1
Exhibit 10.1
REVOLVING CREDIT AND GUARANTEE
AGREEMENT
among
FPA MEDICAL MANAGEMENT, INC.,
a Debtor-in-Possession,
as Borrower
THE SUBSIDIARIES OF THE BORROWER
NAMED HEREIN,
as Guarantors
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
and
BANKBOSTON, N.A.,
as Administrative Agent
DATED AS OF JULY 20, 1998
================================================================================
2
TABLE OF CONTENTS
Page
INTRODUCTORY STATEMENT....................................................................... 1
SECTION 1. DEFINITIONS...................................................................... 2
1.1 Defined Terms........................................................ 2
1.2 Other Definitional Provisions........................................ 13
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.................................................. 14
2.1 Commitments.......................................................... 14
2.2 Procedure for Borrowing.............................................. 14
2.3 Repayment of Loans; Evidence of Debt................................. 14
2.4 Commitment Fee; Other Fees........................................... 15
2.5 Nature of Fees....................................................... 16
2.6 Termination or Reduction of Commitments.............................. 16
2.7 Optional Prepayments................................................. 16
2.8 Mandatory Prepayments and Commitment Reductions; Use
of Cash Collateral................................................ 16
2.9 Interest Rates and Payment Dates..................................... 17
2.10 Computation of Interest and Fees.................................... 17
2.11 Pro Rata Treatment and Payments; Use of Proceeds.................... 17
2.12 Requirements of Law................................................. 18
2.13 Taxes............................................................... 19
2.14 Indemnity........................................................... 21
2.15 Priority and Liens.................................................. 21
2.16 Payment of Obligations.............................................. 23
2.17 No Discharge; Survival of Claims.................................... 23
SECTION 3. REPRESENTATIONS AND WARRANTIES................................................... 23
3.1 Organization and Authority........................................... 23
3.2 Due Execution........................................................ 23
3.3 Statements Made...................................................... 24
3.4 Subsidiaries, Investments, Etc....................................... 24
3.5 Liens................................................................ 25
3.6 Approvals............................................................ 25
3.7 The Orders........................................................... 25
3.8 No Material Litigation............................................... 25
3.9 Intellectual Property................................................ 26
3.10 No Burdensome Restrictions.......................................... 26
i
3
Page
3.11 Taxes............................................................... 26
3.12 Federal Regulations................................................. 26
3.13 ERISA............................................................... 26
3.14 Investment Company Act; Other Regulations........................... 27
3.15 Environmental Matters............................................... 27
SECTION 4. CONDITIONS PRECEDENT............................................................. 28
4.1 Conditions to Initial Loan........................................... 28
4.2 Conditions to Each Loan.............................................. 29
SECTION 5. AFFIRMATIVE COVENANTS............................................................ 31
5.1 Financial Statements................................................. 31
5.2 Certificates; Other Information...................................... 31
5.3 Payment of Obligations............................................... 33
5.4 Maintenance of Property; Insurance................................... 33
5.5 Inspection of Property; Books and Records; Discussions............... 33
5.6 Notices.............................................................. 34
5.7 Environmental Laws................................................... 34
5.8 Employee Benefits.................................................... 35
5.9 Further Assurances................................................... 35
SECTION 6. NEGATIVE COVENANTS............................................................... 35
6.1 Limitation on Indebtedness........................................... 35
6.2 Limitation on Liens.................................................. 36
6.3 Limitation on Guarantee Obligations.................................. 37
6.4 Limitation on Fundamental Changes.................................... 37
6.5 Limitation on Sale of Assets......................................... 37
6.6 Limitation on Restricted Payments.................................... 37
6.7 Limitation on Capital Expenditures................................... 38
6.8 Limitation on Investments, Loans and Advances........................ 38
6.9 Limitation on Transactions with Affiliates........................... 38
6.10 Limitation on Sale and Leaseback Transactions....................... 38
6.11 Limitation on Changes in Fiscal Year................................ 39
6.12 Cash Concentration.................................................. 39
6.13 Limitation on Lines of Business..................................... 39
6.14 Chapter 11 Claims................................................... 39
6.15 Reclamation Claims; Bankruptcy Code Section 546(g)*
Agreements........................................................ 39
6.16 Use of Proceeds..................................................... 39
6.17 Reorganization Plan................................................. 39
6.18 Minimum EBITDA...................................................... 40
6.19 Minimum Net Cash Flow From Operations............................... 40
6.20 Minimum Receipts. .................................................. 40
SECTION 7. EVENTS OF DEFAULT................................................................ 41
- ii -
4
Page
SECTION 8. THE ADMINISTRATIVE AGENT......................................................... 44
8.1 Appointment.......................................................... 44
8.2 Delegation of Duties................................................. 44
8.3 Exculpatory Provisions............................................... 44
8.4 Reliance by the Administrative Agent................................. 44
8.5 Notice of Default.................................................... 45
8.6 Non-Reliance on the Administrative Agent and Other
Lenders........................................................... 45
8.7 Indemnification...................................................... 46
8.8 Administrative Agent in Its Individual Capacity...................... 46
8.9 Successor Agent...................................................... 46
SECTION 9. GUARANTEE........................................................................ 47
9.1 Guarantee............................................................ 47
9.2 No Impairment of Guarantee........................................... 48
9.3 Subrogation.......................................................... 48
SECTION 10. REMEDIES; APPLICATION OF PROCEEDS............................................... 48
10.1 Remedies; Obtaining the Collateral Upon Default..................... 48
10.2 Remedies; Disposition of the Collateral............................. 49
10.3 Application of Proceeds............................................. 50
10.4 WAIVER OF CLAIMS.................................................... 50
10.5 Remedies Cumulative................................................. 51
10.6 Discontinuance of Proceedings....................................... 51
SECTION 11. MISCELLANEOUS................................................................... 52
11.1 Amendments and Waivers.............................................. 52
11.2 Notices............................................................. 52
11.3 No Waiver; Cumulative Remedies...................................... 54
11.4 Survival............................................................ 54
- iii -
5
Page
11.5 Payment of Expenses and Taxes....................................... 54
11.6 Successors and Assigns; Participations and Assignments.............. 55
11.7 Adjustments; Set-off................................................ 58
11.8 Counterparts........................................................ 58
11.9 Severability........................................................ 58
11.10 Integration........................................................ 58
11.11 GOVERNING LAW...................................................... 59
11.12 Submission To Jurisdiction; Waivers................................ 59
11.13 Acknowledgements................................................... 59
11.14 WAIVERS OF JURY TRIAL.............................................. 60
11.15 Absence of Prejudice to the Prepetition Lenders with
Respect to Matters Before the Bankruptcy Court.................... 60
11.16 Confidentiality.................................................... 60
11.17 Conflict with Orders............................................. 60
- iv -
6
SCHEDULES
Schedule I Lenders, Notice Information and Commitments
Schedule 3.4(a) Subsidiaries
Schedule 3.4(b) Administrative Services Agreements
Schedule 3.4(c) Investments
Schedule 3.8 Material Litigation
Schedule 6.1 Indebtedness
Schedule 6.2 Liens
Schedule 6.3 Guarantee Obligations
Schedule 6.8 Transfers
Schedule 6.8(f) Transfers Permitted before July 31, 1998
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Budget
Exhibit C Form of Interim Order
Exhibit D Form of Closing Certificate
Exhibit E Form of Borrowing Certificate
Exhibit F Form of Assignment and Acceptance
- v -
7
REVOLVING CREDIT AND GUARANTEE AGREEMENT, dated as of July 20,
1998, among FPA MEDICAL MANAGEMENT, INC., a Delaware corporation (the
"Borrower"), a debtor and debtor-in-possession in a case pending under Chapter
11 of the Bankruptcy Code, each of the direct and indirect Subsidiaries of the
Borrower designated as a Guarantor on Schedule 3.4(a) hereto (collectively, the
"Guarantors"), each of which Guarantors is a debtor and a debtor-in-possession
in a case pending under Chapter 11 of the Bankruptcy Code which has been
administratively consolidated with the Borrower's case (the cases of the
Borrower and the Guarantors, each a "Case" and collectively, the "Cases"), the
several banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and BANKBOSTON, N.A., as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
INTRODUCTORY STATEMENT
On July 20, 1998 (the "Filing Date"), the Borrower and the
Guarantors filed voluntary petitions with the Bankruptcy Court initiating the
Cases and have continued in the possession of their assets and in the management
of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower applied to and obtained from the Lenders a
revolving credit facility in an aggregate principal amount not to exceed
$50,000,000 (subject in each case, to reductions in accordance with Sections 2.7
and 2.8), all of the Borrower's obligations under which are guaranteed by the
Guarantors.
