products.
"Maturity Date" shall mean the earliest of (i) 30 days after the
entry of the Interim Order in the event the Final Order has not been entered by
the Bankruptcy Court or, if it has been entered, the date on which it is stayed,
reversed, modified, amended or vacated, in whole or in part, (ii) the Scheduled
Maturity Date, (iii) the Consummation Date, and (v) the date of termination in
whole of the Loan Commitments pursuant to Section 2.7 or 9.2. The parties
acknowledge that the foregoing shall not preclude the entry of any order of the
Bankruptcy Court approving or authorizing an amendment or modification of this
Agreement or the other Loan Documents or the Interim Order or the Final Order
permitted by Section 11.5 which order shall be acceptable to the Lenders whose
consent is required to approve such amendment or modification under Section
11.5.
"Maximum Revolving Credit Amount" shall mean, at any time (i) prior
to the entry of the Final Order, $2,000,000 and (ii) after the entry of the
Final Order, the Total Commitment.
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"Medical Group" shall mean a physician practice the primary business
of which is to provide Medical Services focusing on musculoskeletal care.
"Medicaid/Medicare Account Debtor" shall mean any Account Debtor
which is (i) the United States of America acting under the Medicaid/Medicare
program established pursuant to the Social Security Act, (ii) any state or the
District of Columbia acting pursuant to Title XIX of the Social Security Act or
(iii) any agent, carrier, administrator or intermediary for any of the
foregoing.
"Medical Services" shall mean medical and health care services
provided to a Patient, including, medical and health care services provided to a
patient and performed by an Affiliated Medical Group which are covered by a
policy of insurance issued by an Insurer, and includes physician services, nurse
and therapist services, hospital services, skilled nursing facility services,
comprehensive outpatient rehabilitation services, home health care services,
residential and out-patient behavioral healthcare services, and medicine or
health care equipment provided by an Affiliated Medical Group to a Patient for a
necessary or specifically requested valid and proper health or medical purpose.
"Multiemployer Plan" shall mean a Plan which is a "Multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"▇▇▇▇▇▇ Note" shall mean the Amended and Restated Promissory Note due
December 31, 2000, issued by the Borrower in favor of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the
same may be amended, supplemented or otherwise modified from time to time.
"Notes" shall mean have the meaning assigned in Section 2.5.
"Notice of Borrowing" shall have the meaning provided in Section 2.3.
"Obligations" shall mean all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owing to the
Agent or any Lender under or in connection with this Agreement or any other Loan
Document, together with the Loans, the Letter of Credit Liability and all other
advances, debts, liabilities, obligations, covenants and duties owing by any
Loan Party to the Agent, any Lender, any Issuing Lender, any Affiliate of any of
them or any Indemnitee, of every type and description, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
or amendment of a Letter of Credit or payment of any draft drawn thereunder,
loan, guaranty, indemnification, or interest rate swap or hedging contract
between any Loan Party and any Lender or any Affiliate of a Lender or in any
other manner, whether direct or indirect (including, those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
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The term "Obligations" includes, all interest, charges, expenses, fees,
attorneys' fees and disbursements and any other sum payable by any Loan Party
under this Agreement or any other Loan Document and all obligations of the
Borrower hereunder to cash collateralize Letter of Credit Liability.
"Orders" shall mean the Interim Order and the Final Order.
"Participant" shall have the meaning provided in Section 11.4(b).
"Patient" shall mean any Person receiving Medical Services from an
Affiliated Medical Group and all Persons legally liable to pay such Affiliated
Medical Group for such Medical Services other than Insurers.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, limited liability company, trust or
other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Petition Date" shall have the meaning set forth in the Recitals
hereto.
"Plan" shall mean any employee benefit plan subject to Title IV of
ERISA, the funding requirements of which, in whole or in part:
(i) were the responsibility of the Borrower or a member of its
ERISA Controlled Group at any time within the five years immediately
preceding the date hereof,
(ii) are currently the responsibility of the Borrower or a
member of its ERISA Controlled Group, or
(iii) hereafter become the responsibility of the Borrower or a
member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Plan of Reorganization" shall mean a proposed plan of reorganization
for the Borrower or any Guarantor whether filed with or confirmed by order of
the Bankruptcy Court.
"Prepetition Agent" shall mean Paribas, in its capacity as Agent for
the Prepetition Lenders under the Prepetition Credit Agreement.
15
"Prepetition Credit Agreement" shall mean the Credit Agreement dated
as of June 30, 1998, among Borrower, the Prepetition Lenders, and the
Prepetition Agent, as amended, supplemented or otherwise modified before the
Petition Date.
"Prepetition Collateral" shall mean all property of Borrower and its
Subsidiaries securing the Prepetition Obligations.
"Prepetition Lenders" shall mean the several banks, financial
institutions, and other entities from time to time parties to the Prepetition
Credit Agreement.
"Prepetition Loan Documents" shall mean the Prepetition Credit
Agreement and the other Loan Documents (as defined in the Prepetition Credit
Agreement).
"Prepetition Obligations" shall mean the "Obligations" as such term
is defined in the Prepetition Credit Agreement.
"Prime Rate" shall mean the rate of interest from time to time
announced by the Agent at the Agent's Office as its prime commercial lending
rate.
"Professional Fees" shall mean fees and expenses of professionals,
including attorneys, accountants, and financial advisors, approved by the
Bankruptcy Court for payment under section 330 or 331 of the Bankruptcy Code.
"Pro Rata Share" as to any Lender shall mean a fraction (expressed as
a percentage), the numerator of which shall be the aggregate amount of such
Lender's Loan Commitment and the denominator of which shall be the Total
Commitment.
"Regulation D" shall mean Regulation D of the Federal Reserve Board
as from time to time in effect and any successor to all or any portion thereof.
"Reportable Event" shall have the meaning set forth in Section
4043(b) of ERISA (other than a Reportable Event as to which the provision of 30
days notice to the PBGC is waived under applicable regulations), or is the
occurrence of any of the events described in Section 4068(a) or 4063(a) of
ERISA.
"Required Lenders" shall mean Lenders holding more than (i) at any
time when any Loan Commitment is outstanding, 50% of the sum of all such Loan
Commitments and (ii) at any time when no Loan Commitment is outstanding, 50% of
the principal amount of the outstanding Loans and Letter of Credit Liability;
provided, however, if there are only two Lenders, the "Required Lenders" shall
mean both such Lenders.
"Requirement of Law" shall mean, as to any Person, the certificate of
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incorporation and by-laws or other organizational or governing documents of such
Person, and all federal, state and local laws, rules and regulations, and all
orders, judgments, decrees or other determinations of any Governmental Authority
or arbitrator, applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.
"Scheduled Maturity Date" shall mean September 30, 1999.
"Security Agreement" shall mean the security agreement, dated as of
the Closing Date, among the Borrower, the Guarantors and the Agent,
substantially in the form attached hereto as Exhibit E, as the same may from
time to time hereafter be modified, supplemented or amended in accordance with
the terms thereof.
"Subsidiary" of any Person shall mean and include (i) any corporation
50% or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned or controlled by such Person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such Person, directly or
indirectly through Subsidiaries, is either a general partner, manager of a
limited liability company or has a 50% or more equity interest at the time.
"Super-Priority Claim" shall mean an allowed claim against Borrower
and each of the Guarantors in each of the Cases, which is an administrative
expense claim having priority over all administrative expenses of the kinds
specified in sections 503(b) or 507(b) of the Bankruptcy Code.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by any Loan Party, any member of any Loan Party's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.
"Total Commitment" shall mean the aggregate amount of all Lenders'
Loan Commitments.
"Transaction Costs" shall mean all costs and expenses paid or payable
by the Borrower relating to the Transactions including, investment banking fees,
financing fees, advisory fees, appraisal fees, legal fees, accounting fees and
other professional fees.
"Transactions" shall mean each of the transactions contemplated by
the Loan Documents.
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"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Agent's and the Secured Parties'
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of limitation.
"Unfunded Benefit Liabilities" shall mean with respect to any Plan at
any time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
--------------------------------------
Section 2.1 Loans. (a) Subject to and upon the terms and conditions
herein set forth, each Lender individually but not jointly agrees at any time
and from time to time during the Loan Period to make loans (collectively,
"Loans") to the Borrower, which Loans shall not exceed in aggregate principal
amount at any time outstanding (x) with respect to Loans outstanding from all
Lenders, the Total Commitment, as such amount may be reduced from time to time
in accordance with Sections 2.7 and 11.4(c) and (y) with respect to Loans
outstanding from any Lender, such Lender's Loan Commitment; provided that (i) at
no time shall any Lender be obligated to make a Loan in excess of such Lender's
Pro Rata Share of the Available Credit at such time and (ii) no Loan shall be
made hereunder to the Borrower if, after giving effect thereto and to the
application of proceeds thereof and to any other actual or planned disbursement
by the Borrower on the date of such Loan (or within the next 2 Business Days,
the Borrower would have available to it in the Collateral Account (Collections)
and the Concentration Account, cash and Cash Equivalents in an aggregate amount
in excess of $100,000.
(b) Each Borrowing shall be in the aggregate minimum amount of
$100,000 or any integral multiple of $50,000 in excess thereof.
Section 2.2 Letters of Credit. (a) Provided that the Borrower is in
compliance with all of the terms and conditions for the making of Loans by the
Lenders, and subject to the terms and conditions herein set forth, the Borrower
shall have the right to request, through a Letter of Credit Request pursuant to
Section 2.2(b), the Issuing Lender to deliver from time to time Letters of
Credit, and the Issuing Lender shall promptly upon such request issue the
requested Letter of Credit, each of which shall be in a form approved by the
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Issuing Lender; provided that (i) the maximum Letter of Credit Liability at any
one time outstanding shall not exceed $100,000, (ii) such Letter of Credit shall
have a maturity not greater than the Scheduled Maturity Date and (iii) such
Letter of Credit shall not contain automatic renewal or "evergreen" provisions.
Each drawing under a Letter of Credit shall be payable in full upon the date
thereof by the Borrower, without notice or demand of any kind. Subject to the
terms and conditions otherwise applicable to advances of the Loans hereunder,
the Borrower may request a Loan hereunder to be used to reimburse the Issuing
Lender for the amount so drawn. The liability of the Borrower to reimburse the
Issuing Lender for the amounts drawn under Letters of Credit shall be included
within the term "Loan" for all purposes of this Agreement, and any amounts so
drawn shall bear interest until paid in full (whether out of the proceeds of a
Loan otherwise permitted hereunder or otherwise) at the Base Rate, subject to
Section 2.6(b). The Borrower's obligation to reimburse the Issuing Lender for
any and all amounts drawn under any Letter of Credit and all interest thereon
shall be secured by the Collateral. The Borrower's obligations to repay any and
all drawings under any Letter of Credit and any and all other amounts payable to
the Issuing Lender, the Agent or any other Lender hereunder shall be absolute,
irrevocable and unconditional under any and all circumstances whatsoever and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, the Agent or any other
Lender (except such as may arise out of the Issuing Lender's, the Agent's or any
other Lender's gross negligence or willful misconduct hereunder) or any other
Person, including, any setoff, counterclaim or defense based upon or arising out
of:
(A) Any lack of validity or enforceability of this Agreement or
any of the other Loan Documents or such Letter of Credit;
(B) Any amendment or waiver of or any consent to or departure
from the terms of the Loan Documents or such Letter of Credit;
(C) The existence of any claim, setoff, defense or other right
which the Borrower or any other Person may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for
whom any such beneficiary or any such transferee may be acting), the
Issuing Lender, the Agent or any other Lender or any other Person,
whether in connection with such Letter of Credit, the Loan Documents or
any unrelated transaction;
(D) Any demand, statement or any other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or
inaccurate in any respect whatsoever or any variations in punctuation,
capitalization, spelling or format of the drafts or any statements
presented in connection with any drawing under such Letter of Credit;
(E) The surrender or impairment of any security for the
performance or observance of any of the terms of such Letter of Credit or
the Loan Documents; and
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(F) The failure, for any reason, of any Lender to fund advances
to the Borrower hereunder for any purpose.
Nothing contained herein shall constitute a waiver of any rights or remedies of
the Borrower against the Issuing Lender, the Agent or any other Lender arising
out of the gross negligence or willful misconduct of the Issuing Lender, the
Agent or any such other Lender.
(b) Whenever the Borrower desires the issuance of a Letter of
Credit, it shall deliver to the Agent and the Issuing Lender a written notice in
substantially the form attached hereto as Exhibit H (a "Letter of Credit
Request") no later than 10:00 A.M. California time at least three Business Days
prior to the proposed date of issuance. Such Letter of Credit Request shall
specify (i) the proposed date of issuance (which shall be a Business Day under
the laws of the jurisdiction of the Issuing Lender), (ii) the face amount of the
Letter of Credit, which shall not be less than $50,000, (iii) the expiration
date of the Letter of Credit, which shall not exceed the Business Day prior to
the Scheduled Maturity Date, (iv) the name and address of the beneficiary of the
Letter of Credit, and (v) a precise description of the documents and the
verbatim text of any certificate to be presented by the beneficiary of such
Letter of Credit which, if presented by such beneficiary prior to the expiration
date of such Letter of Credit, would require the Issuing Lender to make payments
under the Letter of Credit (provided that the Issuing Lender, in its sole
discretion, may require changes in any such documents and certificates). The
Issuing Lender shall notify the Agent of the issuance of each Letter of Credit
promptly following the issuance thereof. Promptly after receipt of notice of the
issuance of a Letter of Credit, the Agent shall notify each Lender and the
Borrower of the issuance thereof and the amount of each Lender's respective
participation therein.
(c) The payment of drafts under any Letter of Credit shall be
made in accordance with the terms of such Letter of Credit and, in that
connection, the Issuing Lender shall be entitled to honor any drafts and accept
any documents presented to it by the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit and believed by the Issuing
Lender to be genuine. The Issuing Lender shall not have any duty to the Borrower
or any Lender to inquire as to the accuracy or authenticity of any draft or
other drawing documents which may be presented to it, but shall be responsible
only to determine that the documents which are required to be presented before
payment or acceptance of a draft under any Letter of Credit have been delivered
and that they comply on their face with the requirements of that Letter of
Credit.
(d) The Borrower, the Lenders, each Issuing Lender and the
Agent agree that, in the event that an Issuing Lender and the Borrower enter
into any letter of credit application or agreement in relation to any Letter of
Credit which contains provisions that are inconsistent with the express
provisions of this Section 2.2, then the provisions of this Section 2.2 shall be
controlling.
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Section 2.3 Notice of Borrowing. (a) Whenever the Borrower desires to
borrow Loans hereunder, it shall give the Agent at the Agent's Office prior to
10:00 A.M., California time, at least one Business Day's prior written notice of
each Loan in substantially the form attached hereto as Exhibit I (a "Notice of
Borrowing") or telephonic notice (promptly confirmed by delivery of a Notice of
Borrowing) of each Loan. Each Notice of Borrowing shall be irrevocable and shall
specify (i) the aggregate principal amount of the requested Loans, and (ii) the
date of Borrowing (which shall be a Business Day).
(b) Promptly after receipt of a Notice of Borrowing, the Agent
shall provide each Lender with a copy thereof and inform each Lender as to its
Pro Rata Share of the Loans requested thereunder.
Section 2.4 Disbursement of Funds. (a) No later than 1:00 P.M.,
California time, on the date specified in each Notice of Borrowing, each Lender
will make available its Pro Rata Share of the Loans requested to be made on such
date, in U.S. dollars and immediately available funds, at the Agent's Office.
After the Agent's receipt of the proceeds of such Loans, the Agent will make
available to the Borrower by depositing (in the Concentration Account or such
other account of the Borrower covered by the Blocked Account Agreement as the
Agent shall be instructed from time to time by the Borrower) the aggregate of
the amounts so made available in the type of funds actually received.
