EXHIBIT 10.45
================================================================================
$15,000,000
SENIOR SUBORDINATED LOAN AGREEMENT
among
PHYSICIAN HEALTH CORPORATION
PHC HOLDING CORPORATION
_________________________
THE LENDERS PARTY HERETO
and
PARIBAS CAPITAL FUNDING LLC
as Agent
_________________________________
Dated as of October 27, 1997
_________________________________
================================================================================
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1. Amount and Terms of Loans.............................................................................. 1
1.01 The Loans........................................................................................... 1
1.02 Interest............................................................................................ 2
1.03 Fees................................................................................................ 3
1.04 Mandatory Reduction and Termination of
Subsequent Commitment............................................................................... 3
Section 2. Repayment; Prepayments; Payments; Taxes................................................................ 3
2.01 Payment of Loan..................................................................................... 3
2.02 Mandatory and Voluntary Prepayments................................................................. 3
2.03 Method and Place of Payment......................................................................... 7
2.04 Net Payments........................................................................................ 7
Section 3. Conditions Precedent to Loans.......................................................................... 9
3.01 Conditions Precedent to Loans on the Initial Funding Date........................................... 9
3.02 Conditions Precedent to All Loans................................................................... 16
Section 4. Representations, Warranties and Agreements............................................................. 17
4.01 Corporate Status.................................................................................... 17
4.02 Corporate Power and Authority....................................................................... 18
4.03 No Violation........................................................................................ 18
4.04 Governmental Approvals.............................................................................. 18
4.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; Etc........................................................... 18
4.06 Litigation.......................................................................................... 20
4.07 True and Complete Disclosure........................................................................ 20
4.08 Use of Proceeds; Margin Regulations................................................................. 20
4.09 Tax Returns and Payments............................................................................ 21
4.10 Compliance with ERISA............................................................................... 21
4.11 Representations and Warranties in Documents......................................................... 22
4.12 Properties.......................................................................................... 22
4.13 Capitalization...................................................................................... 23
4.14 Subsidiaries........................................................................................ 23
4.15 Compliance with Statutes, Etc....................................................................... 23
4.16 Investment Company Act.............................................................................. 24
4.17 Public Utility Holding Company Act.................................................................. 24
4.18 Environmental Matters............................................................................... 24
4.19 Labor Relations..................................................................................... 25
4.20 Patents, Licenses, Franchises and Formulas.......................................................... 25
4.21 Indebtedness........................................................................................ 25
4.22 Restrictions on or Relating to Subsidiaries......................................................... 25
4.23 The Transaction..................................................................................... 26
4.24 Defaults............................................................................................ 26
4.25 Material Contracts.................................................................................. 26
4.26 Unwind Provisions................................................................................... 27
4.27 Practice Management Agreements...................................................................... 27
4.28 Contemporaneous Acquisitions........................................................................ 27
4.29 Post-Closing Acquisitions........................................................................... 27
4.30 Repurchase Obligations.............................................................................. 27
Section 5. Affirmative Covenants.................................................................................. 27
5.01 Information Covenants............................................................................... 27
5.02 Books, Records and Inspections...................................................................... 31
5.03 Maintenance of Property, Insurance.................................................................. 31
5.04 Corporate Franchises................................................................................ 31
5.05 Compliance with Statutes, Etc....................................................................... 31
5.06 Compliance with Environmental Laws.................................................................. 32
5.07 ERISA............................................................................................... 32
5.08 End of Fiscal Years; Fiscal Quarters................................................................ 33
5.09 Payment of Taxes.................................................................................... 33
5.10 Use of Proceeds..................................................................................... 33
5.11 Intellectual Property Rights........................................................................ 34
5.12 Register............................................................................................ 34
5.13 Ownership of Subsidiaries........................................................................... 35
5.14 Observation of Board of Directors................................................................... 35
5.15 Permitted Acquisitions.............................................................................. 35
5.16 Subsidiary Metroplex Note........................................................................... 39
5.17. Default on Metroplex Note........................................................................... 39
5.18. Corporate Separateness.............................................................................. 39
Section 6. Negative Covenants..................................................................................... 39
6.01 Liens............................................................................................... 39
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc.............................................. 41
6.03 Dividends, Etc...................................................................................... 43
6.04 Indebtedness........................................................................................ 44
6.05 Transactions with Affiliates........................................................................ 44
6.06 Interest Coverage Ratio............................................................................. 45
6.07 Consolidated Indebtedness to Consolidated EBITDA.................................................... 46
(ii)
6.08 Minimum EBITDA...................................................................................... 47
6.09 Capital Expenditures................................................................................ 49
6.10 Restrictions on Additional Subordinated Indebtedness................................................ 50
6.11 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; Etc............................................ 50
6.12 Limitation on Certain Restrictions on Subsidiaries.................................................. 51
6.13 Limitation on Issuance of Capital Stock............................................................. 51
6.14 Business............................................................................................ 51
6.15 Limitation on Creation of Subsidiaries.............................................................. 52
6.16 Amendments with Respect to Senior Debt.............................................................. 52
6.17 No Further Negative Pledges......................................................................... 52
6.18 Leases.............................................................................................. 52
6.19 Unwind Provisions................................................................................... 52
Section 7. Events of Default...................................................................................... 53
7.01 Payments............................................................................................ 53
7.02 Representations, Etc................................................................................ 53
7.03 Covenants........................................................................................... 53
7.04 Default Under Other Agreements...................................................................... 53
7.05 Bankruptcy, Etc..................................................................................... 53
7.06 ERISA............................................................................................... 54
7.07 Judgments........................................................................................... 55
7.08 Physician Turnover.................................................................................. 55
7.09 Ownership........................................................................................... 55
7.10 Subordinated Guaranties............................................................................. 55
Section 8. Definitions and Accounting Terms....................................................................... 55
8.01 Defined Terms....................................................................................... 55
Section 9. The Agent.............................................................................................. 76
9.01 Appointment......................................................................................... 76
9.02 Nature of Duties.................................................................................... 76
9.03 Lack of Reliance on the Agent....................................................................... 77
9.04 Certain Rights of the Agent......................................................................... 77
9.05 Reliance............................................................................................ 77
9.06 Indemnification..................................................................................... 78
9.07 The Agent in Its Individual Capacity................................................................ 78
9.08 Holders............................................................................................. 78
9.09 Resignation by the Agent............................................................................ 78
(iii)
Section 10. Subordinated Guaranty of Holdings..................................................................... 79
10.01 The Guaranty........................................................................................ 79
10.02 Bankruptcy.......................................................................................... 79
10.03 Nature of Liability................................................................................. 80
10.04 Guaranty Subordinate to Senior Indebtedness......................................................... 80
10.05 Guaranty Absolute................................................................................... 80
10.06 Independent Obligation.............................................................................. 80
10.07 Authorization....................................................................................... 81
10.08 Reliance............................................................................................ 82
10.09 Subordination....................................................................................... 82
10.10 Waiver.............................................................................................. 82
10.11 Guaranty Continuing................................................................................. 83
10.12 Binding Nature of Guaranties........................................................................ 83
10.13 Judgments Binding................................................................................... 83
Section 11. Subordination......................................................................................... 84
11.01 Notes Subordinate to Senior Indebtedness............................................................ 84
11.02 Payment Over of Proceeds Upon Dissolution........................................................... 84
11.03 No Payment in Certain Circumstances................................................................. 86
11.04 Acceleration Rights; Remedies....................................................................... 86
11.05 Payment Otherwise Permitted......................................................................... 87
11.06 Subrogation to Rights of Holders of Senior Indebtedness............................................. 87
11.07 Provisions Solely to Define Relative Rights......................................................... 87
11.08 No Waiver of Subordination Provisions; Amendment.................................................... 88
11.09 Reliance on Judicial Order or Certificate of
Liquidating Agent................................................................................... 88
11.10 Turnover; Miscellaneous Subordination Provisions.................................................... 88
Section 12. Miscellaneous....................................................................................... 90
12.01 Payment of Expenses, Etc............................................................................ 90
12.02 Right of Setoff..................................................................................... 91
12.03 Notices............................................................................................. 91
12.04 Benefit of Agreement................................................................................ 92
12.05 No Waiver; Remedies Cumulative...................................................................... 93
12.06 Payments Pro Rata................................................................................... 93
12.07 Calculations; Computations.......................................................................... 94
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL......................................................................... 94
12.09 Counterparts........................................................................................ 95
12.10 Effectiveness....................................................................................... 96
12.11 Headings Descriptive................................................................................ 96
(iv)
12.12 Amendment or Waiver................................................................................. 96
12.13 Survival............................................................................................ 96
12.14 Domicile of Loans................................................................................... 96
(v)
Schedules and Exhibits
----------------------
SCHEDULE I Commitments
SCHEDULE II Insurance Policies
SCHEDULE III [Intentionally Omitted]
SCHEDULE IV Loans, Advances and Commitments
SCHEDULE V [Intentionally Omitted]
SCHEDULE VI Subsidiaries
SCHEDULE VII Existing Liens
SCHEDULE VIII Existing Indebtedness
SCHEDULE IX Retained Indebtedness
SCHEDULE X Financial Statements
SCHEDULE XI Material Contracts
SCHEDULE XII Capitalization
SCHEDULE XIII Acquisitions
SCHEDULE XIV Unwind Provisions and Mandatory Distributions
SCHEDULE XV Pre-closing Acquisitions
SCHEDULE XVI Contemporaneous Acquisitions
SCHEDULE XVII Post-closing Acquisitions
SCHEDULE XVIII Dividend Restrictions
SCHEDULE XIX ERISA
SCHEDULE XX Practice Management Agreements
SCHEDULE XXI Exclusions From Other Subordinated Debt
SCHEDULE XXII Personal Guarantees
SCHEDULE XXIII Outstanding Indebtedness Evidenced by Capital Lease Obligations
EXHIBIT A Form of Note
EXHIBIT B Section 2.04(b)(ii) Certificate
EXHIBIT C Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.
EXHIBIT D Form of Officer's Certificate of each Loan Party
EXHIBIT E Form of Registration Rights Agreement
EXHIBIT F Form of Warrant
EXHIBIT G Form of Warrant Agreement
EXHIBIT H Form of Warrant Purchase Agreement
EXHIBIT I Form of Consent Letter
EXHIBIT J Form of Assignment and Assumption Agreement
EXHIBIT K Form of Subordinated Guaranty
EXHIBIT L Solvency Certificate
(vi)
SENIOR SUBORDINATED LOAN AGREEMENT, dated as of October 27, 1997,
among Physician Health Corporation, a corporation organized and existing under
the laws of the State of Delaware ("Holdings"), PHC Holding Corporation, a
corporation organized and existing under the laws of the State of Georgia and a
wholly-owned Subsidiary of Holdings (the "Borrower"), the financial institutions
party hereto from time to time (each a "Lender" and, collectively, the
"Lenders"), and Paribas Capital Funding LLC ("PCF"), as agent (in such capacity,
the "Agent") for the Lenders. Unless otherwise defined herein, all capitalized
terms used herein and defined in Section 8 are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lenders lend to the
Borrower $15,000,000 for the purposes specified herein; and
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Lenders are willing to make loans to the Borrower in an aggregate
amount of $15,000,000;
NOW, THEREFORE, IT IS AGREED:
Section 1. Amount and Terms of Loans.
-------------------------
1.01 The Loans. (a) Subject to and upon the terms and conditions set
---------
forth herein, each Lender severally agrees to make, on the Initial Funding Date
and on the Subsequent Funding Date, a loan in Dollars (each a "Loan" and,
collectively, the "Loans") to the Borrower in a principal amount equal to such
Lender's Initial Commitment and Subsequent Commitment, respectively. Any amount
of any Loan prepaid or repaid may not be reborrowed. The Loans shall be made on
notice given by the Borrower to the Agent at its Notice Office no later than
1:00 P.M. (New York time) on the Business Day preceding the applicable Funding
Date, which notice shall be in writing and shall be irrevocable and shall
specify the Funding Date (which shall be a Business Day). The Agent shall
promptly give each Lender notice of the Agent's receipt from the Borrower of
such written notice.
(b) No later than 12:00 noon (New York time) on the applicable
Funding Date, each Lender will make available at the Payment Office of the Agent
the amount of the Loan to be made by it, in immediately available funds, and the
Agent will make available to the Borrower at the Payment Office the aggregate of
the amounts so made available by the Lenders. Unless the Agent shall have been
notified by any Lender prior
to such Funding Date that such Lender does not intend to make available to the
Agent on such Funding Date funds in the amount of such Lender's Commitment, the
Agent may assume that such Lender has made such amount available to the Agent
and the Agent 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, 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 pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover on demand 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 until
the date such corresponding amount is recovered by the Agent, at a rate per
annum equal to (i) if recovered from such Lender, the cost to the Agent of
acquiring overnight federal funds and (ii) if recovered from the Borrower, the
rate of interest applicable to the Loans, as determined pursuant to Section
1.02. Nothing in this subsection (b) shall be deemed to relieve any Lender from
its obligation to make its Loan hereunder or to prejudice any rights which the
Borrower may have against any Lender as a result of any failure by such Lender
to make its Loan hereunder. It is understood that no Lender shall be responsible
for any default by any other Lender of its obligation to make its Loan hereunder
and that each Lender shall be obligated to make its Loan provided to be made by
it hereunder regardless of the failure of any other Lender to make its Loan
hereunder.
(c) The Borrower's obligation to pay the principal of, and interest
on, the Loans made by each Lender shall be evidenced by a promissory note to the
order of such Lender, in substantially in the form of Exhibit A, duly executed
and delivered by the Borrower on the Initial Funding Date or the Subsequent
Funding Date, as the case may be (each a "Note" and, collectively, the "Notes"),
and in a stated principal amount equal to the Commitment of such Lender in
respect of such Funding Date.
1.02 Interest. (a) The Borrower agrees to pay interest in respect of
--------
the unpaid principal amount of each Loan from the date such Loan is made until
the maturity thereof (whether by acceleration or otherwise), at a rate which (i)
shall at all times be equal to 12% per annum with respect to Loans made on the
Initial Funding Date and (ii) shall be the rate that is, on the Subsequent
Funding Date, the greater of 12% per annum or the rate per annum for 5 year U.S.
Treasuries (as determined by the Agent) plus 6%; with respect to Loans made on
the Subsequent Funding Date.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the then
applicable interest rate plus 2%, in each case with such interest to be payable
on demand.
2
(c) Accrued and unpaid interest shall be payable quarterly in arrears
on each Quarterly Payment Date, on any repayment (on the amount repaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
1.03 Fees. The Borrower agrees to pay to the Agent for distribution to
----
each Lender, quarterly in arrears on each Quarterly Payment Date and on the date
of each reduction or termination of the Subsequent Commitment, a fee (the
"Unused Commitment Fee") computed at a rate for each day equal to .50% per annum
of the Subsequent Commitment of such Lender.
1.04 Mandatory Reduction and Termination of Subsequent Commitment. (a)
------------------------------------------------------------
The Subsequent Commitment of each Lender shall automatically be reduced as of
the date of any payment (including scheduled payments) of the principal of the
Metroplex Note by an amount equal to the amount of such payment; and
(b) The Subsequent Commitment shall terminate upon the earliest to
occur of (i) repayment in full of the outstanding Loans, (ii) the thirtieth day
after the delivery by Holdings or the Borrower of a report pursuant to Section
5.01 which evidences that a Credit Event Date has occurred, (iii) the fifth day
after the consummation of a Qualified IPO or (iv) April 1, 2002.
Section 2. Repayment; Prepayments; Payments; Taxes.
---------------------------------------
2.01 Payment of Loan. The unpaid principal amount of each Loan plus
---------------
all accrued and unpaid interest thereon and all other amounts owed hereunder
with respect thereto shall be paid in full in cash on the Maturity Date.
2.02 Mandatory and Voluntary Prepayments. (a) The Borrower may, upon
-----------------------------------
not less than two Business Days' and not more than five Business Days' prior
written notice to the Lenders (which notice shall be irrevocable), at any time
and from time to time, prepay the Loans, in whole; provided, however, that no
-------- -------
such prepayment shall be made unless (x) there is no Senior Debt outstanding and
all commitments under the Senior Credit Agreement have been terminated or (y)
the Senior Credit Agreement expressly permits such payments or the required
Banks thereunder have consented to such payment. In connection with any
voluntary prepayment in whole, the Borrower shall prepay the Loan at the
prepayment price set forth below (plus all accrued interest):
3
% of Principal
Prepayment Date During the Period Being Paid
--------------------------------- --------------
From the Initial Funding Date to 105%
but not including the first
anniversary of the Initial Funding Date
From the first anniversary of the Initial Funding 104%
Date to but not including the second
anniversary of the Initial Funding Date
From the second anniversary of the Initial Funding 103%
Date to but not including the third
anniversary of the Initial Funding Date
From the third anniversary of the Initial Funding 102%
Date to but not including the fourth
anniversary of the Initial Funding Date
From the fourth anniversary of the Initial Funding 101%
Date to but not including the fifth
anniversary of the Initial Funding Date
From the fifth anniversary of the Initial Funding 100%
Date and at any time thereafter
(b) The Borrower shall notify the Bank Agent of any prepayment to be
made pursuant to Section 2.02(a) at least five Business Days prior to such
prepayment (unless shorter notice is satisfactory to the Bank Agent).
Notwithstanding the foregoing or the provisions of Section 2.02(d) below, the
Lenders and the Borrower agree and acknowledge that the Senior Credit Agreement
prohibits any payments that would otherwise be made to the Lenders under Section
2.02(a) or (d) and, as a result thereof, no payment shall be made to the Lenders
under Section 2.02(a) or (d) unless and only to the extent the Senior Credit
Agreement is amended or modified to provide that such amounts may be paid to the
Lenders.
(c) All prepayments (whether voluntary or mandatory) shall include
payment of accrued interest on the principal amount of the Loans so prepaid and
shall be applied to payment of accrued interest before application to principal.
Mandatory prepayments under Section 2.02(d) made on or before November 5, 1999
shall not include any prepayment premiums. Any mandatory prepayment made after
November 5, 1999 shall include a prepayment premium equal to 103% of the
principal being paid. Any
4
payment of the Loans as a result of an Event of Default resulting from a Change
of Control shall be deemed a voluntary prepayment for the purposes of this
Section 2 and shall be paid at the payment price specified in Section 2.02(a) as
if such payment had been voluntary. All prepayments which are applied to
principal will be applied on a pro rata basis to all Loans.
--- ----
(d) The Borrower will apply, or cause its applicable Subsidiaries to
apply, the following amounts first to the permanent reduction of the then
-----
outstanding Senior Debt and any commitments thereunder to make revolving loans,
acquisition loans or issue letters of credit (if required under the terms of the
Senior Debt) and next, to the extent not used to prepay the Senior Debt in
----
permanent reduction thereof or to permanently reduce the commitments therefor,
to the Obligations in the manner set forth in Section 2.02(c):
(i) on the date of the receipt thereof by Holdings or any Subsidiary
of Holdings, the Borrower shall repay, in accordance with Section 2.02(c),
an amount equal to (A) 100% of the cash proceeds (net of underwriting
discounts and commissions and all other reasonable costs associated with
such transaction) from any sale or issuance after the Effective Date of
equity of Holdings or any Subsidiary of Holdings, other than proceeds of
(v) equity issued on the Initial Funding Date and after the Initial Funding
Date as consideration to be paid for Post-Closing Acquisitions, (w) the
equity issued under the Equity Call Agreement, (x) Permitted Equity
Issuances (as defined in the Senior Credit Agreement), (y) equity issued to
the Bank Agent or an Affiliate thereof in connection with its investment of
up to an aggregate of $3,000,000 in Holdings and (z) Excluded Public
Offering Proceeds; provided that, with respect to any proceeds of equity
sold or issued to officers or employees of Holdings or the Borrower
("Employee Stock Proceeds"), such Employee Stock Proceeds shall only be
required to be paid at such time or times that the aggregate amount thereof
not previously applied to the Loans equals or exceeds $100,000, and
provided further that from and after April 30, 1998, Holdings shall not use
or permit to be used any Excluded Public Offering Proceeds to make any
voluntary prepayment of any Indebtedness (other than Senior Debt or the
Loans); and (B) 100% of the cash proceeds (net of underwriting discounts
and commissions, loan fees and all other reasonable costs associated with
such transaction) from any incurrence of any Indebtedness by Holdings or
any Subsidiary of Holdings (other than Indebtedness permitted to be
incurred pursuant to Section 6.04 as said Section is in effect on the
Effective Date);
(ii) on each date after the Effective Date on which Holdings or any
Subsidiary of Holdings receives Net Sale Proceeds from any sale or other
disposition of assets (including capital stock and securities other than
capital stock or securities the proceeds from the sale of which are
recaptured pursuant to Section 2.02(d)(i)(A) or would be recaptured under
Section 2.02(d)(i)(A) but for the proviso
5
contained therein), an amount equal to 100% of such Net Sale Proceeds
excluding Net Sale Proceeds of (A) sales of inventory in the ordinary
course of business, (B) other sales of assets the proceeds of which are
used, or irrevocably committed to be used, to purchase, within 180 days
from the date of sale, properties or assets to be used in the business of
Holdings or its Subsidiaries, provided that the aggregate amount of Net
Sale Proceeds excluded pursuant to this clause (B) shall not exceed
$600,000 in the aggregate in any one fiscal year, and (C) other sales of
assets the Net Sale Proceeds of which do not exceed, in the aggregate,
$100,000 in any one fiscal year;
(iii) on each date after the Effective Date on which Holdings or any
Subsidiary of Holdings receives cash proceeds of any Recovery Event, an
amount equal to 100% of such cash proceeds of such Recovery Event (net of
reasonable costs incurred in connection with such Recovery Event, including
the estimated marginal increase in income taxes which will be payable as a
result of such Recovery Event by Holdings or any Subsidiary of Holdings and
repayments of Indebtedness which are required to be made with the proceeds
of such Recovery Event); provided, however, that, so long as no Default or
-------- -------
Event of Default then exists and (A) such proceeds are not in excess of
$500,000 for any one occurrence and $1,500,000 for all occurrences after
the Effective Date, such proceeds shall not be required to be so repaid on
such date to the extent that Holdings delivers a certificate to the Agent
on or prior to such date stating that such proceeds shall be used to
replace or restore any properties or assets in respect of which such
proceeds were paid within a period specified in such certificate not to
exceed one hundred eighty (180) days after the date of receipt of such
proceeds (which certificate shall set forth estimates of the proceeds to be
so expended); (B)(x) if the amount of such proceeds from any such Recovery
Event exceeds $500,000, the entire amount of proceeds from such Recovery
Event shall be repaid and if the amount of such proceeds from any such
Recovery Event, when aggregated with the total amount of all such proceeds
from all Recovery Events occurring after the Effective Date, exceeds
$1,500,000 (excluding any amounts from any Recovery Events previously
repaid pursuant to this Section 2.02(d)(iii)), the amount by which the
amount of proceeds from all Recovery Events (including the Recovery Event
for which the determination is being made) exceeds $500,000 shall be
repaid, and (y) if all or any portion of such proceeds not so repaid
pursuant to this Section 2.02(d)(iii) are not so used within the period
specified in the relevant certificate furnished pursuant to the preceding
clause (A), such remaining portion shall be repaid on the last day of such
specified period; and (C) if the amount of such proceeds from any Recovery
Event which, when aggregated with all other proceeds of Recovery Events
(excluding any amounts from any Recovery Events previously repaid pursuant
to this Section 2.02(d)(iii), or excluded pursuant to clauses (A) and (B)
hereof) during any fiscal year do not exceed $25,000, such proceeds shall
not be included in the
6
calculation of the $1,500,000 threshold amount pursuant to clauses (A) and
(B); and provided, further, that to the extent cash proceeds of any
-------- -------
Recovery Event relate to property leased (rather than owned) by Holdings or
a Subsidiary of Holdings and pursuant to the terms of such lease Holdings
or such Subsidiary is required to pay such proceeds to the lessor or use
such proceeds to replace the leased equipment, then such proceeds shall not
be required to be repaid pursuant to the provisions of this Section
2.02(d)(iii) so long as such proceeds are in fact paid to the lessor or
used to replace the leased equipment; and
(iv) on each date after the Effective Date upon which Holdings or any
of its Subsidiaries receives cash proceeds from any physician or physician
practice group pursuant to the termination of personal guarantees, the
leaving of or termination of employment or any unwind agreement of the type
described in Section 4.26, an amount equal to 100% of such proceeds (net of
reasonable expenses incurred in connection with obtaining such proceeds).