The proceeds of the Loans will be used to repay certain
Indebtedness of Sterling, to pay certain other pre-Filing Date claims that are
authorized by the Bankruptcy Court to the extent consistent with the Budget and
to provide working capital for, and for other general corporate purposes of, the
Borrower and the Guarantors, in all cases subject to the terms of this
Agreement, the Orders and the Budget.
To provide guarantees and security for the repayment of the
Loans and the payment of the other Obligations of the Borrower and the
Guarantors hereunder and under the other Loan Documents, the Borrower and the
Guarantors shall provide to the Administrative Agent and the Lenders, pursuant
to this Agreement and the Orders, the following (each as more fully described
herein):
(a) a guarantee from each of the Guarantors of the due and
punctual payment and performance of the Obligations of the Borrower
hereunder and under the Notes;
8
(b) with respect to the Obligations of the Borrower and the
Guarantors hereunder, an allowed administrative expense claim in each
of the Cases pursuant to Section 364(c)(1) of the Bankruptcy Code
having priority over all administrative expenses of the kind specified
in Sections 503(b) and 507(b) of the Bankruptcy Code;
(c) a perfected first priority Lien, pursuant to Section
364(c)(2) of the Bankruptcy Code, upon all unencumbered cash and cash
equivalents and all unencumbered property of the Borrower and the
Guarantors;
(d) a perfected second priority Lien, pursuant to Section
364(c)(3) of the Bankruptcy Code, upon all property of the Borrower and
the Guarantors (other than property subject to Liens securing the
Prepetition Obligations) that is subject to Permitted Liens, including
valid and perfected Liens in existence on the Filing Date, junior to
such Permitted Liens and other valid and perfected Liens (except as
otherwise provided in Section 2.15(c) and the Orders); and
(e) a perfected first priority priming Lien, pursuant to
Section 364(d)(1) of the Bankruptcy Code, upon all property of the
Borrower and the Guarantors (including, without limitation, accounts
receivable, chattel paper, contracts, documents, equipment, general
intangibles, instruments, inventory, trademarks and trademark licenses
and real property) that is subject to the Liens securing the
Prepetition Obligations and any Liens granted after the Filing Date to
provide adequate protection in respect of the Prepetition Obligations,
which Lien in favor of the Administrative Agent and the Lenders shall
be senior in all respects to all of the Liens securing the Prepetition
Obligations and to any Liens granted after the Filing Date to provide
adequate protection in respect thereof.
All of the claims and the Liens granted hereunder and pursuant
to the Orders in the Cases to the Administrative Agent and the Lenders shall be
subject to the Carve-Out and the Permitted Liens, in each case to the extent
provided in Section 2.15 and the Orders.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Administrative Services Agreement": each Administrative
Services Agreement listed in Schedule 3.5(b) in effect on the Closing
Date between an Affiliated Professional Corporation and the Borrower or
one of its Subsidiaries (not an Affiliated Professional Corporation).
2
9
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Affiliated Professional Corporation": each professional
corporation engaged in the practice of medicine that is affiliated with
the Borrower or one of its Subsidiaries through an Administrative
Services Agreement to which such professional corporation and the
Borrower or one of its Subsidiaries (not an Affiliated Professional
Corporation) are parties.
"Agreement": this Revolving Credit and Guarantee Agreement, as
amended, supplemented or otherwise modified from time to time.
"Asset Sale": any sale or other disposition by the Borrower or
any of its Subsidiaries of any asset or assets of the Borrower or such
Subsidiary (including any sale and leaseback of assets and any mortgage
of real property).
"Assignee": as defined in Section 11.6(c).
"Available Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate amount of such Lender's Loans
outstanding.
"BankBoston": BankBoston, N.A.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Sections
101 et seq.
"Bankruptcy Court": the United States Bankruptcy Court for the
District of Delaware, or any other court having jurisdiction over the
Cases from time to time.
"Base CD Rate": the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1%, and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate
3
10
of interest per annum publicly announced from time to time by
BankBoston, as its prime or base rate in effect at its principal office
in Boston, Massachusetts; and "Federal Funds Effective Rate" shall
mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it. Any change in the Base Rate due to a change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day
of such change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate, respectively.
"Borrowing Date": any Business Day specified in a notice
pursuant to Section 2.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Budget": the cash flow projections attached hereto as Exhibit
B, showing anticipated cash receipts and disbursements on a
week-by-week basis for the period from the Filing Date through
September 25, 1998 and on a month-by-month basis thereafter through
December 31, 1998, for (a) the Borrower and each of the Guarantors,
taken as a whole, (b) each of the Core Businesses (other than HPI) and
(c) the Borrower and the Guarantors (other than any entity that is part
of a Core Business), and all updates thereto delivered and accepted
pursuant to Sections 5.2(f) and (g).
"Business": as defined in Section 3.15(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Boston are authorized
or required by law to close.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Carve-Out": the meaning set forth in Section 2.15(a).
4
11
"Cases": the meaning set forth in the Introductory Statement.
"Cash Collateral": the meaning set forth in Section 363(a) of
the Bankruptcy Code.
"Cash Equivalents": (a) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities of
one year or less from the date of acquisition and overnight bank
deposits of any Lender or of any commercial bank having capital and
surplus in excess of $500,000,000, (c) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than 30 days with
respect to securities issued or fully guaranteed or insured by the
United States Government, (d) commercial paper of a domestic issuer
rated at least A-2 by Standard and Poor's Rating Group ("S&P") or P-2
by Xxxxx'x Investors Service, Inc. ("Moody's"), (e) securities with
maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g)
shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"C/D Assessment Rate": for any day as applied to any Loan, the
annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment
risk classification) within the meaning of 12 C.F.R. Section 327.4 (or
any successor provision) to the FDIC (or any successor) for the FDIC's
(or such successor's) insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage": for any day as applied to any Loan,
that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) (the "Board"), for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time deposits
in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set
forth in Section 4.1 shall be satisfied.
5
12
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all property of the Borrower and the Guarantors,
whether tangible or intangible and of whatever kind or nature
whatsoever, as more particularly described in the Orders.
"Commitment": as to any Lender, the obligation of such Lender
to make Loans to the Borrower hereunder in an aggregate principal
amount not to exceed the amount set forth opposite such Lender's name
on Schedule I, as the same may be changed from time to time pursuant to
the terms hereof.
"Commitment Period": the period from and including the Closing
Date to but not including the Termination Date.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Confirmation Order": an order of the Bankruptcy Court
confirming a Reorganization Plan in any of the Cases.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Core Business": retained businesses of each of Sterling,
Health Partners, Inc., the FPA Florida Medical Groups, Cornerstone,
Meridian, Axminster and Xxxxxxx and their respective Subsidiaries and
Affiliates as described in the Budget and Retained Core Business Unit
Normalized Revenue/EBITDA Analysis dated July 13, 1998.
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA": for any period, all as determined in accordance with
GAAP, the aggregate consolidated net income (or net loss) for the Core
Businesses for such period, plus, without duplication, (a) the sum of
(i) depreciation expense, (ii) amortization expense, (iii) other
non-cash charges, (iv) gains or losses from assets sales, (v) net total
Federal, state and local income tax expense, (vi) gross interest
expense for such period less gross interest income for such period,
(vii) extraordinary losses, (viii) any non-
6
13
recurring charge or restructuring charge which in accordance with GAAP
is excluded from operating income, (ix) the cumulative effect of any
change in accounting principles, (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period and (xi)
obligations incurred pursuant to the employee retention bonus program
less, without duplication, (b) extraordinary gains plus or minus (c)
the amount of cash received or expended in such period in respect of
any amount which, under clause (iii) or (viii) above, was taken in to
account in determining EBITDA for such or any prior period;
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"Equity Rights": with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any
stockholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or securities convertible into, any
additional shares of Capital Stock of any class of such Person.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Facilities": as defined in Section 3.15(a).
"Federal Funds Effective Rate": as defined in the definition
of "Base Rate".
"Fees": collectively the fees referred to in Section 2.4 or
11.5 and any other fees payable by the Borrower or any Guarantor
pursuant to this Agreement or any other Loan Document.
"Filing Date": the meaning set forth in the Introductory
Statement.
"Final Order": an order of the Bankruptcy Court entered in the
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) granting
final approval of this Agreement and the other Loan Documents and
granting the Liens and Super-priority Claims described in the
Introductory Statement in favor of the Administrative Agent and the
Lenders, substantially in the form of, and containing substantially
similar provisions to, the Interim
7
14
Order and otherwise in form and substance reasonably satisfactory to
the Administrative Agent.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"GFS": Xxxxxxxx'x Financial Services, a subsidiary of Medaphis
Corporation and any other third party billing and collection service
retained by Sterling or any of its Subsidiaries.