(b) Unless the Agent shall have been notified by any Lender
prior to the date of a Borrowing that such Lender does not intend to make
available to the Agent its portion of the Loans to be made on such date, the
Agent may assume that such Lender has made such amount available to the Agent on
such date and the Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
and the Agent has made such amount available to the Borrower, the Agent shall be
entitled to recover such corresponding amount on demand from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower and the Borrower
shall immediately repay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent, at a rate per annum
equal to the then applicable rate of interest, calculated in accordance with
Section 2.6, for the respective Loans. Nothing herein shall be deemed to relieve
any Lender from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any default by such Lender hereunder. Notwithstanding anything contained
herein or in any other Loan Document to the contrary, the Agent may apply all
funds and proceeds of Collateral available for the payment of any Obligations
first to repay any amount owing by any Lender to the Agent as a result of such
Lender's failure to fund its Loans hereunder.
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Section 2.5 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, each Lender's Loans (including Loans made pursuant to
Section 2.2(a)) shall be evidenced in the case of such Lender's Loans, by a
promissory note (a "Note") duly executed and delivered by the Borrower
substantially in the form of Exhibit F hereto in a principal amount equal to
such Lender's Loan Commitment, with blanks appropriately completed in conformity
herewith. Each Note issued to a Lender shall (x) be payable to the order of such
Lender, (y) be dated the Closing Date, and (z) mature on the Scheduled Maturity
Date.
(b) Each Lender is hereby authorized, at its option, either (i)
to endorse on the schedule attached to its Note (or on a continuation of such
schedule attached to such Note and made a part thereof) an appropriate notation
evidencing the date and amount of each Loan evidenced thereby and the date and
amount of each principal and interest payment in respect thereof, or (ii) to
record such Loans and such payments in its books and records. Such schedule or
such books and records, as the case may be, shall constitute prima facie
evidence of the accuracy of the information contained therein.
Section 2.6 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Loan from the date of the making
of such Loan to but excluding the date that such Loan is paid in full, at a rate
per annum which shall be equal to the sum of the Base Rate in effect from time
to time plus the Applicable Margin, such rate to change as and when the Base
Rate changes, such interest to be computed on the basis of the actual number of
days elapsed over a year of 360 days.
(b) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of all
Loans and, to the extent permitted by law, overdue interest in respect of all
Loans, shall be payable on demand and bear interest at a rate per annum (the
"Default Rate") equal to the sum of two percent (2%) plus the interest rate
otherwise applicable hereunder to such principal amount in effect from time to
time.
(c) Interest on each Loan shall accrue from and including the
date of the Borrowing thereof to but excluding the date of any repayment thereof
(provided that any Loan borrowed and repaid on the same day shall accrue one
day's interest) and shall be payable monthly in arrears on the last day of each
month, and, on any prepayment (on the amount prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
Section 2.7 Voluntary Reduction of Commitments. Upon at least three
Business Day's prior irrevocable written notice (or telephonic notice promptly
confirmed in writing) to the Agent (which notice the Agent shall promptly
transmit to each of the Lenders), the Borrower shall have the right, without
premium or penalty, to permanently reduce each
22
Lender's Pro Rata Share of all or part of the Total Commitment, but such partial
reduction shall be in the minimum aggregate amount of $500,000 or any integral
multiple of $100,000 in excess thereof.
Section 2.8 Prepayments; Payments. (a) The Borrower shall have the
right to prepay (without premium or penalty) the Loans in whole or in part from
time to time on the following terms and conditions: (i) the Borrower shall give
the Agent written notice (or telephonic notice promptly confirmed in writing),
which notice shall be irrevocable, of its intent to prepay the Loans, at least
one Business Day prior to a prepayment, which notice shall specify the amount of
such prepayment, and (ii) each prepayment shall be in an aggregate principal
amount of $100,000 or any integral multiple of $50,000 in excess thereof. The
Agent shall promptly transmit any such notice to each of the Lenders.
(b) If at any time the aggregate principal amount of the
outstanding Loans plus the aggregate Letter of Credit Liability exceeds the
Maximum Revolving Credit Amount, the Borrower will within three Business days
(i) prepay the Loans in an amount necessary to cause the aggregate principal
amount of the outstanding Loans plus the aggregate Letter of Credit Liability to
be equal to or less than the Maximum Revolving Credit Amount, and (ii) if, after
giving effect to the prepayment in full of the Loans the aggregate Letter of
Credit Liability exceeds the Maximum Revolving Credit Amount, deposit into the
Collateral Account (Extraordinary Proceeds) an amount equal to 105% of the
amount by which the aggregate Letter of Credit Liability exceeds the Maximum
Revolving Credit Amount.
(c) Upon the Maturity Date, the Total Commitment shall be
terminated in full and the Borrower shall pay the Loans in full and, except as
the Agent may otherwise agree in writing, if any Letter of Credit remains
outstanding, deposit into the Collateral Account (Collections) an amount equal
to 105% of the amount by which the sum of the aggregate Letter of Credit
Liability exceeds the amount of cash held in the Collateral Account
(Collections), such cash to be remitted to the Borrower only upon the
expiration, cancellation, satisfaction or other termination of such
reimbursement obligations.
Section 2.9 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Notes shall be made to the Agent for the account of the Lenders entitled
thereto not later than 12:00 noon, California time, on the date when due and
shall be made in lawful money of the United States of America in immediately
available funds at the Agent's Office, and any funds received by the Agent after
such time shall, for all purposes hereof (including the following sentence), be
deemed to have been paid on the next succeeding Business Day. Except as
otherwise specifically provided herein, the Agent shall thereafter cause to be
distributed on the date of receipt thereof to each Lender in like funds its Pro
Rata Share of payments so received.
(b) Whenever any payment to be made hereunder or under any Note
shall be
23
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension.
(c) All payments made by the Borrower hereunder and under the
other Loan Documents shall be made irrespective of, and without any reduction
for, any setoff or counterclaims.
Section 2.10 Fees. (a) The Borrower agrees to pay on the Closing Date
to the Agent, for the ratable benefit of each Lender, a closing fee equal to
$50,000.
(b) The Borrower agrees to pay to the Agent, for the ratable
benefit of each Lender, a commitment fee (the "Commitment Fee"), computed at the
per annum rate of ? of 1% on the average daily unused portion (minus any undrawn
amounts on outstanding Letters of Credit) of the Total Commitment, from and
including the Closing Date to the Maturity Date, payable monthly in arrears on
the last day of each month and on the Maturity Date or such earlier date, if
any, on which the Total Commitment shall terminate in accordance with the terms
hereof.
(c) The Borrower agrees to pay to the Agent, for the ratable
benefit of each Lender, with respect to each Letter of Credit, a letter of
credit commitment computed at the per annum rate of 2% of the maximum amount
available from time to time to be drawn under such Letter of Credit, payable in
arrears monthly on the last day of each month, on the Maturity Date, and on any
other date on which the Loans are paid in full and the Total Commitment
permanently terminated; provided, however, that during the continuance of an
Event of Default, such fee shall be increased by 2% per annum and shall be
payable on demand.
(d) The Borrower agrees to pay to the Issuing Lender, with
respect to each Letter of Credit issued by such Issuing Lender, solely for its
account, an administrative fee computed at the per annum rate of 1/4 of 1% of
the maximum amount available from time to time to be drawn under such Letter of
Credit, payable monthly in arrears on the last day of each month, on the
Maturity Date, and on any other date on which the Loans are paid in full and the
Total Commitment permanently terminated. In addition, the Borrower shall pay to
the Issuing Lender, with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary and premium
charges in accordance with such Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or drawing,
as the case may be.
(e) The fees described in clauses (b), (c) and (d) above shall
be computed on the basis of the actual number of days elapsed over a year of 360
days.
Section 2.11 Increased Capital. If any Lender shall have determined
at any time that such Lender shall incur increased costs or reductions in the
amounts received or
24
receivable hereunder with respect to any Loan because of any change since the
date of this Agreement in any applicable law or governmental rule, regulation,
order or request (whether or not having the force of law) (or in the
interpretation or administration thereof and including the introduction of any
new law or governmental rule, regulation, order or request), then from time to
time, upon such Lender's delivering a written demand therefor to the Agent and
the Borrower (with a copy to the Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or Person for
such increased costs or reduction.
Section 2.12 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of the Agent and each Lender, net income and
franchise taxes imposed on the Agent or such Lender by the jurisdiction under
the laws of which the Agent or such Lender is organized or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction in
which such Lender's Domestic Lending Office is located or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
the Agent or any Lender hereunder or under the Notes, the amounts so payable to
the Agent or such Lender shall be increased to the extent necessary to yield to
the Agent or such Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become payable
by the Agent or any Lender as a result of any such failure. The agreements in
this Section 2.12 shall survive the termination of this Agreement and the
payment of the Notes and all other Obligations.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (including each Assignee that
becomes a party to this Agreement pursuant to Section 9.4) agrees that, prior to
the first date on which any payment is due to it hereunder, it will deliver to
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor or other applicable form, as the
case may be, certifying in each case that such Lender is entitled to receive
payments under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes. Each Lender which
delivers to the Borrower and the Agent a Form 1001 or 4224 or other applicable
form pursuant to the preceding sentence
25
further undertakes to deliver to the Borrower and the Agent two further copies
of such letter and Form 1001 or 4224, or successor or other applicable forms, or
other manner of certification, as the case may be, on or before the date that
any such letter or form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent letter and form previously
delivered by it to the Borrower, and such extensions or renewals thereof as may
reasonably be requested by the Borrower, certifying in the case of a Form 1001
or 4224 or other applicable form that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless in any such case an event (including any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such letter or form with respect to it and such Lender advises
the Borrower that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
Section 2.13 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.11 or
2.12(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of the Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of the Lender, cause
such Lender or its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.13 shall
affect or postpone any of the obligations of the Borrower or any of the rights
of any Lender pursuant to Section 2.11 or 2.12(a).
Section 2.14 Participation Purchased by Lenders in the Letter of
Credit Liability. (a) On the date of the issuance of each Letter of Credit, the
Issuing Lender shall be deemed irrevocably and unconditionally to have sold and
transferred to each Lender (other than the Issuing Lender) and each Lender shall
be deemed to have irrevocably and unconditionally purchased and received from
the Issuing Lender, an undivided interest and participation, to the extent of
such Lender's Pro Rata Share in effect from time to time, in such Letter of
Credit and all Letter of Credit Liability with respect thereto. The Loan
Commitment of each Lender hereunder shall include that Lender's share of the
Letter of Credit Liability.
(b) In the event that any reimbursement obligation under this
Agreement is not paid when due to the Issuing Lender with respect to any Letter
of Credit, the Issuing Lender shall promptly notify the Agent to that effect,
and the Agent shall promptly notify each Lender (other than the Issuing Lender)
of the amount of such reimbursement obligation and each Lender other than the
Issuing Lender shall immediately pay to the Agent for distribution to the
Issuing Lender, in lawful money of the United States and in same day funds, an
amount equal to such Lender's Pro Rata Share then in effect of the amount of
such unpaid reimbursement obligation.
26
(c) The obligation of each Lender other than the Issuing Lender
to make payments under subsection (b) above shall be unconditional and
irrevocable and shall be made under all circumstances, including, following the
occurrence of any Default or any Event of Default or any of the circumstances
referred to in Section 2.2.
(d) Prior to the occurrence of any Event of Default, the Agent
shall promptly distribute to each Lender its Pro Rata Share (or other applicable
share as expressly provided herein) of all amounts received on account of the
obligations of the Borrower to repay amounts drawn under any Letter of Credit
(in like funds as received). Following the occurrence of an Event of Default,
all amounts received by the Agent on account of such obligations shall be
disbursed by the Agent as follows:
(i) First, to the payment of expenses incurred by the Agent in
the performance of its duties and enforcement of its rights under the Loan
Documents, including, all costs and expenses of collection, reasonable
attorneys' fees, court costs and foreclosure expenses;
(ii) Then, to the Lenders, pro rata in accordance with their
respective Pro Rata Share until all outstanding reimbursement obligations for
drawing on such Letter of Credit and interest accrued thereon have been paid in
full; and
(iii) Then, and if but only if there remains any available
amount which has not been drawn under such Letter of Credit, to the Agent to
hold as cash collateral in the Collateral Account (Collections) for the
obligation of the Borrower to reimburse any future drawings on such Letter of
Credit, the Borrower hereby granting to the Agent, for the pro rata, pari passu
benefit of the Lenders, a first perfected security interest therein and hereby
irrevocably agreeing that amounts so held may be applied from time to time in
reimbursement of drawings on such Letter of Credit as the same may occur, until
the expiration of such Letter of Credit and payment in full of all amounts due
with respect to any drawing thereon.
(e) If any payment received from the Borrower on account of any
reimbursement obligation with respect to any Letter of Credit and distributed to
a Lender under Section 2.14(d) hereof is thereafter recovered from the Issuing
Lender, each Lender which received such distribution shall, upon demand by the
Agent, repay to the Issuing Lender such Lender's ratable share of the amount so
recovered together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered) of any interest or other amount
paid or payable by the Issuing Lender in respect of the total amount so
recovered.
Section 2.15 Priority and Liens. (a) The Borrower and each of the
Guarantors hereby covenants, represents and warrants that, upon entry of the
Interim Order (and the Final Order, as applicable), the Obligations of the
Borrower and of the Guarantors
27
hereunder and under the other Loan Documents, shall at all times (i) constitute
allowed Super-Priority Claims under section 364(c)(1) of the Bankruptcy Code and
(ii) be secured by a perfected first priority Lien on all Collateral pursuant to
Section 364(d) of the Bankruptcy Code, subject only to (x) the Carve-Out and (y)
valid, perfected, enforceable and nonavoidable Liens of record existing
immediately prior to the Petition Date, but not subject to the Liens under the
Prepetition Loan Documents.
(b) As to all Collateral, including all real property the title
to which is held by the Borrower or any Guarantor, or the possession of which is
held by the Borrower or any Guarantor under a lease, each of the Borrower and
the Guarantors hereby assigns and conveys as security, grants a security
interest in, hypothecates, mortgages, pledges and sets over unto the Agent for
the benefit of the Lenders all of the right, title and interest of the Borrower
and such Guarantor in all of such Collateral, including all owned real property
and in all leasehold interests held under such leases, together in each case
with all of the right, title and interest of the Borrower and each Guarantor in
and to all buildings, improvements, and fixtures related thereto, any lease or
sublease thereof, all general intangibles relating thereto and all proceeds
thereof, to secure all of the Borrower's and such Guarantor's Obligations to the
Agent and the Lenders under this Agreement, the Orders and under the Bankruptcy
Code. Each of the Borrower and each Guarantor acknowledges that, under the
Orders, the Liens granted in favor of the Agent (on behalf of the Lenders) in
all of the Collateral shall be perfected without the recordation of any UCC
financing statements, notices of Lien or other instruments of mortgage or
assignment. Each of the Borrower and each of the Guarantors further agrees that
(i) the Agent shall have all of the rights and remedies set forth in the
Security Agreement and the Orders in respect of the Collateral and (ii) if
requested by the Agent, each of the Borrower and the Guarantors shall enter into
additional security documentation (including, pledge agreements and fee
mortgages) with respect to such Collateral on terms reasonably satisfactory to
the Agent.
(c) The Borrower and the Guarantors acknowledge and agree that,
as adequate protection for the use of the Prepetition Lenders' Cash Collateral,
the use, sale or lease of the Prepetition Collateral (other than such Cash
Collateral), the diminution in value of the Prepetition Lenders' interests in
the Prepetition Collateral and as adequate protection for the priming that is
being effected as set forth in Section 2.15(a) and the imposition of the
automatic stay pursuant to Section 362(a) of the Bankruptcy Code, the
Prepetition Lenders shall, pursuant to the Interim Order (and the Final Order,
as applicable), receive (i) a Super-Priority Claim junior only to the
Super-Priority Claim granted to the Agent and the Lenders, and (ii) a Lien on
the Collateral having a priority immediately junior to the priming and other
Liens granted in favor of the Agent and the Lenders hereunder and under the
other Loan Documents and the Orders. The Liens provided under this Section
2.15(c) shall be subject and subordinate only to the Carve-Out, to the priming
and other Liens granted in favor of the Agent and the Lenders hereunder and
under the other Loan Documents and the Orders and to valid, perfected,
enforceable and nonavoidable Liens of record existing immediately prior to the
Petition Date.