(e) If Holdings has not consummated an initial public offering of
Holdings capital stock on or before the date that is eighteen months after the
date hereof, then the entire outstanding principal amount of the Loans shall be
due and payable, and shall be repaid, in full on December 31, 2002.
2.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Agent for the account of the Lenders not later than 12:00 noon (New York
time) on the date when due and shall be made in Dollars and in immediately
available funds at the Payment Office of the Agent. Whenever any payment to be
made hereunder or under any Note shall be 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.
2.04 Net Payments. (a) All payments made by Holdings or the Borrower
------------
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 2.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income of a Lender pursuant to the laws of the
jurisdiction or any political subdivision or taxing authority thereof or therein
in which the principal office or applicable lending office of such Lender is
located) and all interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any Taxes are so levied or imposed, the Borrower
and Holdings jointly and severally agree to
7
pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due hereunder or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, then Holdings and the
Borrower jointly and severally shall be obligated to reimburse each Lender, upon
the written request of such Lender, for taxes imposed on or measured by the net
income of such Lender pursuant to the laws of the jurisdiction or any political
subdivision or taxing authority thereof or therein in which the principal office
or applicable lending office of such Lender is located as such Lender shall
determine are payable by such Lender in respect of such amounts so paid to or on
behalf of such Lender pursuant to the preceding sentence and in respect of any
amounts paid to or on behalf of such Lender pursuant to this sentence. The
Borrower or Holdings, as the case may be, will furnish to the Agent within 45
days after the date of the payment of any Taxes due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower or
Holdings. The Borrower and Holdings jointly and severally agree to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Agent on or prior to the Effective Date, or in the case of a Lender that
is an assignee or transferee of an interest under this Agreement pursuant to
Section 12.04 (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 4224 or 1001 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit B (any such certificate, a "Section
2.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 2.04(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the
8
Agent of its inability to deliver any such Form or Certificate, in which case
such Lender shall not be required to deliver any such Form or Certificate
pursuant to this Section 2.04(b). Notwithstanding anything to the contrary
contained in Section 2.04(a), but subject to the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender that is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 2.04(a) hereof to gross-
up payments to be made to a Lender in respect of income or similar taxes imposed
by the United States if (I) such Lender has not provided to the Borrower the
Internal Revenue Service Forms required to be provided to the Borrower pursuant
to this Section 2.04(b) or (II) in the case of a payment, other than interest,
to a Bank described in clause (ii) above, to the extent that such forms do not
establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 2.04, the Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner set forth in Section 2.04(a) (without regard
to the identity of the jurisdiction requiring the deduction or withholding) in
respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
Section 3. Conditions Precedent to Loans.
-----------------------------
3.01 Conditions Precedent to Loans on the Initial Funding Date. The
---------------------------------------------------------
obligation of each Lender to make its Loan on the Initial Funding Date is
subject to (a) the condition precedent that the Effective Date shall have
occurred and (b) the satisfaction of the following additional conditions
precedent:
(a) Notes. On the Initial Funding Date, there shall have been
-----
delivered to the Agent for the account of each Lender the appropriate Note, in
each case executed by the Borrower to the order of such Lender.
(b) Officers' Certificate. On the Initial Funding Date, the Agent
---------------------
shall have received a certificate dated the Initial Funding Date signed on
behalf of each Loan Party by the President, any Executive Vice President or any
Vice President of such Loan Party and which certificate, in the case of Holdings
and the Borrower, shall state that all of the conditions specified in Sections
3.01(g), (h), (j), (n), (o), (p), (q), (r) and (s) have been satisfied on such
date. Each such certificate shall be in the form of Exhibit D with
9
appropriate insertions, together with all exhibits referred to in such
certificate, and the foregoing shall be acceptable to the Agent and the Lenders.
(c) Opinions of Counsel. On the Initial Funding Date, the Agent shall
-------------------
have received (i) from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., counsel to Holdings and the
Borrower, an opinion addressed to the Agent and each of the Lenders and dated
the Initial Funding Date covering the matters set forth in Exhibit C and such
other matters incident to the transactions contemplated herein and in the
Warrant Documents as the Agent may request and (ii) from counsel rendering such
opinions, reliance letters addressed to the Agent and each of the Lenders and
dated the Initial Funding Date with respect to all legal opinions delivered in
connection with the Transaction, with such legal opinions to be in form and
substance satisfactory to the Agent and the Lenders.
(d) Corporate Documents; Proceedings. All corporate and legal
--------------------------------
proceedings and all instruments and agreements relating to the transactions
contemplated by this Agreement, the other Loan Documents, the Warrant Documents
and the other Documents shall be satisfactory in form and substance to the Agent
and the Lenders, and the Agent shall have received all information and copies of
all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams, if
any, which the Agent or the Lenders may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
(e) Subordinated Guaranties. The Agent shall have received a
-----------------------
Subordinated Guaranty, duly executed by each Subordinated Guarantor, each of
which Subordinated Guaranties shall be dated the Initial Funding Date.
(f) Capitalization. On the Initial Funding Date, after giving effect
--------------
to the Transaction, the ownership and capital structure (including, without
limitation, the terms of the capital stock, options, warrants or other
securities issued or to be issued by Holdings and the Subsidiaries of Holdings)
shall be in form and substance satisfactory to the Agent and the Lenders.
(g) Senior Credit Agreement. On or prior to the Initial Funding Date,
-----------------------
there shall have been delivered to the Agent and the Lenders true and complete
copies of the Senior Credit Agreement and all schedules, annexes and exhibits
thereto (certified as such by an appropriate officer of Holdings or the
Borrower), in each case in form and substance satisfactory to the Agent and the
Lenders. All conditions precedent to the making of the initial loans thereunder
shall have been satisfied or waived by the parties thereto, and all
representations and warrants set forth in the Senior Credit Agreement shall be
true and complete in all material respects as if made on and as of the Initial
Funding Date.
10
(h) Litigation. On the Initial Funding Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Document or any documentation executed in connection
herewith or with respect to the Transaction, or which the Agent or Lenders shall
determine could reasonably be expected to have a materially adverse effect on
the Transaction or on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of Holdings and the Subsidiaries of Holdings taken as a whole (after
giving effect to the Transaction).
(i) Fees, etc. On the Initial Funding Date, the Borrower shall have
---------
paid in full to the Agent and the Lenders all costs, fees and expenses
(including, without limitation, all legal fees and expenses) payable to the
Agent and the Lenders to the extent then due pursuant hereto or as otherwise
agreed between the Borrower and the Agent.
(j) Approvals. All necessary governmental and third party approvals
---------
in connection with the Transaction and the transactions contemplated by the
Documents and otherwise referred to herein or therein (including, but not
limited to, those approvals required in respect of existing permits, landlord
consents and transfers of contract rights) shall have been obtained and remain
in effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the sole judgment of the Agent or the Lenders, adverse conditions
upon the consummation of the Transaction or the other transactions contemplated
by the Documents and otherwise referred to herein or therein. There shall not
exist any judgment, order, injunction or other restraint issued or filed or a
hearing seeking injunction relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the consummation of
the Transaction, the transactions contemplated by the Documents, or the making
of the Loans.
(k) Warrant Documents. On or prior to the Initial Funding Date, PCF
-----------------
shall have received duly executed copies of the Warrant, the Warrant Purchase
Agreement, the Warrant Agreement and Registration Rights Agreement and all other
documents related thereto.
(l) Financial Statements; Projections; Management Letters. (A) On or
-----------------------------------------------------
prior to the Initial Funding Date, the Lenders shall have received:
(i) the consolidated balance sheets of Holdings as at December 31,
1996 and June 30, 1997 and the related consolidated statements of operations and
cash flows of Holdings for the fiscal year or six month period, as the case may
be, ended as of such dates and consolidated balance sheet of each of the
companies listed on Schedule X hereto as at the respective dates set forth on
such Schedule X and the related statements of earnings and stockholders' equity
and cash flows of each of such companies (or similar financial
11
statements as specified on such Schedule), as applicable for the fiscal periods
ended as of the dates specified in such Schedule, which, in the case of the
annual statements, have been audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P., in the case of
the financial statements of Holdings and have been examined or reviewed by the
independent certified public accountants as specified on such Schedule in the
case of the other financial statements, who delivered unqualified opinions in
respect thereto except as specified on such Schedule; and
(ii) the pro forma (after giving effect to the Transaction and the
related financing thereof) consolidated balance sheet of Holdings as at the
Initial Funding Date;
all of which financial statements in clauses (i) and (ii) shall be prepared in
accordance with generally accepted accounting principles consistent with past
practices and shall be in form and substance satisfactory to the Agent and the
Required Lenders, and shall not disclose any material adverse differences in the
business, properties, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of Holdings and its Subsidiaries taken as
a whole from that previously disclosed to the Agent and the Required Lenders.
(B) On the Initial Funding Date, the Lenders shall have received
detailed consolidated financial projections, certified by the Chief Financial
Officer of Holdings, for Holdings and its Subsidiaries, which include the
projected results of the Borrower, after giving effect to the Transaction and
the other transactions contemplated herein, for the period commencing on the
Initial Funding Date and ending after the fifth anniversary of the Initial
Funding Date (the "Projections"), which Projections, and the supporting
assumptions and explanations thereto, and the accounting practices and
procedures to be utilized by Holdings following the Initial Funding Date, shall
be satisfactory in form and substance to the Agent and the Required Lenders.
(C) On or prior to the Initial Funding Date, the Lenders shall have
received a copy of any "management letter" received by Holdings or any of its
Subsidiaries from its certified public accountants.
(m) Consent Letter. The Agent shall have received a letter from CT
--------------
Corporation Systems, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ substantially in
the form of Exhibit I hereto, indicating its consent to its continued
appointment by Holdings and the Borrower as its agent to receive service of
process as specified in Section 12.08 of this Agreement.
(n) Material Adverse Change, etc. Since June 30, 1997, nothing shall
----------------------------
have occurred (and the Lenders shall have become aware of no facts or conditions
not previously known) which the Agent or the Lenders shall determine (i) could
reasonably be expected to have a material adverse effect on the rights or
remedies of the Lenders or the Agent, or
12
on the ability of any Loan Party to perform its obligations to the Agent and the
Lenders under this Agreement or any other Loan Document, (ii) could reasonably
be expected to have a material adverse effect on the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of any Loan Party and its Subsidiaries
taken as a whole (after giving effect to the Transaction) or (iii) reasonably
indicates the inaccuracy in any material respect of the information previously
provided to the Agent or any Lender in connection with their analysis of the
transactions contemplated hereby or reasonably indicates that the information
previously provided omitted to disclose any material information.
(o) Plans; Shareholders' Agreements; Management Agreements;
-------------------------------------------------------
Employment Agreements; Collective Bargaining Agreements; Debt Agreements;
-------------------------------------------------------------------------
Affiliate Contracts; Tax Sharing Agreements and Material Contracts. On or prior
------------------------------------------------------------------
to the Initial Funding Date, there shall have been delivered to the Agent true
and correct copies, certified as true and complete by an appropriate officer of
Holdings or the Borrower of:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required by the
Agent, and for each such Plan that is a "single-employer plan," as defined
in Section 4001(a)(15) of ERISA, the most recently prepared actuarial
valuation therefor) and any other "employee benefit plans," as defined in
Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
Holdings or any of its Subsidiaries or any ERISA Affiliate (provided that
the foregoing shall apply in the case of any multiemployer plan, as defined
in 4001(a)(3) of ERISA, only to the extent that any document described
therein is in the possession of Holdings or any Subsidiary of Holdings or
any ERISA Affiliate or reasonably available thereto from the sponsor or
trustee of any such plan) (collectively, the "Employee Benefit Plans");
(ii) all agreements entered into by Holdings or any Subsidiary of
Holdings governing the terms and relative rights of its capital stock and
any agreements entered into by shareholders relating to any such entity
with respect to their capital stock (collectively, the "Shareholders'
Agreements");
(iii) all agreements with members of, or with respect to the,
management of Holdings or any Subsidiary of Holdings other than Employment
Agreements (collectively, the "Management Agreements");
13
(iv) any employment agreements entered into by Holdings or any
Subsidiary of Holdings with any physician or with any officer or director
of Holdings, or any Subsidiary of Holdings (collectively, the "Employment
Agreements");
(v) all collective bargaining agreements applying or relating to
any employee of Holdings or any Subsidiary of Holdings (collectively, the
"Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Indebtedness of
Holdings or any Subsidiary of Holdings whether or not such agreement is to
remain outstanding after giving effect to the incurrence of Loans on the
Funding Date (collectively, the "Debt Agreements");
(vii) all tax sharing, tax allocation and other similar agreements
entered into by Holdings or any Subsidiary of Holdings (collectively, the
"Tax Sharing Agreements");
(viii) all contracts, agreements or understandings entered into
between Holdings or any of its Subsidiaries on the one hand, and any of its
Affiliates, on the other hand (collectively, the "Affiliate Contracts");
and
(ix) all material contracts and licenses of Holdings or any of its
Subsidiaries that are to remain in effect after giving effect to the
consummation of the Transaction, including, without limitation, all
material management service contracts, practice management agreements and
all personal guarantees from physicians guaranteeing the revenues of their
practices and all material securities purchase agreements (collectively,
the "Material Contracts") as set forth on Schedule XI hereto;
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt
Agreements, Tax Sharing Agreements, Affiliate Contracts and Material Contracts
shall be in form and substance satisfactory to the Agent and the Required
Lenders and shall be in full force and effect on the Initial Funding Date.
(p) Consummation of the Acquisitions. (i) On or prior to the Initial
--------------------------------
Funding Date, there shall have been delivered to the Agent true and correct
copies of all Acquisition Documents pertaining to Pre-Closing and
Contemporaneous Acquisitions and all Acquisition Documents to the extent
available for Post-Closing Acquisitions and all terms and provisions of such
Acquisition Documents shall be in form and substance satisfactory to the Agent
and shall not have been amended without the consent of the Agent;
14
provided, however, in the case of the Acquisition Documents relating to Post-
Closing Acquisitions, there shall have been delivered to the Agent true and
correct copies of substantially final forms of the Acquisition Documents and the
final forms of such Acquisition Documents shall not vary materially therefrom.
Each Acquisition, including all of the terms and conditions thereof, shall have
been duly approved by the board of directors and (if required by applicable law)
the shareholders of the parties thereto prior to the closing of such
Acquisition, and all Acquisition Documents shall have been duly executed and
delivered by the parties thereto and shall be in full force and effect. The
representations and warranties set forth in the Acquisition Documents shall be
true and correct in all material respects as if made on and as of the Initial
Funding Date. Each of the conditions precedent to Holdings' and the Borrower's
obligations to con summate each Pre-Closing Acquisition and each Contemporaneous
Acquisition as set forth in the applicable Acquisition Documents shall have been
satisfied to the satisfaction of the Agent and the Required Lenders or waived
with the consent of the Agent and the Required Lenders, and each Pre-Closing
Acquisition and each Contemporaneous Acquisition shall have been consummated in
accordance with all applicable law and the respective Acquisition Documents and
the consideration payable in connection therewith shall not exceed the Purchase
Price for such Acquisition.
(ii) On the Initial Funding Date after giving effect to the
Transaction (to the extent consummated on such date), the ownership and capital
structure (including, without limitation, the terms of any capital stock,
options, warrants or other securities issued or to be issued by Holdings or any
of its Subsidiaries) as of the Initial Funding Date and management of Holdings
and its Subsidiaries shall be in form and substance satisfactory to the Agent
and the Required Lenders.
(q) Solvency Certificate; Insurance Analyses. On the Initial Funding
----------------------------------------
Date, Holdings shall cause to be delivered to the Agent and the Lenders: (i) a
solvency certificate from the Chief Financial Officer of Holdings, in the form
of Exhibit L hereto, which shall be addressed to the Agent and each of the
Lenders and dated the Initial Funding Date and in form and substance
satisfactory to the Agent and the Required Lenders, setting forth the conclusion
that, after giving effect to the Transaction and the incurrence of all
financings contemplated hereby, each of Holdings and its Subsidiaries (on a
consolidated basis) and the Borrower and its Subsidiaries (on a consolidated
basis), are not insolvent and will not be rendered insolvent by the Indebtedness
incurred in connection herewith and the Senior Credit Agreement, will not be
left with unreasonably small capital with which to engage in their respective
businesses and will not have incurred debts beyond their ability to pay such
debts as they mature and become due, and (ii) evidence (including, without
limitation, certificates with respect to each insurance policy listed on
Schedule II) of insurance, complying with the requirements of Section 5.03, with
respect to the business and properties of Holdings and its Subsidiaries, in
scope, form and substance satisfactory to the Agent and the Required Lenders.
15
(r) Equity Amendments. Holdings shall obtain amendments to the terms
-----------------
of its capital stock (the "Equity Amendments"), in form and substance
satisfactory to the Agent and the Required Lenders, subordinating any put
rights, mandatory redemption provisions or similar provisions which require the
payment by Holdings or any of its Subsidiaries of any amounts with respect to
such capital stock while any "senior debt" (to be defined in a manner acceptable
to the Agent) remains outstanding and such other amendments as may be reasonably
requested by the Agent.
(s) Subordinated Debt. All indebtedness of any subsidiary of Holdings
-----------------
required by the Agent to be subordinated to the Loans (the "Other Subordinated
Debt") shall have been amended (the "Subordinated Debt Amendments") to provide
that such Subsidiary shall be released from all of its obligations under such
indebtedness and such indebtedness is assumed by Holdings and shall be
subordinated to all indebtedness under this Agreement and refinancings thereof
with such subordination provisions to be in form and substance satisfactory to
the Required Lenders; provided, however, that notwithstanding the foregoing,
-------- -------
Other Debt shall not include such indebtedness as set forth on Schedule XXI.
3.02 Conditions Precedent to All Loans. The obligation of each Lender
---------------------------------
to make its Loan on any Funding Date (including the Initial Funding Date) is
subject at the time to the satisfaction of the following conditions:
(a) Notes. On such Funding Date, there shall have been delivered to
-----
the Agent for the account of each Lender the appropriate Note, in each case
executed by the Borrower to the order of such Lender.
(b) No Default; Representations and Warranties. At the time of each
------------------------------------------
such Loan and also after giving effect thereto (i) there shall exist no Default
or Event of Default and (ii) all representations and warranties contained herein
shall be true and complete in all material respects with the same effect as
though such representations and warranties had been made on such Funding Date
except for representations and warranties expressly stated to relate to a
specific earlier date, which shall be true and correct in all material respects
as of such date.
(c) Material Adverse Change, etc. Since June 30, 1997, nothing shall
----------------------------
have occurred (and the Lenders shall have become aware of no facts or conditions
not previously known) which the Agent or the Lenders shall determine (i) could
reasonably be expected to have a material adverse effect on the rights or
remedies of the Lenders or the Agent, or on the ability of any Loan Party to
perform its obligations to the Agent and the Lenders under this Agreement or any
other Loan Document, (ii) could reasonably be expected to have a materially
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of any Loan Party and its Subsidiaries taken as a whole or (iii)
reasonably indicates the
16
inaccuracy in any material respect of the information previously provided to the
Agent or any Lender in connection with their analysis of the transactions
contemplated hereby or reasonably indicates that the information previously
provided omitted to disclose any material information.
(d) Litigation. On such Funding Date, no litigation by any entity
----------
(private or governmental) shall be pending or threatened with respect to this
Agreement, any other Document or any documentation executed in connection
herewith, or which the Agent or Lenders shall determine could reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of Holdings and its Subsidiaries taken as a whole.
(e) Notice from Borrower. Prior to the making of a Loan, the Agent
--------------------
shall have received a notice from the Borrower pursuant to Section 1.01.
(f) Metroplex Note. Unless a Credit Event Date or a Qualified IPO
--------------
shall have occurred on or prior to the Subsequent Funding Date, the Agent shall
have consented to the making of the loans on the Subsequent Funding Date and the
proceeds of the Loans made on the Subsequent Funding Date shall only be used to
pay the Metroplex Note in full.
Section 4. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Lenders to enter into this Agreement and to make the Loans, each of
Holdings and the Borrower makes the following representations, warranties and
agreements as to itself and its Subsidiaries on and as of the Initial Funding
Date and on and as of the Subsequent Funding Date, all of which representations,
warranties and agreements shall survive the execution and delivery of this
Agreement and the other Loan Documents and the Subsequent Funding Date, with the
occurrence of the Subsequent Funding Date being deemed to constitute a
representation and warranty that the matters specified in this Section 4 are
true and correct on and as of such date:
4.01 Corporate Status. Each Loan Party and its Subsidiaries (other
----------------
than Physician Network of Brevard Inc., a Florida Corporation) (i) is a duly
organized and validly existing corporation (or a limited liability company or
partnership, as applicable) in good standing under the laws of the jurisdiction
of its organization, (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of property or the conduct of its business requires such
qualifications except for failures to be so qualified which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
17
properties, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole.
4.02 Corporate Power and Authority. Each Loan Party and its
-----------------------------
Subsidiaries has the corporate power to execute, deliver and perform the terms
and provisions of each of the Documents to which it is party and has taken all
necessary corporate action (or limited liability company or partnership action
if applicable) to authorize the execution, delivery and performance by it of
each of such Documents. Each Loan Party and its Subsidiaries has duly executed
and delivered each of the Documents to which it is party, and each of such
Documents constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law).
4.03 No Violation. Neither the execution, delivery or performance by
------------
any Loan Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental instrumentality applicable to it, (ii) will
conflict 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 the Senior Credit Agreement) upon any of the property or assets of any Loan
Party or its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other agreement, contract
or instrument to which any of them are a party or by which any of their property
or assets is bound or to which any of them may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws (or similar
organizational documents) of any Loan Party or its Subsidiaries.
4.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Initial Funding Date
and are in full force and effect), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of any
Document, (ii) the legality, validity, binding effect or enforceability of any
such Document or (iii) the Transaction.