"GFS Report": the monthly report prepared by GFS with respect
to, among other things, On Hold Receivables of Sterling and its
Subsidiaries.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing 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 (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee
8
15
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantor": the meaning set forth in the Introductory
Statement.
"HPI": Health Partners, Inc. and its Subsidiaries and
Affiliates.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations, contingent or otherwise, of such Person as an
account party under acceptance, letter of credit or similar facilities
and (e) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interim Order": an order of the Bankruptcy Court, after
notice given and a hearing conducted in accordance with Bankruptcy Rule
4001(c), authorizing and approving the transactions contemplated by
this Agreement and the other Loan Documents and granting the Liens and
Super-priority Claims described in the Introduction hereto in favor of
the Administrative Agent and the Lenders, substantially in the form of
Exhibit C, or otherwise in form and substance reasonably satisfactory
to the Administrative Agent.
"Key Employees": Xx. Xxxxxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxxxx
Xxxxxxxx.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loans": as defined in Section 2.1.
9
16
"Loan Documents": this Agreement, the Notes and any other
instrument or agreement executed in connection herewith.
"Loan Parties": the Borrower and each Guarantor.
"Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the
aggregate Commitments of all Lenders (or, if the Commitments have been
terminated, the percentage which the aggregate principal amount of such
Lender's Loans then outstanding constitutes of the aggregate principal
amount of the Loans of all Lenders then outstanding).
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this or any of the other Loan
Documents or the rights or remedies of the Administrative Agent or the
Lenders hereunder or thereunder, in either case, other than such
effects that result solely from the commencement of the Cases.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Maturity Date": February 1, 1999.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Flow from Operations": as to the Borrower or any
Guarantor, the difference between cash receipts and cash disbursements
for such entity and its Subsidiaries, without regard to (a) financing
costs, (b) obligations incurred pursuant to the employee retention
bonus program, (c) utility company deposits, (d) professional fee
retainers, (e) professional fees, (f) the proceeds of a Recovery Event
or an Asset Sale, (g) intercompany Transfers and (h) borrowings or
repayments under this Agreement, determined in a manner consistent with
the manner in which the line item "Net Cash Flow from Operations" was
determined on the Budget for the Borrower or any such Guarantor, as the
case may be, delivered on the Closing Date.
"Net Cash Proceeds": in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as
10
17
and when received) of such Asset Sale or Recovery Event, net of
attorneys' fees, accountants' fees, investment banking fees and other
customary fees and expenses actually incurred in connection therewith
and net of taxes paid or reasonably estimated to be payable as a result
thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements).
"Non-Excluded Taxes": as defined in Section 2.13(a).
"Non-U.S. Lender": as defined in Section 2.13(b).
"Note": as defined in Section 2.3(e).
"Obligations": (a) the principal of and interest on the Loans
and the Notes and (b) the Fees and all other present and future, fixed
or contingent, obligations and liabilities (monetary or otherwise) of
the Borrower and the Guarantors to the Lenders and the Administrative
Agent under the Loan Documents, including, without limitation, all
costs and expenses payable pursuant to Section 11.5.
"On Hold Receivables": Medicare and Medicaid accounts
receivable of Sterling or any of its Subsidiaries designated as "on
hold" as of the Closing Date.
"Orders": the Interim Order and the Final Order.
"Participant": as defined in Section 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Liens": Liens permitted to exist under Section 6.2.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Plan Term Sheet": the Plan of Reorganization Term Sheet,
dated July 17, 1998, attached as Annex A to the excerpts of the minutes
of the meeting of the Board of Directors of the Borrower and delivered
to the Administrative Agent and the Lenders pursuant to Section 4.1(b)
hereof.
11
18
"Prepetition Agent": BankBoston, in its capacity as
Administrative Agent for the Prepetition Lenders under the Prepetition
Credit Agreement.
"Prepetition Credit Agreement": the Credit Agreement, dated as
of June 30, 1997, among the Borrower, the Prepetition Lenders, the
Prepetition Agent and Xxxxxx Commercial Paper Inc., as arranger and
syndication agent, as amended, supplemented or otherwise modified prior
to the Filing Date.
"Prepetition Collateral": all Property securing the
Prepetition Obligations.
"Prepetition Lenders": collectively, the several banks,
financial institutions and other entities from time to time parties to
the Prepetition Credit Agreement.
"Prepetition Obligations": the aggregate outstanding principal
amount of the loans and other obligations (including letters of credit
outstanding as of the Filing Date) under or pursuant to the Prepetition
Credit Agreement, and all accrued but unpaid interest and fees, costs
and other charges payable to the Prepetition Agent or the Prepetition
Lenders under or pursuant to the Prepetition Credit Agreement.
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible.
"Recovery Event": any (i) settlement of or payment in respect
of a property or casualty insurance claim relating to any asset of the
Borrower or any of its Subsidiaries and (ii) collection of On Hold
Receivables in excess of an aggregate of $5,000,000 of such
collections.
"Register": as defined in Section 11.6(e).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reorganization Plan": a plan of reorganization in any of the
Cases.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under Sections .13, .14, .16, .18, .19 or .20
of PBGC Reg. Section 2615.
"Required Lenders": at any date, a minimum of two Lenders the
Loan Percentages of which aggregate at least 66-2/3%.
12
19
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer and the
president of the Borrower or any executive vice president or senior
vice president of the Borrower, or, with respect to financial matters,
the chief financial officer of the Borrower.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Sterling": Sterling Healthcare Group, Inc., a Florida
corporation and Wholly Owned Subsidiary of the Borrower.
"Sterling Agent": BankBoston, in its capacity as
administrative agent for the Sterling Lenders under the Sterling Credit
Agreement.
"Sterling Credit Agreement": the Credit Agreement, dated as of
June 30, 1998, among Sterling, the Sterling Lenders and the Sterling
Agent, as amended, supplemented or otherwise modified prior to the
Filing Date.
"Sterling Lenders": collectively, the several banks, financial
institutions and other entities from time to time parties to the
Sterling Credit Agreement.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower and shall include all
Affiliated Professional Corporations other than those Affiliated
Professional Corporations that are not debtors in the Cases.
"Super-priority Claim": a claim against the Borrower and any
Guarantor in any of the Cases which is an administrative expense claim
having priority over any or all administrative expenses of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy Code.
13
20
"Termination Date": the earliest to occur of (a) the Maturity
Date, (b) the effective date of a Reorganization Plan confirmed by the
Bankruptcy Court pursuant to the Confirmation Order or (c) the
termination of the Commitments in accordance with the terms hereof.
"Three-Month Secondary CD Rate": for any day, the secondary
market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it.
"Transferee": as defined in Section 11.6(g).
"Transfers": as defined in Section 6.8.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or through
other Wholly Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
14
21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof,
each Lender severally agrees to make revolving credit loans ("Loans") to the
Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding which does not exceed the amount of
such Lender's Commitment. During the Commitment Period the Borrower may use the
Commitments by borrowing, prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that the
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the requested Borrowing Date), specifying (i)
the amount to be borrowed, and (ii) the requested Borrowing Date. Each borrowing
under the Commitments shall be in an amount equal to the lesser of (x)
$1,000,000 or a whole multiple of $500,000 in excess thereof and (y) the
Available Commitments. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower, at the funding office of
the Administrative Agent specified by the Administrative Agent by notice to the
Borrower and the Lenders, prior to 1:00 P.M., New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. The Administrative Agent will then make available to the
Borrower the aggregate of the amounts made available to the Administrative Agent
by the Lenders, in like funds as received by the Administrative Agent.
2.3 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Lender, the then unpaid principal amount of each Loan
of such Lender on the Maturity Date (or such earlier date on which the Loans
become due and payable pursuant to Section 7). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 2.9.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 11.6(e), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, (ii) the amount of any principal or
interest due and payable or to become due and payable from the
15
22
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Loans of such
Lender, substantially in the form of Exhibit A with appropriate insertions as to
date and principal amount (a "Note").
2.4 Commitment Fee; Other Fees. (a) The Borrower agrees to pay
to the Administrative Agent for the account of each Lender a commitment fee for
the period commencing on the Filing Date to the Termination Date, computed (on
the basis of the actual number of days elapsed over a year of 360 days) at the
rate of 1/2 of 1% per annum on the average daily Available Commitments of all
Lenders. Such commitment fee, to the extent then accrued, shall be payable in
arrears (x) monthly on the last day of each calendar month, (y) on the
Termination Date and (z) as provided in Section 2.6 hereof, upon any permanent
reduction or termination in whole or in part of the Commitments.
(b) The Borrower agrees to pay to the Administrative Agent,
for the account the Lenders, a non-refundable facility fee in an amount equal to
2% of the aggregate Commitments of all Lenders, payable on the Closing Date.