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Section 2.16 Professional Fees. (a) The Lenders agree that so long as
the Maturity Date shall not have occurred and the Agent or the Lenders have not
exercised any remedies under the Loan Documents, the Borrower and the Guarantors
shall be permitted to pay Professional Fees, and the amounts so paid shall not
reduce the Carve-Out provided under Section 2.16(b).
(b) The Liens of the Agent and the Lenders described in Section
2.15(a) shall be subject and subordinate only to (x) following the exercise of
any remedies by the Agent or the Lenders under the Loan Documents or from and
after the Maturity Date, the payment of (as the same may be due and payable)
Professional Fees in the Cases in an aggregate amount not to exceed $500,000
(plus any unpaid Professional Fees previously incurred, accrued or invoiced
before the exercise of such remedies or the Maturity Date, to the extent
subsequently awarded), (y) the payment of unpaid fees pursuant to 28 U.S.C. ?
1930 and any fees payable to the Clerk of the Bankruptcy Court and (z) any
amounts approved by the Bankruptcy Court for payment of retention or stay
bonuses to the Loan Parties' employees up to an aggregate maximum amount of
$1,800,000 (collectively, the "Carve-Out"); provided, however, that the
Carve-Out shall not include, apply or be available for any fees or expenses
incurred by any party, including the Loan Parties or any statutory committee
appointed in any Case, in connection with the initiation or prosecution of any
claims, causes of action, adversary proceedings or other litigation against the
Agent or the Lenders or the Prepetition Lenders, including, challenging the
amount, validity, priority, perfection or enforceability of, or asserting any
defense, counterclaim or offset to the Prepetition Obligations or the
Obligations or the Liens securing such Prepetition Obligations or Obligations.
Section 2.17 Payment of Obligations. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement or any
of the other Loan Documents, the Lenders shall be entitled to immediate payment
of such Obligations without further application to or order of the Bankruptcy
Court.
Section 2.18 No Discharge; Survival of Claims. Each of the Borrower
and the Guarantors agrees that to the extent the Obligations hereunder are not
satisfied in full, (a) the Obligations arising hereunder shall not be discharged
by the entry of a Confirmation Order (and each of the Borrower and the
Guarantors hereby waives any such discharge under Section 1141(d)(4) of the
Bankruptcy Code), (b) the Obligations shall bind each reorganized debtor after
the Case, and (c) the Super-Priority Claims granted to the Agent and the Lenders
under the Interim Order and the Final Order and described in Section 2.15 and
the Liens granted to the Agent under the Interim Order and the Final Order and
described in Section 2.15 shall not be affected in any manner by the entry of a
Confirmation Order.
29
SECTION 3. CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT.
Section 3.1 Conditions Precedent to Initial Loans and Effectiveness
of this Agreement. The effectiveness of this Agreement and the obligation of
each Lender to make its initial Loans is subject to the satisfaction on the
Closing Date of the following conditions precedent:
(a) Loan Documents.
(i) Credit Agreement. Each of the Loan Parties shall have
executed and delivered this Agreement to the Agent.
(ii) Notes. The Borrower shall have executed and delivered to
each of the Lenders the appropriate Notes in the amount, maturity and as
otherwise provided herein.
(iii) Security Agreement. Each of the Loan Parties shall have
executed and delivered to the Agent the Security Agreement.
(iv) Other Documents. Each of the Loan Parties shall have
executed and delivered to the Agent all other Loan Documents to be entered into
by each Loan Party in connection with the Transactions.
(v) Accounts. The Agent shall have established the Collateral
Account (Collections) and the Collateral Account (Extraordinary Proceeds).
(b) Opinions of Counsel. The Agent shall have received legal
opinion, dated the Closing Date, from Katten, Muchin & Zavis, counsel to the
Loan Parties in form and substance satisfactory to the Agent.
(c) Corporate Documents. The Agent shall have received the
Articles of Incorporation of each Loan Party as amended, modified or
supplemented through June 30, 1998, certified to be true, correct and complete
by the Secretary of State of the appropriate jurisdiction as of such date,
together with a good standing certificate from such Secretary of State dated on
or about June 30, 1998.
(d) Secretary's Certificate. The Agent shall have received a
certificate of the Secretary or Assistant Secretary of each Loan Party, dated
the Closing Date, certifying (i) the names and true signatures of the incumbent
officers of such Loan Party authorized to sign the applicable Loan Documents,
(ii) the By-Laws of such Loan Party as in effect on the Closing Date, (iii) the
resolutions of such Loan Party's Board of Directors approving and authorizing
the commencement of the Case and the execution, delivery and performance of all
Loan Documents executed by such Loan Party, (iv) that there have been no changes
in the Articles of Incorporation of such Loan Party since June 30, 1998 and (v)
that such Loan Party is in good standing in its jurisdiction of incorporation as
of the Closing Date.
30
(e) Interim Order. At the time of the making of the initial
Loan, the Interim Order (i) shall be in full force and effect and (ii) shall not
have been stayed, reversed, vacated, rescinded, modified or amended in any
respect and, if the Interim Order is the subject of a pending appeal in any
respect, neither the making of such extension of credit nor the performance by
the Borrower or any of the Guarantors of any of their respective obligations
hereunder or under the other Loan Documents or under any other instrument or
agreement referred to herein or therein shall be the subject of a presently
effective stay pending appeal.
(f) First Day Orders. All orders submitted to the Bankruptcy
Court on or about the Filing Date shall be in form and substance reasonably
satisfactory to the Agent.
(g) Budget. The Agent and the Lenders shall have received the
Budget, in form and substance reasonably satisfactory to the Agent.
(h) Insurance. Evidence satisfactory to the Agent that the
insurance required by the terms of this Agreement and the other Loan Documents
is in full force and effect.
(i) Fees and Expenses. The Agent shall have received, for its
account and for the account of each Lender, as applicable, all Fees and other
fees and expenses due and payable hereunder on or before the Closing Date,
including, the reasonable fees and expenses accrued through the Closing Date of
Weil, Gotshal & ▇▇▇▇▇▇ LLP and any other counsel retained by the Agent.
(j) No Litigation. Except as set forth on Schedule 4.4
delivered in accordance with Section 3.4(a), no law or regulation shall have
been adopted, no order, judgment or decree of any Governmental Authority shall
have been issued, and no litigation (other than the Case) shall be pending or
threatened (i) with respect to the Transactions or the Loan Documents or (ii)
which the Borrower or any Lender shall determine is reasonably likely to have a
Material Adverse Effect.
(k) Additional Matters. The Agent shall have received such
other certificates, opinions, documents and instruments relating to the
Transactions, and such information relating to the Accounts, as may have been
reasonably requested by the Agent or any Lender, and all corporate and other
proceedings and all other related documents (including, all documents referred
to herein and not appearing as exhibits hereto) and all legal matters in
connection with the Transactions shall be satisfactory in form and substance to
the Lenders.
(l) No Violations. The making of the Loans or the issuance of
the Letter of Credit on such date does not violate any Requirement of Law and is
not stayed or enjoined, temporarily, preliminarily or permanently.
31
Section 3.2 Conditions Precedent to All Loans and Letters of Credit.
The obligation of each Lender to make any Loan (including the initial Loans made
on the Closing Date) and of the Issuing Lender to issue any Letter of Credit is
subject to the satisfaction on the date such Loan is made or such Letter of
Credit is issued of the following conditions precedent:
(a) Bankruptcy Court Approval. The Interim Order shall be in
full force and effect and shall not have been stayed, reversed, vacated,
rescinded, modified (other than by the Final Order) or amended in any respect
or, if the date of such requested Loan or Letter of Credit is more than 30 days
after the Closing Date or if the amount of such requested Loan or Letter of
Credit, when added to the amount of all outstanding Loans and Letters of Credit
Liability would exceed $2,000,000, or if less, the maximum amount authorized
under the Interim Order, the Final Order shall have been entered, which Final
Order shall be in full force and effect and shall not have been stayed,
reversed, vacated, rescinded or, without the consent of the Required Lenders,
modified or amended in any respect and, if the Interim Order or the Final Order,
as the case may be, is the subject of a pending appeal in any respect, neither
the making of such Loan, the issuance of such Letter of Credit nor the
performance by any of the Loan Parties of any of their respective obligations
hereunder or under the Loan Documents or under any other instrument or agreement
referred to herein or therein shall be the subject of a then effective stay
pending appeal.
(b) Representations and Warranties. The representations and
warranties contained herein and in the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date) shall be true and correct in all material respects on such date both
before and after giving effect to the making of such Loan and the issuance of
such Letter of Credit.
(c) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date either before or
after giving effect to the making of such Loan or the issuance of such Letter of
Credit.
(d) Notice of Borrowing; Letter of Credit Request. The Agent
shall have received a fully executed Notice of Borrowing or Letter of Credit
Request, as applicable, in respect of the Loans to be made or Letters of Credit
to be issued on such date.
(e) No Litigation. Except as set forth on Schedule 4.4
delivered in accordance with Section 3.4(a), no law or regulation shall have
been adopted, no order, judgment or decree of any Governmental Authority shall
have been issued, and no litigation (other than the Case) shall be pending or
threatened, which the Borrower or the Required Lenders shall determine is
reasonably likely to have a Material Adverse Effect.
32
(f) Material Adverse Change. Since the Closing Date there shall
not have occurred any event, act or condition with respect to the assets,
liabilities, operations, business or financial condition of any Loan Party which
has had, or could have, a Material Adverse Effect.
(g) Budget. The most recent cash receipts and disbursement
budget delivered to the Agent pursuant to Section 5.1(e)(i) shall be
satisfactory to the Lenders.
(h) Other Documentation. The Agent and the Lenders shall have
received such other certificates, opinions and other documentation as each shall
reasonably request.
Section 3.3 Representation; Delivery of Documents. The acceptance of
the proceeds of each Loan and the issuance of each Letter of Credit shall
constitute a representation and warranty by the Borrower to each of the Lenders
that all of the conditions required to be satisfied under this Section 3 in
connection with the making of such Loan or the issuance of such Letter of Credit
have been satisfied. All of the Notes, certificates, agreements, legal opinions
and other documents and papers referred to in this Section 3, unless otherwise
specified, shall be delivered to the Agent for the account of each of the
Lenders and, except for the Notes, in sufficient counterparts for each of the
Lenders.
Section 3.4 Conditions Subsequent. Each of the Loan Parties covenants
and agrees to satisfy each of the following conditions prior to the entry of the
Final Order by the Bankruptcy Court:
(a) Each of the Loan Parties shall have delivered to the Agent
final Schedules to each of the Loan Documents, in each case certified to be
true, complete and correct by an officer of such Loan Party as of the date of
such delivery, and each of such Schedules shall be in form and substance
satisfactory to the Lenders.
(b) Each of the Loan Parties shall have delivered to the Agent
the Articles of Incorporation of such Loan Party as amended, modified or
supplemented through such date of delivery, in each case certified to be true,
correct and complete by the Secretary of State of the appropriate jurisdiction
as of the date of such delivery, together with a good standing certificate from
such Secretary of State dated as of such date.
33
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans, each of the Credit Parties makes the following representations
and warranties, which shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans:
Section 4.1 Corporate Status. Each Loan Party (i) is a corporation
duly organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) subject to entry of the
Final Order (when applicable), has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged or
presently proposes to engage and (iii) has duly qualified and is authorized to
do business and is in good standing as a foreign corporation in every
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified, except where the failure to be so
qualified would not result in a Material Adverse Effect.
Section 4.2 Corporate Power and Authority. Subject to the entry of
the Final Order (when applicable), each Loan Party has the corporate (or other)
power and authority to execute, deliver and carry out the terms and provisions
of each of the Loan Documents to which it is a party and has taken all necessary
corporate (or other) action to authorize the execution, delivery and performance
by it of such Loan Documents. Each Loan Party has duly executed and delivered
each such Loan Document, and each such Loan Document constitutes its legal,
valid and binding obligation, enforceable in accordance with its terms and with
the Interim Order (or the Final Order, when applicable).
Section 4.3 No Violation. Neither the execution, delivery or
performance by any Loan Party of the Loan Documents to which it is a party, nor
compliance by it with the terms and provisions thereof nor the consummation of
the Transactions, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
Governmental Authority (including the Bankruptcy Court), (ii) will conflict or
be inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to this Agreement) upon any of the property or assets of such
Loan Party pursuant to the terms of any indenture, mortgage, deed of trust,
agreement or other instrument to which such Loan Party is a party or by which it
or any of its property or assets is bound or to which it may be subject, or
(iii) will violate any provision of the Articles of Incorporation or By-Laws of
such Loan Party.
Section 4.4 Litigation. Except as set forth on Schedule 4.4 delivered
in accordance with Section 3.4(a), there are no actions, suits or proceedings
pending or, to the knowledge of any Loan Party after due inquiry, threatened (i)
with respect to any of the
34
Transactions or the Loan Documents or (ii) that could, individually or in the
aggregate, result in a Material Adverse Effect.
Section 4.5 Financial Statements; Financial Condition; Budget. The
(i) audited consolidated balance sheets of the Borrower and its subsidiaries as
at March 31, 1998, and the related audited consolidated statements of income and
of cash flows for the period then ended and (ii) unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as at September 30, 1998 and the
related consolidated statements of income and cash flows for the periods then
ended, are complete and correct in all material respects, have been prepared in
accordance with GAAP, and present fairly the consolidated financial position,
results of operations and cash flows of the Borrower and its Subsidiaries as at
the dates and for the periods indicated, except as disclosed in the notes
thereto and, with respect to interim financial statements, subject to normal
year-end adjustments. The Loan Parties have no material liability (contingent or
otherwise) not reflected in such financial statements or in the notes thereto.
The Budget, any cash receipts and disbursement budgets delivered pursuant to
Section 5.1(e)(i) and all other financial projections and related materials and
documents delivered to the Lenders pursuant hereto were prepared in good faith
based upon the facts and assumptions that were reasonable in light of the then
current and foreseeable business conditions and prospects of the Borrower and
represented management's opinion of the Borrower's projected financial
performance based on the information available to the Borrower at the time so
furnished.
Section 4.6 Material Adverse Change. Since the Petition Date, there
has occurred no event, act or condition which has had, or could have, a Material
Adverse Effect.
Section 4.7 Use of Proceeds; Margin Regulations. All proceeds of each
Loan will be used by the Loan Parties only in accordance with the provisions of
Section 5.13. No part of the proceeds of any Loan will be used by any Loan Party
to purchase or carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock. Neither the making of any
Loan nor the use of the proceeds thereof will violate or be inconsistent with
the provisions of Regulations T, U or X of the Federal Reserve Board.
Section 4.8 Governmental Approvals. Except for the Interim Order and
the Final Order, no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
Governmental Authority, or any subdivision thereof, is required on the part of
any Loan Party to authorize, or is required on the part of any Loan Party in
connection with (i) the execution, delivery and performance of any Loan Document
or the consummation of any of the Transactions or (ii) the legality, validity,
binding effect or enforceability of any Loan Document, except those that have
already been duly made or obtained and remain in full force and effect.