4.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; Etc. (i) The audited consolidated balance sheets of
-----------------------------
Holdings as at December 31, 1996 and June 30, 1997 and the related consolidated
statements of operations and cash flows of Holdings for the fiscal year or six
month period, as the case may be, ended as of such dates, and the financial
statements of each company listed on Schedule X
18
at the dates listed on Schedule X and for the fiscal periods ended as of the
dates listed on Schedule X, which, in the case of the annual statements, have
been audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P., in the case of the financial statements
of Holdings and have been examined or reviewed by the independent certified
public accountants listed on Schedule X, in the case of the other financial
statements, who delivered unqualified opinions in respect thereto and (ii) the
pro forma (after giving effect to the Transaction and the related financing
thereof) consolidated balance sheet of Holdings and the Borrower as at the
Initial Funding Date, copies of all of which financial statements referred to in
the pre ceding clauses (i) and (ii) have heretofore been furnished to the Agent,
present fairly the financial position of the respective entities at the dates of
said statements and the results of operations for the period covered thereby
(or, in the case of the pro forma balance sheet, present a good faith estimate
of the pro forma ▇▇▇▇▇ cial condition of Holdings and its Subsidiaries (after
giving effect to the Transaction) on a consolidated basis at the date thereof).
All such financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently applied except to the
extent provided in the notes to said financial statements and with respect to
interim financial statements, subject to normal year end adjustments. Since June
30, 1997, there has been no material adverse change in the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of Holdings and its Subsidiaries
taken as a whole.
(b) On and as of the Initial Funding Date, on a pro forma basis after
giving effect to the Transaction and all other transactions contemplated by the
Documents as of such date and to all Indebted ness (including, without
limitation, the Loans) being incurred in connection with the Transaction, and
Liens created, and to be created, by each Loan Party in connection therewith:
(a) the sum of the assets (including all contribution and subrogation rights and
other intangible assets), at a fair valuation, of each Loan Party will exceed
its debts; (b) no Loan Party has incurred or intends to, or believes that it
will, incur debts beyond its ability to pay such debts as such debts mature; and
(c) each Loan Party will have sufficient capital with which to conduct its
business. For purposes of this Section 4.05(b) "debt" means any liability on a
claim, and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, subordinated, disputed,
undisputed, secured or unsecured.
(c) Except as fully reflected in the financial statements and the
notes related thereto described in Section 4.05(a), there were as of the Initial
Funding Date (and after giving effect to the Transaction and the other
transactions contemplated hereby and by the Documents) no liabilities or
obligations with respect to Holdings or any of its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether
19
or not due) which, either individually or in aggregate, could reasonably be
expected to be material to Holdings and its Subsidiaries taken as a whole. As of
the Initial Funding Date, neither Holdings nor any of its Subsidiaries knows of
any basis for the assertion against Holdings or any of its Subsidiaries of any
liability or obligation of any nature whatsoever that is not fully reflected in
the financial statements and the notes related thereto described in Section
4.05(a) which, either individually or in the aggregate, could reasonably be
expected to be material to Holdings and its Subsidi aries taken as a whole. As
of the Initial Funding Date (and after giving effect to the Transaction) none of
Holdings or any of its Subsidiaries will have any outstanding Indebtedness or
preferred stock other than (i) the Loans, (ii) the Senior Debt, (iii) the
Existing Indebtedness and (iv) Holdings Preferred Stock.
(d) On and as of the Initial Funding Date, the Projections have been
prepared in good faith by Holdings and there are no statements or conclusions in
any of the Projections which are based upon or include information known to
Holdings to be misleading or which fail to take into account material infor
mation regarding the matters reported therein. On the Initial Funding Date,
each of Holdings and the Borrower believes that the Projections were reasonable
and attainable (although actual results may differ from the Projections and no
representation is made that the Projections will in fact be attained).
4.06 Litigation. There are no actions, suits or proceedings pending
----------
or, to the best knowledge of each Loan Party and its Subsidiaries, threatened
(i) with respect to any Document or the transactions contemplated thereby, or
(ii) that are reasonably likely to materially and adversely affect the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Loan Parties
and their Subsidiaries taken as a whole.
4.07 True and Complete Disclosure. All factual information (taken as a
----------------------------
whole) heretofore or contemporaneously furnished by or on behalf of any of the
Loan Parties or their Subsidiaries in writing to any Lender (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or Warrant Documents or
any transaction contemplated herein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any of the Loan
Parties and their Subsidiaries in writing to any Lender or the Agent will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact.
4.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the
-----------------------------------
Loans shall be used by the Borrower to (i) finance, in part, the consummation of
the Transaction and (ii) pay Transaction Fees and Expenses; provided, however,
-------- -------
that the proceeds of Loans
20
made on a Subsequent Funding Date occurring after June 30, 1998 may only be used
to pay in full the Metroplex Note.
(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit 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
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
4.09 Tax Returns and Payments. Each of the Loan Parties and each of
------------------------
their Subsidiaries has timely filed or caused to be timely filed (including
pursuant to any valid extensions of time for filing) with the appropriate taxing
authority, all material returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income, properties or
operations of such Loan Party or such Subsidiary. The Returns accurately reflect
in all material respects all liability for taxes of such Loan Party or such
Subsidiary as a whole for the periods covered thereby. Each of the Loan Parties
and each of their Subsidiaries has paid all material taxes payable by it which
have become due other than those contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles. There is no material action, suit, proceeding, investigation, audit,
or claim now pending or, to the best knowledge of any of the Loan Parties and
each of their Subsidiaries, threatened by any authority regarding any taxes
relating to any Loan Party or any of its Subsidiaries. As of the Initial Funding
Date, none of the Loan Parties or their Subsidiaries has entered into an
agreement or waiver or has been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of any of the Loan Parties or their Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of any
of the Loan Parties or their Subsidiaries not to be subject to the normally
applicable statute of limitations. None of the Loan Parties or their
Subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. None of the Loan Parties or their
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction or any other transactions contemplated hereby
(it being understood that the representation contained in this sentence does not
cover any future tax liabilities of Holdings or any of its Subsidiaries arising
as a result of the operation of their businesses in the ordinary course of
business).
4.10 Compliance with ERISA. Schedule XIX sets forth each Plan; each
---------------------
Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including, without
limitation, ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code; no
21
Reportable Event has occurred; no Plan which is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan which is subject to Section 412 of the
Code or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; all contributions required to be made with respect to a Plan have been
timely made; neither Holdings nor any Subsidiary of Holdings nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any
such liability under any of the foregoing sections with respect to any Plan; no
condition exists which presents a material risk to Holdings or any Subsidiary of
Holdings or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan
which is subject to Title IV of ERISA; no action, suit, proceeding, hearing,
audit or investigation with respect to the administration, operation or the
investment of assets of any Plan (other than routine claims for benefits) is
pending, expected or threatened; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all
Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date of the most recent
Credit Event Date, would not exceed $100,000; each group health plan (as defined
in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or
has covered employees or former employees of the Borrower, any Subsidiary of the
Borrower, or any ERISA Affiliate has at all times been operated in compliance
with the provisions of Part 6 of subtitle B of Title I of ERISA and Section
4980B of the Code; no lien imposed under the Code or ERISA on the assets of
Holdings or any Subsidiary of Holdings or any ERISA Affiliate exists or is
likely to arise on account of any Plan; and Holdings and its Subsidiaries may
cease contributions to or terminate any employee benefit plan maintained by any
of them without incurring any material liability.
4.11 Representations and Warranties in Documents. All
-------------------------------------------
representations and warranties set forth in the Documents and their
corresponding annexes, exhibits and schedules are true in all material respects
at the time as of which such representations and warranties were made and on the
Initial Funding Date.
4.12 Properties. Each of the Loan Parties and each of their
----------
Subsidiaries has good and merchantable title to all properties owned by it,
including all property reflected in the consolidated pro forma balance sheet
(after giving effect to the Transactions)
22
referred to in Section 4.05(a) (except as sold or otherwise disposed of since
the date of such balance sheet in the ordinary course of business or as
permitted by Section 6.02), free and clear of all Liens, other than (i) as
referred to in such consolidated balance sheet or in the notes thereto or in the
pro forma balance sheet or (ii) as otherwise permitted by Section 6.01.
4.13 Capitalization. On the Initial Funding Date, after giving
--------------
effect to the Transaction, the authorized capital stock of Holdings consists of
(i) 100,000,000 shares of common stock, $.0025 par value per share ("Holdings
Common Stock"), 4,968,572 of which shares are issued and outstanding, (ii)
40,000,000 shares of Non-Voting Common Stock, $.0025 par value, of which no
shares are issued and outstanding, (iii) 20,000,000 shares of Prime Common
Stock, $.0025 par value per share (the "Holdings Prime Stock"), of which
4,955,904 shares are issued and outstanding; (iv) 500,000 shares of Class A
Stock $.01 par value of which 200,000 shares are issued and outstanding; and (v)
18,000,000 shares of preferred stock, $.01 per value per share ("Holdings
Preferred Stock") of which 9,000,000 shares consists of Series B Convertible
Preferred Stock of which 3,460,362 shares are issued and outstanding, and of
which 6,000,000 shares consist of Series B non-voting Convertible Preferred
Stock of which 917,814 shares are issued and outstanding. On the Initial
Funding Date, the authorized capital stock of the Borrower consists of 10,000
shares of common stock $.01 par value per share ("Borrower Common Stock") of
which 1,000 shares are issued and outstanding and are owned solely by Holdings.
All of the issued and outstanding shares of each Loan Party have been duly and
validly issued, are fully paid and nonassessable and, except as set forth on
Schedule XII, have not been issued in violation of any preemptive rights.
Except as set forth on Schedules VI, XI, XII, (limited only to documents
indicated by an asterisk) and XIV on the Effective Date, none of the Loan
Parties or their Subsidiaries has outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock.
4.14 Subsidiaries. On the Initial Funding Date, the corporations,
------------
limited liability companies and partnerships listed on Schedule VI are the only
Subsidiaries of Holdings. Schedule VI correctly sets forth, as of the Initial
Funding Date, the percentage ownership (direct and indirect) of Holdings and the
Borrower in each class of capital stock (or other equity interests) of such
Subsidiaries and also identifies the direct owner thereof.
4.15 Compliance with Statutes, Etc. Each of the Loan Parties and
------------------------------
each of its Subsidiaries is in compliance with all applicable statutes,
regulations 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 applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls
23
and relating to the prohibition on the corporate practice of medicine), except
with respect to each of the foregoing such noncompliance as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Loan Parties and their Subsidiaries taken as a whole.
4.16 Investment Company Act. None of the Loan Parties or any of
----------------------
their Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.17 Public Utility Holding Company Act. None of the Loan Parties or
----------------------------------
any of their Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
4.18 Environmental Matters. (a) Holdings and each of its
---------------------
Subsidiaries is in compliance with, in all respects, all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws except such noncompliances which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of Holdings and its Subsidiaries
taken as a whole. There are no past, pending or, to the best knowledge of
Holdings, threatened material Environmental Claims against Holdings or any of
its Subsidiaries or any Real Property currently owned or operated by Holdings or
any of its Subsidiaries. There are no facts, circumstances, conditions or
occurrences concerning the business or operations of Holdings or any of its
Subsidiaries or any Real Property owned or operated at any time by Holdings or
any of its Subsidiaries or, to the knowledge of Holdings any property adjoining
any such Real Property that could reasonably be expected (i) to form the basis
of an Environmental Claim against Holdings or any of its Subsidiaries or any
Real Property owned or operated by Holdings or any of its Subsidiaries or (ii)
to cause such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property under any Environ
mental Law except such Environmental Claims and restrictions which individually
or in the aggregate could not reasonably be expected to have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects of
Holdings and its Subsidiaries taken as a whole.
(b) Neither Holdings nor any of its Subsidiaries has, at any time,
generated, used, treated, stored, transported or released Hazardous Materials
on, to or from any Real Property at any time owned, leased or at any time
operated by Holdings or any of its Subsidiaries; except for such Hazardous
Material of a type and in a quantity used in the
24
normal course of business of Holdings or its Subsidiaries, which Hazardous
Material is being held, used, stored and disposed of in compliance with
applicable Environmental Laws.
4.19 Labor Relations. Neither Holdings nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on Holdings and its Subsidiaries taken as a
whole. There is (i) no significant unfair labor practice complaint pending
against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings or the Borrower, threatened against any of them, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings or the Borrower, threatened against any of them and (ii) no significant
strike, labor dispute, slowdown or stoppage pending against Holdings or any of
its Subsidiaries or, to the best knowledge of Holdings or the Borrower,
threatened against Holdings or any of its Subsidiaries.
4.20 Patents, Licenses, Franchises and Formulas. Holdings, together
------------------------------------------
with its Subsidiaries, has a license to use or otherwise has the right to use,
free and clear of pending or threatened Liens, all the material patents, patent
applications, trademarks, service marks, trade names, trade secrets, copyrights,
proprietary information, computer programs, data bases, licenses, franchises and
formulas, or rights with respect to the foregoing (collectively, "Intellectual
Property"), and has obtained all licenses and other rights of whatever nature,
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, could reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole.
4.21 Indebtedness. Schedule IX sets forth a true and complete list
------------
of all Indebtedness (other than the Loans and the Senior Debt under the Senior
Credit Agreement) of the Loan Parties and each of their Subsidiaries as of the
Funding Date after giving effect to the Transaction and the other transactions
contemplated hereby (the "Retained Indebtedness"), in each case showing the
aggregate amount thereof, which in the case of all such Retained Indebtedness
shall not exceed $26,565,002 in the aggregate, and the name of the respective
obligor and any other entity which directly or indirectly guaranteed such debt.
None of the Retained Indebtedness was incurred in connection with, or in
contemplation of, the Transaction.
4.22 Restrictions on or Relating to Subsidiaries. There does not
-------------------------------------------
exist any encumbrance or restriction on the ability of (i) any Loan Party or any
Subsidiary thereof to pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits, or to pay
any Indebtedness, (ii) any Loan Party or any
25
Subsidiary thereof to make loans or advances to another Loan Party or any
Subsidiary thereof or (iii) any Loan Party or any Subsidiary thereof to transfer
any of its properties or assets to another Loan Party or any Subsidiary thereof,
except for such encumbrances or restrictions existing under or by reason of (v)
applicable law, (w) this Agreement and the other Loan Documents, (x) the Senior
Credit Agreement and (y) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of any Loan Party or any
Subsidiary thereof.
4.23 The Transaction. All aspects of the Transaction have been
---------------
effected in accordance with the Documents and all applicable law. At the time
of consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to consummate the
Transaction shall have been obtained, given, filed or taken and are in full
force and effect (or effective judicial relief with respect thereto has been
obtained). All applicable waiting periods with respect thereto have or, prior
to the time when required, will have, expired without, in all such cases, any
action being taken by any competent authority which restrains, prevents or
imposes material adverse conditions upon the consummation of the Transaction.
Additionally, at the time of consummation thereof, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the consummation of the Transaction, and there does not exist
any judgment, order or injunction prohibiting or imposing any material adverse
condition upon the Loans or the performance by any of the Loan Parties or their
Subsidiaries of their obligations under the Documents. All actions taken by
each of the Loan Parties and their Subsidiaries pursuant to or in furtherance of
the Transaction have been taken in compliance in all material respects with the
respective Documents and all applicable law. The Physician Practice Groups
being acquired pursuant to the Acquisitions have aggregate pro forma Revenues
and EBITDA at least $46.9 million and $6.2 million, respectively. The Purchase
Price (and the components of such Purchase Price) for each Acquisition is as set
forth in Schedules XV through XVIII. The pro forma EBITDA referred to in the
second preceding sentence is personally guaranteed in part by the selling
physicians pursuant to the terms of the Personal Guarantees. Set forth on
Schedule XXII are the names of the individuals providing personal guarantees
(the "Personal Guarantees") and a description of such guarantees. Each of the
Personal Guarantees constitutes the legal, valid and binding obligation of each
of the guarantors enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium
or similar laws relating to creditors' rights generally or by general equitable
principles (regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
4.24 Defaults. As of the Initial Funding Date, neither Holdings nor
--------
any of its Subsidiaries is in, nor has Holdings or any of its Subsidiaries
received any notices alleging any, breach or default by Holdings or any of its
Subsidiaries under any contract with a doctor or medical practice group or under
any other Material Contract.
26
4.25 Material Contracts. All Material Contracts of Holdings and each
------------------
of its Subsidiaries as of the Initial Funding Date are listed on Schedule XI
hereto.
4.26 Unwind Provisions. Except as set forth on Schedule XIV, as of
-----------------
the Initial Funding Date, neither Holdings nor any of its Subsidiaries is party
to an agreement of any nature which allows any party to such agreement, upon the
happening or non-happening of an event, to repurchase the stock or assets it
sold to Holdings or its Subsidiary in the original sale of such party's medical
practice or put such party in the position or a similar position to that the
party maintained prior to entering into such agreement.
4.27 Practice Management Agreements. As of the Initial Funding Date,
------------------------------
all of the practice management agreements or similar agreements with physicians
or physicians entities to which Holdings or its Subsidiaries are directly or
indirectly parties to are set forth on Schedule XX. All of the rights and
interest, including the ability to collect proceeds, of Holdings and its
Subsidiaries under the agreements set forth on Schedule XX are assignable to the
Bank Agent as collateral for the Senior Debt without the consent or approval of
any third party.
4.28 Contemporaneous Acquisitions. All of the Acquisitions that the
----------------------------
Borrower or its Subsidiaries will effect on the Initial Funding Date are set
forth on Schedule XVI (the "Contemporaneous Acquisitions").
4.29 Post-Closing Acquisitions. All of the Acquisitions that the
-------------------------
Borrower or its Subsidiaries will effect after the Initial Funding Date with the
proceeds of the Term Loan portion of the Senior Debt or Notes are set forth on
Schedule XVII (the "Post-Closing Acquisitions").
4.30 Repurchase Obligations. As of the Initial Funding Date, no
----------------------
Material Contract requiring Holdings or any of its Subsidiaries to repurchase,
purchase or otherwise acquire or make distributions with respect to, its capital
stock (or with respect to rights, options or warrants with respect to its
capital stock) other than as set forth on Schedule XIV.
Section 5. Affirmative Covenants. Each of Holdings and the Borrower
---------------------
covenants and agrees that on and after the Effective Date and until the Loans
and Notes, together with interest, and all other Obligations (other than
indemnities and similar Obligations for which no claim has been made), are paid
in full and for so long as the Commitment is outstanding:
5.01 Information Covenants. Holdings or the Borrower shall furnish to
---------------------
the Agent:
27
(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month the consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of earnings for such month and for the elapsed portion
of the fiscal year ended with the last day of such month, setting forth
comparative figures for the corresponding month and elapsed portion of such
fiscal year for the prior fiscal year and comparable budgeted figures for such
period, all of which shall be certified by the chief financial officer or
controller of Holdings as being fairly stated in all material respects subject
to normal year-end audit adjustments and shall be accompanied by a management
discussion and analysis of the results of operations and financial condition
with respect to such period.
(b) Quarterly Financial Statements. Within 45 days after the close of
------------------------------
each of the first three quarterly accounting periods in each fiscal year of
Holdings (i) the consolidated and consolidating balance sheets of Holdings and
its Subsidiaries as at the end of such quarterly period and the related
consolidated and consolidating statements of earnings and stockholders' equity
and statement of cash flows for such quarter, in each case for such quarterly
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, in each case setting forth comparative figures for the
related periods in the prior fiscal year and comparable budgeted figures for
such period, all of which shall be certified by the chief financial officer or
controller of Holdings, subject to normal year-end audit adjustments and shall
be accompanied by a management discussion and analysis of the results of
operations and financial condition with respect to such period.
(c) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of Holdings, the consolidated and consolidating balance sheets
of Holdings and its Subsidiaries as at the end of such fiscal year and the
related consolidated and consolidating statements of earnings and stockholders'
equity and statement of cash flows for such fiscal year and setting forth
comparative figures for the preceding fiscal year and comparable budgeted
figures for such period and certified, (x) in the case of the consolidating
statements by the chief financial officer of Holdings and (y) in the case of the
consolidated financial statements of Holdings and its Subsidiaries, by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ L.L.P. or any of the other "big six" or other independent certified
public accountants of recognized national standing reasonably acceptable to the
Required Lenders, together with a signed opinion of such accounting firm (which
opinion shall not be qualified in any respect) stating that in the course of its
regular audit of the financial statements of Holdings, which audit was conducted
in accordance with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default or Event of Default which has occurred and
is continuing or, if in the opinion of such accounting firm such a Default or
Event of Default has occurred and is continuing, a statement as to the nature
thereof and shall be accompanied by a management discussion and analysis of the
results of operations and financial condition with respect to such period.
28
(d) Management Letters. Promptly after the receipt thereof by
------------------
Holdings or any Subsidiary of the Borrower, a copy of any "management letter"
received by Holdings or such Subsidiary from its certified public accountants.
(e) Budgets. As soon as available but in no event later than 30 days
-------
after the first day of each fiscal year of Holdings, a budget for the Loan
Parties in form reasonably satisfactory to the Agent and the Required Lenders
(including budgeted statements of earnings and sources and uses of cash, cash
flow statements, and balance sheets) prepared by Holdings for each calendar
month of such fiscal year and on an annual basis for the next succeeding fiscal
year prepared in reasonable detail with appropriate presentation and discussion
of the principal assumptions upon which such budgets are based, accompanied by
the statement of the chief financial officer or controller of Holdings to the
effect that, to the best of his or her knowledge, the budget is a reasonable
estimate for the periods covered thereby.
(f) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 5.01(a), (b) and (c), a certificate
of the chief financial officer, chief executive officer, president or corporate
controller of Holdings to the effect that no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has occurred
and is continuing, specifying the nature and extent thereof, which certificate,
in the case of certificates delivered pursuant to Section 5.01(b) or (c), shall
set forth the calculations required to establish whether Holdings or the
Borrower was in compliance with the provisions of Sections 2.02(d), 6.02, 6.04,
6.06 through 6.09, at the end of such fiscal quarter or year, as the case may
be.
(g) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after an officer of any of the Loan Parties or their
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or Event of Default, (ii) any litigation or
governmental investigation or proceeding pending (x) against any of the Loan
Parties or their Subsidiaries which could reasonably be expected to materially
and adversely affect the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Loan Parties and their Subsidiaries taken as a whole or (y)
with respect to any Document, (iii) any other event which could reasonably be
expected to materially and adversely affect the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Loan Parties and their Subsidiaries taken as a
whole and (iv) any default or breach by Holdings or any of its Subsidiaries
under any contract or agreement with any doctor or medical practice or any other
Material Contract or receipt of any notice of such default or breach received
from any doctor or medical practice or any party to any other Material Contract.
29
(h) Other Reports and Filings. Promptly upon transmission thereof,
-------------------------
copies of any financial information, proxy materials and other information and
reports, if any, which any of the Loan Parties or their Subsidiaries (x) has
filed with the Securities and Exchange Commission or any successor thereto (the
"SEC") or (y) has delivered to holders of, or any agent or trustee with respect
to, Indebtedness (including the holders of any Senior Debt) of such Loan Party
or such Subsidiary in its capacity as such a holder, agent, or trustee.