(c) The Borrower agrees to pay to the Administrative Agent for
its own account, a non-refundable Agent's fee in an aggregate amount equal to
$50,000, payable on the Closing Date.
2.5 Nature of Fees. All Fees shall be paid on the dates due,
in immediately available funds, to the Administrative Agent (for the respective
accounts of the Administrative Agent and the Lenders), as provided herein. Once
paid, none of the Fees shall be refundable under any circumstances.
2.6 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that no such termination or
reduction of Commitments shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date thereof, the
aggregate
16
23
outstanding principal amount of Loans of all Lenders would exceed the aggregate
outstanding Commitments of all Lenders then in effect. Any such reduction shall
be in an amount equal to $1,000,000 or a whole multiple of $500,000 in excess
thereof, and shall reduce permanently the Commitments then in effect.
2.7 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable notice to the
Administrative Agent by the Borrower, specifying the date and amount of
prepayment. Upon receipt of any such notice, the Administrative Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial
prepayments of the Loans shall be in an aggregate principal amount of $1,000,000
or a whole multiple of $500,000 in excess thereof.
2.8 Mandatory Prepayments and Commitment Reductions; Use of
Cash Collateral. (a) If at any time prior to the termination of the Commitments,
the aggregate outstanding principal amount of the Loans of all Lenders exceeds
the aggregate Commitments of all Lenders then in effect, the Borrower, without
notice or demand, shall immediately pay an amount equal to any such excess.
(b) If on any date the Borrower or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or from any Recovery Event,
such Net Cash Proceeds shall be applied on such date toward the prepayment of
the outstanding principal amount of the Loans which amounts may be reborrowed in
accordance with the terms of this Agreement and the Budget. To the extent that
the amount of such Net Cash Proceeds exceeds the amount applied pursuant to the
immediately preceding sentence (such excess being referred to herein as the
"Excess Amount"), the Borrower may retain and use such Excess Amount in
accordance with the terms of this Agreement and the Budget. Each prepayment of
the Loans under this Section 2.8 shall be accompanied by accrued interest to the
date of such prepayment on the amount of the Loans prepaid.
(d) Upon the Termination Date, the aggregate Commitments of
all Lenders shall be terminated in full and the Borrower shall pay the Loans in
full (including all accrued and unpaid interest thereon, fees and other
Obligations in respect thereof).
2.9 Interest Rates and Payment Dates. Each Loan shall bear
interest at a rate per annum equal to the Base Rate plus 2%. If all or a portion
of (a) any principal of any Loan, (b) any interest payable thereon, (c) any
commitment or facility fee or (d) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
the principal of the Loans and any such overdue interest, commitment or facility
fee or other amount shall bear interest at a rate per annum which is the rate
set forth in the first sentence of this Section 2.9 plus 2% from the date of
such non-payment until such overdue principal, interest, commitment of facility
fee or other amount is paid in full (as well after as
17
24
before judgment). Interest shall be payable in arrears on the last day of each
calendar month, provided that interest accruing on overdue amounts shall be
payable from time to time on demand.
2.10 Computation of Interest and Fees. (a) Interest on Loans,
commitment and facility fees, interest on overdue interest, commitment and
facility fees and other amounts payable hereunder shall be calculated on the
basis of a 360-day year for the actual days elapsed. Any change in the interest
rate on a Loan resulting from a change in the Base Rate shall become effective
as of the opening of business on the day on which such change becomes effective.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error.
2.11 Pro Rata Treatment and Payments; Use of Proceeds. (a)
Each borrowing by the Borrower from the Lenders hereunder, each payment by the
Borrower on account of any commitment or facility fee and any reduction of the
Commitments of the Lenders shall be made pro rata according to the respective
Loan Percentages of the relevant Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Loans then held by the Lenders. All payments (including prepayments) to
be made by the Borrower hereunder and under the Notes, whether on account of
principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders, at
the Administrative Agent's office specified in Section 11.2, in Dollars and in
immediately available funds; provided that, notwithstanding the requirement that
all payments be made without setoff or counterclaim, in the event that any xxxx
by the Administrative Agent for interest or commitment or facility fees
incorrectly states that the Borrower owes an amount greater than the amount
actually due, the Borrower pays the amount shown on such xxxx, and such error is
subsequently corrected by the Administrative Agent or determined as having been
made by a court having jurisdiction pursuant to this Agreement, the Borrower may
apply the amount of such overpayment toward future payments due from it
hereunder, or recover the amount of such overpayment from the Administrative
Agent or the Lenders, as the case may be, in the event that no further payments
are due hereunder. The Administrative Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding sentence,
interest thereon shall be payable at the then applicable rate during such
extension.
18
25
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.11(b) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower.
(c) The Borrower shall use the proceeds of the Loans only in
the manner consistent with Section 6.16.
2.12 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Note or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.13 and changes in the rate
of tax on the overall net income of such Lender); or
(ii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations
19
26
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.12, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled. Any such notification shall include an itemization in
reasonable detail of such additional amounts claimed. A certificate as to any
additional amounts payable pursuant to this Section 2.12 (accompanied by the
itemization described in the preceding sentence) submitted by any Lender to the
Borrower (with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to this
Section 2.12 shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
2.13 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement, any other Loan Document) or the
Notes. If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder or
under the Notes, the amounts so payable to the Administrative Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes, provided, however, that the Borrower shall make
payments net of and after deduction for Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Non-U.S. Lender (as defined
below) with respect to any Non-Excluded Taxes (i) that are attributable to such
Non-U.S. Lender's failure to comply with the requirements of paragraph (b) of
this Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time the Lender becomes a party to this Agreement,
except to the extent that such Lender's assignor (if any) was entitled, at the
time of assignment, to receive additional amounts from the Borrower with respect
to such Non-Excluded Taxes pursuant to this Section 2.13(a). Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
20
27
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non- Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any Non-Excluded Taxes,
incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure; provided
that the Administrative Agent or any such Lender provides the Borrower with an
itemization in reasonable detail in support of its request for indemnification
hereunder. The agreements in this Section 2.13 shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
(b) Each Lender (or Transferee) that is not a corporation or
partnership created or organized in or under the laws of the United States, any
estate that is subject to federal income taxation regardless of the source of
its income or any trust which is subject to the supervision of a court within
the United States and the control of a United States fiduciary as described in
Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) on or
before the date on which it becomes a party to this Agreement (or, in the case
of a Participant, on or before the date on which such Participant purchases the
related participation) either:
(A) (x) two duly completed and signed copies of either
Internal Revenue Service Form 1001 (relating to such Non-U.S. Lender
and entitling it to a complete exemption from withholding of U.S. Taxes
on all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Loan Documents) or Form 4224 (relating to all
amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Loan Documents), or successor and related
applicable forms, as the case may be, and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8, or successor and
related applicable forms, as the case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
in the form reasonably requested by the Borrower or the Administrative
Agent from time to time to the effect that such Non-U.S. Lender is
eligible for a complete exemption from withholding of U.S. Taxes under
Code Section 871(h) or 881(c), and (y) two duly completed and signed
copies of Internal Revenue Service Form W-8 or successor and related
applicable form.
Further, each Non-U.S. Lender agrees to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies
21
28
of such Form 1001, 4224, W-8, as the case may be, or successor and related
applicable forms, on or before the date that any such form expires or becomes
obsolete and promptly after the occurrence of any event requiring a change from
the most recent form(s) previously delivered by it to the Borrower or the
Administrative Agent (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) in accordance with the
applicable United States laws and regulations; unless, in any such case, any
change in law or regulation has occurred subsequent to the date such lender
became a party to this Agreement (or in the case of a Participant, the date on
which such Participant purchased the related participation) which renders all
such forms inapplicable or which would prevent such Lender (or Participant) from
properly completing and executing any such form with respect to it and such
Lender promptly notifies the Borrower and the Administrative Agent (or, in the
case of a Participant, the Lender from which the related participation shall
have been purchased) if it is no longer able to deliver, or if it is required to
withdraw or cancel, any form of statement previously delivered by it pursuant to
this Section 2.13(b).