Section 4.9 Security Interests and Liens. This Agreement, together
with the Security Agreement and the Orders, creates, as security for the
Obligations, valid and
35
enforceable security interests in and Liens on all of the Collateral, in favor
of the Agent for the ratable benefit of the Lenders having the priorities set
forth herein. There are no Liens of any nature whatsoever on any assets of the
Borrower or the Guarantors other than (A) Liens (including pledges) in favor of
the Prepetition Agent and the Prepetition Lenders (i) under or in connection
with the Prepetition Credit Agreement, (ii) granted under the Interim Order or
the Final Order and this Agreement, and (B) other Liens in existence on the
Petition Date as listed on Schedule 6.3 delivered in accordance with Section
3.4(a) or permitted by Section 6.3. Schedule 6.3 to this Agreement is a complete
and correct list, as of the date of this Agreement of each Lien securing
Indebtedness of any Person (other than the Liens securing the Prepetition
Obligations) and covering any property of any Loan Party, and the aggregate
Indebtedness secured (or that may be secured) by each such Lien and the property
covered by each such Lien is correctly described in Schedule 6.3 delivered in
accordance with Section 3.4(a).
Section 4.10 Tax Returns and Payments. Each Loan Party has filed all
tax returns required to be filed by it and has paid all known taxes and
assessments payable by it which have become due, other than those not yet
delinquent or those that are reserved against in accordance with GAAP which are
being diligently contested in good faith by appropriate proceedings.
Section 4.11 ERISA. Except as set forth on Schedule 4.11 delivered in
accordance with Section 3.4(a), no Loan Party has or has had any Plans. To the
best knowledge of each Loan Party and the members of each ERISA Controlled
Group, (i) no accumulated funding deficiency (as defined in Section 412 of the
IRC or Section 302 of ERISA) or Reportable Event has occurred with respect to
any Plan, (ii) there are no Unfunded Benefit Liabilities under any Plan, (iii)
each Loan Party and each member of its ERISA Controlled Group has complied with
the requirements of Section 515 of ERISA with respect to each Multiemployer Plan
and is not in "default" (as defined in Section 4219(c)(5) of ERISA) with respect
to payments to any Multiemployer Plan, (iv) the aggregate potential total
withdrawal liability and the aggregate potential annual withdrawal liability
payments of such Loan Party and the members of its ERISA Controlled Group as
determined in accordance with Title IV of ERISA as if each Loan Party and the
members of its ERISA Controlled Group had completely withdrawn from all
Multiemployer Plans is not greater than $50,000 and $50,000, respectively, (v)
no Multiemployer Plan is or is likely to be in reorganization (as defined in
Section 4241 of ERISA or Section 418 of the IRC) or is insolvent (as defined in
Section 4245 of ERISA) and (vi) each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the IRC and other federal or
state law. No material liability to the PBGC (other than required premium
payments), the Internal Revenue Service, any Plan or any trust established under
Title IV of ERISA has been, or is expected by any Loan Party or any member of
its ERISA Controlled Group to be, incurred by such Loan Party or any member of
its ERISA Controlled Group. Except as otherwise disclosed on Schedule 4.11
delivered in accordance with Section 3.4(a), neither any Loan Party nor any
member of its ERISA Controlled Group has any contingent liability with respect
to any post-retirement benefit under
36
any "welfare plan" (as defined in Section 3(1) of ERISA), other than liability
for continuation coverage under Part 6 of Title I of ERISA. No lien under
Section 412(n) of the IRC or 302(f) of ERISA or requirement to provide security
under Section 401(a)(29) of the IRC or Section 307 of ERISA has been or is
reasonably expected by any Loan Party or any member of its ERISA Controlled
Group to be imposed on the assets of such Loan Party or any member of its ERISA
Controlled Group. There has been no prohibited transaction (for purposes of
Section 406 of ERISA and Section 4975 of the IRC) or violation of the fiduciary
responsibility rules of ERISA with respect to any Plan.
Section 4.12 Investment Company Act; Public Utility Holding Company
Act. No Loan Party is (x) an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, (y) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (z) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
Section 4.13 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of any Loan Party in writing to the
Agent or any Lender on or prior to the Closing Date, for purposes of or in
connection with this Agreement, the other Loan Documents or the Transactions is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of any Loan Party in writing to the Agent or any Lender will be,
true and accurate in all material respects on the date as of which such
information is dated or furnished and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time. As of the Closing Date, there are no facts, events or
conditions known to any Loan Party which, individually or in the aggregate, have
or reasonably could be expected to have a Material Adverse Effect. The
projections and pro forma financial information included in such information are
based on good faith estimates and assumptions believed by the Persons furnishing
such projections and information to be reasonable at the time made, it being
recognized by the Lenders that such projections as to future events are not to
be viewed as facts and that any actual results during the period or periods
covered by any such projections may differ from the projected results. Except as
expressed herein, the Borrower makes no representations or warranties with
respect to such projections and pro forma financial information.
Section 4.14 Corporate Structure; Capitalization. Schedule 4.14
delivered in accordance with Section 3.4(a) sets forth the number of authorized
and issued shares of capital stock or other ownership interest of each Loan
Party and the registered owner(s) of each Subsidiary of the Borrower. All of
such stock and interests have been duly and validly issued and are fully paid
and non-assessable. Except as set forth on Schedule 4.14 delivered in accordance
with Section 3.4(a), no Loan Party has outstanding any securities convertible
into or exchangeable for its capital stock or other ownership interests nor does
any Loan Party
37
have outstanding any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock or other ownership interest.
Section 4.15 Ownership of the Borrower; Subsidiaries; Collateral. Set
forth on Schedule 4.15 delivered in accordance with Section 3.4(a) is a complete
and accurate list showing, as of the date hereof, all Subsidiaries of the
Borrower and, as to each such Subsidiary, the jurisdiction of its incorporation,
the number of shares of each class of Stock authorized, the number outstanding
on the date hereof and the percentage of the outstanding shares of each such
class owned (directly or indirectly) by the Borrower. No Stock of any Subsidiary
of the Borrower is subject to any outstanding option, warrant, right of
conversion or purchase or any similar right. Except as set forth on Schedule
4.15 delivered in accordance with Section 3.4(a), (i) all of the outstanding
capital stock of each such Subsidiary has been validly issued, is fully paid and
non-assessable and is owned by the Borrower, free and clear of all Liens, (ii)
neither the Borrower nor any such Subsidiary is a party to, or has knowledge of,
any agreement restricting the transfer or hypothecation of any shares of Stock
of any such Subsidiary, other than the Loan Documents and the Prepetition Credit
Agreement and (iii) the Borrower does not own or hold, directly or indirectly,
any capital stock or equity security of, or any equity interest in, any Person
other than such Subsidiaries. The Subsidiaries of the Borrowers identified as
"Inactive" on Schedule 4.15 delivered in accordance with Section 3.4(a) do not
own any material assets and do not conduct any business. Each of the Borrower
and the Guarantors is the sole owner of each item of the Collateral in which it
purports to grant a security interest pursuant to the Security Agreement, having
good title thereto, subject only to Permitted Liens.
Section 4.16 Environmental Matters. (a) (i) Each of the Loan Parties
and its Environmental Affiliates is in compliance in all material respects with
all applicable Environmental Laws, (ii) each of the Loan Parties and its
Environmental Affiliates has all Environmental Approvals required to operate its
business as presently conducted or as reasonably anticipated to be conducted,
(iii) none of the Loan Parties nor any of their Environmental Affiliates has
received any material communication (written or oral), whether from a
Governmental Authority, citizens group, employee or otherwise, that alleges that
such Loan Party or Environmental Affiliate is not in full compliance with all
Environmental Laws, and (iv) to the Borrower's best knowledge after due inquiry,
there are no circumstances that may prevent or interfere with such full
compliance in the future.
(b) There is no Environmental Claim pending or threatened
against any Loan Party or its Environmental Affiliates.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, the release,
emission, discharge or disposal of any Material of Environmental Concern, that
could form the basis of any Environmental Claims against any Loan Party or any
of its Environmental Affiliates.
38
(d) Without in any way limiting the generality of the
foregoing, (i) there are no on-site or (except for properly permitted off-site
disposal sites) off-site locations in which any Loan Party or its Environmental
Affiliate has stored, disposed or arranged for the disposal of Materials of
Environmental Concern, (ii) there are no underground storage tanks located on
property owned or leased by any Loan Party or its Environmental Affiliates,
(iii) there is no friable asbestos in any building, building component,
structure or office space owned or leased by any Loan Party or its Environmental
Affiliates, and (iv) no polychlorinated biphenyls (PCB's) are used or stored at
any property owned or leased by any Loan Party or its Environmental Affiliates.
Section 4.17 Patents, Trademarks, etc. None of the Loan Parties owns,
holds or has obtained any patents, trademarks, servicemarks, trade names,
copyrights or similar rights. No material product, process, method, substance,
part or other material presently sold by or employed by any Loan Party in
connection with such business infringes any patent, trademark, service ▇▇▇▇,
trade name, copyright, license or other right owned by any other Person. There
is not pending or, to the knowledge of any Loan Party, threatened any claim or
litigation against or affecting any Loan Party contesting its right to sell or
use any such product, process, method, substance, part or other material.
Section 4.18 Ownership of Property. Schedule 4.18 delivered in
accordance with Section 3.4(a) sets forth all the real property owned or leased
by each Loan Party and identifies the street address, the current owner (and
current record owner, if different) and whether such property is leased or
owned, and if such property is leased, the length of the lease term. Each Loan
Party has good and marketable fee simple title to or valid leasehold interests
in all of such real property and good title to all of its personal property
subject to no Lien of any kind except Liens permitted hereby. Each Loan Party
enjoys peaceful and undisturbed possession under all of its respective leases.
Section 4.19 Licenses, etc. Each Loan Party has obtained and holds in
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted.
Section 4.20 Compliance With Law and Licensing Requirements; Patient
Trust Funds. Each Loan Party is in compliance with all material laws, rules,
regulations, orders, judgments, writs and decrees relevant to its business. All
state licenses, permits and Medicaid/Medicare provider/billing agreements
necessary to operate the Affiliated Medical Entities' businesses have been
obtained by the Affiliated Medical Entities, are in full force and effect and
are not the subject of any revocation or termination action by the issuing
agencies, except where the failure to obtain such licenses, permits and
Medicaid/Medicare provider/billing agreements has not had, and could not be
expected to have, a Material
39
Adverse Effect. To the best of each Loan Party's knowledge, each Affiliated
Medical Entity has maintained all patient trust funds in separate accounts and
have accounted for such funds at least annually in accordance with all
applicable laws, rules and regulations.
Section 4.21 No Burdensome Restriction; No Defaults. (a) Neither the
Borrower nor any of its Subsidiaries (i) is bound by any contractual obligation
the compliance with which would have a Material Adverse Effect or the
performance of which by the Borrower, either unconditionally or upon the
happening of an event, will result in the creation of a Lien (other than a Lien
granted pursuant to a Loan Document) on the property or assets of any thereof,
or (ii) is subject to any charter or corporate restriction which has a Material
Adverse Effect.
(b) Except as set forth on Schedule 4.21(b) delivered in
accordance with Section 3.4(a), neither the Borrower nor any of its Subsidiaries
is in default under or with respect to any contractual obligation owed by it
and, to the knowledge of the Loan Parties, no other party is in default under or
with respect to any contractual obligation owed to the Borrower or to any of its
Subsidiaries, other than those defaults which in the aggregate would not be
reasonably likely to have a Material Adverse Effect.
(c) No Event of Default or Default has occurred and is
continuing.
(d) There is no Requirement of Law the compliance with which by
any Loan Party would be reasonably likely to have a Material Adverse Effect.
(e) Except for the Prepetition Credit Agreement, no Subsidiary
of the Borrower is subject to any contractual obligation restricting or limiting
its ability to declare or make any dividend payment or other distribution on
account of any shares of any class of its stock or its ability to purchase,
redeem, or otherwise acquire for value or make any payment in respect of any
such shares or any shareholder rights.
Section 4.22 The Interim Order and the Final Order. As of the date of
the making of the initial extension of credit under this Agreement, the Interim
Order has been entered and has not been stayed, amended, vacated, reversed,
rescinded or otherwise modified in any respect. As of the date of the making of
any subsequent extension of credit under this Agreement, the Interim Order or
the Final Order, as the case may be, has been entered and has not been stayed,
amended (except in accordance with the terms of this Agreement), vacated,
reversed, rescinded or otherwise modified (except in accordance with the terms
of this Agreement) in any respect.
SECTION 5. AFFIRMATIVE COVENANTS.
Each of the Loan Parties covenants and agrees that until the Total
Commitment has terminated, and the Obligations are paid in full:
40
Section 5.1 Information Covenants. The Borrower will furnish to each
Lender:
(a) Monthly Financial Statements. Within 45 days after the
close of each month, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such month and the related consolidated statements
of income, cash flow and retained earnings for such month and for the elapsed
portion of the fiscal year ended with the last day of such month, and in each
case setting forth comparative figures for the related periods in the prior
fiscal year occurring after April 1, 1998.
(b) Quarterly Financial Statements. Within 45 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly period and the related consolidated
statements of income, cash flow and retained earnings for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and in each case setting forth comparative figures for the
related periods in the prior fiscal year.
(c) Annual Financial Statements. Within 90 days after the close
of each fiscal year of the Borrower, the consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income, cash flow and
retained earnings for such fiscal year, setting forth comparative figures for
the preceding fiscal year and, with respect to such consolidated financial
statements, certified without qualification by the Auditors, in each case
together with a report stating that in the course of its regular audit of the
consolidated financial statements of the Borrower, which audit was conducted in
accordance with GAAP, the Auditors have obtained no knowledge of any Default or
Event of Default, or if in the opinion of the Auditors such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof.
(d) Compliance Certificates. At the time of the delivery of the
financial statements under clauses (a), (b) and (c) above, a certificate of the
chief financial officer of the Borrower (each a "Compliance Certificate") which
certifies (x) that such financial statements fairly present in all material
respects the financial condition and the results of operations of the Borrower
and its Subsidiaries as at the dates and for the periods indicated, subject, in
the case of interim financial statements, to normal year-end adjustments and (y)
that such officer has reviewed the terms of the Loan Documents and has made, or
caused to be made under his or her supervision, a review in reasonable detail of
the business and condition of the Borrower and its Subsidiaries during the
accounting period covered by such financial statements, and that as a result of
such review such officer has concluded that no Default or Event of Default has
occurred during the period commencing at the beginning of the accounting period
covered
41
by the financial statements accompanied by such certificate and ending on the
date of the related accounting period or, if any Default or Event of Default has
occurred, specifying the nature and extent thereof and, if continuing, the
action the Borrower proposes to take in respect thereof. Such certificate shall
set forth the calculations required to establish (i) whether the Borrower was in
compliance with the provisions of Section 6.1 during and as at the end of the
accounting period covered by the financial statements accompanied by such
certificate, and (ii) in the case of the financial statements delivered pursuant
to clause (b) above, the amount of Excess Cash Flow for the respective fiscal
quarter.
(e) Cash Flow Budgets. (i) On the Closing Date and thereafter
no later than the beginning of every other week, a cash receipts and
disbursements budget for the next succeeding two-week period, a revised weekly
cash receipts and disbursements budget through the end of the succeeding
calendar month, and a comparison of actual cash receipts and disbursements to
the most recent prior budget for the two-week period that ended two weeks before
the current week.
(ii) No later than 10 days before the end of each fiscal month
beginning January 1999, an update to the monthly cash receipts and disbursements
Budget provided under Exhibit A for the two succeeding months and for the next
succeeding fiscal quarter.
(f) Notice of Default or Litigation. Promptly and in any event
within three Business Days after any Loan Party obtains knowledge thereof,
notice of (i) the occurrence of any Default or Event of Default, (ii) any
post-Petition Date litigation or governmental proceeding pending or, to the
knowledge of any Loan Party, threatened against any Loan Party which reasonably
could be expected to have a Material Adverse Effect and (iii) any other
post-Petition Date event, act or condition known to any Loan Party which
reasonably could be expected to have a Material Adverse Effect.
(g) ERISA.