(i) Environmental Matters. Promptly upon, and in any event within two
---------------------
Business Days after an officer of any of the Loan Parties or any of their
Subsidiaries obtains knowledge thereof, notice of any of the following
environmental matters: (i) any pending or threatened material Environmental
Claim against any of the Loan Parties, any of their Subsidiaries, any Real
Property owned or operated by any of the Loan Parties or any of their
Subsidiaries; (ii) any condition or occurrence on or arising from any Real
Property owned or operated at any time by any of the Loan Parties or any of
their Subsidiaries that (A) could reasonably be anticipated to result in a
material noncompliance by such Loan Party or Subsidiary with any applicable
Environmental Law, or (B) could reasonably be anticipated to form the basis of a
material Environmental Claim against such Loan Party or Subsidiary or any Real
Property owned or operated by such Loan Party or Subsidiary; (iii) any condition
or occurrence on any Real Property owned or operated by any of the Loan Parties,
any of their Subsidiaries or any property adjoining such Real Property that
could reasonably be anticipated to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability of
such Real Property under any Environmental Law; and (iv) the taking of any
removal or remedial action in response to a material Release or material
threatened Release or the actual or alleged presence of any Hazardous Material
on or from any Real Property owned or operated at any time by any of the Loan
Parties or any of their Subsidiaries in each case as required by any
Environmental Law or any governmental or other administrative agency. All such
notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and such Loan
Party's, such Subsidiary's response thereto. In addition, Borrower will provide
the Lenders with copies of all material non-privileged communications with any
government or governmental agency relating to Environmental Claims, all material
communications with any person relating to material Environmental Claims, and
such detailed reports of any material Environmental Claim as may reasonably be
requested by the Required Lenders.
(j) Annual Meetings with Lenders. Within 120 days after the close of
----------------------------
each fiscal year of Holdings, Holdings shall, at the request of the Agent, hold
a meeting at its offices or other mutually agreed upon site, with all Lenders
who choose to attend such meeting at which meeting shall be reviewed the
financial results of the previous fiscal year and the financial condition of the
Loan Parties and their Subsidiaries and the budgets presented for the current
fiscal year of the Loan Parties and their Subsidiaries.
30
(k) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) with respect to any Loan Party or its
Subsidiaries, as the Agent or the Required Lenders may reasonably request.
5.02 Books, Records and Inspections. Holdings shall, and shall cause
------------------------------
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries, in conformity with United States generally
accepted accounting principles and all requirements of law, shall be made of all
dealings and transactions in relation to its business and activities. Holdings
shall, and shall cause each of its Subsidiaries to, permit officers and
designated representatives of the Agent or any Lender to visit and inspect,
under guidance of officers of Holdings or such Subsidiaries, any of the
properties of such Loan Party or its Subsidiaries, and to examine the books of
account of such Loan Party or its Subsidiaries and discuss the affairs, finances
and accounts of such Loan Party or its Subsidiaries with, and be advised as to
the same by, its and their officers, all at such reasonable times and intervals
and to such reasonable extent as the Agent or such Lender may request.
5.03 Maintenance of Property, Insurance. Schedule II sets forth a
----------------------------------
true and complete listing of all insurance maintained by Holdings and each of
its Subsidiaries as of the Effective Date. Holdings will, and will cause each of
its Subsidiaries to, (i) keep all material property useful and necessary in its
business in good working order and condition (ordinary wear and tear excepted),
(ii) maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks as
are described on Schedule II, and (iii) furnish to each Lender, upon written
request, full information as to the insurance carried.
5.04 Corporate Franchises. Holdings shall, and shall cause each of
--------------------
its Subsidiaries (other than Immaterial Subsidiaries) to, do or cause to be done
all things necessary to preserve and keep in full force and effect its existence
and its material rights, franchises licenses and patents; provided, however,
-------- -------
that nothing in this Section 5.04 shall prevent the withdrawal of any such
Person of its qualification as a foreign corporation in any jurisdiction where
such withdrawal could not reasonably be expected to have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
properties, operations, condition (financial or otherwise) or prospects of
Holdings and its Subsidiaries taken as a whole.
5.05 Compliance with Statutes, Etc. Holdings shall, and shall cause
-----------------------------
each of its Subsidiaries to, comply with all applicable statutes, regulations
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 except such noncompliance as could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, operations,
31
properties, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole.
5.06 Compliance with Environmental Laws. (a) Holdings shall, and
----------------------------------
shall cause each of its Subsidiaries to, comply, in all material respects, with
all Environmental Laws applicable to the ownership or use of all the Real
Property, and shall promptly pay, or cause its Subsidiaries to promptly pay all
costs and expenses incurred in such compliance, and will keep or cause to be
kept Holdings' or its Subsidiaries' interest in all owned Real Properties free
and clear of any Liens imposed pursuant to such Environmental Laws. Holdings
shall not, and shall not permit any of its Subsidiaries to, generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, Release or disposal of Hazardous Materials on any Real Property, or
transport or permit the transportation of Hazardous Materials to or from any
Real Property other than in the normal course of business in compliance with
applicable law.
(b) At the request of the Agent or the Required Lenders at any time
and from time to time during the existence of this Agreement: (i) if an Event of
Default exists under this Agreement, (ii) upon the reasonable belief by the
Agent that Holdings or any of its Subsidiaries has breached any representation
or covenant herein with respect to any environmental matters and such breach is
continuing, or (iii) in the event notice is provided under Section 5.01(i)
herein, Holdings shall provide, at its sole cost and expense, an environmental
site assessment report concerning any of its or its Subsidiaries' Real Property,
prepared by an environmental consulting firm approved by the Agent and the
Required Lenders, indicating the presence or Release, if any, of Hazardous
Materials on or from any of the Real Property and the potential cost of any
removal or remedial action required by any Environmental Laws in connection with
any Hazardous Materials on such Real Property. If Holdings fails to provide the
same after 30 days' notice or as soon thereafter as is reasonably possible, the
Agent may order the same, and Holdings shall grant and hereby grants to the
Agent and the Lenders and their agents access to such Real Property and
specifically grants the Agent and the Lenders an irrevocable non-exclusive
license to undertake such an assessment all at Holdings' expense, which
assessments, if obtained, will be provided to Holdings.
5.07 ERISA. As soon as possible and, in any event, within 10 days
-----
after Holdings or any of their Subsidiaries knows or has reason to know of the
occurrence of any of the following, Holdings shall deliver to each of the
Lenders a certificate of the chief financial officer of Holdings setting forth
details as to such occurrence and the action, if any, that Holdings, such
Subsidiary, or the relevant ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by Holdings, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant
or the Plan administrator with respect thereto: that a Reportable Event has
occurred; that an accumulated funding deficiency has been incurred or an
application may be or has been
32
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan; that a contribution required to be made to a Plan has not been timely
made; that a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; that proceedings may be
or have been instituted to terminate or appoint a trustee to administer a Plan;
that a proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; that Holdings, any of its
Subsidiaries, or any ERISA Affiliate will or may incur any liability (including
any indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA; or
Holdings or any of its Subsidiaries, may incur any material liability pursuant
to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA). Holdings shall deliver to each of the Lenders
a complete copy of the annual report (Form 5500) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Lenders pursuant to the first sentence hereof,
copies of annual reports and any material notices received by, Holdings, any of
its Subsidiaries, or any ERISA Affiliate with respect to any Plan shall be
delivered to the Lenders no later than 10 days after the date such report has
been filed with the Internal Revenue Service or such notice has been received by
Holdings and any of its Subsidiaries, or such ERISA Affiliate, as applicable.
5.08 End of Fiscal Years; Fiscal Quarters. Holdings' and each of its
------------------------------------
Subsidiaries' fiscal years shall end on December 31 and each of its and its
Subsidiaries' first three fiscal quarters shall end on March 31, June 30 and
September 30.
5.09 Payment of Taxes. Holdings shall, and shall cause each of its
----------------
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would otherwise
attach thereto, and all lawful claims which, if unpaid, might become a lien or
charge upon any properties of any of its Subsidiaries not otherwise permitted
under Section 6.01; provided, however, that no Loan Party or its Subsidiaries
-------- -------
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with generally accepted
accounting principles.
33
5.10 Use of Proceeds. The Borrower shall use all proceeds of the
---------------
Loans as provided in Section 4.08.
5.11 Intellectual Property Rights. Holdings shall, and shall cause
----------------------------
each of its Subsidiaries to make all filings in connection with the transfer of
the Intellectual Property Rights in the Acquisitions. Holdings will and will
cause each of its Subsidiaries to maintain in full force and effect all
Intellectual Property rights necessary or appropriate to the business of
Holdings or any Subsidiary of Holdings and take no action (including, without
limitation, the licensing of Intellectual Property), or fail to take an action,
as the case may be, in connection with such Intellectual Property rights which
could reasonably be expected to result in a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole. Holdings shall, and shall cause each of its
Subsidiaries to, diligently prosecute all pending applications filed in
connection with seeking or seeking to perfect the Intellectual Property rights
and take all other reasonable actions necessary for the protection and
maintenance of the Intellectual Property rights necessary or appropriate to the
business of Holdings or any Subsidiary of Holdings at all times from and after
the Funding Date other than any such actions the failure of which, in the
aggregate, could not reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole.
5.12 Register. The Borrower hereby designates the Agent to serve as
--------
the Borrower's agent, solely for purposes of this Section 5.13, to maintain a
register (the "Register") on which it will record the Loans made by each of the
Lenders and each repayment in respect of the principal amount of the Loans of
each Lender. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Lender, the transfer of the rights to the principal
of, and interest on, any Loan shall not be effective until such transfer is
recorded on the Register maintained by the Agent with respect to ownership of
such Loans and prior to such recordation all amounts owing to the transferor
with respect to such Loans shall remain owing to the transferor. The
registration of an assignment or transfer of all or part of any Loans shall be
recorded by the Agent on the Register only upon the acceptance by the Agent of a
properly executed and delivered assignment and assumption agreement pursuant to
Section 12.04(b). Coincident with the delivery of such an assignment and
assumption agreement to the Agent for acceptance and registration of assignment
or transfer of all or part of a Loan, or as soon thereafter as practicable, the
assigning or transferor Lender shall surrender the Note evidencing such Loan,
and thereupon one or more new Notes in the same aggregate principal amount shall
be issued to the assigning or transferor Lender and/or the new Lender. Holdings
and the Borrower jointly and severally agree to indemnify the Agent from and
against any and all losses,
34
claims, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by the Agent in performing its duties under this
Section 5.12.
5.13 Ownership of Subsidiaries. The Borrower shall, at all times,
-------------------------
unless otherwise expressly permitted by Section 6.02, indirectly own, except as
set forth on Schedule VI, 100% of the capital stock and stock equivalents of
each of its Subsidiaries (other than Immaterial Subsidiaries and other than as
permitted in Section 5.15) provided that if the Borrower indirectly owns less
than 100% of the capital stock and stock equivalents of any such Subsidiary on
the Effective Date, the Borrower shall maintain, at least, its percentage of the
capital stock and stock equivalents of such Subsidiary as of the Effective Date
as is set forth on Schedule VI.
5.14 Observation of Board of Directors. PCF may designate one
---------------------------------
individual (the "Observer") to attend all meetings of the Board of Directors of
Holdings (and any committees thereof) in a non-voting observer capacity. The
Observer shall be entitled to receive all reports, presentations and materials
as if the Observer were a member of the Board of Directors. Notwithstanding the
foregoing and Section 13(d) of the Warrant Agreement, PCF agrees that PCF and
Paribas Principal Incorporated shall together be entitled to designate only one
observer, as shall be mutually agreed upon by them from time to time.
5.15 Permitted Acquisitions. (a) Subject to the provisions of this
----------------------
Section 5.15 applicable thereto and the requirements contained in the definition
of Permitted Acquisition, the Borrower and its Subsidiaries may from time to
time after the Initial Funding Date effect Permitted Acquisitions, so long as
with respect to each Permitted Acquisition, to the extent provided below:
(i) no Default or Event of Default or default or event of default
under the Senior Debt is in existence at the time of the consummation of
such Permitted Acquisition or would exist after giving effect thereto, all
representations and warranties contained herein and in the other Documents
shall be true and correct in all material respects with the same effect as
though such representations and warranties were made on and as of the date
of such Permitted Acquisition (both before and after giving effect thereto)
and no other agreement, contract or instrument to which the Borrower or any
of its Subsidiaries is a party restricts such Permitted Acquisition;
(ii) the Borrower shall have given the Agent and the Lenders at least
30 days (or ten Business Days in the case of clause (s) below) prior
written notice of any such Permitted Acquisition (each such notice, a
"Permitted Acquisition Notice"), which notice shall (r) contain the
estimated date such Permitted Acquisition is scheduled to be consummated,
(s) attach a true and correct copy of
35
the draft purchase agreement, letter of intent, description of material
terms or similar agreement entered into or contemplated to be entered into
by the Borrower or one of its Subsidiaries and the seller in connection
with such Permitted Acquisition, (t) contain the estimated aggregate
purchase price of such Permitted Acquisition and the amount of related
costs and expenses and the intended method of financing thereof, (u)
contain the estimated amount of Acquisition Loans required to effect such
Permitted Acquisition, (v) contain a description of any Permitted Earn-Out
Debt or Permitted Seller Notes to be incurred by Holdings in connection
with such Permitted Acquisition an the maximum potential liability of
Holdings with respect thereto, and (w) contain a description of the
Permitted Equity Issuances to be effected by Holdings in connection with
such Permitted Acquisition;
(iii) the Borrower shall have provided the Lenders with all
information provided to its Board of Directors or any of its shareholders
with respect to such Permitted Acquisition, including without limitation,
all information required pursuant to the Securities Purchase Agreement and
such other information related to the Person or business, division or
product line being acquired and the Permitted Acquisition as the Agent
shall reasonably request, including without limitation expert reports
prepared by such accounting, environmental, and/or other experts as the
Agent shall reasonably request;
(iv) (I) as soon as available but not less than three days after the
execution thereof, a copy of the executed purchase agreement and all
related agreements, schedules and exhibits with respect to such Permitted
Acquisition and (II) at the time of delivery of the purchase agreement, a
certification from the Borrower as to the purchase price for the
acquisition and the estimated amount of all related costs, fees and
expenses and that, except as described, there are no other amounts which
will be payable in connection with the respective Permitted Acquisition;
(v) calculations are made by the Borrower of the Consolidated EBITDA
of the Person or business, division or product line being acquired pursuant
to the respective Permitted Acquisition (determined in accordance with the
definition of Consolidated EBITDA contained herein, but treating references
therein and in any other defined terms used in determining Consolidated
EBITDA to "Holdings" to instead be references to the Person or business,
division or product line being acquired pursuant to the respective
Permitted Acquisition), and the amount thereof shall exceed zero for the
period of four consecutive fiscal quarters (taken as one accounting period)
most recently ended prior to the date of the Permitted Acquisition (the
"Calculation Period"); provided, however, in the case of calculations based
-------- -------
on financial statements not audited by a "big-six accounting firm" or other
nationally recognized accounting firm reasonably acceptable to the Agent,
the Agent and the Required Lenders shall be satisfied that the Consolidated
36
EBITDA of such Person or business, division or product line being acquired
pursuant to the respective Permitted Acquisition exceeds zero for the
Calculation Period;
(vi) the Agent shall be satisfied in its reasonable discretion that
the proposed Permitted Acquisition will not be reasonably likely to result
in materially increased liabilities (contingent or otherwise) of Holdings
or any of its Subsidiaries other than Permitted Seller Notes and Permitted
Earn-Out Debt incurred in accordance with the provisions of this Agreement
(including, without limitation, tax, ERISA or environmental liabilities);
provided, that, so long as the Permitted Acquisition Notice has been given
--------
as required above and so long as Holdings has furnished each Lender,
following request by the Agent, information with respect to liabilities of
the type described in this clause with all information so requested, if the
Agent has not notified the Borrower on or prior to the tenth day prior to
the consummation of the Permitted Acquisition that the Agent has not yet
been satisfied that the proposed Permitted Acquisition would not be
reasonably likely to result in materially increased liabilities of Holdings
or any of its Subsidiaries, such Lender shall be deemed for purposes of
this clause (vii) to be so satisfied;
(vii) after giving effect to any additional indebtedness to be
incurred in the connection therewith and the Consolidated EBITDA of the
Person or business, division or product line being acquired pursuant to the
respective Permitted Acquisition determined in accordance with clause
5.15(a)(vi) above for the Calculation Period, the ratio of Consolidated
Indebtedness on the last day of the Calculation Period to Consolidated
EBITDA of Holdings and its Subsidiaries for the Calculation Period, on a
Pro Forma Basis shall be equal to or less than 3.50:1;
(xii) recalculations are made by the Borrower of compliance with the
covenants contained in Sections 6.06 through 6.09, inclusive, for the
Calculation Period on a Pro Forma Basis, and such recalculations shall show
that all such covenants would have been complied with throughout the
Calculation Period on a Pro Forma Basis;
(ix) the Borrower in good faith believes, on a Pro Forma Basis (as if
the Calculation Period were the one-year period following the date of the
consummation of the respective Permitted Acquisition) that the financial
covenants contained in such Sections 6.06 through 6.09, inclusive, will
continue to be met for the one year period following the date of the
consummation of the respective Permitted Acquisition;
37
(x) the purchase price for any Permitted Acquisition may not
exceed ten times the Consolidated EBITDA of the Person or business,
division or product line being acquired for the Calculation Period;
(xi) the sum of the items described in clauses (I) - (IV) of
Section 5.15(a)(v) in connection with any single Permitted Acquisition
shall not exceed $10 million and in connection with all Permitted
Acquisitions shall not exceed $30 million in the aggregate;
(xii) the aggregate amount (determined by using the face amount of
the debt or the amount payable at maturity, whichever is greater) of
Permitted Seller Notes and Permitted Earn-Out Debt issued by Holdings after
the date hereof shall not exceed $20,000,000;
(xiii) the Borrower shall only include for any Person or business,
division or product line acquired, 100% of audited financial statement
based Consolidated EBITDA calculated on a Pro Forma Basis and 75% of
personally guaranteed unaudited financial statement based Consolidated
EBITDA calculated on a Pro Forma Basis with respect to calculations made in
connection with the covenants contained in this Section 5.15 and Sections
6.06 through 6.09, inclusive; and
(xiv) prior to the consummation of the respective Permitted
Acquisition, the Borrower shall furnish the Agent and the Lenders an
officer's certificate executed by the chief financial officer of Holdings,
certifying as to compliance with the requirements of the applicable
preceding clauses (i) through (xiii) and containing the calculations
required by preceding clauses (v), (vii), (viii), (x), (xi) and (xii). The
consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by Holdings that all conditions thereto have
been satisfied and that same is permitted in accordance with the terms of
this Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Sections 3.02 and 7.
(b) At the time of each Permitted Acquisition involving the creation
or acquisition of a Subsidiary, not less than 100% of the capital stock of such
Subsidiary shall be directly owned by the Borrower; provided, however, for up to
one Business Day after such Permitted Acquisition, Holdings may own such
Subsidiary; and provided, further, that either Holdings or the Borrower may own
less than 100% (but more than 50%) of the capital stock or other equity or
beneficial ownership interests of Subsidiaries for which the Borrower has paid
(in the aggregate) no more than $5 million in consideration.
(c) The Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Acquisition to execute and
deliver, prior to the date of
38
the respective Permitted Acquisition, the Subsidiaries Guaranty (or an amendment
thereto pursuant to which it shall become a guarantor thereunder) or a
substantially similar guaranty, in either case with the documentation to be in
form and substance satisfactory to the Agent.
5.16 Subsidiary Metroplex Note. In connection with any payment with
-------------------------
respect to the Subsidiary Metroplex Note, Holdings shall make the necessary
requests under the Equity Call Agreement in order to obtain all funds necessary
to make such payment from the shareholders of Holdings party to the Equity Call
Agreement unless the funds necessary to make such payment consist of Excluded
Public Offering Proceeds; provided, however, in the event that neither Holdings
nor the Bank Agent makes the necessary requests under the Equity Call Agreement,
then the Agent shall be entitled to make such request.
5.17. Default on Metroplex Note. Upon the occurrence of a default in
-------------------------
payment by Holdings under the Metroplex Note, the Borrower agrees that, if the
Subsequent Commitment remains outstanding, at the request of the Agent, the
Borrower will borrow an amount equal to the Subsequent Commitment in accordance
with the terms of this Agreement and will use the proceeds of such borrowing to
pay in full the Metroplex Note.
5.18. Corporate Separateness. Holdings and each of its Subsidiaries
----------------------
will take all such action as is necessary to keep the operations of each such
Person separate and apart from those of each such other Person, including,
without limitation, ensuring that all customary corporate formalities, including
the maintenance of corporate records and holding regular meetings of
shareholders and directors are followed. None of Holdings or any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of Holdings or any of its
Subsidiaries being disregarded, or in the assets and liabilities of Holdings or
any of its Subsidiaries being substantively consolidated with those of Holdings
or any of its Subsidiaries in a bankruptcy, reorganization or other insolvency
proceeding.
Section 6. Negative Covenants. Holdings and the Borrower hereby
------------------
covenant that on and after the Effective Date and until the Loans and Notes,
together with interest and all other Obligations (other than indemnities and
similar Obligations for which no claim has been made) incurred hereunder and
thereunder, have been paid in full and the Commitment is no longer outstanding:
6.01 Liens. Holdings shall not, and shall not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of their respective property or assets (real or personal,
tangible or intangible), whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or
39
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to Holdings or any of its
Subsidiaries, or assign any right to receive income or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under any
similar recording or notice statute; provided, however, that the provisions of
-------- -------
this Section 6.01 shall not prevent Holdings or any of its Subsidiaries from
creating, incurring, assuming or permitting the existence of the following
(Liens described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens with respect to Holdings or any Subsidiary of the
Borrower for taxes not yet due or Liens for taxes being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any
Subsidiary of the Borrower imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's, mechanics' and
landlords' liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from the
value of the Borrower's or any of its Subsidiaries' property or assets or
materially impair the use thereof in the operation of the business of the
Borrower or the Subsidiaries of the Borrower or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens of the Borrower or the Subsidiaries of the Borrower in
existence on the Effective Date which are listed, and the property subject
thereto described, on Schedule VII, but only to the respective date, if
any, set forth in such Schedule VII for the removal and termination of any
such Liens;
(iv) Liens securing Senior Debt and Liens permitted by the Senior
Credit Agreement;
(v) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances on the property of Holdings or any
Subsidiary of Holdings arising in the ordinary course of business and not
materially interfering with the conduct of the business of Holdings or any
Subsidiary of Holdings;
(vi) Liens on property of Holdings and the Subsidiaries of Holdings
subject to, and securing only, Capitalized Lease Obligations to the extent
such Capitalized Lease Obligations are permitted by Section 6.04, provided
--------
that such Liens only serve to secure the payment of Indebtedness arising
under such Capitalized Lease
40
Obligation and the Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any other asset of Holdings
or any Subsidiary of Holdings;
(vii) Liens (other than any Lien imposed by ERISA) on property of
Holdings or any Subsidiary of Holdings incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or (y) to secure
the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money), provided that the aggregate
amount of cash and the fair market value of the property encumbered by
Liens described in this clause (vii) shall not exceed $250,000;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business of Holdings or any Subsidiary of Holdings within sixty
(60) days following the time of purchase thereof by Holdings or any
Subsidiary of Holdings and improvements and accretions thereto to secure
Indebtedness incurred to pay all or a portion of the purchase price thereof
or any Indebtedness incurred to refinance such Indebtedness, provided that
--------
(x) the aggregate principal amount of all Indebtedness secured by Liens
permitted by this clause (viii) does not exceed at any one time outstanding
the amounts permitted under Section 6.04, (iii) with respect to all
machinery and equipment and (y) in all events, the Lien encumbering the
equipment or machinery so acquired and improvements and accretions thereto
does not encumber any other asset of Holdings or any of its Subsidiaries;
(ix) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by Holdings or any
Subsidiary of Holdings in the ordinary course of business; and
(x) inchoate Liens (where there has been no execution or levy and
no pledge or delivery of collateral) arising from and out of judgments or
decrees in existence at such time not constituting an Event of Default.