2.14 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement; provided that each Lender requesting
indemnification hereunder provide the Borrower with an itemization in reasonable
detail in support of such request. A certificate as to any amounts payable
pursuant to this Section 2.14, accompanied by a reasonably detailed calculation
of the basis for such claim, submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
2.15 Priority and Liens. (a) The Borrower and each of the
Guarantors hereby covenants, represents and warrants that, upon entry of the
Interim Order (and the Final Order, as applicable), the Obligations of the
Borrower and the Guarantors hereunder and under the other Loan Documents, (i)
pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times
constitute allowed Super-priority Claims, (ii) pursuant to Section 364(c)(2) of
the Bankruptcy Code, shall at all times be secured by a perfected first priority
Lien on all Collateral that is otherwise not encumbered by a valid and perfected
Lien as of the Filing Date, (iii) pursuant to Section 364(c)(3) of the
Bankruptcy Code, shall be secured by a perfected second priority Lien upon all
Collateral (other than the Prepetition Collateral, as to which the Lien in favor
of the Administrative Agent and the Lenders will be as described in clause (iv)
of this sentence) that is subject to a Permitted Lien, including, without
limitation, valid and perfected Liens in existence on the Filing Date or valid
Liens perfected (but not granted) thereafter to the extent such post-Filing Date
perfection in respect of a pre-Filing Date claim is expressly permitted under
the Bankruptcy Code, junior to such Permitted Liens, provided that the Liens
granted in favor of the Administrative Agent and the Lenders shall be senior to
any Permitted Lien which is expressly stated herein to be junior to the Liens in
favor of the Administrative Agent and the Lenders, and (iv) pursuant to Section
364(d)(1) of the Bankruptcy Code, shall be secured by a perfected first
22
29
priority, senior priming Lien on all of the Prepetition Collateral and any
Property of the Debtors on which a Lien is granted after the Filing Date to
provide adequate protection in respect of the Prepetition Obligations, subject
and subordinate in each case with respect to subclauses (i) through (iv) above,
only to (x) following the occurrence and during the continuance of a Default or
an Event of Default, the payment (as the same may be due and payable) of
professional fees and disbursements allowed by order of the Bankruptcy Court and
incurred by the Borrower or any Guarantor and any statutory committee of
unsecured creditors appointed in the Cases in an aggregate amount not to exceed
$3,000,000 (plus any unpaid professional fees and disbursements previously
incurred, accrued or invoiced prior to such Default or Event of Default, to the
extent subsequently awarded) and (y) the payment of unpaid fees pursuant to 28
U.S.C. Section 1930 and any fees payable to the Clerk of the Bankruptcy Court
(collectively, the "Carve-Out"). The Lenders agree that so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower and the
Guarantors shall be permitted to pay compensation and reimbursement of expenses
allowed and payable under Sections 330 and 331 of the Bankruptcy Code and orders
of the Bankruptcy Court, as the same may be payable, and the amounts so paid
shall not reduce the Carve-Out.
(b) As to all Collateral, including without limitation, all
real property the title to which is held by the Borrower or any Guarantor, or
the possession of which is held by the Borrower or any Guarantor pursuant to
leasehold interest, each of the Borrower and the Guarantors hereby assigns and
conveys as security, grants a security interest in, hypothecates, mortgages,
pledges and sets over unto the Administrative Agent all of the right, title and
interest of the Borrower and such Guarantor in all of such Collateral, including
without limitation, all owned real property and in all such leasehold interests,
together in each case with all of the right, title and interest of the Borrower
and each Guarantor in and to all buildings, improvements, and fixtures related
thereto, any lease or sublease thereof, all general intangibles relating thereto
and all proceeds thereof. The Borrower and each Guarantor acknowledges that,
pursuant to the Orders, the Liens granted in favor of the Administrative Agent-
(on behalf of the Lenders) in all of the Collateral shall be perfected without
the recordation of any Uniform Commercial Code financing statements, notices of
Lien or other instruments of mortgage or assignment. Each of the Borrower and
the Guarantors further agrees that (i) the Administrative Agent shall have
rights and remedies set forth in Section 10 in respect of the Collateral and
(ii) if requested by the Administrative Agent, each of the Borrower and the
Guarantors shall enter into separate security agreements, pledge agreements and
fee mortgages with respect to such Collateral on terms reasonably satisfactory
to the Administrative Agent.
(c) The Borrower and the Guarantors acknowledge and agree
that, as adequate protection for the use of the Prepetition Lenders' Cash
Collateral, the use, sale or lease of the Prepetition Collateral (other than
such Cash Collateral), the diminution of the Prepetition Lenders' interests in
the Prepetition Collateral that are being primed as set forth in Section
2.15(a)(iv) and the imposition of the automatic stay pursuant to Section 362(a)
of the Bankruptcy Code, the Prepetition Lenders shall, pursuant to the Interim
Order (and the Final Order, as applicable), receive (i) a Super-priority Claim
junior only to the Super-priority Claim granted to
23
30
the Administrative Agent and the Lenders, and (ii) a replacement Lien on the
Collateral having a priority immediately junior to the priming and other Liens
granted in favor of the Administrative Agent and the Lenders hereunder and under
the other Loan Documents and the Orders (subject and subordinate, in the case of
clauses (i) and (ii) above, to the Carve-Out and valid and perfected Liens which
are senior (after giving effect to the Interim Order (and the Final Order, as
applicable)) to the Liens granted to the Administrative Agent and the Lenders
pursuant to the Interim Order (and the Final Order, as applicable).
2.16 Payment of Obligations. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement or any
of the other Loan Documents, the Lenders shall be entitled to immediate payment
of such Obligations without further application to or order of the Bankruptcy
Court.
2.17 No Discharge; Survival of Claims. Each of the Borrower
and the Guarantors agrees that to the extent its Obligations hereunder are not
satisfied in full, (a) its Obligations arising hereunder shall not be discharged
by the entry of a Confirmation Order (and each of the Borrower and the
Guarantors pursuant to Section 1141(d) (4) of the Bankruptcy Code, hereby waives
any such discharge) and (b) the Super-priority Claim granted to the
Administrative Agent and the Lenders pursuant to the Orders and described in
Section 2.15 and the Liens granted to the Administrative Agent pursuant to the
Orders and described in Section 2.15 shall not be affected in any manner by the
entry of a Confirmation Order.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans, each of the Borrower and the
Guarantors hereby jointly and severally represents and warrants to the
Administrative Agent and each Lender that:
3.1 Organization and Authority. Each of the Borrower and the
Guarantors (a) is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which the failure to
so qualify would have a Material Adverse Effect; (b) subject to the entry by the
Bankruptcy Court of the Interim Order (or the Final Order when applicable), has
the requisite corporate power and authority to effect the transactions
contemplated hereby and by the other Loan Documents, and (c) subject to the
entry by the Bankruptcy Court of the Interim Order (or the Final Order when
applicable), has all requisite corporate power and authority and the legal right
to own, pledge, mortgage and operate its properties, and to conduct its business
as now or currently proposed to be conducted.
3.2 Due Execution. Upon entry by the Bankruptcy Court of the
Interim Order (or the Final Order, when applicable), the execution, delivery and
performance by each of the Borrower and the Guarantors of each of the Loan
Documents to which it is a party, and the commencement of the Cases (a) are
within the respective corporate powers of each of the
24
31
Borrower and the Guarantors, have been duly authorized by all necessary
corporate action, including the consent of shareholders where required, and do
not (i) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (ii) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulation
T, U or X of the Board of Governors), or any order or decree of any court or
governmental instrumentality, (iii) conflict with or result in a breach of, or
constitute a default under, any material indenture, mortgage or deed of trust
entered into after the Filing Date, any provision of any security issued by the
Borrower or any Guarantor after the Filing Date or any material lease,
agreement, instrument or other undertaking entered into after the Filing Date
binding on the Borrower or the Guarantors or any of their properties, or (iv)
result in or require the creation or imposition of any Lien upon any of the
property of any of the Borrower or the Guarantors other than the Liens granted
pursuant to this Agreement, the other Loan Documents or the Orders; and do not
require the consent, authorization by or approval of or notice to or filing or
registration with any Governmental Authority (other than the entry of the
Orders). Upon entry by the Bankruptcy Court of the Interim Order (or the Final
Order, when applicable), this Agreement has been duly executed and delivered by
each of the Borrower and the Guarantors. This Agreement is, and each of the
other Loan Documents to which the Borrower and each of the Guarantors is or will
be a party, when delivered hereunder or thereunder, will be, a legal, valid and
binding obligation of the Borrower and each Guarantor, as the case may be,
enforceable against the Borrower and the Guarantors, as the case may be, in
accordance with its terms and the Orders.
3.3 Statements Made. The written statements, which have been
made by the Borrower or any of the Guarantors to the Administrative Agent, any
of the Lenders (solely in their capacity as a Lender hereunder) or to the
Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections), taken as a whole and in light of
the circumstances in which made, contain no untrue statement of a material fact
and do not omit to state a material fact necessary to make such statements not
misleading; and, to the extent that any such written statements constitute
projections, such projections were prepared in good faith on the basis of
assumptions, methods, data, tests and information believed by the Borrower or
such Guarantor to be valid and accurate in all material respects at the time
such projections were furnished to the Administrative Agent, any Lender or the
Bankruptcy Court, as the case may be.