------
(i) As soon as possible and in any event within 10 days
after any Loan Party or any member of its ERISA Controlled Group knows, or has
reason to know, that:
(A) any Termination Event with respect to a Plan has occurred
or will occur, or
(B) any condition exists with respect to a Plan which presents
a material risk of termination of the Plan or imposition of an excise
tax or other liability on any Loan Party or any member of its ERISA
Controlled Group, or
(C) any Loan Party or any member of its ERISA Controlled Group
has applied for a waiver of the minimum funding standard under Section
412 of the IRC or Section 302 of ERISA, or
42
(D) any Loan Party or any member of its ERISA Controlled Group
has engaged in a "prohibited transaction," as defined in Section 4975
of the IRC or as described in Section 406 of ERISA, that is not exempt
under Section 4975 of the IRC and Section 408 of ERISA, or
(E) the aggregate present value of the Unfunded Benefit
Liabilities under all Plans has in any year increased by $50,000 or to
an amount in excess of $50,000, or
(F) any condition exists with respect to a Multiemployer Plan
which presents a material risk of a partial or complete withdrawal (as
described in Section 4203 or 4205 of ERISA) by any Loan Party or any
member of its ERISA Controlled Group from a Multiemployer Plan, or
(G) any Loan Party or any member of its ERISA Controlled Group
is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan, or
(H) a Multiemployer Plan is in "reorganization" (as defined in
Section 418 of the IRC or Section 4241 of ERISA) or is "insolvent" (as
defined in Section 4245 of ERISA), or
(I) the potential withdrawal liability (as determined in
accordance with Title IV of ERISA) of any Loan Party and the members of
its ERISA Controlled Group with respect to all Multiemployer Plans has
in any year increased by $50,000 or to an amount in excess of $100,000,
or
(J) there is an action brought against any Loan Party or any
member of its ERISA Controlled Group under Section 502 of ERISA with
respect to its failure to comply with Section 515 of ERISA,
a certificate of the president or chief financial officer of the relevant Loan
Party setting forth the details of each of the events described in clauses (A)
through (J) above as applicable and the action which the relevant Loan Party or
the applicable member of its ERISA Controlled Group proposes to take with
respect thereto, together with a copy of any notice or filing from the PBGC or
which may be required by the PBGC or other agency of the United States
government with respect to each of the events described in clauses (A) through
(J) above, as applicable.
(ii) As soon as possible and in any event within two Business
Days after the receipt by any Loan Party or any member of its ERISA Controlled
Group of a
43
demand letter from the PBGC notifying such Loan Party or such member of its
ERISA Controlled Group of its final decision finding liability and the date by
which such liability must be paid, a copy of such letter, together with a
certificate of the president or chief financial officer of such Loan Party
setting forth the action which such Loan Party or such member of its ERISA
Controlled Group proposes to take with respect thereto.
(h) SEC Filings. Promptly upon transmission thereof, copies of
all regular and periodic financial information, proxy materials and other
information and reports, if any, which any Loan Party shall file with the
Securities and Exchange Commission or any governmental agencies substituted
therefor or which any Loan Party shall send to its stockholders.
(i) Bankruptcy Court and Other Filings. Promptly after they are
available, to counsel for the Agent, a copy of each pleading, motion,
application, or statement of information filed by or on behalf of any Loan Party
with the Bankruptcy Court or the United States Trustee in any Case or
distributed by or on behalf of any Loan Party to any committee appointed in any
Case under section 1102 of the Bankruptcy Code, and the Loan Parties shall
include counsel for the Agent on any "Special Notice List" or other similar list
of parties to be served with papers in the Cases.
(j) Environmental. Promptly and in any event within five
Business Days after the existence of any of the following conditions, a
certificate of the chief executive officer or chief financial officer of any
Loan Party specifying in detail the nature of such condition and such Loan
Party's or Environmental Affiliate's proposed response thereto: (i) the receipt
by such Loan Party or any of its Environmental Affiliates of any communication
(written or oral), whether from a Governmental Authority, citizens group,
employee or otherwise, that alleges that such Loan Party or Environmental
Affiliate is not in compliance in any material respect with applicable
Environmental Laws, (ii) any Loan Party or any of its Environmental Affiliates
shall obtain actual knowledge that there exists any Environmental Claim pending
or threatened against any Loan Party or such Environmental Affiliate that could
reasonably be expected to have a Material Adverse Effect, or (iii) any release,
emission, discharge or disposal of any Material of Environmental Concern that
could form the basis of any Environmental Claim against any Loan Party or any of
its Environmental Affiliates that could reasonably be expected to have a
Material Adverse Effect.
(k) Other Information. From time to time, such other
information or documents (financial or otherwise) as any Lender may reasonably
request.
Section 5.2 Books, Records, Inspections and Collateral Audits. The
Loan Parties shall, and shall cause each of their respective Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. The Loan
Parties shall, and shall cause each of their respective Subsidiaries to,
44
permit officers and designated representatives of any Lender to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries, and
examine the books of record and account of the Borrower or any of its
Subsidiaries, and discuss the affairs, finances and accounts of the Borrower or
any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all upon reasonable notice and at such
reasonable times as such Lender may desire. The Loan Parties shall, and shall
cause each of their respective Subsidiaries to, permit the Agent (at the
instruction of the Required Lenders) or its representatives or agents, at the
expense of the Borrower, to conduct audits to inspect, review and evaluate the
Collateral.
Section 5.3 Maintenance of Insurance. The Loan Parties shall, and
shall cause each of their respective Subsidiaries to, (a) maintain with
financially sound and reputable insurance companies insurance on itself and its
properties in at least such amounts and against at least such risks as are
customarily insured against in the same general area by companies engaged in the
same or a similar business, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Closing Date, and
(b) furnish to the Agent from time to time, upon written request, the policies
under which such insurance is issued, certificates of insurance and such other
information relating to such insurance as the Agent may reasonably request.
Section 5.4 Taxes. (a) Except as required by the Bankruptcy Code or
by an order of the Bankruptcy Court, the Loan Parties shall pay or cause to be
paid, and shall cause each of their respective Subsidiaries to pay or cause to
be paid, when due, all taxes, charges and assessments and all other lawful
claims required to be paid by the Loan Parties or such Subsidiaries, except (i)
as contested in good faith and by appropriate proceedings diligently conducted,
if adequate reserves have been established with respect thereto in accordance
with GAAP, and (ii) where non-payment involves the danger of the sale,
forfeiture or loss of any property covered thereby.
(b) The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, file or consent to the filing of any consolidated
tax return with any Person (other than the Borrower and its Subsidiaries).
Section 5.5 Conduct of Business. Each of the Loan Parties shall (a)
conduct its business in the ordinary course and consistent with past practice;
(b) use, its reasonable efforts, in the ordinary course and consistent with past
practice, to (i) subject to Section 6.4, preserve its business and the goodwill
and business of the customers, advertisers, suppliers and others having business
relations with such Loan Party to the extent not inconsistent with this
Agreement, and (ii) keep available the services and goodwill of its present
employees; (c) preserve, all registered patents, trademarks, trade names,
copyrights and service marks with respect to its business; and (d) perform and
observe all the terms, covenants and conditions required to be performed and
observed by it under its contractual obligations (including, to pay all rent and
other charges payable under any lease and all debts and other obligations as
45
the same become due), and do all things necessary to preserve and to keep
unimpaired its rights under such contractual obligations; provided, however,
that, in the case of each of clauses (a) through (d), such Loan Party shall not
be deemed in default of this Section 5.5 if it fails to take any action required
hereby and if all such failures in the aggregate would not be reasonably likely
to have a Material Adverse Effect; provided, further, that such Loan Party will
comply with all orders of the Bankruptcy Court.
Section 5.6 Compliance with Law. The Loan Parties shall, and shall
cause each of their respective Subsidiaries to, comply in all material respects
with all applicable laws, rules, statutes, regulations, decrees and orders of,
and all applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, including, ERISA and all Environmental Laws.
Section 5.7 Performance of Obligations. Except as required by the
Bankruptcy Code or by an order of the Bankruptcy Court, the Loan Parties shall,
and shall cause each of their respective Subsidiaries to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement,
debt instrument, lease, undertaking and contract by which it or any of its
properties is bound or to which it is a party.
Section 5.8 Maintenance of Properties. The Loan Parties shall, and
shall cause each of their respective Subsidiaries to, ensure that its properties
used or useful in its business are kept in good repair, working order and
condition, normal wear and tear and obsolescence excepted.
Section 5.9 Collateral Accounts and Cash Management System. (a) The
Agent shall possess sole dominion and control over the Collateral Accounts. As
long as any of the Obligations remain unpaid or any of the Loan Commitments are
outstanding, neither the Borrower, the Guarantors nor any Person or entity
claiming by, through or under the Borrower or the Guarantors shall have any
control over the use of, or any right to effect a withdrawal from, any of the
Collateral Accounts. All amounts in the Collateral Accounts shall be applied by
the Agent as specified in Section 5.9(e).
(b) The Loan Parties shall maintain a cash management system
acceptable to the Agent, which cash management system shall provide (i) for all
proceeds of Accounts (excluding Amounts Due From Affiliated Physicians) received
by any Loan Party to be deposited in the Concentration Account. The Loan Parties
shall enter into a Blocked Account Agreement covering the Concentration Account
within 30 days after the Closing Date.
(c) Upon receipt by any Loan Party of Asset Sales Proceeds or
Amounts Due From Affiliated Physicians, such Loan Party shall promptly deposit
such proceeds or amounts in the Collateral Account (Extraordinary Proceeds).
46
(d) Upon the occurrence and during the continuance of any
Default or Event of Default, the Agent may (and shall at the request of the
Required Lenders) deliver written notice pursuant to the Blocked Account
Agreement instructing the applicable bank party to such Blocked Account
Agreement to wire on a daily basis all available funds in the Concentration
Account to the Collateral Account (Collections). All funds on deposit in the
Collateral Accounts shall be applied or held in the manner specified in Section
5.9(e).
(e) The Loan Parties agree that all available funds in the
Collateral Account (Collections) may be applied first, pro rata, to the
outstanding principal amount of the Loans then outstanding, and second to any
other Obligations then due and payable. If there are no Loans outstanding and no
other Obligations then due and payable, then the funds in the Collateral Account
(Collections) shall be retained in the Collateral Account (Collections) to the
extent necessary to collateralize the Letter of Credit Liability then
outstanding and the Prepetition Obligations; provided, however, on any Business
Day that any funds are on deposit in the Collateral Account (Collections) and no
Default or Event of Default shall have occurred and be continuing or, if a
Default or Event of Default shall have occurred and is continuing, the Agent
shall not have either (i) delivered a Blocking Notice to the Borrower or (ii)
exercised any of the rights or remedies provided in Section 9.2, the Borrower
may direct the Agent to (and the Agent shall) disburse such funds in the
Collateral Account (Collections) to the Concentration Account. After the
occurrence and during the continuance of an Event of Default, all available
funds in the Collateral Account (Extraordinary Proceeds) may be (and shall be at
the direction of the Required Lenders) applied to the Obligations then due and
payable. All amounts held in the Collateral Account (Extraordinary Proceeds), to
the extent not applied to the Obligations, shall be held as Collateral for the
Obligations and the Prepetition Obligations, and may not be utilized by any of
the Loan Parties.
Section 5.10 Licensure; Medicaid/Medicare Cost Reports. The Borrower
shall cause each relevant Loan Party to maintain all necessary provider numbers
and licenses and take any steps necessary to comply with any such new or
additional requirements that may be imposed on providers of medical products and
services. If required, all Medicaid/Medicare cost reports will be properly filed
by each relevant Loan Party.
Section 5.11 Year 2000. Each Loan Party shall take all action
necessary to ensure that computer hardware and software used in its business and
operations will, in the case of dates or time periods occurring after December
31, 1999, function at least as effectively as in the case of dates or time
periods prior to January 1, 2000. At the request of the Agent or any Lender, the
Borrower shall provide the Agent or such Lender, as the case may be, with
assurance reasonably acceptable to the Agent or such Lender, as the case may be,
of such Loan Party's year 2000 capability.
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SECTION 6. NEGATIVE COVENANTS.
Each of the Loan Parties covenants and agrees that unless otherwise
consented to in writing by the Required Lenders, until the Total Commitment has
terminated, and the Obligations are paid in full:
Section 6.1 Financial Covenants. (a) The Borrower shall not permit
its Consolidated EBITDA for any fiscal month set forth below to be less than the
amount set forth opposite such month:
Month Amount
----- ------
January, 1999 $575,655
February, 1999 $528,020
March, 1999 $462,922
April, 1999 $562,136
May, 1999 $562,136
June, 1999 $562,136
July, 1999 $638,636
August, 1999 $562,136
September, 1999 $562,136
(b) Adjusted Cash Balance. The Borrower shall not permit its
Adjusted Cash Balance on the last day of any fiscal month set forth below to be
less than the amount set forth opposite such month:
Month Amount
----- ------
January, 1999 $1,117,685
February, 1999 $ 841,286
March, 1999 $ 353,848
April, 1999 $ 330,598
May, 1999 $ 560,514
June, 1999 $ 768,895
July, 1999 $ 1,091,856
August, 1999 $ 1,459,815
September, 1999 $ 1,742,275
Section 6.2 Indebtedness. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, create, incur, assume,
suffer to exist or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, other than:
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(a) Indebtedness hereunder and under the other Loan Documents;
(b) Existing Indebtedness;
(c) Indebtedness permitted under Section 6.6;
(d) Indebtedness of (i) the Borrower owing to any Guarantor and
(ii) any Guarantor owing to the Borrower or any other Guarantor.
Section 6.3 Liens. The Loan Parties shall not, and shall not permit
any of their respective Subsidiaries to, create, incur, assume or suffer to
exist, directly or indirectly, any Lien on any of its property or assets
(whether tangible or intangible and including, any document or instrument in
respect of goods or Accounts) now owned or hereafter acquired, other than:
(a) Liens existing on the Petition Date and set forth on
Schedule 6.3 delivered in accordance with Section 3.4(a);
(b) Liens securing taxes, assessments or governmental charges
or levies; provided, however, that (i) neither the Loan Parties nor any of their
Subsidiaries are in default in respect of any payment or other obligation with
respect thereto or (ii) (x) the Loan Parties and their Subsidiaries are in good
faith and by appropriate proceedings diligently contesting such obligation and
adequate reserves therefor have been established on the books of the Loan
Parties or such Subsidiaries in conformity with GAAP and (y) such nonpayment
does not involve any danger of the sale, forfeiture or loss of any property
covered thereby;
(c) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
any of the Loan Parties or any of their Subsidiaries in the ordinary course of
business which secure its obligations to such Person; provided, however, that
(i) the Loan Parties or their Subsidiaries, as the case may be, are not in
default with respect to such payment obligation to such Person, or (ii) (x) the
Loan Parties or Subsidiaries, as the case may be, are in good faith and by
appropriate proceedings diligently contesting such obligation and adequate
reserves therefor have been established on the books of such Loan Party or such
Subsidiary in conformity with GAAP and (y) such nonpayment does not involve any
danger of the sale, forfeiture or loss of any property covered thereby;
(d) Liens (other than any Lien imposed by ERISA or pursuant to
any Environmental Law) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social
49
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases (solely with respect to tangible assets located
on the premises, government contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money)); provided, however, that all such Liens in the aggregate have no
Material Adverse Effect.
(e) Easements, rights-of-way, zoning and similar restrictions
and other similar charges or encumbrances not interfering with the ordinary
conduct of the business of any Loan Party and which do not detract materially
from the value of the property to which they attach or impair materially the use
thereof by any Loan Party or materially adversely affect the security interests
of the Agent or the Lenders therein;
(f) Liens granted to the Agent for the benefit of the Lenders
pursuant to the Loan Documents; and
(g) Leases or subleases of real estate granted to others not
interfering in any material respect with the business of the Loan Parties or any
of their Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement.
Section 6.4 Restriction on Fundamental Changes.
-----------------------------------
(a) The Loan Parties shall not, and shall not permit any of
their respective Subsidiaries to (or apply to the Bankruptcy Court for authority
to do so, except in connection with the Plan of Reorganization), directly or
indirectly, by operation of law or otherwise, merge or consolidate with any
Person, or liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), discontinue its business or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or any
substantial part of its business or property, whether now or hereafter acquired,
except as otherwise permitted under Section 6.5.