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc. (a)
------------------------------------------------------
Holdings shall not convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or substantially all of its assets;
and (b) Holdings shall not, and shall not permit any of its Subsidiaries (other
than Immaterial Subsidiaries) to, (i) wind up, liquidate or dissolve its
affairs, (ii) enter into any transaction of merger or consolidation, (iii)
convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing
at any future time) all or any part of its property or assets, including without
limitation assets consisting of capital stock of a Subsidiary and Stock
Equivalents thereof, (iv) enter into any
41
partnerships, joint ventures or sale-leaseback transactions, or (v) purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets of any Person, or make or maintain any loan or advance to any
Person, or own or purchase or otherwise acquire any capital stock or Stock
Equivalents or equity interests or obligations of or other securities of any
Person, or otherwise make any other investment in any Person (each of the
foregoing in this clause (v) being an "Investment"), except that the following
shall be permitted:
(A) purchases or other acquisitions by Holdings and its Subsidiaries
of inventory, materials and equipment in the ordinary course of business;
(B) Capital Expenditures by Holdings and its Subsidiaries to the
extent permitted by Section 6.09 hereof;
(C) Holdings and its Subsidiaries may sell assets so long as either
(i) the aggregate amount of Net Sale Proceeds from such sales pursuant to
this clause (C) in any one fiscal year does not exceed $250,000 or (ii) the
amount of Net Sale Proceeds from such sales in any one fiscal year does not
exceed $600,000 in the aggregate and such proceeds are used, or irrevocably
committed to be used, to purchase, within 180 days from the date of sale,
assets to be used in the business of Holdings or its Subsidiaries;
(D) to the extent permitted by this Agreement, Holdings and its
Subsidiaries may lease (as lessee) real or personal property;
(E) Holdings and its Subsidiaries (other than Immaterial
Subsidiaries) may make and maintain Investments (1) consisting of
receivables owing to any of them (including, without limitation, through
the indirect acquisition thereof through a security interest), if created
or acquired in the ordinary course of business and payable or dischargeable
in accordance with customary terms, (2) in cash and Cash Equivalents, (3)
in Interest Rate Contracts, (4) contemplated by the Transaction, (5)
consisting of loans and advances in the ordinary course of business and
consistent with past practices to their respective employees for moving,
travel and emergency expenses and other similar expenses, so long as the
aggregate principal amount thereof at any one time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $500,000, (6) consisting of advances to doctors for the
purpose of allowing such doctors to make tax payments, (7) consisting of
purchases or acquisitions of securities of trade creditors or customers
received in any plan of reorganization or similar arrangement on the
bankruptcy or insolvency of such trade creditors or customers or received
in settlement of delinquent obligations of, and other disputes with,
suppliers arising in the ordinary course of business, (8) consisting of
capital stock of Subsidiaries listed
42
on Schedule VI, (9) loans and advances outstanding or commitments therefor
as of the date hereof and listed on Schedule IV and (10) any other
Investments permitted pursuant to the Senior Credit Agreement as in effect
on the date hereof;
(F) Holdings and its Subsidiaries may sell inventory in the ordinary
course of business;
(G) the Loan Parties may consummate the Transaction in accordance
with the Documents;
(H) Dividends may be paid to the extent permitted by Section 6.03;
(I) each of Holdings and its Subsidiaries may enter into licensing
arrangements with respect to Intellectual Property, in accordance with
customary past practice of Holdings or such Subsidiary (as the case may
be);
(J) other purchases and acquisitions of assets provided that the
aggregate consideration paid for all such purchases or other acquisitions
pursuant to this clause (J) shall not exceed $100,000 in any one fiscal
year;
(K) the sale or transfer of assets by Holdings or any Subsidiary
thereof, excluding any sale or transfer prohibited by subsections (a) or
(b) above, provided that (1) no Default or Event of Default is continuing
or would result therefrom, (2) all Net Sale Proceeds of any such sale or
transfer are applied to the prepayment of the Senior Debt or the
Obligations to the extent required by Section 2.02(d), (3) such sale or
transfer is for cash consideration, payable on the date of consummation of
such sale or transfer, equal to no less than the Fair Market Value of such
assets being sold or transferred, (4) in the case of any sale or transfer
of capital stock or Stock Equivalents of any of Holdings' Subsidiaries, all
of the capital stock and Stock Equivalents of such Subsidiary are
transferred, (5) the aggregate Fair Market Value of any assets sold or
transferred shall not exceed $1,500,000, and (6) the aggregate Fair Market
Value of all assets sold during any fiscal year shall not exceed $250,000;
(L) any acquisition expressly permitted by Section 5.15 hereof; and
(M) the Designated Assets shall be permitted to be resold to the
original sellers thereof pursuant to, and in accordance with, the
repurchase provisions of the Designated Agreements.
6.03 Dividends, Etc. Except as set forth on Schedule XVIII hereto,
---------------
Holdings shall not, and shall not permit its Subsidiaries to, declare or pay any
Dividends,
43
except that any Subsidiary of Holdings may pay Dividends to Holdings or any
Wholly-Owned Subsidiary of Holdings and the Borrower (other than Immaterial
Subsidiaries) may pay Dividends to Holdings or the Borrower (a) with the
proceeds of Acquisition Loans so long as contemporaneously with its receipt
thereof, Holdings or the Borrower uses such proceeds to effect Permitted
Acquisitions and (b) with the proceeds of the Notes so long as contemporaneously
with its receipt thereof, Holdings uses such proceeds to repay amounts owing
with respect to the Metroplex Note.
6.04 Indebtedness. Holdings shall not, nor shall it permit any of its
------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(ii) Senior Debt;
(iii) Any Indebtedness expressly permitted pursuant to the terms of
the Senior Credit Agreement as in effect on the date hereof;
(iv) Indebtedness of the Borrower and its Subsidiaries (other than
Indebtedness specified in clauses (i), (ii) and (iii) of this Section 6.04)
as set forth on Schedule XXI;
(v) Indebtedness of Holdings (other than Indebtedness specified in
clauses (i), (ii) or (iii) of this Section 6.04) in an aggregate principal
amount at any time outstanding not in excess of $20,000,000; provided, that
--------
(A) such Indebtedness shall have an average maximum current pay interest of
no more than 8% per annum, with no single item of Indebtedness bearing
interest at a rate greater than 10% per annum, (B) no single item of
Indebtedness shall have a final maturity that is less than two years, (C)
all such Indebtedness shall have an average weighted-life to maturity of
not less than 2.5 years, and (D) such Indebtedness shall be issued only as
consideration for Permitted Acquisition; and
(vi) Indebtedness listed on Schedule VIII hereto.
6.05 Transactions with Affiliates. Holdings shall not, and shall not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Holdings or any Affiliate of Holdings' Subsidiaries unless (a)
such transaction or series of related transactions is in writing and on terms
that are no less favorable to Holdings or such Subsidiary, as the case may be,
than those that would be available in a comparable transaction in arm's-length
dealings with an unrelated third party, (b) with respect to any
44
transaction or series of related transactions involving aggregate value in
excess of $100,000, Holdings delivers an officers' certificate to the Agent
certifying that such transaction or series of related transactions complies with
clause (a) above and such transaction or series of related transactions has been
approved by a majority of the disinterested members of the board of directors of
Holdings and (c) with respect to any transaction or series of related
transactions involving aggregate payments in excess of $600,000, such
transaction or series of related transactions has been approved by the
disinterested directors of Holdings (or in the event there is only one
disinterested director, by such disinterested director) and Holdings delivers to
the Agent a written opinion of an investment banking firm of national standing
or other recognized independent expert with experience appraising the terms and
conditions of the type of transaction or series of related transactions for
which an opinion is required stating that the transaction or series of related
transactions is fair to Holdings or such Subsidiary from a financial point of
view; except that (i) Holdings and its Subsidiaries may effect the Transaction,
and (ii) Holdings and its Subsidiaries may make loans and advances in the
ordinary course of business consistent with past practices to their respective
employees for moving, travel and emergency expenses and other similar expenses
and may make advances to doctors for the purpose of allowing the doctors to make
tax payments, so long as the aggregate principal amount thereof at any one time
outstanding (determined without regard to any write-downs or write-offs of such
loans and advances) shall not exceed $500,000.
6.06 Interest Coverage Ratio. Holdings shall not permit the ratio of
-----------------------
Consolidated EBITDA to Consolidated Interest Expense for any period of four
consecutive fiscal quarters (or, if shorter, the period beginning on November 1,
1997 and ending on the last day of a fiscal quarter of Holdings ended after
November 1, 1997), in each case taken as one accounting period, ending on the
last day of the period set forth below to be less than the ratio set forth
opposite such period:
Fiscal Quarter
Ended Ratio
----------------- -----
December 31, 1997 2.50:1:0
March 31, 1998 2.75:1.0
June 30, 1998 2.75:1.0
September 30, 1998 3.0:1.0
December 31, 1998 3.0:1.0
March 31, 1999 3.50:1.0
June 30, 1999 3.50:1.0
September 30, 1999 3.5:1.0
December 31, 1999 3.50:1.0
45
March 31, 2000 3.75:1.0
June 30, 2000 3.75:1:0
September 30, 2000 3.75:1.0
December 31, 2000 3.75:1.0
March 31, 2001 3.75:1.0
June 30, 2001 3.75:1.0
September 30, 2001 3.75:1.0
December 31, 2001 3.75:1.0
March 31, 2002 3.75:1.0
June 30, 2002 3.75:1.0
September 30, 2002 3.75:1.0
December 31, 2002 3.75:1.0
March 31, 2003 3.75:1.0
June 30, 2003 3.75:1.0
September 30, 2003 3.75:1.0
December 31, 2003 3.75:1.0
March 31, 2004 3.75:1.0
June 30, 2004 3.75:1.0
6.07 Consolidated Indebtedness to Consolidated EBITDA. Holdings shall
------------------------------------------------
not permit the ratio of Consolidated Indebtedness as of the last day of any
fiscal quarter ended on a date set forth below to Consolidated EBITDA for any
period of four consecutive fiscal quarters (or, if shorter, the period beginning
on the Initial Funding Date and ending on the last day of a fiscal quarter of
Holdings ended after the Initial Funding Date) then ended, in each case taken as
one accounting period, ending on the last day of the period set forth below to
be greater than the ratio set forth opposite such period below:
Fiscal Quarter
Ended Ratio
----------------- -----
December 31, 1997 5.00:1.0
March 31, 1998 5.00:1.0
June 30, 1998 5.00:1.0
September 30, 1998 5.00:1.0
December 31, 1998 5.00:1.0
March 31, 1999 4.50:1.0
June 30, 1999 4.50:1.0
46
September 30, 1999 4.50:1.0
December 31, 1999 4.50:1.0
March 31, 2000 4.00:1.0
June 30, 2000 4.00:1.0
September 30, 2000 4.00:1.0
December 31, 2000 4.00:1.0
March 31, 2001 3.75:1.0
June 30, 2001 3.75:1.0
September 30, 2001 3.75:1.0
December 31, 2001 3.75:1.0
March 31, 2002 3.00:1.0
June 30, 2002 3.00:1.0
September 30, 2002 2.50:1.0
December 31, 2002 2.50:1.0
March 31, 2003 2.00:1.0
June 30, 2003 2.00:1.0
September 30, 2003 2.00:1.0
December 31, 2003 2.00:1.0
March 31, 2004 2.00:1.0
June 30, 2004 2.00:1.0
6.08 Minimum EBITDA. Holdings shall not permit its Consolidated
--------------
EBITDA for any period of four consecutive fiscal quarters (or, if shorter, the
period beginning on the Initial Funding Date and ending on the last day of a
fiscal quarter of the Borrower ended after the Initial Funding Date), in each
case taken as one accounting period, to be less than the sum of (x) $5,000,000
and (y) an amount equal to 70% of the Consolidated EBITDA of each company
acquired after the Initial Funding Date for the twelve month period immediately
preceding the date of each such company's acquisition.
6.09 Capital Expenditures. Holdings shall not and shall not permit
--------------------
any of its Subsidiaries to, make any expenditure for fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted accounting
principles and including Capitalized Lease Obligations (collectively, "Capital
Expenditures"), except that (x) during the period (taken as one accounting
period) commencing on November 1, 1997 and ending on December 31, 1997 Holdings
and its Subsidiaries may make Capital Expenditures (other than in connection
with Permitted Acquisitions) so long as the aggregate amount thereof does not
exceed
47
the greater of (x) the amount permitted pursuant to the Securities Purchase
Agreement and (y) $1,000,000 during such period and (y) during any calendar year
thereafter Holdings and its Subsidiaries may make Capital Expenditures (other
than in connection with Permitted Acquisitions) so long as the aggregate amount
thereof does not exceed the greater of (x) the amount permitted pursuant to the
Securities Purchase Agreement and (y) the amount set forth opposite such fiscal
year below, such amounts set forth below to be adjusted upward for each Post-
Closing Acquisition by $25,000 for each physician employed directly or
indirectly by any company or practice acquired pursuant to a Permitted
Acquisition; provided that 80% of the allowable Capital Expenditures not spent
in 1997 may be carried over into 1998.
Fiscal Year Amount
----------- ------
1998 $5,000,000
1999 $5,000,000
2000 $5,000,000
2001 $5,000,000
2002 $5,000,000
(b) In addition to the Capital Expenditures permitted above, the
Borrower and its Subsidiaries may make Permitted Acquisitions in accordance with
Section 5.15 in an amount not to exceed the amounts permitted thereby.
6.10 Restrictions on Additional Subordinated Indebtedness. Holdings
----------------------------------------------------
will not, nor will it permit any of its Subsidiaries to, create or suffer to
exist any Indebtedness for borrowed money which (i) provides that it is
subordinate in right of payment to any Senior Indebtedness and (ii) is senior in
right of payment to or pari passu with the Loans or other Obligations.
---- -----
6.11 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
--------------------------------------------------------------------------------
Other Agreements; Etc. Holdings shall not, and shall not permit its
----------------------
Subsidiaries to:
(a) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due), of any Indebtedness that is not Senior Indebtedness;
48
(b) amend, modify or change in any manner adverse to the interests
of the Lenders its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of
designation) or its By-Laws;
(c) amend, modify or change or terminate the Stockholders' Agreement
or enter into any other agreement with respect to its capital stock, except
amendments, modifications or changes and new agreements which are not
materially adverse to any Lenders, do not violate or breach, or are not
inconsistent with, any of the terms of this Agreement or any other Loan
Document and which do not, and will not, involve the payment by Holdings or
its Subsidiaries of any material amounts and do not result in Holdings or
its Subsidiaries incurring then or any time in the future any material
liability or monetary obligation.
(d) amend, modify, change or enter into any new Tax Sharing
Agreement; or
(e) amend, modify or change, or enter into any new Management
Agreement, Employee Benefit Plan or Employment Agreement (as such terms are
defined in the Senior Credit Agreement as in effect on the Initial Funding
Date), except if the aggregate cost to Holdings and its Subsidiaries as a
result of such amendments, modifications, changes to such plans and
agreements and new plans and agreements is not reasonably likely to have a
material adverse effect on the performance, business, property, assets,
nature of assets, liabilities, condition (financial or otherwise) or
prospects of Holdings and its Subsidiaries taken as a whole.
6.12 Limitation on Certain Restrictions on Subsidiaries. Except as
--------------------------------------------------
set forth on Schedule XVIII, Holdings shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Person to (i) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits to Holdings or any
other Subsidiary of Holdings, or pay any Indebtedness owed to Holdings or any
other Subsidiary of Holdings, (ii) make loans or advances to Holdings or any
other Subsidiary of Holdings or (iii) transfer any of its properties or assets
to Holdings, except for such encumbrances or restrictions existing under or by
reason of (v) applicable law, (w) this Agreement and the other Loan Documents,
(x) the Senior Credit Agreement or (y) customary provisions restricting
subletting or assignments of any lease governing a leasehold interest of
Holdings or any other Subsidiary of Holdings.
6.13 Limitation on Issuance of Capital Stock. (a) Holdings shall
---------------------------------------
not permit any of its Subsidiaries to issue any capital stock (including by way
of sales of treasury stock) or any options or warrants to purchase, or
securities convertible into, capital
49
stock, except (i) for transfers and replacements of then outstanding shares,
(ii) for stock splits, stock dividends and similar issuances which do not
decrease the percentage ownership of any Person in any class of the capital
stock of Holdings or such Subsidiary or (iii) upon the formation of any new
Subsidiary as permitted by this Agreement in connection with Permitted
Acquisitions.
(b) Holdings shall not issue any capital stock, except (i) shares of
capital stock issued upon conversion of any stock issued or authorized to be
issued under its Certificate of Incorporation as of the Effective Date, (ii)
shares of capital stock issued upon the exercise of any warrants of Holdings
outstanding as of the Effective Date, (iii) stock dividends, stock splits, and
issuances of capital stock which is capital stock authorized under its
Certificate of Incorporation as of the Effective Date for cash with respect to
which, after giving effect to such issuance pursuant to this clause (iii), the
cash proceeds, if any, therefrom are applied in accordance with Section 2.02 or
(iv) shares of capital stock issued in a public offering registered under the
Securities Act, with minimum net proceeds to the corporation (net of
underwriting discounts and offering expenses) of at least $20 million; provided
that none of the foregoing occurrences in clause (i) through (iv) shall be
permitted if a Change of Control would result therefrom.
6.14 Business. On and after the tenth Business Day following the
--------
Initial Funding Date, Holdings will not conduct any business or own any assets
other than the stock of the Borrower, and for one Business Day after the
acquisition thereof, that of Subsidiaries acquired or formed in connection with
Permitted Acquisitions. The Borrower shall not, and shall not permit any of its
Subsidiaries to, engage, directly or indirectly, in any business other than a
Permitted Business.
6.15 Limitation on Creation of Subsidiaries. Holdings shall not, and
--------------------------------------
shall not permit any Subsidiary to, establish, create or acquire any new
Subsidiary except Subsidiaries of the Borrower may be acquired or formed in
connection with Permitted Acquisitions to the extent otherwise permitted by this
Agreement or the Senior Credit Agreement and direct Subsidiaries of Holdings may
be acquired or formed in connection with Permitted Acquisitions so long as
within one Business Day of the acquisition thereof the stock of such Subsidiary
is transferred to the Borrower.
6.16 Amendments with Respect to Senior Debt. The Borrower shall not
--------------------------------------
amend, modify or restate the terms of Senior Debt if such amendment,
modification or restatement would (i) decrease the average weighted-life to
maturity of the Senior Debt by more than one and one-half (1-1/2) years from
that in effect on the date hereof (calculated as if such amendment was entered
into on the date hereof and taking into account all previous amendments) or (ii)
increase the interest rate of the Senior Debt to a rate in excess of the maximum
interest rates calculated from time to time permitted under Section 1.08
50
of the Senior Credit Agreement, as such Section 1.08 is in effect on the date
hereof, plus 2%.
----
6.17 No Further Negative Pledges. Except (a) as otherwise permitted
---------------------------
by or under the terms of Existing Debt, this Agreement or the Senior Credit
Agreement, and (b) with respect to specific property encumbered to secure
payment of particular Indebtedness permitted to be incurred by the terms hereof,
Holdings shall not, and shall not permit any of its Subsidiaries to, enter into
any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.18 Leases. Except as set forth on Schedule XXIII, neither Holdings
------
nor the Borrower will incur any expense (including, without limitation, any
property taxes paid as additional rent or lease payments) under any agreement to
rent or lease any real or personal property (or any extension or renewal
thereof) (excluding Capitalized Lease Obligations), and Holdings will not permit
the aggregate expense (including, without limitation, any property taxes paid as
additional rent or lease payments) incurred by Holdings and its Subsidiaries on
a consolidated basis under any agreement to rent or lease any real or personal
property (or any extension or renewal thereof) (excluding Capitalized Lease
Obligations) to exceed $4 million for the period commencing on the Initial
Funding Date and ending December 31, 1997 or to exceed $8 million for the fiscal
year 1998, $10 million for fiscal year 1999 $12 million for fiscal year 2000,
and $14 million for any fiscal year thereafter.
6.19 Unwind Provisions. Neither Holdings nor any of its Subsidiaries
-----------------
will enter into any agreement of any nature of the type described in Section
4.26 except for agreements substantially in the same form as the agreements
which are in effect on the Initial Funding Date, so long as any "unwind
provisions" or similar provisions arising in the case of any event other than a
breach under such agreement by Holdings or any of its Subsidiaries shall not be
effective prior to the 65th month anniversary of the Initial Funding Date.
Section 7. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
7.01 Payments. Any Loan Party shall (i) default in the payment when
--------
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for five or more Business Days, in the payment when
due of any interest on any Loan or Note or any other amounts owing by it
hereunder or under any other Loan Document; or
51
7.02 Representations, Etc. Any representation, warranty or statement
---------------------
made by any Loan Party herein or in any other Loan Document, or in any
certificate delivered pursuant hereto or thereto, shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
7.03 Covenants. (a) The Borrower or Holdings shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement contained
in Section 5.01(g)(i), 5.08, 5.10, 5.13, 5.15, 5.17 or 6 and such default shall
continue unremedied for a period of ten days after written notice to the
Borrower and Holdings by the Agent or any Lender or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Borrower and Holdings by the Agent
or any Lender; or (b) any Loan Party shall default in the due performance or
observance by it of any term, covenant or agreement contained in any other Loan
Document after any applicable notice provided for therein has been given or any
lapse of time provided for therein has occurred; or
7.04 Default Under Other Agreements. (i) Holdings or any of its
------------------------------
Subsidiaries shall default in any payment of any principal amount of any
Indebtedness (other than the Indebtedness referred to in Section 7.01) beyond
the period of grace on the final maturity thereof if any provided in the
instrument or agreement under which such Indebtedness was created, or (ii) any
Indebtedness shall be declared to be due and payable prior to the final maturity
thereof; provided that it shall not constitute an Event of Default pursuant to
--------
this Section 7.04 unless the aggregate amount of all Indebtedness referred to in
the preceding clauses (i) and (ii) above exceeds $750,000 at any one time; or
7.05 Bankruptcy, Etc. Holdings or any of its Subsidiaries shall
----------------
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto; or an involuntary case is commenced against Holdings or any of its
Subsidiaries and the petition is not controverted within 10 days, or is not
dismissed or discharged, within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of Holdings or any of its
Subsidiaries, or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries, or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed or undischarged for a
period of 60 days, or Holdings or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or Holdings or any of its Subsidiaries suffers
any appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged
52
or unstayed for a period of 60 days; Holdings or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by Holdings or any of its Subsidiaries for the purpose of effecting any of
the foregoing; or
7.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days; any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan has not
been timely made, Holdings or any Subsidiary of Holdings or any ERISA Affiliate
has incurred or is likely to incur any liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a
group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the Code) under Section 4980B of the Code, or Holdings or any Subsidiary of
Holdings has incurred or is likely to incur liabilities pursuant to one or more
employee welfare benefit plans (as defined in Section 3(1) of ERISA) that
provide benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or Plans; (b) there shall result from any such
event or events the imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually, and/or in the aggregate, in the
opinion of the Required Banks, has had, or could reasonably be expected to have,
a material adverse effect upon the business, operations, condition (financial or
otherwise) or prospects of Holdings or any Subsidiary of Holdings; or
7.07 Judgments. One or more judgments or decrees shall be entered
---------
against Holdings or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by a reputable insurance company) of
$750,000 or more and all such judgments or decrees shall not be satisfied,
vacated, discharged or stayed or bonded pending appeal for any period of 30
consecutive days; or
53
7.08 Physician Turnover. The occurrence of greater than 15% of the
------------------
Designated Physicians terminating his or her employment (exclusive of death,
disability or retirement) with such Holdings and its Subsidiaries.