3.4 Subsidiaries, Investments, Etc.
(a) Set forth on Schedule 3.4(a) is a complete and correct
list, as of the date hereof, of all of the Subsidiaries of the Borrower,
together with, for each such Subsidiary, (i) the jurisdiction of organization of
such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary
and (iii) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Schedule 3.4(a) designates each Subsidiary which is an Affiliated
Professional Corporation and lists the shareholders of each Subsidiary and the
percentage ownership of each such shareholder. Except as disclosed on Schedule
3.4(a) hereto, (x) each of the Borrower and its Subsidiaries owns, free
25
32
and clear of Liens, and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it on Schedule 3.4(a)
hereto, (y) all of the issued and outstanding Capital Stock of each such Person
organized as a corporation is validly issued, fully paid and nonassessable and
(z) there are no outstanding Equity Rights with respect to such Person.
(b) Set forth on Schedule 3.4(b) is a complete and correct
list of each Administrative Services Agreement to which the Borrower or a
Guarantor is a party.
(c) Set forth on Schedule 3.4(c) is a complete and correct
list, as of the date of this Agreement, of all investments (of the type referred
to in Section 6.8) (other than investments disclosed on Schedule 3.4(a) hereto)
held by the Borrower or any of its Subsidiaries in any Person and, for each such
investment, (i) the identity of the Person or Persons holding such investment
and (ii) the nature of such investment. Except as disclosed on Schedule 3.4(c)
hereto, each of the Borrower and its Subsidiaries owns, free and clear of all
Liens, all such investments.
3.5 Liens. After giving effect to the repayment of the
Sterling Obligations as contemplated by the Interim Order (and the release of
Liens securing the same), there are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Liens (including
pledges of the Capital Stock of the Guarantors) in favor of the Prepetition
Agent and the Prepetition Lenders (A) pursuant to, or in connection with, the
Prepetition Credit Agreement and (B) granted pursuant to the Orders and Section
2.15(c); (ii) other Liens in existence on the Filing Date as reflected on
Schedule 6.2; and (iii) other Permitted Liens. Schedule 6.2 hereto is a complete
and correct list, as of the date of this Agreement and after giving effect to
the repayment of the Sterling Obligations as contemplated by the Interim Order
(and the release of Liens securing the same), of each Lien securing Indebtedness
of any Person (other than the Liens securing the Prepetition Obligations) and
covering any Property of the Borrower or any of the Guarantors, and the
aggregate Indebtedness secured (or that may be secured) by each such Lien and
the Property covered by each such Lien is correctly described in Schedule 6.2.
Neither the Borrower nor any Guarantor is party to any contract, agreement,
lease or instrument entered into after the Filing Date the performance of which,
either unconditionally or upon the happening of an event, will result in or
require the creation of a Lien on any assets of the Borrower or any Guarantor in
violation of this Agreement.
3.6 Approvals. Except for the Orders, no Authorizations of any
Governmental Authority, or any securities exchange, are necessary for the
execution, delivery or performance by the Borrower or any of its Subsidiaries of
the Loan Documents to which the Borrower or such Subsidiary is a party, or for
the legality, validity or enforceability hereof or thereof.
3.7 The Orders. As of the date of the making of the initial
extension of credit hereunder, the Interim Order has been entered and has not
been stayed, amended, vacated, reversed, rescinded or otherwise modified in any
respect. As of the date of the making of any subsequent extension of credit
hereunder, the Interim Order and/or the Final Order, as the case
26
33
may be, have been entered and have not been stayed, amended (except in
accordance with the terms hereof), reversed, vacated, rescinded or otherwise
modified (except in accordance with the terms hereof) in any respect.
3.8 No Material Litigation. To the knowledge of the Borrower,
except as set forth on Schedule 3.8., no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or threatened
by or against the Borrower or any of its Subsidiaries or against any of its or
their respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
3.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower, are required to be filed, within the required filing periods (as
modified by any extensions), and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); to the knowledge
of the Borrower or such Guarantor, as the case may be, no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
meaning of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. If
requested by any Lender or the Administrative Agent, the Borrower
27
34
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U.
3.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
3.14 Investment Company Act; Other Regulations. Neither the
Borrower nor any of its 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. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.15 Environmental Matters. Except to the extent that all of
the following, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;
(a) The facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "Facilities") do not
contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law.
(b) The Facilities and all operations at the Facilities in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Facilities or violation of any
Environmental Law with respect to the Facilities or the business
operated by the Parent, the Borrower or any of their Subsidiaries (the
"Business"). Neither the Borrower nor any of its Subsidiaries has
assumed any liability of any other Person under Environmental Laws.
28
35
(c) Neither the Borrower nor any of its Subsidiaries has
received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard
to any of the Facilities or the Business, nor does the Borrower or any
of its Subsidiaries have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Facilities in violation of, or in a
manner or to a location which could reasonably be expected to give rise
to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of
at, on or under any of the Facilities in violation of, or in a manner
that could give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower or any of their
Subsidiaries, threatened, under any Environmental Law to which the
Borrower or any of its Subsidiaries is or will be named as a party with
respect to the Facilities or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Facilities
or the Business.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Facilities or arising
from or related to the operations of the Borrower or any of its
Subsidiaries in connection with the Facilities or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loan. The agreement of each Lender
to make the initial Loan requested to be made by it on the Closing Date is
subject to the satisfaction, prior to or concurrently with the making of such
Loan on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart for each Lender,
and (ii) for the account of any Lender requesting a Note in accordance
with Section 2.3(e), a Note conforming to the requirements thereof and
executed and delivered by a duly authorized officer of the Borrower.
29
36
(b) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit D, with appropriate insertions and attachments (including
without limitation the resolutions of the Board of Directors, in form
and substance satisfactory to the Lenders, authorizing and approving,
among other things, the commencement of the Cases, the transactions
contemplated by this Agreement and the other Loan Documents and the
transactions contemplated by the Plan Term Sheet, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of such Loan Party.
(c) Interim Order. At the time of the making of the initial
Loan, but in any event no later than 15 days after the Filing Date, the
Administrative Agent shall have received a copy of the Interim Order
approving the Loan Documents and granting the Super-priority Claim
status and Liens described in Section 2.15 and finding that the
Lenders are extending credit to the Borrower in good faith within the
meaning of Section 364(e) of the Bankruptcy Code, which Interim Order
(i) shall be in form and substance satisfactory to the Administrative
Agent, (ii) shall have been entered upon an application of the Borrower
and the Guarantors reasonably satisfactory in form and substance to the
Administrative Agent, (iii) shall be in full force and effect and (iv)
shall not have been stayed, reversed, vacated, rescinded, modified or
amended in any respect and, if the Interim Order is the subject of a
pending appeal in any respect, neither the making of such extension of
credit nor the performance by the Borrower or any of the Guarantors of
any of their respective obligations hereunder or under the other Loan
Documents or under any other instrument or agreement referred to herein
shall be the subject of a presently effective stay pending appeal.
(d) Cash Collateral. At the time of the making of the initial
extension of credit, but in any event no later than 15 days after the
Filing Date, the Administrative Agent shall have received, with a copy
for each Lender, a copy of an order or orders of the Bankruptcy Court,
in form and substance reasonably satisfactory to the Administrative
Agent, pursuant to Section 363(c)(2)(B) of the Bankruptcy Code,
authorizing the use by the Borrower and the Guarantors of any Cash
Collateral in which the Prepetition Lenders under the Prepetition
Credit Agreement may have an interest and providing for Super-priority
Claims and Liens contemplated by Section 2.15(c), which order(s) shall
be in full force and effect and shall not have been stayed, reversed,
vacated, rescinded, modified or amended in any respect without the
prior written consent of the Administrative Agent. The Liens and claims
described in this Section and Section 2.15(c), and the other rights
granted in respect of the use of Cash Collateral, may be contained in
the Orders.
(e) First Day Orders. All orders submitted to the Bankruptcy
Court on or about the Filing Date shall be in form and substance
reasonably satisfactory to the Administrative Agent.
30
37
(f) Fees. The Administrative Agent shall have received all
fees, expenses and other consideration required to be paid on or before
the Closing Date.
(g) Budget. The Administrative Agent and the Lenders shall
have received the Budget, in form and substance reasonably satisfactory
to the Administrative Agent.
(h) Insurance. The Administrative Agent shall have received
evidence in form and substance reasonably satisfactory to it that all
of the requirements of Section 5.4 shall have been satisfied.
(i) Sterling Obligations. The Sterling Obligations shall be
paid in full on the Closing Date.
4.2 Conditions to Each Loan. The agreement of each Lender to
make any Loan requested to be made by it on any date (including, without
limitation, its initial Loan) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects
on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loan requested to be made on such date.