(b) The Loan Parties shall not, and shall not permit any of
their respective Subsidiaries to (or apply to the Bankruptcy Court for authority
to do so, except in connection with the Plan of Reorganization), (i) acquire by
purchase or otherwise any property or assets of, or stock or other evidence of
beneficial ownership of, any Person, except purchases of intellectual property,
inventory, equipment, materials and supplies in the ordinary course of the Loan
Parties' or such Subsidiary's business, (ii) create any Subsidiary, or (iii)
enter into any partnership or joint venture.
(c) The Loan Parties shall not and shall not permit any of
their respective Subsidiaries to (or apply to the Bankruptcy Court for authority
to do so, except in connection with the Plan of Reorganization), amend its
articles of incorporation (or other formation document) or by-laws, in any
manner.
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Section 6.5 Sale of Assets. The Loan Parties shall not, and shall not
permit any of their respective Subsidiaries to, convey, lease, sell, transfer or
otherwise dispose of (or agree to do so at any future time) all or any part of
their respective property or assets, except sales of inventory in the ordinary
course of business.
Section 6.6 Contingent Obligations. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, create or become or be
liable with respect to any Contingent Obligation, except:
(a) pursuant to the Loan Documents; and
(b) Contingent Obligations which are in existence on the
Petition Date and which are set forth on Schedule 6.6 delivered in accordance
with Section 3.4(a).
Section 6.7 Capital Expenditures. None of the Loan Parties shall make
or incur (or commit to make or incur) and shall permit any of their respective
Subsidiaries to make or incur (or commit to make or incur) Capital Expenditures
in fiscal year 1999 which exceed, in the aggregate, (i) $25,000 or (ii) to the
extent the Borrower delivers a certificate to the Agent certifying that such
Capital Expenditures are expressly required under a Management Services
Agreement and setting forth a detailed written summary of the nature and amount
of such expenditures, $600,000.
Section 6.8 Advances, Investments and Loans. The Loan Parties shall
not, and shall not permit any of their respective Subsidiaries to, lend money or
credit or make advances to any Person, or directly or indirectly purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to any Person, except that the following shall be
permitted:
(a) accounts receivable owned by any Loan Party, if created in
the ordinary course of the business of such Loan Party and payable or
dischargeable in accordance with customary trade terms;
(b) loans and advances among the Borrower and the Guarantors in
the ordinary course of business;
(c) advances to Affiliated Medical Entities under the relevant
Management Services Agreements;
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(d) Cash Equivalents;
(e) existing investments and Contingent Obligations outstanding
on the Petition Date described on Schedule 6.6 delivered in accordance with
Section 3.4(a); and
(f) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course of
business.
Section 6.9 Transactions with Affiliates. The Loan Parties shall not,
and shall not permit any of their respective Subsidiaries to, enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate, other than on terms and conditions
substantially as favorable to the Loan Party or such Subsidiary as would be
obtainable at the time in a comparable arm's-length transaction with a Person
other than an Affiliate.
Section 6.10 Limitation on Voluntary Payments; Management Services
Agreements. The Loan Parties shall not, and shall not permit any of their
respective Subsidiaries to, (a) enter into any Management Services Agreement or
(b) amend, modify or waive, or permit the amendment, modification or waiver of,
any provision of any Management Services Agreement.
Section 6.11 Changes in Business. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, enter into any
business which is substantially different from that conducted by the Loan
Parties or any such Subsidiary on the Petition Date.
Section 6.12 Certain Restrictions. The Loan Parties shall not, and
shall not permit any of their respective Subsidiaries to, enter into any
agreement which restricts the ability of the Loan Parties or any of their
Subsidiaries to (a) enter into amendments, modifications or waivers of the Loan
Documents, (b) create, incur, assume, suffer to exist or otherwise become liable
with respect to any Indebtedness, or (c) pay any dividend or other distribution.
Section 6.13 Sale and Leasebacks. The Loan Parties shall not, and
shall not permit any of their Subsidiaries to, become liable, directly or
indirectly, with respect to any lease, whether an operating lease or a
Capitalized Lease, of any property (whether real or personal or mixed) whether
now owned or hereafter acquired, (i) which the Loan Party or such Subsidiary has
sold or transferred or is to sell or transfer to any other Person, or (ii) which
the Loan Party or such Subsidiary intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
the Loan Party or such Subsidiary to any other Person in connection with such
Lease.
52
Section 6.14 Sale of Accounts. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries or any Affiliated Medical Entity
to, sell, with or without recourse, or discount or otherwise sell for less than
the face value therefor, any of their notes or Accounts (or any portion
thereof), except for compromises made in the ordinary course of business.
Section 6.15 Use of Proceeds. The Borrower and the other Loan Parties
shall not, and shall not permit any of their Subsidiaries, to use the proceeds
of the Loans for purposes other than working capital purposes and other general
corporate purposes of the Loan Parties as detailed in the Budget.
Notwithstanding anything in this Agreement to the contrary, no Loans, no
proceeds of the Prepetition Collateral or the Collateral and no Cash Collateral
may be used by the Loan Parties or any other Person (including any statutory
committee appointed in any Case) to object to or contest in any manner, or raise
any defenses to, the validity, extent, perfection, priority or enforceability of
the Prepetition Obligations or the Obligations or any Liens with respect
thereto, or any other rights or interests of the Agent or the Lenders, or the
Prepetition Lenders, or to assert any claims or causes of action, including any
actions under chapter 5 of the Bankruptcy Code, against the Agent or the Lenders
or the Prepetition Lenders.
Section 6.16 Chapter 11 Claims. The Loan Parties shall not, and shall
not permit any of their respective Subsidiaries to incur, create, assume, suffer
to exist or permit any other Super-Priority Claim which is pari passu with or
senior to the claims of the Agent and the Lenders against the Borrower and the
Guarantors hereunder, except for the Carve-Out.
Section 6.17 Dividends; Capital Stock. The Loan Parties shall not,
and shall not permit any of their respective Subsidiaries to declare or pay,
directly or indirectly, any dividends or make any other distribution or payment,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of capital stock (or
any options, warrants, rights or other equity securities or agreements relating
to any capital stock), or set apart any sum for the aforesaid purposes, provided
that any Guarantor may pay dividends to the Borrower or to any other Guarantor.
Section 6.18 No Speculative Transactions. The Loan Parties shall not
and shall not permit any of their respective Subsidiaries to engage in any
speculative transaction or in any transaction involving commodity options or
futures contracts except for the sole purpose of hedging in the normal course of
business and consistent with industry practices.
Section 6.19 Maintenance of Ownership of Subsidiaries. The Loan
Parties shall not sell or otherwise dispose of any shares of stock or any stock
equivalents of any Subsidiary or permit any Subsidiary to issue, sell or
otherwise dispose of any shares of its stock or any stock equivalent or the
stock or any stock equivalent of any other Subsidiary.
53
Section 6.20 Accounting Changes. The Loan Parties shall not make, nor
shall they permit any of their Subsidiaries to make, any change in accounting
treatment or reporting practices or tax reporting treatment, except as required
by GAAP or applicable law and disclosed to the Lenders and the Agent.
SECTION 7. GUARANTY
Section 7.1 Guaranty. (a) Each of the Guarantors unconditionally and
irrevocably guarantees the due and punctual payment and performance by the
Borrower of the Borrower's Obligations. Each of the Guarantors further agrees
that such Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and it will remain bound upon this guaranty
notwithstanding any extension or renewal of any of such Obligations. The
Obligations of the Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The Obligations of the Guarantors hereunder
shall not be affected by (i) the failure of the Agent or any Lender to assert
any claim or demand or to enforce any right or remedy against the Borrower or
any other Guarantor under the provisions of this Agreement or any other Loan
Document or otherwise; (ii) any extension or renewal of any provision hereof or
thereof, (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or any
Lender to exercise any right or remedy against any other Guarantor; or (vi) the
release or substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agent
or any Lender to any security held for payment of the Obligations or to any
balance of any deposit, account or credit on the books of the Agent or any
Lender in favor of the Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it
might have based on a failure to remain informed of the financial condition of
the Borrower and of any other Guarantor and any circumstances affecting the
ability of the Borrower to perform under this Agreement.
54
(e) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations or any
other instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Lenders makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(f) Subject to the provisions of Section 9.1, upon the
Obligations becoming due and payable (by acceleration or otherwise), the Lenders
shall be entitled to immediate payment of such Obligations by each Guarantor
upon written demand by the Agent, without further application to or order of the
Bankruptcy Court.
Section 7.2 No Impairment of Guaranty. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the generality of the foregoing, the obligations of the Guarantors
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement or any other agreement, by any waiver or
modification of any provision thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the Obligations are paid in full.
Section 7.3 Subrogation. Upon payment by any Guarantor of any sums to
the Agent or any Lender hereunder, all rights of such Guarantor against the
Borrower arising as a result thereof by way of right of subrogation or
otherwise, shall in all respects be subordinate and junior in right of payment
to the prior final and indefeasible payment in full of all the Obligations. If
any amount shall be paid to such Guarantor for the account of the Borrower, such
amount shall be held in trust for the benefit of the Agent and the Lenders and
shall forthwith be paid to the Agent and the Lenders to be credited and applied
to the Obligations, whether matured or unmatured.
SECTION 8. POWER OF ATTORNEY
Except as required by the Bankruptcy Code or by an order of the
Bankruptcy
55
Court, each Loan Party hereby irrevocably constitutes and appoints the Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Loan Party and in the name of such Loan Party or in its own
name, from time to time in the Agent's discretion, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action by any
technologically available means, which may include, any form of electronic data
transmission, and to execute in any appropriate manner, which may include, using
any symbol that the Agent may adopt to signify such Loan Party's intent to
authenticate, any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement. Without in any way
affecting the validity of any action taken pursuant to the foregoing, the Agent
hereby agrees to provide the Loan Parties three (3) days' prior written notice
prior to exercising any powers pursuant to the foregoing power of attorney. This
power of attorney is a power coupled with an interest and shall be irrevocable.
SECTION 9. EVENTS OF DEFAULT
Section 9.1 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. The Borrower shall default in the
payment when due of any principal or interest on the Loans or in the payment
when due of any Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any representation or
warranty made by any Loan Party herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.
(c) Breach of Covenants.
--------------------
(i) Any Loan Party shall fail to perform or observe any
agreement, covenant or obligation arising under Sections 3.4, 5.1(i), 5.5 (with
respect to the existence of the Borrower) or Section 6.
(ii) Any Loan Party shall fail to perform or observe any
agreement, covenant or obligation arising under this Agreement (except those
described in subsections (a),
56
(b) and (c)(i) above) or any other Loan Document, and such failure shall
continue for 30 days (or, in the case of a breach under any other Loan Document,
such longer grace period provided under such Loan Document) after the earlier to
occur of (i) the provision of notice by the Agent of such failure or (ii) actual
knowledge by the any Loan Party of such failure.
(d) Certain Bankruptcy Events.
--------------------------
(i) Any Case is dismissed or converted to a case under chapter
7 of the Bankruptcy Code, or a trustee is appointed in any Case; or
(ii)(A) An order of the Bankruptcy Court shall be entered
granting or there shall arise another Super-Priority Claim or Lien pari passu
with or senior to that granted (x) to the Agent and the Lenders pursuant to this
Agreement and the Orders, or (y) to the Prepetition Lenders pursuant to the
Orders (other than pursuant to clause (x) above), (B) an order of a court of
competent jurisdiction shall be entered reversing, staying, vacating or
rescinding either of the Orders, (C) an order of a court of competent
jurisdiction shall be entered amending, supplementing or otherwise modifying
either of the Orders, (D) the Prepetition Lenders' Cash Collateral shall be used
in a manner inconsistent with the Orders, or (E) any Loan Party shall fail to
comply with the terms of either of the Orders in any material respect; or
(iii) An order of the Bankruptcy Court shall be entered in any
of the Cases appointing a responsible officer or an examiner having enlarged
powers relating to the operation of the business of any Loan Party (powers
beyond those set forth under sections 1106(a)(3) and (4) of the Bankruptcy Code)
under section 1106(b) of the Bankruptcy Code; or
(iv) The Borrower or any Guarantor shall make any payments of
Indebtedness relating to pre-Petition Date obligations other than (A) as
permitted under the Orders, (B) pre-petition wages and benefits and other
employee-related claims which are payable with the approval of the Bankruptcy
Court and sales tax and employee withholding taxes which have been collected by
any Loan Party but not yet paid, (C) as otherwise permitted under this
Agreement, payment of certain other pre-Petition Date claims, including payments
to physician providers, that are authorized by the Bankruptcy Court pursuant to
orders described in Section 3.1(f), or (D) in connection with the assumption of
any contract or lease approved by the Bankruptcy Court, in each case to the
extent consistent with the Budget; or
(v) The entry of an order granting relief from the automatic
stay so as to allow a third party to proceed against any asset or assets of the
Borrower or any Guarantor which have a value in excess of $200,000 in the
aggregate; or
57
(vi) The filing of any pleading by the Borrower or any
Guarantor seeking, or otherwise consenting to, any of the matters set forth in
paragraphs (d)(i) through (v); or
(vii) There shall occur any event after the Petition Date that
results in a Material Adverse Effect; or
(viii) The entry of the Final Order shall not have occurred
within 30 days after the Petition Date; or
(ix) Any Loan Party shall support (whether by way of any motion
or other pleading filed with the Bankruptcy Court or any other writing to
another party-in-interest executed by or on behalf of a Loan Party or by oral
argument) any other Person's opposition to any motion made in the Bankruptcy
Court by the Agent or the Lenders seeking confirmation of the amount or
enforceability of the Prepetition Obligations or the validity, perfection or
enforceability of the liens or security interests granted in connection
therewith; or
(x) Any Loan Party shall seek to, or shall support (whether by
way of any motion or other pleading filed with the Bankruptcy Court or any other
writing to another party-in-interest executed by or on behalf of a Loan Party or
by oral argument) any other Person's motion to, disallow in whole or in part any
of the Prepetition Obligations or the Obligations or to challenge the validity,
perfection or enforceability of the liens or security interests granted in
connection with the Prepetition Obligations or the Obligations; or
(xi) Commencement by any of the Loan Parties or their estates
or any of their respective Affiliates of any litigation, arbitration or other
proceeding relating to any claim or action against the Agent or any of the
Lenders arising or alleged to arise out of any conduct of any of such entities
prior to the Closing Date under or in connection with the Prepetition Loan
Documents.
(e) ERISA. (i) Any Termination Event shall occur, or (ii) any
Plan shall incur an "accumulated funding deficiency" (as defined in Section 412
of the IRC or Section 302 of ERISA), whether or not waived or (iii) any Loan
Party or a member of its ERISA Controlled Group shall have engaged in a
transaction which is prohibited under Section 4975 of the IRC or Section 406 of
ERISA which could result in the imposition of liability in excess of $500,000 on
any Loan Party or any member of its ERISA Controlled Group, or (iv) any Loan
Party or any member of its ERISA Controlled Group shall fail to pay when due an
amount which it shall have become liable to pay to the PBGC, any Plan or a trust
established under Title IV of ERISA, or (v) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that an ERISA
Plan must be terminated or have a trustee appointed to administer any ERISA
Plan, or (vi) any Loan Party or a member of its
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ERISA Controlled Group suffers a partial or complete withdrawal from a
Multiemployer Plan or is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan, or (vii) a proceeding
shall be instituted against any Loan Party or any member of its ERISA Controlled
Group to enforce Section 515 of ERISA, or (viii) any other event or condition
shall occur or exist with respect to any Plan which could subject any Loan Party
or any member of its ERISA Controlled Group to any tax, penalty or other
liability in excess of $500,000.