7.09 Ownership. There shall be a Change of Control; or
---------
7.10 Subordinated Guaranties. Any provision of any Subordinated
-----------------------
Guaranty after delivery thereof under Section 3 shall for any reason cease to be
valid and binding on any Subordinated Guarantor party thereto, or any
Subordinated Guarantor shall so state in writing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the written request of the Required
Lenders, shall by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, any Lender or
the holder of any Note to enforce its claims against any Loan Party (provided
--------
that, if an Event of Default specified in Section 7.05 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Agent to the Borrower as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Subsequent Commitment terminated, whereupon all Commitments of each Lender
remaining at such time shall forthwith terminate immediately and any fees in
connection therewith shall become due and payable without any other notice of
any kind; (ii) declare the principal of and any accrued interest in respect of
all Loans and the Notes and all Obligations to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; and (iii)
exercise any rights or remedies under any Subordinated Guaranty.
Section 8. Definitions and Accounting Terms.
--------------------------------
8.01 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition Agreements" shall mean each Agreement listed on Schedule
XIII pursuant to which each of the Acquisitions was, is or will be, effected in
each case as the same may be supplemented, modified, amended or restated from
time to time in accordance with Section 6.11 hereof.
"Acquisition Documents" shall mean the Acquisition Agreements and all
other documents entered into or delivered in connection with the Acquisitions as
the same may be supplemented, modified, amended or restated from time to time in
accordance with Section 6.11 hereof.
54
"Acquisition Loan" shall have the meaning provided in the Senior
Credit as in effect on the date hereof.
"Acquisitions" shall mean and include each of the Pre-Closing
Acquisitions, the Contemporaneous Acquisitions and the Post-Closing
Acquisitions.
"Additional Senior Credit Indebtedness" shall mean Indebtedness of the
Borrower under the Senior Credit Agreement, so long as Banque Paribas is the
Bank Agent, in an aggregate amount of not more than $7,500,000.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors,
officers and trustees of such Person), controlled by, or under direct or
indirect common control with, such Person; provided, however, that for purposes
--------
of Section 6.05, an Affiliate of Holdings shall include (w) any Person that
directly or indirectly owns more than 5% of any class of the capital stock of
Holdings (x) any officer, director, trustee or beneficiary of Holdings or any
such shareholder, (y) any spouse, parent, sibling or descendant of any such
person in clause (w) or (x) above, and (z) any trust for the benefit of any such
Person or for any spouse, issue or lineal descendant of such Person described in
clauses (w) through (y) above. For all purposes of this Agreement, neither the
Agent, the Bank Agent, any Bank, any Lender nor any of their respective
Affiliates, shall be considered an Affiliate of Holdings or any Subsidiary of
Holdings. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agent" shall mean Paribas Capital Funding LLC in its capacity as
Agent for the Lenders hereunder, and shall include any successor to the Agent
appointed pursuant to Section 9.09.
"Agreement" shall mean this loan agreement, as modified, supplemented
or amended from time to time.
"Bank" shall mean each financial institution listed on Schedule I to
the Senior Credit Agreement, as well as any institution which becomes a "Bank"
thereunder pursuant thereto.
"Bank Agent" shall mean Banque Paribas, as agent for the Banks under
the Senior Credit Agreement, or any successor thereto appointed pursuant to the
terms thereof.
"Bankruptcy Code" shall have the meaning provided in Section 7.05.
55
"Bankruptcy Event" shall have the meaning provided in Section 11.02.
"Borrower" shall mean PHC Holding Corporation, a corporation organized
and existing under the laws of the State of Georgia.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Capital Expenditures" shall have the meaning provided in Section
6.09.
"Capitalized Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with generally accepted accounting principles, is accounted for as
a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations under Capitalized Leases, in each case taken at the amount thereof
accounted for as Indebtedness in accordance with generally accepted accounting
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
--------
United States is pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank organized under the laws of the United States,
any State thereof or the District of Columbia having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any State thereof, or the District of Columbia having, capital,
surplus and undivided profits aggregating in excess of $200,000,000 and having a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Corporation ("S&P") or "A2" or the equivalent thereof from
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), with maturities of not more than
twelve months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States and/or tax exempt securities issued
by any agency or instrumentality of any state of the United States or
subdivision thereof, in each case rated at least A-2 or the equivalent thereof
by S&P or at least P-2 or the equivalent thereof by Moody's and in each case
maturing not more than 12 months after the date of acquisition by such Person
and (v) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
56
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. (S) 9601 et seq.
"Change of Control" means the occurrence of one or more of the
following: (i) any Person, entity or "group" (within the meaning of Section
13(d) and 14(d) of the Securities Exchange Act) (other than the Investor Group)
obtains the power to elect a majority of the Board of Directors of Holdings,
(ii) either Weston and its Affiliates, ▇▇▇▇▇ ▇▇▇▇▇▇ or the Investor Group shall
cease to have record and beneficial ownership of at least 75% of the number of
shares of Holdings Common Stock owned by such Persons on the Effective Date,
(iii) any Person, entity or "group" (within the meaning of Section 13(d) and
14(d) of the Securities Exchange Act) (other than the Investor Group) shall
become the "beneficial owner" (as defined in Rules 13(d) and 134(d)-5 under the
Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time) of 20%
or more of any outstanding class of capital stock of Holdings having ordinary
voting power in the election of directors of Holdings, or (iv) the Board of
Directors of Holdings shall cease to consist of a majority of Continuing
Directors, (v) ▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to serve (except in the cases of death
or disability) as President and Chief Executive Officer of Holdings, except if
any time after an initial public offering of Holdings Common Stock, Holdings
shall replace ▇▇▇▇▇ ▇▇▇▇▇▇ within 180 days of her ceasing to serve as President
and Chief Executive Officer of Holdings with an individual approved by the
Agent.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Commitment" shall mean, for each Lender, the Initial Commitment
and/or the Subsequent Commitment for such Lender, as the context may require.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income before interest income, Consolidated Interest Expense and provision for
taxes and without giving effect to any net extraordinary gains or losses or
gains or losses from sales of assets other than inventory sold in the ordinary
course of business or gains or losses from Recovery Events or unrealized foreign
exchange gains or losses.
57
"Consolidated EBITDA", for any period shall mean Consolidated EBIT,
adjusted by adding thereto the amount of all amortization of intangibles and
depreciation.
"Consolidated Indebtedness" shall mean, at any time, the aggregate
principal amount of all Indebtedness of Holdings and its Subsidiaries determined
on a consolidated basis (excluding all Indebtedness of the type described in
clause (vii) of the definition thereof, except to the extent amounts are owing
with respect thereto upon the termination of the respective agreement
constituting such Indebtedness).
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Holdings and its Subsidiaries for such period
(calculated without regard to any limitations on the payment thereof) payable
during such period in respect of all Indebtedness of Holdings and its
Subsidiaries, on a consolidated basis, for such period (including, without
duplication, that portion of Capitalized Lease Obligations representing the
interest factor for such period) including, without limitation, all commissions,
discounts and net costs or benefits under Interest Rate Contracts.
"Consolidated Net Income" shall mean, for any period, net income of
Holdings and its Subsidiaries for such period determined on a consolidated basis
(after provision for taxes), provided that (a) the net income of any Subsidiary
--------
of Holdings, which is not a Wholly-Owned Subsidiary, shall have its net income
included in the Consolidated Net Income of Holdings and its Subsidiaries only to
the extent of the ownership interest of Holdings and its Wholly-Owned
Subsidiaries in such non-Wholly-Owned Subsidiaries and only so long as such
Subsidiary is not party to any contract or other agreement of the type described
in 6.12, except in the case of MHOA Texas I, L.L.C., the DVI Debt Documents and
(b) the net income of any Immaterial Subsidiary and of the Designated Companies
shall not be included in the Consolidated Net Income of Holdings and its
Subsidiaries.
"Contemporaneous Acquisitions" shall have the meaning provided in
Section 4.29.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, 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
58
hold harmless the holder 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.
"Continuing Directors" shall mean, with respect to Holdings, the
directors of Holdings on the Initial Funding Date and each other director, if
such other director's nomination for election to the board of directors of
Holdings is recommended by a majority of the then Continuing Directors.
"Credit Event Date" shall mean the date on which (i) the Consolidated
EBITDA of Holdings and its Subsidiaries is at least $25 million, and (ii) the
ratio of the Consolidated Indebtedness of Holdings and its Subsidiaries to
Consolidated EBITDA of Holdings and its Subsidiaries is less than 3.5:1.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Designated Agreements" shall mean (i) the Practice Repurchase
Agreement by and among the Borrower and ▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
M.D., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., M.D., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
M.D., C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Antonio Caos, M.D.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., ▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D., and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
pertaining to the Designated Assets of Primary Care Specialists, Inc.; (ii)
Practice Repurchase Agreement by and among the Borrower and ▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇,
M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D. pertaining to the Designated Assets of Internal
Medicine Specialists, Inc.; and (iii) Practice Repurchase Agreement by and among
the Borrower and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D., and ▇▇▇▇▇▇
▇▇▇▇▇▇▇, M.D. pertaining to the Designated Assets of Larach, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, Inc., as each such agreement is in effect on the Effective Date.
"Designated Assets" shall mean the assets of the Designated Companies
and defined and described as the Company Assets in the Designated Agreements as
initially executed.
"Designated Companies" shall mean each of Primary Care Specialists,
Inc., Internal Medicine Specialists, Inc. and Larach, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc.
59
"Designated Physicians" shall mean the physicians set forth on a
Schedule to be delivered to the Agent within 30 days of the Initial Funding Date
which are the physicians employed directly or indirectly (including through a
Management Services Agreement or similar agreement) who received any
consideration in the form of cash payment, stock or seller note in connection
with the Acquisitions.
"Dividend", with respect to any Person, shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than capital stock of such Person) or cash to its
stockholders in their capacity as stockholders, or redeemed, retired, purchased
or otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock outstanding on or after the Effective Date (or
any options or warrants issued by such Person with respect to its capital
stock), or set aside any funds for any of the foregoing purposes, or shall have
permitted any Subsidiary of such Person to purchase or otherwise acquire for a
consideration any shares of any class of the capital stock of such Person
outstanding on or after the Effective Date (or any options or warrants issued by
such Person with respect to its capital stock). Without limiting the foregoing,
"Dividends" with respect to any Person shall also include all cash payments made
or required to be made by such Person with respect to any stock appreciation
rights, equity incentive plans or any similar plans or setting aside of any
funds for the foregoing purposes.
"Documents" shall mean the Loan Documents, the Equity Amendments, the
Senior Credit Agreement, the Warrant Documents and the Subordinated Debt
Amendments.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"DVI Debt Documents" shall mean Loan and Security Agreement No. 1
among MHOA Texas I, L.L.C., as Borrower, Physician Health Corporation, as
Guarantor, and DVI Financial Services Inc., as Lender, dated as of June 16,
1997, the Loan and Security Agreement No. 2 among MHOA Texas I, L.L.C., as
Borrower, Physician Health Corporation, as Guarantor, and DVI Financial Services
Inc., as Lender, dated as of June 16, 1997, the Loan and Security Agreement No.
3 among MHOA Texas I, L.L.C., as Borrower, Physician Health Corporation, as
Guarantor, and DVI Financial Services Inc., as Lender, dated as of June 16,
1997, the Loan and Security Agreement No. 4 among MHOA Texas I, L.L.C., as
Borrower, Physician Health Corporation, as Guarantor, and DVI Financial Services
Inc., as Lender, dated as of June 16, 1997, the Loan and Security Agreement No.
5 among MHOA Texas I, L.L.C., as Borrower, Physician Health Corporation, as
Guarantor, and DVI Financial Services Inc., as Lender, dated as of June 16,
1997, the Loan and Security Agreement No. 6 among MHOA Texas I, L.L.C., as
Borrower, Physician Health Corporation, as Guarantor, and DVI Financial Services
Inc.,
60
as Lender, dated as of June 16, 1997, and the Loan and Security Agreement among
MHOA Texas I, L.L.C. and DVI Business Credit Corporation, dated as of June 16,
1997, and all documents related to any of the foregoing, including, without
limitation, guarantees, security agreements and pledge agreements, as such
agreements are in effect on the Effective Date hereof.
"DVI Indebtedness" shall mean indebtedness of MHOA Texas I, L.L.C.
owing to DVI Financial Services Inc. in an amount not to exceed $8,000,000 under
the DVI Debt Documents.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, other "accredited investor" (as defined in Regulation D
of the Securities Act) other than individuals, or a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act.
"Employee Stock Proceeds" shall have the meaning provided in Section
2.02(d)(i).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any violation of, or liability under, any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, policy and rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. (S) 7401 et seq.; the Clean Air Act, 42 U.S.C.
(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; the Occupational Safety
and Health Act,
61
29 U.S.C. (S) 651 et seq.; and any applicable state and local or foreign
counterparts or equivalents.
"Equity Amendments" shall have the meaning provided in Section
3.01(r).
"Equity Call Agreement" shall mean the Equity Call Agreement dated as
of June 16, 1997 among Holdings, Metroplex Hematology/Oncology Associates,
L.L.P. and the investors party thereto as in effect on the date hereof.
"Equity Securities" shall have the meaning provided in the
Stockholders' Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement, and to any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which, together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of Holdings or a Subsidiary of
Holdings being or having been a general partner of such person.
"Event of Default" shall have the meaning provided in Section 7.
"Excluded Public Offering Proceeds" shall mean (i) proceeds from the
issuance of common equity by Holdings in the initial public offering of common
equity of Holdings used to repurchase up to 40,000 shares of common stock (or
warrants exercisable into 40,000 shares of common stock) at a purchase price per
share not to exceed the initial public offering price and (ii) 50% of all
proceeds from the public offering of common equity of Holdings after Holdings
has applied $35 million of proceeds from public offerings of Holdings common
equity in accordance with Section 2.02 of this Agreement.
"Existing Indebtedness" shall mean the Indebtedness set forth on
Schedule VIII hereto, which shall include all Retained Indebtedness.
"Fair Market Value" means (i) with respect to any asset (other than a
marketable security) at any date, the value of the consideration obtainable in a
sale of such asset at such date assuming a sale by a willing seller to a willing
purchaser dealing at arm's length and arranged in an orderly manner over a
reasonable period of time having regard to the nature and characteristics of
such asset, as reasonably determined by the Board of
62
Directors of the seller, or, if such asset shall have been the subject of a
relatively contemporaneous appraisal by an independent third party appraiser,
the basic assumptions underlying which have not materially changed since its
date, as set forth in such appraisal, and (ii) with respect to any marketable
security at any date, the closing sale price of such security on the business
day (on which any national securities exchange is open for the normal
transaction of business) next preceding such date, as appearing in any published
list of any national securities exchange or in the National Market List of the
National Association of Securities Dealers, Inc. or, if there is no such closing
sale price of such security, the final price for the purchase of such security
at face value quoted on such business day by a financial institution of
recognized standing which regularly deals in securities of such type.
"Funding Date" shall mean the Initial Funding Date and/or the
Subsequent Funding Date, as the context may require.
"Guaranties" shall mean and include each of the Subsidiary Guaranties
executed by the Subsidiaries of Holdings (other than the Borrower and the
Immaterial Subsidiaries) and the Holdings Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, transformers or other equipment that contain, dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar meaning and
regulatory effect, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated under applicable Environmental Laws.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Additional Convertible Securities" shall have the meaning
provided in Section 4.13.
"Holdings Common Stock" shall have the meaning provided in Section
4.13.
"Holdings Guaranty" shall mean the guaranty of Holdings contained in
Section 10 thereof.
"Holdings Preferred Stock" shall have the meaning provided in Section
4.13.
63
"Holdings Prime Stock" shall have the meaning provided in Section
4.13.
"Holdings Series B Non-Voting Preferred Stock" shall have the meaning
provided in Section 4.13.
"Holdings Series B Voting Preferred Stock" shall have the meaning
provided in Section 4.13.
"Immaterial Subsidiaries" shall mean Subsidiaries of Holdings which
have assets with a book value and fair market value of less than $20,000 (and
the aggregate amount of assets of all such Subsidiaries does not exceed
$100,000) and are not party to any material contracts and Central Florida
Medical Management Services Organization as long as it continues in its present
business and does not enter into any other business.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services other than trade payables and accrued expenses arising in the ordinary
course of business in accordance with customary trade terms, (ii) the maximum
amount available to be drawn under all letters of credit issued for the account
of such Person and all unpaid drawings in respect of such letters of credit,
(iii) all Indebtedness of the types described in clauses (i), (ii), (iv), (v),
(vi) or (vii) of this definition secured by any Lien on any property owned by
such Person, whether or not such Indebtedness has been assumed by such Person,
(iv) all Capitalized Lease Obligations of such Person, (v) all obligations of
such person to pay a specified purchase price for goods or services, whether or
not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all
Contingent Obligations of such Person and (vii) all obligations under any
Interest Rate Contracts or under any control disbursement accounts, repurchase
agreements, reverse repurchase agreements, caps, collars, derivatives, currency
hedge agreements or other similar types of agreements entered into with a Person
not a Lender or a financial institution as the case may be.
"Indemnified Matters" shall have the meaning provided in Section
12.01.
"Indemnitees" shall have the meaning provided in Section 12.01.
"Initial Commitment" shall mean, for each Lender, the amount set forth
opposite such Lender's name in Schedule I hereto directly below the column
entitled "Initial Commitment," as the same may be adjusted from time to time as
a result of assignments to or from such Lender pursuant to Section 11.04.
"Initial Funding Date" shall mean the first date on which Loans are
made.
64
"Intellectual Property" shall have the meaning provided in Section
4.20.
"Interest Rate Contract" shall mean interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates, and shall include, in any event, all
"Interest Rate Protection or Other Hedging Agreements" referred to in the Senior
Credit Agreement and in the Security Documents referred to therein, each as in
effect on the date hereof.
"Investor Group" shall mean Weston Presidio Capital II, L.P., Mercury
Asset Management plc, on behalf of Rowan Nominees Limited, NatWest Ventures
Investments Limited ▇/▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ Venture Capital IV, LLC, Partech
U.S. Partners III C.V., U.S. Growth Fund Partners C.V., Axa U.S. Growth Fund
LLC, Double Black Diamond II LLC, Almanori Limited, Multinvest Limited,
BancBoston Investments Inc., National City Venture Corporation, Total Class B
Non-Voting Preferred Stock, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Guaranty
& Trust Co. c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ (No. 410-66530-1-9-390), ▇▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Nominees c/o Mercury Asset
Management Ltd., Natwest Ventures, Ltd.
"Leasehold Properties" of any Person means all right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the preamble.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" has the meaning specified in Section 1.01.
"Loan Documents" shall mean this Agreement, each Note and each
Subordinated Guaranty.
"Loan Party" means each of Holdings, the Borrower and each
Subordinated Guarantor.
"Margin Stock" shall have the meaning provided in Regulation U.
65
"Material Contracts" shall have the meaning provided in Section
3.01(p).
"Maturity Date" shall mean the seventh year anniversary of the Initial
Funding Date.
"Metroplex Note" shall mean the note due April 1, 2002 and payable by
Holdings to Metroplex Hematology/Oncology Associates, LLP.
"▇▇▇▇▇'▇" shall have the meaning provided in the definition of "Cash
Equivalents."
"Net Sale Proceeds" shall mean for any sale or other disposition of
assets including capital stock and securities, the gross cash proceeds
(including any cash received by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when received) received from such
sale, net of reasonable transaction costs (including, without limitation,
attorneys' fees), the amount of such gross cash proceeds required to be used to
permanently repay any Indebtedness which is secured by the respective assets
which were sold, and the estimated marginal increase in income taxes and any
stamp tax which will be payable by Holdings' consolidated group as a result of
such sale.
"Non-Payment Default" shall have the meaning provided in Section
11.03.
"Notice Office" shall mean the office of the Agent located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent or any Lender pursuant to the terms of this Agreement or any other
Loan Document, including without limitation, all principal, interest, premium,
penalties, fees, expenses, indemnification, reimbursements, damages and any
other liabilities, together with and including any amounts received upon the
exercise of rights of recision or other rights of action (including claims for
damages) or otherwise.
"Other Subordinated Debt" shall have the meaning provided in Section
3.01(s).
"Paribas Capital Funding LLC" or "PCF" shall mean Paribas Capital
Funding LLC, a limited liability company organized under the laws of the State
of Delaware.
66
"Payment Default" shall have the meaning provided in Section 11.03.
"Payment Office" shall mean the office of the Agent located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning set forth in the Senior
Credit Agreement as in effect on the date hereof.
"Permitted Acquisition Notice" shall have the meaning provided in
Section 8.15(a).
"Permitted Business" shall mean a line of business in which the
Borrower and each of the Subsidiaries of the Borrower are engaged on the Initial
Funding Date after giving effect to the Transaction, and reasonably related
extensions thereof.
"Permitted Earnout Debt" shall mean Indebtedness of Holdings incurred
in connection with a Permitted Acquisition and in accordance with Section 5.15,
which Indebtedness is not secured by any assets of Holdings or any of its
Subsidiaries (including, without limitation, the assets so acquired) and is only
payable by Holdings upon the passage of time (e.g., non-compete payments) or in
----
the event certain future performance goals are achieved with respect to the
assets acquired; provided that such Indebtedness shall only constitute Permitted
--------
Earn-Out Debt to the extent the terms of such Indebtedness expressly limit the
maximum potential liability of Holdings with respect thereto and all such other
terms shall be in form and substance reasonably satisfactory to the Agent.
"Permitted Equity Issuances" shall mean issuance of Holdings Common
Stock or Holdings Prime Stock by Holdings as consideration in Permitted
Acquisitions, but only to the extent permitted pursuant to Section 5.15.
"Permitted Liens" shall have the meaning provided in Section 6.01.
"Permitted Refinancing" means any refinancing of Senior Debt which
refinancing does not (a) decrease the average weighted-life to maturity of the
Senior Debt by more than one and one-half (1-1/2) years from that in effect on
the date hereof (calculated as if such refinancing was made on the date hereof)
and (b) increase any interest rate applicable to the Senior Debt to a rate in
excess of the maximum interest rates calculated from time to time permitted
under Section 1.08 of the Senior Credit Agreement, as such Section 1.08 is in
effect on the date hereof, plus 2%.
67
"Permitted Seller Notes" shall mean notes issued by Holdings to
sellers of stock or assets in a Permitted Acquisition and issued in accordance
with Section 5.15, which notes shall be subordinated, unsecured and
unguaranteed, and shall otherwise be in form and substance reasonably
satisfactory to the Agent.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Personal Guarantees" shall have the meaning set forth in Section
4.23.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) any Loan Party or any of its
Subsidiaries, or any ERISA Affiliate, and each such Plan for the five year
period immediately following the latest date on which any Loan Party or any of
its Subsidiaries, or any ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Post-Closing Acquisitions" have the meaning provided in Section 4.30.
"Pre-Closing Acquisitions" shall mean the Acquisitions set forth on
Schedule XV.