(c) Bankruptcy Court Approval. The Interim Order shall be in
full force and effect and shall not have been stayed, reversed,
vacated, rescinded, modified (other than by the Final Order) or amended
in any respect or, if the date of such requested Loan is more than 30
days after the Closing Date or if the amount of such requested Loan,
when added to the amount of all outstanding Loans would exceed the
maximum amount authorized pursuant to the Interim Order, the Final
Order shall have been entered, which Final Order shall be in full force
and effect and shall not have been stayed, reversed, vacated, rescinded
or, without the consent of the Required Lenders, modified or amended in
any respect and, if the Interim Order or the Final Order, as the case
may be, is the subject of a pending appeal in any respect, neither the
making of such Loan nor the performance by the Borrower of any of its
obligations hereunder or under the Loan Documents or under any other
instrument or agreement referred to herein or therein shall be the
subject of a then effective stay pending appeal.
(d) Notices of Borrowing. The Administrative Agent shall have
received a notice of borrowing complying with Section 2.2.
31
38
(e) Borrowing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate executed by a
Responsible Officer of the Borrower, substantially in the form of
Exhibit E, certifying that (i) the requested Loan and the intended use
thereof are consistent with the terms of this Agreement and is to be
used solely for expenditures, and in the amounts (subject to permitted
variances) set forth in the Budget, (ii) the proceeds thereof are
necessary, after utilization and application of the Borrower's and the
Guarantors' available cash reserves, in order for the Borrower and the
Guarantors to satisfy their respective obligations with respect to the
items set forth in the Budget, (iii) all of the representations and
warranties contained in Section 3 are true and correct as required by
Section 4.2(a), (iv) the Borrower and the Guarantors have observed and
performed in all material respects all applicable covenants and
agreements contained herein and in the other Loan Documents and the
Orders (as applicable) and satisfied in all material respects each
condition to such Loan contained herein or in the other Loan Documents
or in the Orders (as applicable) to be observed, performed or satisfied
by the Borrower or the Guarantors and (v) such officer has no knowledge
of any Default or Event of Default.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such borrowing that the conditions
contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note or Loan remains outstanding and unpaid or any other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and (except with respect to Section 5.1) each Guarantor shall:
5.1 Financial Statements. Furnish to the Administrative Agent
and each Lender as soon as available, but in any event not later than (a)(i) in
the case of June 1998, August 25, 1998, (ii) in the case of July 1998, September
4, 1998, and (iii) in the case of each calendar month thereafter, 25 days after
the end of such calendar month, a copy of the unaudited consolidated balance
sheet of each Core Business as at the end of such calendar month and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of each such Core Business for such month and the period from the Filing
Date through the end of such month and (b)(i) in the case of June, 1998,
September 15, 1998, (ii) in the case of July, 1998, September 30, 1998, and
(iii) in the case of each calendar month thereafter, 45 days after the end of
such calendar month, a copy of the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income and retained earnings and of
cash flows of the Borrower and its consolidated Subsidiaries for such month and
the period from the Filing Date through the end of such month. All such
financial statements shall be complete and correct in all material
32
39
respects and shall be prepared in reasonable detail and in accordance with GAAP
(except for the absence of notes in the financial statements and subject to
normal year-end adjustments) applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such Responsible
Officer and disclosed therein).
5.2 Certificates; Other Information. Furnish to:
(a) the Administrative Agent and each Lender concurrently with
the delivery of any financial statement pursuant to Section 5.1, (y) a
certificate of a Responsible Officer of the Borrower stating that, to
the best of each such Responsible Officer's knowledge, during such
period (i) no Subsidiary has been formed or acquired, and (ii) each
Loan Party has observed or performed in all material respects all of
its covenants and other agreements, and satisfied in all material
respects every condition, contained in this Agreement and the other
Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (z) to the extent applicable, calculations
demonstrating compliance with the prepayment provisions of Sections 2.8
and 6.19;
(b) the Administrative Agent and each Lender not later than
5:00 p.m., New York City time, on each Wednesday of every calendar
week, (i) (A) commencing on July 29, 1998, a forecast, in a form
acceptable to the Administrative Agent, of cash flows of each of (x)
the Loan Parties, taken as a whole, (y) each Core Business and (z) the
Loan Parties, taken as a whole, that are not part of a Core Business
for the period of six consecutive calendar weeks commencing with the
week in which such forecast is delivered and (B) commencing on July 29,
1998, a comparison of actual cash flows of each of (x) the Borrower and
the Guarantors, taken as a whole, (y) each Core Business (other than
HPI) and (z) the Loan Parties, taken as a whole, that are not part of a
Core Business for the immediately preceding week to (I) in the case of
the comparison delivered on July 29, 1998, the Budget for the preceding
week for the applicable Loan Parties and (II) in the case of the
comparisons delivered thereafter, to the most recently forecasted cash
flows of the applicable Loan Parties for such week, with an explanation
of any significant variance, in each case accompanied by a certificate
of a Responsible Officer of the Borrower stating that such forecast and
reconciliation are based upon reasonable estimates and assumptions and
information that is accurate to the best knowledge of such Responsible
Officer and that such Responsible Officer has no reason to believe that
such forecast and reconciliation are incorrect or misleading in any
material respect, and (ii) not later than 5:00 p.m., New York City
time, on the Wednesday of every calendar week, commencing July 29,
1998, a report regarding the termination of, or material modification
to, any contract of the Borrower or any of its Subsidiaries with any
hospitals or other healthcare facilities, any Affiliated Professional
Corporation involving annual net revenues in excess of $500,000;
(c) the Administrative Agent and each Lender within five days
after the same are filed, copies of all financial statements and
reports which the Borrower may make to, or
33
40
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(d) the Administrative Agent and each Lender as soon as
available, but not later than the later of (i) 20 days after the end of
each calendar month and (ii) three Business Days following receipt by
the Borrower thereof, the GFS Report for the second preceding month,
together with a certificate of a Responsible Officer of the Borrower
demonstrating compliance with the requirements of Section 2.8 and to
the effect that such report, to the best of such Responsible Officer's
knowledge, is complete and accurate;
(e) the Administrative Agent and each Lender promptly
following the delivery thereof to the Borrower or to the Board of
Directors or management of the Borrower, a copy of any management
letter or report by independent public accountants with respect to the
financial condition, operations, business or prospects of the Borrower
and its Subsidiaries;
(f) the Administrative Agent and each Lender no later than
September 30, 1998, an updated Budget depicting projected cash receipts
and disbursements on a monthly basis for the fiscal month of January,
1999, in the form of Exhibit B reasonably satisfactory to the
Administrative Agent.
(g) the Administrative Agent and each Lender no later than 10
days before the end of each fiscal month commencing August, 1998, an
update to the Budget detailing projected cash receipts and
disbursements on a weekly basis for the second succeeding fiscal month
in the form of Exhibit B consistent with the monthly Budget for such
fiscal month delivered on the Closing Date (or, in the case of January,
1999, in accordance with Section 5.2(f)) and otherwise reasonably
satisfactory to the Administrative Agent;
(h) the Administrative Agent and each Lender no later than
five (5) Business Days after each of the dates specified in Sections
6.19 and 6.20, a report setting forth the calculations demonstrating
compliance with such Sections, in a form reasonably satisfactory to the
Administrative Agent;
(i) to counsel to the Administrative Agent, promptly after the
same is available, copies of all pleadings, motions, applications,
judicial information, financial information and other documents filed
by or on behalf of the Borrower or any of the Guarantors with the
Bankruptcy Court or the United States Trustee in the Cases, or
distributed by or on behalf of the Borrower or any of the Guarantors to
any official committee appointed in the Cases; and
(j) the Administrative Agent and each Lender promptly, such
additional financial and other information as the Administrative Agent
or any Lender may from time to time reasonably request.
34
41
5.3 Payment of Obligations. Except in accordance with the
Bankruptcy Code or by an applicable order of the Bankruptcy Court, pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its material obligations of whatever nature
that constitute administrative expenses under Section 503(b) of the Bankruptcy
Code in the Cases, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower or its Subsidiaries, as the case may be.
5.4 Maintenance of Property; Insurance. (a) Keep all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; (b) maintain with financially sound
and reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business (provided that the Borrower may maintain self insurance in reasonable
amounts consistent with industry standards for similarly-situated companies);
and (c) furnish to each Lender, upon written request, full information as to the
insurance carried.
5.5 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and accounts in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and upon
reasonable notice, but in no event less than two days' prior written notice from
the Administrative Agent to the Borrower, permit representatives of any Lender
to visit and inspect any of its properties and examine and make abstracts from
any of its books and records at any reasonable time and as often as may
reasonably be desired (but, in any case, at such times and in such a manner so
as not to unreasonably interfere with the business or operations of the Borrower
or its Subsidiaries, as the case may be) and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with senior officers of the Borrower and its Subsidiaries and, in
conjunction with the Borrower, with its independent certified public
accountants. Any information obtained by any Lender pursuant to this Section 5.5
shall be subject to the provisions of Section 11.16.