(f) Security. (i) Any material provision of any Loan Document
shall, for any reason, cease to be in full force and effect and valid and
binding on any Loan Party, or any Loan Party shall so state in writing; or
(ii) Any Loan Document, the Interim Order or the Final Order
shall, for any reason, cease to create a valid Lien in any of the Collateral
purported to be covered thereby or such Lien shall cease to be a perfected Lien
having the priority provided for in the Loan Documents and in the Orders
pursuant to section 364 of the Bankruptcy Code against each Loan Party or any
Loan Party shall so allege in any pleading filed in any court; or
(g) Guarantees. The guarantees provided for in Section 7 shall
for any reason cease to be in full force and effect or any Guarantor shall fail
to pay any amount owing pursuant to Section 7 when due or any Guarantor shall
disavow any of its obligations under Section 7.
(h) Change of Control. A Change in Control shall occur.
(i) Judgments. Any judgment or order for the payment of money
in excess of $100,000 shall be rendered against any of the Loan Parties after
the Petition Date, and there shall be any period of ten (10) consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
(j) Environmental Matters. (i) Any Environmental Claim shall
have been asserted against any Loan Party or any Environmental Affiliate thereof
which, if determined adversely, could reasonably be expected to have a Material
Adverse Effect, (ii) any release, emission, discharge or disposal of any
Material of Environmental Concern shall have occurred, and such event has formed
the basis of an Environmental Claim against any Loan Party or any Environmental
Affiliate thereof which, if determined adversely, could have a Material Adverse
Effect, or (iii) any Loan Party or its Environmental Affiliate shall have failed
to obtain any Environmental Approval necessary for the management, use, control,
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect, in each case, if the existence of such condition could
have a Material Adverse Effect.
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(k) Management Services Agreements. (i) In any twelve month
period, Management Services Agreements in respect of greater than 15% of the
Loan Parties' aggregate revenues as of the Closing Date shall be terminated
without the prior written consent of the Required Lenders or (ii) any party to
any Management Services Agreement shall withhold during any calendar month any
amount payable to the Loan Parties pursuant thereto in excess of the lesser of
$1,000,000 in the aggregate and 10% of the total amount of such payments
projected for such month in the Budget or any cash receipts and disbursement
budgets delivered pursuant to Section 5.1(e)(i).
Section 9.2 Rights and Remedies. (a) Upon the occurrence of
any Event of Default set forth in Section 9.1(d), the Loan Commitments shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon, and without presentation,
demand, or protest or other requirements of any kind (including, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Loan Parties, and the obligation of each Lender to make any Loan hereunder shall
thereupon terminate; and upon the occurrence and during the continuance of any
other Event of Default, the Agent shall at the request, or may with the consent,
of the Required Lenders, by written notice to the Borrower, (i) declare that the
Loan Commitments are terminated, whereupon the Loan Commitments and the
obligation of each Lender to make any Loan hereunder shall immediately
terminate, (ii) terminate any Letter of Credit that may be terminated in
accordance with its terms, (iii) direct the Loan Parties to pay (and the Loan
Parties agree that upon receipt of such notice they will pay) to the Agent at
the Agent's Office an amount of cash, to be held in the Collateral Accounts, in
an aggregate amount equal to 105% of the Letter of Credit Liability and (iv)
declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Loans and any and all accrued Fees and other Obligations to be,
and the same shall thereupon be, immediately due and payable with all additional
interest from time to time accrued thereon, and without presentation, demand, or
protest or other requirements of any kind (including, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Loan Parties.
(b) Upon the occurrence and during the continuance of an Event
of Default, the automatic stay provided by section 362 of the Bankruptcy Code
shall be deemed automatically vacated, without further order of the Bankruptcy
Court, and the Agent, on behalf of the Lenders, shall, upon three business days'
notice to the Borrower and any creditors' committee appointed in the Case
pursuant to section 1102 of the Bankruptcy Code, be immediately permitted to,
among other things, pursue any and all of its remedies against the Loan Parties
or the Collateral and seek payment in respect of all Obligations.
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(c) In addition to the remedies set forth above, the Agent, on
behalf of the Lenders, may exercise any of the remedies with respect to the
Collateral provided for in the Security Agreement or any of the other Loan
Documents or any other remedies provided by applicable law.
SECTION 10. THE AGENT
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Section 10.1 Appointment. Each Lender hereby irrevocably designates
and appoints Paribas as the Agent of such Lender under this Agreement and each
other Loan Document, and each such Lender irrevocably authorizes Paribas as the
Agent for such Lender, to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement and each other Loan Document, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
shall be read into this Agreement or otherwise exist against the Agent.
Notwithstanding anything to the contrary herein, the Issuing Lender shall act on
behalf of the Lenders with respect to the Letters of Credit (and all conditions
precedent to the issuance or extension thereof) until such time and except for
so long as the Agent may elect to act for the Issuing Lender with respect
thereto; provided, however, that the Issuing Lender shall have all of the
benefits and immunities (i) for acts taken or omissions suffered by the Issuing
Lender in connection with the Letters of Credit as fully as if the term "Agent"
as used in this Section 10 included the Issuing Lender with respect to such acts
or omissions, and (ii) as additionally provided in this Agreement with respect
to the Issuing Lender. The provisions of this Section 10 are solely for the
benefit of the Agent and the Lenders, and the Borrower shall have no rights as a
third party beneficiary or otherwise under any of the provisions hereof. In
performing its functions and duties hereunder and under the other Loan
Documents, the Agent shall act solely as the agent of the Lenders and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Borrower or any Lender or any of their
respective successors and assigns.
Section 10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 10.3 Exculpatory Provisions. The Agent shall not be (i)
liable for any
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action lawfully taken or omitted to be taken by it (except for its own gross
negligence or willful misconduct) or any Person described in Section 10.2 under
or in connection with this Agreement or any other Loan Document, or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party contained in this Agreement
or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any other Loan Document or for any failure of any Loan Party to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of any Loan
Party. This Section is intended solely to govern the relationship between the
Agent, on the one hand, and the Lenders, on the other.
Section 10.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless the Agent shall have received an executed
Assignment and Acceptance in respect thereof. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
Section 10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be directed by the Required Lenders; provided that unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or
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refrain from taking such action, with respect to such Default or Event of
Default as the Agent shall deem advisable and in the best interests of the
Lenders and shall notify the Lenders of any such action taken.
Section 10.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, any review of the affairs of the Loan Parties, shall be deemed
to constitute any representation or warranty by the Agent. Each Lender
represents and warrants to the Agent that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Loan Parties and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, prospects, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly required under the Loan Documents to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, prospects, financial and other condition or
creditworthiness of the Loan Parties which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
Section 10.7 Indemnification. The Lenders agree to indemnify the
Agent and its officers, directors, employees, representatives and agents (to the
extent not reimbursed by any Loan Party and without limiting the obligation of
the Loan Parties to do so), ratably according to their Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, the actual out of pocket fees and disbursements of
counsel for the Agent or such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
the Agent or such Person shall be designated a party thereto) that may at any
time (including, at any time following the payment of the Obligations) be
imposed on, incurred by or asserted against the Agent or such Person as a result
of, or arising out of, or in any way related to or by reason of, any of the
Transactions or the execution, delivery or performance of any Loan Document (but
excluding any such liabilities, obligations, losses, damages, penalties,
actions, suits, costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Agent or such Person as determined by a
court of competent jurisdiction in a final non-appealable judgment or order).
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Section 10.8 Agent in its Individual Capacity. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though the Agent were not the Agent
hereunder. With respect to Loans made or renewed by it and any Note issued to
it, the Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
Section 10.9 Resignation by the Agent. (a) The Agent may resign from
the performance of all of its functions and duties hereunder and/or under the
other Loan Documents by giving 15 Business Days' prior written notice to the
Borrower and the Lenders. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Lenders shall appoint a
successor Agent hereunder or thereunder who shall be a commercial bank or trust
company.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent may then appoint a successor Agent who shall
serve as Agent hereunder or thereunder until such time, if any, as the Lenders
appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Lenders shall thereafter perform all the duties of the Agent hereunder and/or
under any other Loan Document until such time, if any, as the Lenders appoint a
successor Agent as provided above.
SECTION 11. MISCELLANEOUS
Section 11.1 Payment of Expenses, Indemnity, etc. The Borrower and
the other Loan Parties shall:
(a) pay all reasonable out-of-pocket costs and expenses of the
Agent and the Lenders in connection with the negotiation, preparation, execution
and delivery of the Loan Documents and the documents and instruments referred to
therein, the creation, perfection or protection of the Agent's Liens in the
Collateral (including, fees and expenses for title and lien searches and filing
and recording fees), and any amendment, waiver or consent
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relating to any of the Loan Documents (including, as to each of the foregoing,
the reasonable fees and disbursements of Weil, Gotshal & ▇▇▇▇▇▇ LLP, special
counsel to the Agent and any other attorneys retained by the Agent or the
Lenders) and of the Agent and each Lender in connection with the preservation of
rights under, and enforcement of, the Loan Documents and the documents and
instruments referred to therein or in connection with any restructuring or
rescheduling of the Obligations;
(b) pay, and hold the Agent and each of the Lenders harmless
from and against, any and all present and future stamp, excise and other similar
taxes with respect to the Loan Documents and the Transactions and hold the Agent
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and
(c) indemnify the Agent, each Lender and each of their
Affiliates and each of their respective officers, directors, employees,
representatives and agents (each an "Indemnitee") from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever (including, the reasonable fees and disbursements of
counsel for such Indemnitee in connection with any investigative, administrative
or judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may at any time (including, at any
time following the payment of the Obligations) be imposed on, asserted against
or incurred by any Indemnitee as a result of, or arising out of, or in any way
related to or by reason of, (i) any of the Loan Documents or the Transactions,
(ii) the grant to the Agent and the Lenders of any Lien in any property or
assets of any Loan Party or any stock or other equity interest in any Loan
Party, and (iii) the exercise by the Agent and the Lenders of their rights and
remedies (including, foreclosure) under any agreements creating any such Lien
(but excluding, as to any Indemnitee, any such losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements incurred by reason of the gross negligence or willful misconduct
of such Indemnitee as determined by a court of competent jurisdiction in a final
non-appealable judgment or order). The Loan Parties' obligations under this
Section shall survive the termination of this Agreement and the payment of the
Obligations.
Section 11.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to the
Loan Parties or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Lender (including, by branches and agencies of such
Lender wherever
65
located) to or for the credit or the account of any Loan Party against and on
account of the Obligations of any Loan Party to such Lender under this Agreement
or under any of the other Loan Documents, including, all interests in
Obligations purchased by such Lender pursuant to Section 11.7, and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not such Lender
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
Section 11.3 Notices. Except as otherwise expressly provided herein,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and shall be deemed to
have been duly given or made when delivered by hand, or five days after being
deposited in the United States mail, postage prepaid, or, in the case of
telecopy notice, when sent or, if not sent during business hours on a Business
Day, then on the next Business Day, or, in the case of a nationally recognized
overnight courier service, one Business Day after delivery to such courier
service, addressed, in the case of each party hereto, at its address specified
opposite its signature below or on the appropriate Assignment and Acceptance, or
to such other address as may be designated by any party in a written notice to
the other parties hereto.
Section 11.4 Successors and Assigns; Participation; Assignments.
---------------------------------------------------
(a) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Loan Parties, the Lenders, the Agent, all
future holders of the Notes and their respective successors and assigns, except
that the Loan Parties may not assign or transfer any of their respective rights
or obligations under this Agreement without the prior written consent of each
Lender. No Lender may participate, assign or sell any of its Credit Exposure (as
defined in clause (b) below) except as provided in this Section 11.4 or as
required by operation of law, in connection with the merger, consolidation or
dissolution of any Lender.
(b) Participation. Any Lender may at any time sell to one or
more Persons (each a "Participant") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Loan Commitment of such Lender
and or any other interest of such Lender hereunder (in respect of any such
Lender, its "Credit Exposure"). Notwithstanding any such sale by a Lender of
participating interests to a Participant, such Lender's rights and obligations
under this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement (except as expressly
provided below), and the Loan Parties and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. The Loan Parties agree that if any Obligations
are due and unpaid, or shall have been declared or
66
shall have become due and payable upon the occurrence and during the continuance
of an Event of Default, each Participant shall be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement or any Note,
provided that such right of setoff shall be subject to the obligations of such
Participant to share with the Lenders, and the Lenders agree to share with such
Participant, as provided in Section 11.7. The Loan Parties also agree that each
Participant shall be entitled to the benefits of Section 2.11. Each Lender
agrees that any agreement between such Lender and any such Participant in
respect of such participating interest shall not restrict such Lender's right to
agree to any amendment, supplement, waiver or modification to this Agreement or
any other Loan Document, except where the result of any of the foregoing would
be to extend the final maturity of any Obligation or any regularly scheduled
installment thereof or reduce the rate or extend the time of payment of interest
thereon or reduce the principal amount thereof or release all or substantially
all of the Collateral (except as expressly provided in the Loan Documents) or
release any Guarantor from its obligations under a Guarantee.
(c) Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign, with the
consent of the Agent, which consent shall not be unreasonably withheld, to any
other Person (each an "Assignee") all or any part of its Credit Exposure, in a
minimum amount of $1,000,000 or, if such Lender's Credit Exposure is less than
$1,000,000, such Lender's total Credit Exposure. The Loan Parties, the Agent and
the Lenders agree that to the extent of any assignment the Assignee shall be
deemed to have the same rights and benefits under the Loan Documents and the
same rights of setoff and obligation to share pursuant to Section 11.7 as it
would have had if it were a Lender hereunder; provided that the Borrower and the
Agent shall be entitled to continue to deal solely and directly with the
assignor Lender in connection with the interests so assigned to the Assignee
unless and until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower
and the Agent (A) an Assignment and Acceptance in the form of Exhibit G (an
"Assignment and Acceptance") together with delivery to the Borrower of any Note
or Notes subject to such Assignment and (B) if applicable to the Assignee, the
forms required to be delivered pursuant to Section 2.12(b); and (iii) such
Lender shall have paid to the Agent, for its own account, an assignment fee of
$3,500. Immediately upon compliance with the provisions of this Section 11.4(c),
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Loan Commitments arising therefrom. The Loan Commitment
allocated to each Assignee shall reduce such Loan Commitment of the assigning
Lender pro tanto.
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(d) Replacement Notes. Within 5 Business Days after its receipt
of notice by the Agent that the Agent has received an executed Assignment and
Acceptance and payment of the processing fee, the Borrower shall execute and
deliver to the Agent new Notes evidencing such Assignee's assigned Loans and
Loan Commitment and, if the assignor Lender has retained a portion of its Loans
and Loan Commitment, replacement Notes in the principal amount of the Loans
retained by the assignor Lender (such Notes to be in exchange for, but not in
payment of, the Notes held by such Lender).
(e) Assignments to Federal Reserve Bank. Notwithstanding any
other provision contained in this Agreement or any other Loan Document to the
contrary, any Lender may assign all or any portion of the Loans or Notes held by
it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Notes or Loans made by the
Borrower to or for the account of the assigning and/or pledging Lender in
accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans or Notes to the extent
of such payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
(f) Subsequent Lenders. Each of the parties hereto agrees that
from time to time and upon the prior written consent of the Agent, any Person
may become party to this Agreement as a Lender and be subject to all of the
obligations and entitled to all of the rights of a Lender under the Loan
Documents upon such Person's execution and delivery of a counterpart of this
Agreement; provided, that in no event shall the Total Commitment exceed five
million dollars after giving effect to the Loan Commitment of each additional
Lender becoming a party to this Agreement pursuant to this Section 11.4(f). The
Agent shall be authorized to amend or supplement Schedule 1 to set forth the
Loan Commitment of each Lender becoming a party to this Agreement pursuant to
this Section 11.4(f).