"Pro Forma Basis" shall mean, with respect to any Permitted
Acquisition or repayment of DVI Indebtedness, the calculation of the
consolidated results of Holdings and its Subsidiaries otherwise determined in
accordance with this Agreement as if the respective Permitted Acquisition or
repayment of DVI Indebtedness (and all other Permitted Acquisitions and
repayments consummated during the respective Calculation Period or thereafter
and prior to the date of determination pursuant to Section 5.15 or other
applicable provision of this Agreement) had been effected on the first day of
the respective Calculation Period; provided that all calculations shall take
--------
into account the following assumptions:
(i) with respect to Consolidated Interest Expense or Consolidated
Indebtedness, if any Indebtedness is incurred pursuant to the respective
Permitted Acquisition or repayment of DVI Indebtedness (or was incurred in
any other Permitted Acquisition or other repayment of DVI Indebtedness
which occurred during the relevant Calculation Period or thereafter and
prior to the date of determination) then all such Indebtedness shall be
deemed to have been outstanding from the first day of the respective
Calculation Period (and the interest expense associated with such
Indebtedness shall be determined at the actual rates applicable thereto or
which would have been applicable had such debt been outstanding for the
whole such period and shall be included in determining Consolidated
Interest
68
Expense on such Pro Forma Basis) and all Indebtedness that was outstanding
during the Calculation Period or thereafter and prior to the date of the
Permitted Acquisition or repayment of DVI Indebtedness but not outstanding
on the date of the Permitted Acquisition or repayment of DVI Indebtedness
shall be deemed to have been repaid in full on the first day of the
Calculation Period; and
(ii) if all or any portion of the respective Calculation Period occurs
before November 1, 1997, then compliance with Section 5.15(a) and Sections
6.06 through 6.09, inclusive on a Pro Forma Basis, shall only be required
to be established for the period beginning on the Initial Funding Date and
ending on the last day of the respective Calculation Period; provided that
--------
to the extent a financial covenant calculation compares a balance sheet
item to an income statement item, all calculations relating to the
financial results of the Person or business, division or product line being
acquired pursuant to the Permitted Acquisition shall, to the extent that
such results relate to income statement items, be multiplied by a fraction
(x) the numerator of which shall be the number of days from the Initial
Funding Date to the end of the Calculation Period and (y) the denominator
of which shall be the number of days in the Calculation Period without
giving effect to this clause (iii) which provides that the Calculation
Period commences on the Initial Funding Date (and is therefore less than
four fiscal quarters).
"Projections" shall have the meaning provided in Section 3.01(o).
"Purchase Price" shall mean the aggregate purchase price for each
Acquisition and the amount and form of each type of consideration payable with
respect thereto as set forth on Schedule XIII hereto.
"Qualified IPO" shall mean an initial public offering of the common
stock of Holdings registered under the Securities Act, with minimum net proceeds
to Holdings (net of underwriting discounts and offering expenses) of at least
$50 million.
"Quarterly Payment Date" shall mean the first Business Day of each
January, April, July and October of each calendar year.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. (S) 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leasehold Properties.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any cash insurance proceeds payable by reason of theft, loss,
physical
69
destruction or damage or any other similar event with respect to any properties
or assets of Holdings or any such Subsidiary (excluding business interruption
insurance).
"Register" shall have the meaning provided in Section 5.13.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof among the Borrower and the other investors
named therein.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Lenders" shall mean Lenders the sum of whose outstanding
Loans represents an amount greater than 50% of the sum of all the outstanding
Loans.
"Retained Indebtedness" shall have the meaning provided in Section
4.21.
"Returns" shall have the meaning provided in Section 4.09.
"S&P" shall have the meaning provided in the definition of "Cash
Equivalents."
70
"SEC" shall have the meaning provided in Section 5.01(h).
"Section 2.04(b)(ii) Certificate" shall have the meaning provided in
Section 2.04(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of June 16, 1997 among the Company, Weston and certain other
investors.
"Senior Credit Agreement" shall mean the Credit Agreement dated as of
the date hereof among Holdings, the Borrower, the Bank Agent and the Banks, as
such agreement may, subject to Section 6.16, be amended, restated, extended,
replaced, supplemented, restructured or otherwise modified or refinanced
pursuant to a Permitted Refinancing from time to time (in whole or in part
without limitation as to terms extensions of maturities, increasing the amount
of borrowings or other conditions or covenants), including all related notes,
collateral documents, guarantees, Interest Rate Contracts, instruments and
agreements entered into in connection therewith, as the same may be amended,
modified, supplemented, restated, restructured, replaced or refinanced pursuant
to a Permitted Refinancing from time to time.
"Senior Debt" shall mean (a) all payment obligations now or hereafter
incurred pursuant to and in accordance with the terms of the Senior Credit
Agreement (including without limitation all principal, interest, (including,
without limitation, any post-petition interest on such obligations at the rate
set forth in Senior Credit Agreement, accruing whether or not granted or
permitted in connection with an event of the type referred to in Section 7.05
hereof) and Interest Date Protection or other Hedging Agreements as defined in
the Senior Credit Agreement), premium, penalties, fees, expenses,
indemnification, reimbursements, damages and other liabilities payable under the
Senior Credit Agreement; provided, that in no event shall the principal amount
of Senior Debt (exclusive of interest rate protection obligations) exceed the
sum of (i) $38,000,000 (as such amount is reduced by repayments of term loans to
the extent that such repayments may not be reborrowed), (ii) an amount equal to
the revolving loans and commitments therefor outstanding under the Senior Credit
Agreement from time to time to the extent they do not exceed $7,000,000, reduced
by reductions of revolving commitments to the extent such reductions are
permanent and (b) Additional Senior Credit Indebtedness. Senior Debt
outstanding under the Senior Credit Agreement shall continue to constitute
Senior Debt for all purposes hereof, notwithstanding that such Senior Debt or
any claim in respect thereof may be disallowed, avoided or subordinated pursuant
to any insolvency law, the Bankruptcy
71
Code or any similar federal or state law for the relief of debtors or other
applicable insolvency law or equitable principles as a claim for unmatured
interest.
"Senior Indebtedness" shall mean collectively, with respect to the
Borrower and its Subsidiaries, (a) the Senior Debt, (b) all Capitalized Lease
Obligations of the Borrower and its Subsidiaries, to the extent such
Indebtedness is permitted to be incurred pursuant to Section 6.04, and (c) any
additional Indebtedness of the Borrower and its Subsidiaries for borrowed money
which is either secured or not subordinated to the payment of the Obligations,
to the extent such additional Indebtedness is permitted to be incurred pursuant
to Section 6.04.
"Shareholders' Agreements" means all agreements entered into by the
Borrower or any Subsidiary of the Borrower governing the terms and relative
rights of its capital stock and any agreements entered into by shareholders
relating to any such entity with respect to their capital stock.
"Stockholders' Agreement" shall mean the Second Amended and Restated
Stockholders' Agreement, dated as of June 16, 1997, among the Borrower and the
other investors named therein.
"Subordinated Debt Amendments" shall have the meaning provided in
Section 3.01(s).
"Subordinated Guarantor" shall mean each Subsidiary of Holdings (other
than the Borrower and any Immaterial Subsidiaries and Central Florida Medical
Management Service Organization).
"Subordinated Guaranty" shall mean a subordinated guaranty, in
substantially the form of Exhibit K, executed by each Subordinated Guarantor, as
such guaranty may be amended, supplemented or otherwise modified from time to
time.
"Subordinated Obligations" shall have the meaning set forth in Section
11.01.
"Subsequent Commitment" shall mean, for each Lender, the amount set
forth opposite such Lender's name in Schedule I hereto directly below the column
entitled "Subsequent Commitment," as the same may be (x) reduced or terminated
from time to time pursuant to Section 1.04, 2.02 or 7 or (y) adjusted from time
to time as a result of assignments to or from such Lender pursuant to Section
12.04.
"Subsequent Funding Date" shall mean the date, other than the Initial
Funding Date, on which Loans are made.
72
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% 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 by such Person directly or
indirectly through and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
directly or indirectly through and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
"Subsidiary Metroplex Note" shall mean the Promissory Note dated June
16, 1997 in the original amount of $6,210,000 from Holdings payable to Metroplex
Hematology/Oncology Associates, L.L.P. which note was assumed by MHOA Texas I,
L.L.C.
"Tax Sharing Agreements" shall mean any tax sharing, tax allocation
and other similar agreements entered into by the Borrower or any Subsidiary of
the Borrower.
"Taxes" shall have the meaning provided in Section 2.04(a).
"Total Commitment" means the aggregate Commitments of the Lenders.
"Transaction" shall mean collectively, (i) the incurrence of Loans
hereunder on the Initial Funding Date, (ii) the consummation of the
Acquisitions, (iii) the incurrence of the Senior Debt, (iv) the issuance of
capital stock of Holdings in connection with the transactions contemplated
hereby, (v) the repayment of all Indebtedness to be repaid by Holdings or its
Subsidiaries in connection with the transactions contemplated hereby, together
with all accrued interest, premiums, fees, commissions and expenses owing in
connection therewith, and the termination of all commitments thereunder, (vi)
the payment of the Transaction Fees and Expenses in connection therewith and
(vii) the entering into of the Equity Amendments and the Subordinated Debt
Amendments.
"Transaction Fees and Expenses" shall mean all fees and expenses
incurred in connection with and arising out of the Transaction and the
transactions contemplated thereby and hereby; provided, however, that the
-------- -------
aggregate amount of such fees and expenses shall not exceed $2.0 million in the
aggregate.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the
73
close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, each determined in accordance with Statement of Financial
Accounting Standards No. 87, based upon the actuarial assumptions used by the
Plan's actuary in the most recent annual valuation of the Plan.
"Unused Commitment Fee" shall have the meaning provided in Section
1.03.
"United States" and "U.S." shall each mean the United States of
America.
"Voting Stock" shall mean, with respect to any Person, the outstanding
stock of all classes (or equivalent interests) which would ordinarily, in the
absence of contingencies, entitle the holders thereof to vote for the election
of directors (or Persons performing similar functions) of such Person.
"Warrant" shall mean collectively, one or more warrants issued to PCF
or its assignees in connection with this Agreement, substantially in the form of
Exhibit F hereto.
"Warrant Agreement" shall mean the Warrant Agreement dated as of the
date hereof between the Borrower and PCF, in substantially the form of Exhibit G
hereto, as the same may be amended, supplemented or modified from time to time.
"Warrant Documents" means the Warrant, the Warrant Purchase Agreement,
the Warrant Agreement and the Registration Rights Agreement.
"Warrant Purchase Agreement" shall mean the Warrant Purchase Agreement
dated as of the date hereof between the Borrower and PCF, in substantially the
form of Exhibit H hereto.
"Weston" shall mean Weston Presidio Capital Partners II, L.P.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
Section 9. The Agent.
---------
9.01 Appointment. The Lenders hereby designate PCF as Agent to act as
-----------
specified herein and in the other Loan Documents. Each Lender hereby irrevocably
74
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Agreement, the other Loan Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its officers, directors, agents or employees.
9.02 Nature of Duties. The Agent shall have no duties or
----------------
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents. Neither the Agent nor any of its officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship in respect of any Lender or the holder of any
Note; and nothing in this Agreement or any other Loan Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or any other Loan Document except as
expressly set forth herein.
9.03 Lack of Reliance on the Agent. Independently and without
-----------------------------
reliance upon the Agent, each Lender and the holder of each Note, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Holdings and
its Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of Holdings and its Subsidiaries and,
except as expressly provided in this Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. The Agent shall not be responsible to any Lender
or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, priority or sufficiency of
this Agreement or any other Loan Document or the financial condition of Holdings
or its Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Loan Document, or the financial condition of Holdings or
its Subsidiaries or the existence or possible existence of any Default or Event
of Default. In no event shall the Agent be required to take any action in
contravention of applicable law or if such action would cause
75
it, in its sole determination, to incur any risk or liability for which it is
not adequately indemnified for to its sole satisfaction.
9.04 Certain Rights of the Agent. If the Agent shall request
---------------------------
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Lenders; and the Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender or the holder
of any Note shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder or under any
other Loan Document in accordance with the instructions of the Required Lenders.
9.05 Reliance. The Agent shall be entitled to rely, and shall be
--------
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or facsimile message, cablegram,
radiogram, legal opinion, order or other document or telephone message signed,
sent or made by any Person that the Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Loan Document and its duties hereunder and thereunder, upon advice of counsel
selected by it.
9.06 Indemnification. To the extent the Agent is not reimbursed and
---------------
indemnified by the Borrower, the Lenders will reimburse and indemnify the Agent,
in proportion to their respective "percentages" as used in determining the
Required Lenders, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties hereunder or under any
other Loan Document, in any way relating to or arising out of this Agreement or
any other Loan Document; provided, that no Lender shall be liable for any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
9.07 The Agent in Its Individual Capacity. With respect to its
------------------------------------
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Lender" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Lenders," "Required Lenders," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other business
with the Borrower and its Subsidiaries or any Affiliate thereof as if it were
not performing the duties specified herein, and may accept fees and other
consideration from
76
Holdings and its Subsidiaries for services in connection with this Agreement and
otherwise without having to account for the same to the Lenders.
9.08 Holders. The Agent may deem and treat the payee of any Note as
-------
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
9.09 Resignation by the Agent. The Agent may resign from the
------------------------
performance of all its functions and duties hereunder and/or under the other
Loan Documents at any time by giving fifteen 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 Required Lenders shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within
such 15 Business Day period, the Agent, with the consent of the Borrower, shall
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 10. Subordinated Guaranty of Holdings
---------------------------------
10.01 The Guaranty. In order to induce the Lenders to enter into this
------------
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by Holdings from the proceeds of the Loans, Holdings
hereby agrees with the Lenders as follows: Holdings hereby unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all indebtedness of the Borrower to the Lenders under this Agreement and
the other Loan Documents. If any or all of the indebtedness of the Borrower to
the Lenders becomes due and payable hereunder or under
77
such other Loan Documents, Holdings unconditionally promises to pay such
indebtedness to the Lenders, or order of demand, together with any and all
expenses which may be incurred by the Agent or the Lenders in collecting any of
the indebtedness. The word "indebtedness" is used in this Section 10 in its most
comprehensive sense and means any and all advances, debts, obligations and
liabilities of the Borrower arising in connection with this Agreement or any
other Loan Documents, in each case, heretofore, now, or hereafter made, incurred
or created, whether voluntarily or involuntarily, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether or not such
indebtedness is from time to time reduced, or extinguished and thereafter
increased or incurred, whether the Borrower may be liable individually or
jointly with others, whether or not recovery upon such indebtedness may be or
hereafter become barred by any statute of limitations, and whether or not such
indebtedness may be or hereafter become otherwise unenforceable.
10.02 Bankruptcy. Additionally, Holdings unconditionally and
----------
irrevocably guarantees the payment of any and all indebtedness of the Borrower
to the Lenders whether or not due or payable by the Borrower upon the occurrence
of any of the events specified in Section 7.05, and unconditionally and
irrevocably promises to pay such indebtedness to the Lenders, or order, on
demand, in lawful money of the United States.
10.03 Nature of Liability. The liability of Holdings hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
indebtedness of the Borrower whether executed by Holdings, any other guarantor
or by any other party, and the liability of Holdings hereunder shall not be
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Agent or the Lenders on the indebtedness which the Agent or such Banks repay the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and Holdings waives any right to
the deferral or modification of its obligations hereunder by reason of any such
proceeding.
10.04 Guaranty Subordinate to Senior Indebtedness. Holdings covenants
-------------------------------------------
and agrees, and the Agent and the Lenders, by acceptance of this Holdings
Guaranty likewise covenant and agree, that, (a) to the extent and in the manner
hereinafter set forth in this Section 10.04, this Holdings Guaranty, including
pursuant to any amendment, modification, restatement or renewal thereof, is
hereby expressly made subordinated and subject in right of payment to the prior
payment in full of all Senior Debt and (b) the terms and conditions of such
subordination is for the benefit of the holders of the Senior Debt and each such
holder may enforce such subordination.
78
10.05 Guaranty Absolute. No invalidity, irregularity or
-----------------
unenforceability of all or any part of the indebtedness guaranteed hereby or of
any security therefor shall affect, impair or be a defense to this Guaranty, and
this Guaranty shall be primary, absolute and unconditional notwithstanding the
occurrence of any event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor except
payment in full of the indebtedness guaranteed herein.
10.06 Independent Obligation. The obligations of Holdings hereunder
----------------------
are independent of the obligations of any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor or the Borrower and
whether or not any other guarantor the Borrower be joined in any such action or
actions. Holdings waives, to the fullest extent permitted by law the benefit of
any statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to Holdings.
10.07 Authorization. Holdings authorizes the Agent and the Lenders
-------------
without notice or demand to Holdings, and without affecting or impairing its
liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the indebtedness (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the indebtedness as so changed, extended, renewed or
altered;
(b) take and hold security for the payment of the indebtedness and
sell, exchange, release, surrender, realize upon or otherwise deal with in
any manner and in any order any property by whomsoever at any time pledged
or mortgaged to secure, or howsoever securing, the indebtedness or any
liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
79
(e) settle or compromise any of the indebtedness, any security
therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate
the payment of all or any part thereof to the payment of any
liability(whether due or not) of the Borrower to its creditors other than
the Lenders;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Lenders regardless of what
liability or liabilities of Holdings or the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this Agreement
or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Section 10.
10.08 Reliance. It is not necessary for the Agent or the Lenders to
--------
inquire into the capacity or powers of the Borrower or its Subsidiaries or the
officers, directors, partners or agents acting or purporting to act on its
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
10.09 Subordination. Any indebtedness of the Borrower now or
-------------
hereafter held by Holdings is hereby subordinated to the indebtedness of the
Borrower to the Agent and the Lenders, and such indebtedness of the Borrower to
Holdings, if the Agent (at the direction of the Required Lenders), after an
Event of Default has occurred, so requests, shall be collected, enforced and
received by Holdings as trustee for the Lenders and be paid over to the Lenders
on account of the indebtedness of the Borrower to the Lenders, but without
affecting or impairing in any manner the liability of Holdings under the other
provisions of this Guaranty. Prior to the transfer by Holdings of any note or
negotiable instrument evidencing any indebtedness of the Borrower to Holdings,
Holdings shall ▇▇▇▇ such note or negotiable instrument with a legend that the
same is subject to this subordination.
10.10 Waiver. (a) Holdings waives any right to require the Agent or
------
the Lenders to (i) proceed against the Borrower, any other guarantor or any
other party, (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor or any other party or (iii) pursue any other
remedy in the Agent's or the Lenders' power whatsoever. Holdings waives any
defense based on or arising out of any defense of the
80
Borrower, any other guarantor or any other party other than payment in full of
the indebtedness (other than payment), including, without limitation, any
defense based on or arising out of the disability of the Borrower, any other
guarantor or any other party, or the unenforceability of the indebtedness or any
party thereof from any cause, or the cessation from any cause of the liability
of the Borrower other than to the extent of payment in full of the indebtedness.
The Agent and the Lenders may, in accordance with the Loan Documents, at their
election, foreclose on any security held by the Agent or the Lenders by one or
more judicial or nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Agent and the Lenders may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of Holdings hereunder except to the extent
the indebtedness has been paid. Holdings waives any defense arising out of any
such election by the Agent and the Borrower, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or other right
or remedy of Holdings against the Borrower or any other party or any security.
(b) Except as otherwise specifically required hereunder, Holdings
waives all presentments, demands for performance, protests and notices,
including, without limitation, notices of nonperformance, notices of protest,
notices of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation or incurring of new or additional indebtedness. Holdings
assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of non-payment of the indebtedness and the nature, scope
and extent of the risks which Holdings assumes and incurs hereunder, and agrees
that the Agent and the Lenders shall have no duty to advise Holdings of
information known to them regarding such circumstances or risks.
10.11 Guaranty Continuing. This Guaranty is a continuing one and all
-------------------
liabilities to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Lender or any holder of any Note, in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly specified
are cumulative and not exclusive of any rights or remedies which any Lender or
any subsequent holder of a Note would otherwise have. No notice to or demand
on Holdings in any case shall entitle Holdings to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the Lender or any holder, creator or purchaser to any other or further action in
any circumstances without notice or demand.
81
10.12 Binding Nature of Guaranties. This Guaranty shall be binding
----------------------------
upon Holdings and its successors and assigns and shall inure to the benefit of
the Lender and their successors and assigns.
10.13 Judgments Binding. If claim is ever made upon any Lender or
-----------------
any subsequent holder of a Note for repayment or recovery of any amount or
amounts received in payment or on account of any of the indebtedness and any of
the aforesaid payees repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower) then and in such event Holdings agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon
Holdings, notwithstanding any revocation hereof or the cancellation of any Note,
or other instrument evidencing any liability of the Borrower, and Holdings shall
be and remain liable to the aforesaid payees hereunder for the amount so repaid
or recovered to the same extent as if such amount had never originally been
received by any such payee.
Section 11. Subordination
-------------
11.01 Notes Subordinate to Senior Indebtedness. The Borrower
----------------------------------------
covenants and agrees, and each Lender and each other holder of any Note, if any,
likewise covenants and agrees, that, (a) to the extent and in the manner
hereinafter set forth in this Section 11, the payment of the Obligations,
including pursuant to any amendment, modification, restatement or renewal
thereof (the "Subordinated Obligations"), is hereby expressly made subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness and (b) the terms and conditions of such subordination is for the
benefit of the holders of the Senior Indebtedness and each such holder may
enforce such subordination.
11.02 Payment Over of Proceeds Upon Dissolution. In the event of (i)
-----------------------------------------
any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Borrower or to its assets, or (ii) any liquidation,
dissolution or other winding up of any the Borrower, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Borrower (collectively, "Bankruptcy Events"), then and in any
such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness (including interest after the commencement of a
Bankruptcy Event at the rate specified in the Senior Indebtedness, whether or
not allowed), before any Lender is entitled to receive any direct or indirect
payment or distribution on account of Subordinated
82
Obligations including, without limitation, by exercise of set-off and any
payment which may be payable or deliverable by reason of any other Indebtedness
being subordinated in right of payment to the Subordinated Obligations;
(b) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities, by set-off or otherwise,
to which any Lender would be entitled but for the provisions of this Section 11,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other Indebtedness of the Borrower being
subordinated to the payment of Subordinated Obligations (except for any such
payment or distribution (1) authorized by an unstayed, final, nonappealable
order or decree stating that effect is being given to the subordination of such
Subordinated Obligations to the Senior Indebtedness, and made by a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or (2) of securities which, if debt securities, are subordinated
to at least the same extent as the Subordinated Obligations are to (A) such
Senior Indebtedness or (B) any securities issued in exchange for Senior
Indebtedness; provided, however, that (x) the final maturity day of such
-------- -------
securities shall not be earlier than one year following the maturity date of the
last to mature of the Senior Indebtedness (including any securities issued in
exchange therefor) at the time outstanding and the scheduled amortization
thereof shall not be more favorable (as to amount or time of payment) then the
scheduled amortization of the principal amount of the Subordinated Obligations,
(y) such securities shall contain covenants which are no more restrictive than
the covenants contained herein and shall not contain greater defaults than as
are contained herein, and (z) such securities shall bear interest at a rate per
annum less than or equal to 12% per annum computed on the same basis as
described herein) shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of all
Senior Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the principal of, and interest
on, such Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full of all such Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 11, any Lender shall have received any such payment or distribution
of assets of the Borrower of any kind or character, whether, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the Borrower
being subordinated to the payment of the Subordinated Obligations (but excluding
any payment of the character described in the parenthetical clause in the
foregoing paragraph (b)) before all Senior Indebtedness is paid
83
in full or payment thereof is provided for, then and in such event such payment
or distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Borrower for application
to the payment of all such Senior Indebtedness remaining unpaid, to the extent
necessary to pay such Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall
occur any consolidation of the Borrower with, or any merger of the Borrower
into, another corporation or the liquidation or dissolution of the Borrower
following any conveyance, transfer or lease of its properties and assets
substantially as an entirety to another corporation, such consolidation, merger
or liquidation shall not be deemed a Bankruptcy Event; provided, that no other
Bankruptcy Event shall have occurred and be continuing at the time of such
consolidation, merger or liquidation. The Bank Agent is hereby authorized to
file an appropriate claim on behalf of the Lenders if the Lenders do not file
such claim or there is not filed on behalf of the Lenders a proper proof of
claim in the form required in any Bankruptcy Event prior to thirty (30) days
before the expiration of the time to file such claim or claims.
11.03 No Payment in Certain Circumstances. In the event that (i) the
-----------------------------------
Borrower shall fail to pay when due (after giving effect to any applicable grace
periods), upon acceleration or otherwise, any amount or obligation with respect
to Senior Indebtedness (a "Payment Default") which Payment Default shall not
have been cured or waived, or (ii) an event of default (other than a Payment
Default) under the Senior Credit Agreement shall occur and be continuing, which
shall not have been cured or waived (a "Non-Payment Default"), and the Borrower
and the Agent receive written notice of such Non-Payment Default from either the
Bank Agent or the holders of at least a majority in aggregate principal amount
of the Senior Debt under the Senior Credit Agreement at the time outstanding (a
"Non-Payment Blockage Notice"), then no payment on account of the Subordinated
Obligations shall be made by the Borrower (x) in the case of any Payment
Default, unless and until such Senior Indebtedness shall have been paid in full
or until such Payment Default shall have been cured or waived, or (y) in the
case of any Non-Payment Default, from the earlier of the date on which the
Borrower and the Agent receive such Non-Payment Blockage Notice until the
earlier of (1) 179 days after such date and (2) the date, if any, on which the
Senior Debt under the Senior Credit Agreement is paid in full or such Non-
Payment Default is waived by the holders of such Senior Debt or otherwise cured
(a "Blockage Period"); provided, that only one Non-Payment Blockage Notice may
be given in any 360-day period.
In the event that, notwithstanding the foregoing, the Borrower shall
make any payment to any Lender prohibited by the foregoing provisions of this
Section 11.03,
84
then and in such event such payment shall be paid over and delivered forthwith
to the holders (or their agent or trustee) of the relevant Senior Indebtedness.
The provisions of this Section 11.03 shall not apply to any payment with respect
to which Section 11.02 would be applicable.
11.04 Acceleration Rights; Remedies. If an Event of Default, other
-----------------------------
than an Event of Default under Section 7.05, shall exist at any time that any
Senior Debt under the Senior Credit Agreement shall be outstanding, no Lender
nor any other holder of the Notes nor the Agent shall take any action, judicial
or otherwise, to accelerate or collect payment on the Subordinated Obligations
or to pursue any other remedy with respect to the Subordinated Obligations prior
to the earlier of (i) the expiration of five Business Days immediately following
the receipt by the Bank Agent of notice of the occurrence of such Event of
Default from the Agent or from the holder or holders entitled to accelerate
payments on the Subordinated Obligations or (ii) acceleration of the Senior
Debt, but such action may only be taken if at the end of such period such Event
of Default has not been cured or waived; provided, that any amount received by
the Agent or any of the Lenders as a result of any acceleration permitted above
prior to payment in full in cash of the Senior Debt under the Senior Credit
Agreement shall be paid to the Bank Agent in accordance with the provisions of
this Section 11.
11.05 Payment Otherwise Permitted. Nothing contained in this Section
---------------------------
11 or elsewhere in this Agreement or in the Notes shall prevent the Borrower, at
any time except as set forth in Section 11.02 or under the conditions described
in Section 11.03, from making payments at any time of principal of and interest
on the Loans or any other amount payable by the Borrower under the Notes or this
Agreement. Notwithstanding the provisions of this Section 10, neither the Agent
nor any Lender shall be charged with knowledge of the existence of any facts,
including of the occurrence of a Payment Default, which would prohibit the
making of any payment or distribution by the Borrower or the receipt or
retention thereof by the Agent or any Lender, or the taking of any action by the
Agent or any Lender of the type referred to in Section 11.04, unless the Agent
or such Lender as the case may be, shall have received at least two Business
Day's prior written notice of such facts.
11.06 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
Subject to, and solely effective following, the final payment in full of all
Senior Indebtedness the Lenders shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to such Senior Indebtedness to the extent of the
payments or distributions made to the Banks, or otherwise applied to payment of,
the Senior Indebtedness pursuant to the provisions of this Section 11 until the
principal of and interest on the Loans and the Notes shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which the Lenders
would be entitled
85
except for the provisions of this Section 11, and no payments over pursuant to
the provisions of this Section 11 to the holders of Senior Indebtedness by the
Lenders shall, as among the Borrower, its creditors (other than holders of
Senior Indebtedness) and the Lenders, be deemed to be a payment or distribution
by the Borrower to or on account of the Senior Indebtedness.
11.07 Provisions Solely to Define Relative Rights. The provisions of
-------------------------------------------
this Section 11 are and are intended solely for the purpose of defining the
relative rights of the holders of the Notes on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this Section 11 or
elsewhere in this Agreement or in the Notes is intended to or shall (i) impair,
as among the Borrower, its creditors (other than holders of Senior Indebtedness)
and the Lenders, the obligation of the Borrower, which is absolute and
unconditional, to pay to the Lenders the principal of, and premium and interest
on, and any other amount payable by the Borrower under, the Loans, the Notes or
this Agreement as and when the same shall become due and payable in accordance
with its terms; or (ii) affect the relative rights against the Borrower of the
Lenders and its creditors (other than the holders of Senior Indebtedness); or
(iii) prevent the Lenders from accelerating the Loans and exercising all other
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this Section 11 of the holders
of Senior Indebtedness (x) upon the occurrence of a Bankruptcy Event, to
receive, pursuant to and in accordance with Section 11.02, cash, property and
securities otherwise payable or deliverable to the Lenders, (y) under the
conditions specified in Section 11.03, to prevent any payment prohibited by such
Section or (z) Section 11.04.
11.08 No Waiver of Subordination Provisions; Amendment. No right of
------------------------------------------------
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Borrower or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Borrower
with the terms, provisions, and covenants of this Agreement, regardless of any
knowledge thereof any such holder may have or be otherwise charged with. Without
in any way limiting the generality of the foregoing, the holders of Senior
Indebtedness may at any time and from time to time, without the consent of or
notice to the Lenders or any other holder of the Notes, without incurring
responsibility to the Lenders or such holders and without impairing or releasing
the subordination provided in this Section 11 or the obligations hereunder of
the Lenders and such holders to the holders of Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior
86
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Borrower and any other Person.
11.09 Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets of the Borrower referred to in this
Section 11, the Lenders shall be entitled to rely upon any unstayed, final,
nonappealable order or decree entered by any court of competent jurisdiction in
which a Bankruptcy Event is pending, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 11.
11.10 Turnover; Miscellaneous Subordination Provisions. (a) If a
------------------------------------------------
distribution is made to any holder of Subordinated Obligations that because of
this Section 11 should not have been made to it, such holder shall segregate
such distribution from its other funds and property and hold it in trust for the
benefit of, and, upon written request, pay it over (in the same form as
received, with any necessary endorsement) to, the holders of Senior Indebtedness
as their interests may appear, or their agent or representative or the trustee
under the indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued, as their respective interests may appear, for
application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of, all obligations with
respect to Senior Indebtedness remaining unpaid to the extent necessary to pay
such obligations in full in accordance with their terms, after giving effect to
an concurrent payment or distribution to or for the holders of Senior
Indebtedness.
(b) A distribution may consist of cash, securities or other property,
by set-off or otherwise, and a payment or distribution on account of any
obligations with respect to the holders of Subordinated Obligations shall
include any redemption, purchase or other acquisition of the Subordinated
Obligations.
(c) For the purpose of this Section 11, all indebtedness now or
hereafter existing under the Senior Credit Agreement shall not be deemed to have
been paid in full unless the holders or owners thereof shall have received
payment in full in cash.
(d) The agreements contained in this Section 11 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness upon any Bankruptcy Event of the Borrower, all as
though such payment had not been made.
87
(e) All rights and interests under this Agreement of the holders of
Senior Debt, and all agreements and obligations of the holders of Subordinated
Obligations and the Borrower under this Section 11, shall remain in full force
and effect irrespective of (i) any lack of validity or enforceability of the
Senior Credit Agreement, any promissory notes evidencing the Indebtedness
thereunder, or any other agreement or instrument relating thereto or to any
other Senior Debt, including, without limitation, any agreement referred to in
the definition of Senior Credit Agreement, or (ii) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
holders of Subordinated Obligations or the Borrower.
(f) The provisions set forth in this Section 11 constitute a
continuing agreement and shall (i) be and remain in full force and effect until
payment in full of all Indebtedness under the Senior Credit Agreement at such
time when no Bank shall have any obligation to make advances under the Senior
Credit Agreement, (ii) be binding upon the holders of Subordinated Obligations
and the Borrower and its respective successors, transferees and assigns, and
(iii) inure to the benefit of, and be enforceable directly by, each of the
holders of Senior Indebtedness and their respective successors, transferees and
assigns.
Section 12. Miscellaneous.
-------------
12.01 Payment of Expenses, Etc. Each of Holdings and the Borrower
------------------------
jointly and severally agrees to: (i) whether or not the transactions herein
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Agent (including, without limitation, the reasonable fees and
disbursements of Weil, Gotshal & ▇▇▇▇▇▇ LLP) in connection with the preparation,
execution and delivery of this Agreement and the other Loan Documents and the
documents and instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto, of the Agent in connection with
its syndication efforts with respect to this Agreement (including, without
limitation, the reasonable fees and disbursements of Weil, Gotshal & ▇▇▇▇▇▇ LLP)
and of the Agent and each of the Lenders in connection with the enforcement of
this Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Agent and for each of the Lenders);
(ii) pay and hold each of the Lenders and the Agent harmless from and against
any and all present and future stamp, excise and other similar taxes with
respect to the foregoing matters and save each of the Lenders 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 (iii) defend, protect, indemnify and hold harmless the Agent and each
Lender, and each of their respective officers, directors, employees,
representatives, attorneys, agents, Affiliates, any other Person in control of
the Agent or its affiliates (collectively called the "Indemnitees") from and
against any and all liabilities, obligations (including removal or remedial
actions),
88
losses, damages (including foreseeable and unforeseeable consequential damages
and punitive damages), penalties, claims, actions, judgments, suits,
proceedings, costs, expenses and disbursements (including reasonable attorneys'
and consultants fees and disbursements) of any kind or nature whatsoever that
may at any time be incurred by, imposed on or assessed against the Indemnitees
directly or indirectly based on, or arising or resulting from, or in any way
related to, or by reason of (a) any investigation, litigation or other
proceeding (whether or not the Agent or any Lender is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among the Agent, any Lender, the Borrower or any of its Subsidiaries, or any
third Person or otherwise) related to the entering into and/or performance of
this Agreement or any other Document or the proceeds of any Loans hereunder or
the consummation of any transactions contemplated herein (including, without
limitation, the Transaction) or in any other Document or the exercise of any of
their rights or remedies provided herein or in the other Loan Documents; or, (b)
the actual or alleged generation, presence or Release of Hazardous Materials on
or from, or the transportation of Hazardous Materials to or from, any Real
Property owned or at any time operated by Holdings or any of its Subsidiaries;
or (c) any Environmental Claim relating to Holdings, any of its Subsidiaries or
any Real Property owned or at any time operated by Holdings or any of its
Subsidiaries; or (d) the exercise of the rights of the Agent and of any Lender
under any of the provisions of this Agreement, any other Loan Document, or any
other Document or any Loans hereunder; or (e) the consummation of any
transaction contemplated herein (including, without limitation, the Transaction)
or in any other Loan Document (the "Indemnified Matters") regardless of when
such Indemnified Matter arises, but excluding any such Indemnified Matter based
solely on the gross negligence or willful misconduct of any Indemnitee.
12.02 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 an 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 Borrower
or any of its Subsidiaries or to any other Person, any such notice being hereby
expressly waived, but in any event subject to Section 11, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of the Borrower or any of its Subsidiaries against and
on account of the Obligations and liabilities of the Borrower or any of its
Subsidiaries to such Lender under this Agreement or under any of the other Loan
Documents, including, without limitation, all interests in Obligations purchased
by such Lender pursuant to Section 12.06(b), 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. The Agent and the Lenders hereby agree to
provide notice to the
89
Borrower and the Bank Agent of any action taken pursuant to this Section 12.02;
provided, that the failure to give such notice shall not affect any action
--------
taken by the Agent or such Lender pursuant to this Section 12.02.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Holdings or the
Borrower, at its address specified opposite its signature below; if to any
Lender, at its address specified opposite its name below; and if to the Agent,
at its Notice Office; if to the Banks or the Bank Agent, to the address
specified in the Senior Credit Agreement; or, as to Holdings, the Borrower or
the Agent, at such other address as shall be designated by such party in a
written notice to the other parties hereto and, as to the Bank Agent, each Bank
and each Lender, at such other address as shall be designated by the Bank Agent,
such Bank or such Lender in a written notice to the Borrower and the Agent. All
such notices and communications shall, when mailed, telegraphed, telexed,
facsimile, or cabled or sent by overnight courier, be effective three Business
Days after deposited in the mails, certified, return receipt requested, when
delivered to the telegraph company or cable company or one Business Day
following delivery to an overnight courier, as the case may be, or sent by telex
or facsimile device, except that notices and communications to the Agent shall
not be effective until received by the Agent or the Bank Agent.
12.04 Benefit of Agreement. This Agreement shall be binding upon and
--------------------
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that no Loan Party may assign
-------- -------
or transfer any of its rights, obligations or interest hereunder or under any
other Loan Document without the prior written consent of the Lenders; and
provided, further, that although any Lender may transfer, assign or grant
-------- -------
participations in its rights hereunder, such Lender shall remain a "Lender" for
all purposes hereunder (and may not transfer or assign all or any portion of its
Loans hereunder except as provided in Section 12.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Lender"
hereunder; and provided, further, that no Lender shall transfer or grant any
-------- -------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Loan Document except to
the extent such amendment or waiver would: (i) extend the final scheduled
maturity of any Loan or Note in which such participant is participating, or
reduce the rate or extend the time of payment of interest (except in connection
with a waiver of applicability of any post-default increase in interest rates)
or reduce the principal amount thereof over the amount thereof then in effect
(it being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default or of a mandatory repayment shall not
constitute a change in the terms of such participation), or (ii) consent to the
assignment or transfer by or a release of the Borrower or any Subordinated
Guarantor of any of its rights and obligations under this Agreement or any
90
other Loan Document other than, in the case of any Subordinated Guaranty, as
otherwise provided therein. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Loan Documents (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the participant relating thereto) and all amounts payable by any Loan
Party hereunder and thereunder shall be determined as if such Lender had not
sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender together
with one or more other Lenders) may assign all or a portion of its outstanding
principal amount of Loans to one or more Eligible Transferees each of which
assignees shall become a party to this Agreement as a Lender by execution of an
assignment and assumption agreement substantially in the form of Exhibit J
(appropriately completed); provided that: (i) at such time Schedule I shall be
--------
deemed modified to reflect the outstanding Loans of such new Lender and of the
existing Lenders; (ii) new Notes will be issued, at the Borrower's expense, to
such new Lender and to the assigning Lender upon the request of such new Lender
or assigning Lender, such new Notes to be in conformity with the requirements of
Section 1.01 (with appropriate modifications) to the extent needed to reflect
the revised outstanding Loans; (iii) the consent of the Agent shall be required
in connection with any such assignment pursuant to this Section 12.04(b)(which
consent shall not be unreasonably withheld or delayed); and (iv) the Agent shall
receive at the time of each such assignment, from the assigning Lender, the
payment of a non-refundable assignment fee of $3,500. No transfer or assignment
under this Section 12.04(b) will be effective until recorded by the Agent on the
Register pursuant to Section 5.13. At the time of each assignment pursuant to
this Section 12.04(b) to a Person which is not already a Lender hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Agent the appropriate
Internal Revenue Service Forms (and, if applicable, a Section 2.04(b)(ii)
Certificate) required by Section 2.04(b). The Agent shall provide notice to the
Borrower of any such assignment effected pursuant to this Section 12.04(b);
provided, that the failure to give such notice shall not prohibit, affect or
--------
otherwise impair any such assignment.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the part
------------------------------
of the Agent or any Lender or any holder of any Note in exercising any right,
power or privilege hereunder or under any other Loan Document and no course of
dealing between Holdings or any of their Subsidiaries 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, powers and remedies herein or in any other Loan Document expressly
provided are cumulative and not exclusive of any rights, powers or remedies
91
which the Agent or any Lender or the holder of any Note would otherwise have. No
notice to or demand on the Borrower or any of their Subsidiaries in any case
shall entitle any such Person to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or any Lender or the holder of any Note to any other or further action in any
circumstances without notice or demand.
12.06 Payments Pro Rata. Except as otherwise provided in this
-----------------
Agreement, the Agent agrees that promptly after its receipt of each payment from
or on behalf of the Borrower or any Subordinated Guarantor in respect of any
Obligations hereunder, it shall distribute such payment to the Lenders pro rata
--------
based upon their respective shares, if any, of the Obligations with respect to
which such payment was received.
(b) 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 the principal of, or interest on, the
Loans, 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 the Obligations to such other
Lenders in such amount as shall result in a proportional participation by all
the Lenders in such amount; provided, that if all or any portion of such excess
--------
amount is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery, but
without interest.
12.07 Calculations; Computations. The financial statements to be
--------------------------
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders); provided, that except as otherwise specifically provided herein, all
--------
computations determining compliance with Section 6, including the definitions
used therein, shall utilize accounting principles and policies in conformity
with those used to prepare the historical financial statements for the fiscal
year ended June 30, 1997 delivered to the Lenders pursuant to Section 4.05(a).
(b) All computations of interest, hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable.
92
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
----------
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY DESIGNATES,
ACCEPTS AND EMPOWERS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF
HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS
CT CORPORATION SERVICES, WITH OFFICES ON THE EFFECTIVE DATE AT ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE,
ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY,
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, HOLDINGS AND THE
BORROWER AGREE TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS
AGREEMENT. EACH OF HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO HOLDINGS OR THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS
AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
93
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.09 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. A set of counterparts
executed by all the parties hereto shall be maintained by the Borrower and the
Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which Holdings, the Borrower, the Agent and each
of the Lenders shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Agent at its Notice Office or,
in the case of the Lenders, shall have given to the Agent telephonic (confirmed
in writing), written or facsimile transmission notice (actually received) in
accordance with Section 12.03 at such office that the same has been signed and
mailed to it.
12.11 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.
12.12 Amendment or Waiver. Neither this Agreement nor any other Loan
-------------------
Document nor any terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge or
termination is in writing signed by the respective parties thereto and the
Required Lenders; provided, that no such amendment, change, waiver, discharge or
--------
termination shall, without the consent of each Lender: (i) extend the final
scheduled maturity of any Loan or Note beyond the relevant Maturity Date, or
reduce the rate or extend the time of payment of interest thereon (except in
connection with a waiver of applicability of any post-default increase in
interest rates), or reduce the principal amount thereof; (ii) amend, modify or
waive any provision of this Section 12.12; (iii) reduce the percentage specified
in, or otherwise modify, the definition of Required Lenders; or (iv) consent to
the assignment or transfer by the Borrower or (except as permitted hereby) any
of its Subsidiaries of any of their rights and
94
obligations under this Agreement; provided further, that no such change, waiver,
-------- -------
discharge or termination shall: (w) without the consent of the Agent, amend,
modify or waive any provision of Section 9 or any other provision relating to
the rights or obligations of the Agent; or (x) without the consent of the
Required Lenders, alter the required application of any prepayments or
repayments pursuant to Section 2.02. The Borrower and the Lenders hereby agree
for the benefit of the holders of Senior Debt that no amendment of, supplement
of, modification to or waiver under any provision of this Agreement or any Notes
will be entered into or effected (x) with respect to Section 11 or (y) with
respect to any other provisions, if the same would be adverse to the holders of
Senior Debt (or any of them), without the prior consent of the required Banks
under the Senior Credit Agreement.
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 2.04 and 12.01 shall survive the execution and delivery
of this Agreement and the Notes and the making and repayment of the Loans.
12.14 Domicile of Loans. Each Lender may transfer and carry its
-----------------
Loans at, to or for the account of any office, Subsidiary or Affiliate of such
Lender.
95
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.
Address: PHC HOLDING CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: President
PHYSICIAN HEALTH CORPORATION
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Title: President
PARIBAS CAPITAL FUNDING LLC,
Address: as a Lender and as Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By /s/ illegible
----------------------------
Title:
By
____________________________
Title:
SCHEDULE I
----------
COMMITMENTS
-----------
Lender Initial Commitment Subsequent Commitment
------ ------------------ ---------------------
Paribas Capital Funding LLC $9,000,000 $6,000,000
---------- ----------
Total $9,000,000 $6,000,000
========== ==========
Total $ 15,000,000
=====
SCHEDULE II
-----------
INSURANCE POLICIES
------------------
SCHEDULE III
------------
[INTENTIONALLY OMITTED]
---------------------
SCHEDULE IV
-----------
LOANS, ADVANCES AND COMMITMENTS
-------------------------------
SCHEDULE V
----------
[INTENTIONALLY OMITTED]
SCHEDULE VI
-----------
SUBSIDIARIES
------------
SCHEDULE VII
------------
EXISTING LIENS
--------------
SCHEDULE VIII
-------------
EXISTING INDEBTEDNESS
---------------------
SCHEDULE IX
-----------
RETAINED INDEBTEDNESS
---------------------
SCHEDULE X
----------
FINANCIAL STATEMENTS
--------------------
SCHEDULE XI
-----------
MATERIAL CONTRACTS
------------------
SCHEDULE XII
------------
CAPITALIZATION
--------------
SCHEDULE XIII
-------------
ACQUISITIONS
------------
SCHEDULE XIV
------------
UNWIND PROVISIONS AND MANDATORY DISTRIBUTIONS
---------------------------------------------
SCHEDULE XV
-----------
PRE-CLOSING ACQUISITIONS
------------------------
SCHEDULE XVI
------------
CONTEMPORANEOUS ACQUISITIONS
----------------------------
SCHEDULE XVII
-------------
POST-CLOSING ACQUISITIONS
-------------------------
SCHEDULE XVIII
--------------
DIVIDEND RESTRICTIONS
---------------------
SCHEDULE XIX
------------
ERISA
-----
SCHEDULE XX
-----------
PRACTICE MANAGEMENT AGREEMENTS
------------------------------
SCHEDULE XXI
------------
EXCLUSIONS FROM OTHER SUBORDINATED DEBT
---------------------------------------
SCHEDULE XXII
-------------
PERSONAL GUARANTEES
-------------------