Section 11.5 Amendments and Waivers. Neither this Agreement, any
Note, any other Loan Document to which any Loan Party is a party nor any terms
hereof or thereof may be amended, supplemented, modified or waived except in
accordance with the provisions of this Section. The Required Lenders and the
Loan Parties may, from time to time, enter into written amendments, supplements,
modifications or waivers for the purpose of adding, deleting, changing or
waiving any provisions to this Agreement, the Notes, or the other Loan Documents
to which any Loan Party is a party, provided, that no such amendment,
supplement, modification or waiver shall (a) extend either the Maturity Date or
any installment or required prepayment of any Obligations or reduce the rate or
extend the time of payment of interest on any Obligations, or reduce the
principal amount of any Obligations or reduce any fee payable to the Lenders
hereunder, or release all or a substantial portion of the Collateral (except as
expressly contemplated by the Loan Documents), or release any Guarantor from its
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obligations hereunder, or change the amount of any Loan Commitment of any
Lender, or amend, modify or waive any provision of this Section 11.5 or the
definition of Required Lenders, or consent to or permit the assignment or
transfer by any Loan Party of any of its rights and obligations under this
Agreement or any other Loan Document, or consent to any subordination or other
materially adverse modification of the priority of the claims and Liens of the
Lenders, in each case without the written consent of all the Lenders or (b)
amend, modify or waive any provision of Section 10 or any other provision of any
Loan Document if the effect thereof is to affect the rights or duties of the
Agent, without the written consent of the then Agent. Any such amendment,
supplement, modification or waiver shall apply to each of the Lenders equally
and shall be binding upon the Loan Parties, the Lenders, the Agent and all
future holders of the Notes. In the case of any waiver, the Loan Parties, the
Lenders and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of Default
waived shall be deemed to be cured and not continuing, but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
Section 11.6 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Agent or any Lender or any holder of a Note in exercising any
right, power or privilege hereunder or under any other Loan Document and no
course of dealing between any Loan Party and the Agent or any Lender or the
holder of any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Loan Document preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Agent or any Lender or the holder of any Note would
otherwise have. No notice to or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent, the
Lenders or the holder of any Note to any other or further action in any
circumstances without notice or demand.
Section 11.7 Sharing of Payments. Each of the Lenders agrees that if
it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which, with respect to the related sum or sums received by
other Lenders, is in a greater proportion than the total of such Obligations
then owed and due to such Lender bears to the total of such Obligations then
owed and due to all of the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in such Obligations owing to such
Lenders in such amount as shall result in a proportional participation by all of
the Lenders in such amount; provided that if all or any
69
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
Section 11.8 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.
Section 11.9 Consent to Jurisdiction. Each Loan Party irrevocably
------------------------
(a) submits itself and its property to the jurisdiction of the
Bankruptcy Court and, if the Bankruptcy Court does not have (or abstains from
exercising) jurisdiction, to the jurisdiction of any New York State or Federal
court sitting in New York City and any appellate court from any thereof in any
action or proceeding arising out of or relating to any Loan Document;
(b) agrees that all claims in respect of such action or
proceeding may be heard and determined in the foregoing counts, as applicable;
(c) waives, to the fullest extent that it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding;
(d) consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to it at its
address pursuant to Section 11.3; and
(e) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(f) Nothing in this Section 11.9 shall affect the right of the
Agent or any Lender to serve legal process in any other manner permitted by law
or affect the right of the Agent or any Lender to bring any action or proceeding
against any Loan Party or its property in the courts of other jurisdictions.
Section 11.10 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 11.11 Effectiveness. This Agreement shall become effective on
the
70
date on which all of the parties hereto shall have signed a counterpart hereof
and shall have delivered the same to the Agent which delivery, in the case of
the Lenders, may be given to the Agent by telecopy (with the originals delivered
promptly to the Agent via overnight courier service).
Section 11.12 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
Section 11.13 Marshalling; Recapture. Neither the Agent nor any
Lender shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any Loan
Party or any other party or against or in payment of any or all of the
Obligations. To the extent any Lender receives any payment by or on behalf of
any Loan Party, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
any Loan Party or its estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of the Loan Party to such Lender as of the date such initial payment, reduction
or satisfaction occurred.
Section 11.14 Severability. In case any provision in or obligation
under this Agreement or the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 11.15 Survival. All indemnities set forth herein including,
in Sections 2.10, 2.11, 2.12, 10.7 and 11.1 shall survive the execution and
delivery of this Agreement and the Notes and the making and repayment of the
Loans hereunder.
Section 11.16 Domicile of Loans. Each Lender may transfer and carry
its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Lender.
Section 11.17 Limitation of Liability. No claim may be made by the
Borrower or any other Loan Party against the Agent or any Lender or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other
Transactions, or any act, omission or event occurring in connection therewith;
each Loan Party hereby waives, releases and agrees not to ▇▇▇ upon any claim for
any such damages,
71
whether or not accrued and whether or not known or suspected to exist in its
favor.
Section 11.18 Calculations; Computations. The financial statements to
be furnished to the Agent and the Lenders pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved and consistent with GAAP as used in the preparation of the financial
statements referred to in Section 4.5, and, except as otherwise specifically
provided herein, all computations determining compliance with Section 6.1 hereof
shall utilize GAAP.
Section 11.19 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
Section 11.20 Absence of Prejudice to the Prepetition Lenders with
Respect to Matters Before the Bankruptcy Court. The Agent or any Lender, in its
capacity as the Prepetition Agent or a Prepetition Lender under the Prepetition
Credit Agreement shall be free to bring, oppose or support any matter before the
Bankruptcy Court no matter how treated in this Agreement, and the fact that the
Agent is also the Prepetition Agent and a Lender is also an Prepetition Lender
shall in no way prejudice the rights of such entities under, or in respect of,
the Prepetition Credit Agreement or hereunder.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
72
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
BMJ MEDICAL MANAGEMENT, INC., as the
Borrower
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
BMJ OF ▇▇▇▇▇▇▇▇, INC., as Guarantor
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
ORTHOPAEDIC MANAGEMENT NETWORK,
INC., as Guarantor
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
VALLEY SPORTS SURGEONS INC.,
as Guarantor
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
BMJ BROG, INC., as Guarantor
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
BMJ OF NEVADA, INC., as Guarantor
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
Notice Address:
BMJ Medical Management,Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Executive Vice President and
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Katten, Muchin & Zavis
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇)-▇▇▇-▇▇▇▇
Telecopier: (▇▇▇)-▇▇▇-▇▇▇▇
PARIBAS, as Agent, Issuing Lender and
as a Lender
By:
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
By:
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
Notice Address:
Paribas
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇,
Director - Head of WR
Healthcare
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
FLEET CAPITAL CORPORATION, as Issuing
Lender and as a Lender
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Notice Address:
Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: _________________________
Telephone: (___) ___-____
Telecopier: (___) ___-____
With copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn:________________________
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule 1 to
-------------
Credit Agreement
----------------
Lenders and Commitments
-----------------------
Name of Lender Domestic Lending Office Commitment
-------------- ----------------------- ----------
Paribas $2,750,000
Fleet Capital Corporation $1,000,000
Schedule 3.1(j) to
------------------
Credit Agreement
----------------
Litigation
----------
Schedule 4.11 to
----------------
Credit Agreement
----------------
ERISA
-----
Schedule 4.14 to
----------------
Credit Agreement
----------------
Capitalization
--------------
Schedule 4.15 to
----------------
Credit Agreement
----------------
Subsidiaries
------------
Schedule 4.18 to
----------------
Credit Agreement
----------------
Properties
----------
Schedule 4.21(b) to
-------------------
Credit Agreement
----------------
Defaults under Contractual Obligations
--------------------------------------
Schedule 6.2 to
---------------
Credit Agreement
----------------
Prepetition Indebtedness
------------------------
Schedule 6.3 to
---------------
Credit Agreement
----------------
Prepetition Liens
-----------------
Schedule 6.6 to
---------------
Credit Agreement
----------------
Contingent Obligations; Investments
-----------------------------------
TABLE OF CONTENTS
Page
----
SECTION 1..............................................................................................DEFINITIONS. 2
Section 1.1 ..................................................................................Definitions 2
SECTION 2.....................................................................AMOUNT AND TERMS OF CREDIT FACILITIES. 19
Section 2.1..........................................................................................Loans 19
Section 2.2..............................................................................Letters of Credit 19
Section 2.3............................................................................Notice of Borrowing 22
Section 2.4.........................................................................Disbursement of Funds. 22
Section 2.5.........................................................................................Notes. 23
Section 2.6.......................................................................................Interest 23
Section 2.7............................................................Voluntary Reduction of Commitments. 24
Section 2.8.........................................................................Prepayments; Payments. 24
Section 2.9....................................................................Method and Place of Payment 25
Section 2.10..........................................................................................Fees 25
Section 2.11.............................................................................Increased Capital 26
Section 2.12.........................................................................................Taxes 26
Section 2.13......................................................................Change of Lending Office 27
Section 2.14 .........................Participation Purchased by Lenders in the Letter of Credit Liability 28
Section 2.15............................................................................Priority and Liens 29
Section 2.16.............................................................................Professional Fees 30
Section 2.17........................................................................Payment of Obligations 31
Section 2.18..............................................................No Discharge; Survival of Claims 31
SECTION 3...........................................................CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT. 31
Section 3.1 ....................Conditions Precedent to Initial Loans and Effectiveness of this Agreement. 31
Section 3.2.......................................Conditions Precedent to All Loans and Letters of Credit. 33
Section 3.3..........................................................Representation; Delivery of Documents 35
Section 3.4..........................................................................Conditions Subsequent 35
SECTION 4............................................................................REPRESENTATIONS AND WARRANTIES 36
Section 4.1..............................................................................Corporate Status. 36
Section 4.2.................................................................Corporate Power and Authority. 36
Section 4.3..................................................................................No Violation. 36
Section 4.4.....................................................................................Litigation 37
Section 4.5.............................................Financial Statements; Financial Condition; Budget. 37
Section 4.6........................................................................Material Adverse Change 37
1
Section 4.7...........................................................Use of Proceeds; Margin Regulations. 37
Section 4.8.........................................................................Governmental Approvals 37
Section 4.9...................................................................Security Interests and Liens 38
Section 4.10......................................................................Tax Returns and Payments 38
Section 4.11.........................................................................................ERISA 38
Section 4.12....................................Investment Company Act; Public Utility Holding Company Act 39
Section 4.13..................................................................True and Complete Disclosure 39
Section 4.14...........................................................Corporate Structure; Capitalization 40
Section 4.15...........................................Ownership of the Borrower; Subsidiaries; Collateral 40
Section 4.16.........................................................................Environmental Matters 40
Section 4.17.....................................................................Patents, Trademarks, etc. 41
Section 4.18.........................................................................Ownership of Property 41
Section 4.19................................................................................Licenses, etc. 42
Section 4.20 ..........................Compliance With Law and Licensing Requirements; Patient Trust Funds 42
Section 4.21........................................................No Burdensome Restriction; No Defaults 42
Section 4.22.........................................................The Interim Order and the Final Order 43
SECTION 5....................................................................................AFFIRMATIVE COVENANTS. 43
Section 5.1..........................................................................Information Covenants 43
Section 5.2..............................................Books, Records, Inspections and Collateral Audits 47
Section 5.3.......................................................................Maintenance of Insurance 47
Section 5.4..........................................................................................Taxes 48
Section 5.5..........................................................................A Conduct of Business 48
Section 5.6............................................................................Compliance with Law 48
Section 5.7.....................................................................Performance of Obligations 49
Section 5.8......................................................................Maintenance of Properties 49
Section 5.9.................................................Collateral Accounts and Cash Management System 49
Section 5.10.....................................................Licensure; Medicaid/Medicare Cost Reports 50
Section 5.11.....................................................................................Year 2000 50
SECTION 6.......................................................................................NEGATIVE COVENANTS. 50
Section 6.1............................................................................Financial Covenants 51
Section 6.2...................................................................................Indebtedness 51
Section 6.3..........................................................................................Liens 52
Section 6.4.............................................................Restriction on Fundamental Changes 53
Section 6.5................................................................................Sale of Assets. 54
Section 6.6.........................................................................Contingent Obligations 54
Section 6.7...........................................................................Capital Expenditures 54
Section 6.8................................................................Advances, Investments and Loans 54
Section 6.9...................................................................Transactions with Affiliates 55
2
Section 6.10..............................Limitation on Voluntary Payments; Management Services Agreements 55
Section 6.11...........................................................................Changes in Business 55
Section 6.12..........................................................................Certain Restrictions 55
Section 6.13...........................................................................Sale and Leasebacks 55
Section 6.14..............................................................................Sale of Accounts 56
Section 6.15...............................................................................Use of Proceeds 56
Section 6.16.............................................................................Chapter 11 Claims 56
Section 6.17......................................................................Dividends; Capital Stock 56
Section 6.18...................................................................No Speculative Transactions 56
Section 6.19......................................................Maintenance of Ownership of Subsidiaries 57
Section 6.20............................................................................Accounting Changes 57
SECTION 7..................................................................................................GUARANTY 57
Section 7.1.......................................................................................Guaranty 57
Section 7.2......................................................................No Impairment of Guaranty 58
Section 7.3....................................................................................Subrogation 59
SECTION 8.........................................................................................POWER OF ATTORNEY 59
SECTION 9.........................................................................................EVENTS OF DEFAULT 59
Section 9.1..............................................................................Events of Default 59
Section 9.2............................................................................Rights and Remedies 64
SECTION 10. THE AGENT............................................................................................. 64
Section 10.1...................................................................................Appointment 65
Section 10.2..........................................................................Delegation of Duties 65
Section 10.3........................................................................Exculpatory Provisions 65
Section 10.4.............................................................................Reliance by Agent 66
Section 10.5.............................................................................Notice of Default 66
Section 10.6.......................................................Non-Reliance on Agent and Other Lenders 67
Section 10.7...............................................................................Indemnification 67
Section 10.8..............................................................Agent in its Individual Capacity 68
Section 10.9......................................................................Resignation by the Agent 68
SECTION 11. MISCELLANEOUS......................................................................................... 68
Section 11.1...........................................................Payment of Expenses, Indemnity, etc 68
Section 11.2...............................................................................Right of Setoff 69
Section 11.3.......................................................................................Notices 70
Section 11.4............................................Successors and Assigns; Participation; Assignments 70
Section 11.5........................................................................Amendments and Waivers 72
3
Section 11.6................................................................No Waiver; Remedies Cumulative 73
Section 11.7...........................................................................Sharing of Payments 74
Section 11.8.................................................................................GOVERNING LAW 74
Section 11.9.......................................................................Consent to Jurisdiction 74
Section 11.10.................................................................................Counterparts 75
Section 11.11................................................................................Effectiveness 75
Section 11.12.........................................................................Headings Descriptive 75
Section 11.13.......................................................................Marshalling; Recapture 75
Section 11.14.................................................................................Severability 75
Section 11.15.....................................................................................Survival 76
Section 11.16............................................................................Domicile of Loans 76
Section 11.17......................................................................Limitation of Liability 76
Section 11.18...................................................................Calculations; Computations 76
Section 11.19......................................................................Waiver of Trial by Jury 76
Section 11.20...........Absence of Prejudice to the Prepetition Lenders with Respect to Matters Before the
Bankruptcy Court 76
SCHEDULES
Schedule 1 -- Lenders and Commitments
Schedule 3.1(j) -- Litigation
Schedule 4.11 -- ERISA
Schedule 4.14 -- Capitalization
Schedule 4.15 -- Subsidiaries
Schedule 4.18 -- Property
Schedule 4.21(b) -- Defaults under Contractual Obligations
Schedule 6.2 -- Indebtedness
Schedule 6.3 -- Liens
Schedule 6.6 -- Contingent Obligations
4
EXHIBITS
Exhibit A -- Budget
Exhibit B -- Form of Compliance Certificate
Exhibit C -- Copy of Interim Order
Exhibit D -- Form of Blocked Account Agreement
Exhibit E -- Form of Security and Pledge Agreement
Exhibit F -- Form of Revolving Note
Exhibit G -- Form of Assignment and Acceptance
Exhibit H -- Form of Letter of Credit Request
Exhibit I -- Form of Notice of Borrowing
5