5.6 Notices. Promptly give notice to the Administrative Agent
of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any post-Filing
Date Contractual Obligation of the Borrower or any of its Subsidiaries,
including copies of any notice asserting the existence of any such
default or event of default or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower or any of
its Subsidiaries and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
35
42
(c) any post-Filing Date litigation or proceeding affecting
the Borrower or any of its Subsidiaries in which the amount involved is
$500,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower or any of its Subsidiaries knows or
has reason to know thereof: (i) the occurrence or expected occurrence
of any Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.6 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
5.7 Environmental Laws. (a) Comply in all material respects
with, and ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
5.8 Employee Benefits. Comply in all material respects with
the applicable provisions of ERISA and the Code and other applicable laws, rules
and regulations with respect to any Plan, the failure of which would result in a
Material Adverse Effect.
5.9 Further Assurances. At the cost and expense of the
Borrower, execute and file all such further documents and instruments, and
perform such other acts, as the Agent may reasonably determine are necessary or
advisable to maintain the Liens granted to the Agent in connection with this
Agreement and the Orders and to maintain the priority of such Liens purported to
be granted pursuant to this Agreement and the Orders. Without limiting the
generality of the foregoing, the Borrower and the Guarantors shall assist the
Agent and the
36
43
Lenders in the preparation and filing of any Uniform Commercial Code financing
statements reasonably requested by the Agent.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note or Loan remains outstanding and unpaid or any other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and shall not permit any of the Guarantors to, directly or
indirectly:
6.1 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower and the Guarantors under the
Loan Documents;
(b) Indebtedness of the Borrower and the Guarantors
outstanding on the Filing Date and reflected on Schedule 6.1, but
excluding the refinancing of any such Indebtedness;
(c) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate principal
amount not exceeding as to the Borrower and its Subsidiaries $500,000
at any time outstanding;
(d) Indebtedness of the Borrower to any Guarantor or any
Guarantor to the Borrower incurred after the Closing Date on account of
Transfers of the type described in Section 6.8(c), (d) or (e);
(e) Indebtedness of any Guarantor that is part of a Core
Business to any other Guarantor that is part of the same Core Business;
(f) Guarantee Obligations permitted by Section 6.3.
6.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens existing on the Filing Date and listed on Schedule
6.2;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
37
44
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any Subsidiary;
(f) Liens securing Indebtedness of the Borrower or any
Subsidiary incurred after the Closing Date to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be
created substantially simultaneously with the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (iii)
the amount of Indebtedness secured thereby is not thereafter increased
and (iv) the proceeds of the Indebtedness secured by any such Lien
shall at no time exceed 100% of the original purchase price of such
property;
(g) Liens created pursuant to this Agreement and the Orders;
and
(h) Liens of landlords arising by operation of law, and Liens
of a lessor under any lease entered into by the Borrower or any
Subsidiary in the ordinary course of its business, to the extent the
provisions of such leases relating to such Liens are standard and
customary in the relevant market.
6.3 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the Filing Date and
listed on Schedule 6.3; and
(b) Guarantee Obligations of the Guarantors under this
Agreement and the Orders.
6.4 Limitation on Fundamental Changes to Core Businesses. As
to any Loan Party that is part of a Core Business, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, (a) unless any Requirement of Law requires that any Affiliated
Professional Corporation merge with, or transfer
38
45
assets to, a Subsidiary of the Borrower that is part of a Core Business, in
which case such transaction may occur with the consent of the Required Lenders
(not to be unreasonably withheld) and (b) except any Loan Party that is part of
the same Core Business may sell, lease, transfer or otherwise dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to any other Loan
Party that is part of a Core Business.
6.5 Limitation on Sale of Assets. (a) As to any Loan Party
that is part of a Core Business, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary of the Borrower that is party of a
Core Business, issue or sell any shares of such Subsidiary's Capital Stock to
any Person, except (a) the sale of inventory in the ordinary course of business
and (b) the sale or other disposition of obsolete or worn out property in the
ordinary course of business, or the sale or other disposition of property no
longer useful in the conduct of its business, provided that (x) the Net Cash
Proceeds of all such Asset Sales of the type described in clause (b) after the
Closing Date shall not exceed (i) $10,000 with respect to any individual Asset
Sale or related series of Asset Sales and (ii) $50,000 in the aggregate as to
all such Asset Sales, and (y) all such Net Cash Proceeds of any such Asset Sales
shall be applied in accordance with Section 2.8.
(b) As to any Loan Party that is not part of a Core Business,
convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary of the Borrower that is not part of a Core Business, issue or
sell any shares of such Subsidiary's Capital Stock to any Person unless Net Cash
Proceeds of any such Asset Sales are applied in accordance with Section 2.8.
6.6 Limitation on Restricted Payments. Declare or pay any
dividend (other than dividends payable solely in common stock of the Person
making such dividend) on, or make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries or any warrants or options to purchase
any such Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary.
6.7 Limitation on Capital Expenditures. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure except for expenditures in the ordinary course of business not
exceeding, in the aggregate for the Borrower and its Subsidiaries, $1,000,000 in
accordance with a budget to be delivered to the Administrative Agent no later
than July 31, 1998.
6.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit, transfer or capital contribution to (each of
the foregoing, a "Transfer"), or
39
46
purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in, any
Person, except:
(a) investments in existence on the Filing Date and listed on
Schedule 6.8;
(b) investments in Cash Equivalents;
(c) Transfers by the Borrower to a Subsidiary for purposes
consistent with the Budget;
(d) Transfers by any Subsidiary of the Borrower which are
applied to the repayment of the Loans;
(e) Transfers in the ordinary course of business consistent
with past practice between the Borrower and any Subsidiary of the
Borrower in connection with their consolidated cash management system;
and
(f) at any time prior to July 31, 1998, Transfers described on
Schedule 6.8(f).
6.9 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction (a) is otherwise permitted under this Agreement, and (b) is
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
6.10 Limitation on Sale and Leaseback Transactions. Enter into
any arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary.
6.11 Limitation on Changes in Fiscal Year. Permit the fiscal
year of the Borrower or any of its Subsidiaries to end on a day other than
December 31.
6.12 Cash Concentration. Fail to maintain a system of cash
management that concentrates funds on a daily basis in a manner similar in all
material respects to the pre-Filing Date cash management system of the Borrower
and its Subsidiaries, except as otherwise approved by the Administrative Agent.
6.13 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for the physician practice
management business or businesses which are directly related thereto.
40
47
6.14 Chapter 11 Claims. Except for the Carve-Out, incur,
create, assume, suffer to exist or permit any other Super-priority Claim or Lien
which is pari passu with or senior to the claims of (a) the Administrative Agent
and the Lenders granted pursuant to this Agreement and the Orders or (b) other
than for claims referenced in clause (a), the Prepetition Agent and the
Prepetition Lenders granted pursuant to Section 2.15(c) and the Orders.
6.15 Reclamation Claims; Bankruptcy Code Section 546(g)*
Agreements. (a) Make any payments or transfer any property on account of claims
asserted by any vendors of the Borrower or any Subsidiary for reclamation in
accordance with Section 2-702 of the Uniform Commercial Code and Section 546(c)
of the Bankruptcy Code; and
(b) Enter into any agreements or file any motion seeking a
Bankruptcy Court order for the return of inventory to any vendor pursuant to
Section 546(g)* of the Bankruptcy Code.
6.16 Use of Proceeds. (a) Use the proceeds of the Loans for
purposes other than working capital purposes and other general corporate
purposes of the Borrower and the Guarantors as detailed in the Budget, including
the repayment of the Sterling Obligations with the proceeds of the initial Loan
and the payment of certain other pre-Filing Date claims, including payments to
physician providers, that are authorized by the Bankruptcy Court pursuant to the
orders described in Section 4.1(e), in each case to the extent consistent with
the Budget or (b) use any portion of the Loans, the Carve-Out or the Cash
Collateral of the Prepetition Lenders to commence or prosecute any action or
objection with respect to (i) the claims of the Prepetition Agent or the
Prepetition Lenders against the Borrower and the Guarantors or the Prepetition
Agent's or the Prepetition Lenders' Liens which secure the Prepetition
Obligations, (ii) the Super-priority Claim or Liens granted to the
Administrative Agent and the Lenders pursuant to this Agreement and the Orders,
or (iii) the Super-priority Claim or Liens granted to the Prepetition Agent and
the Prepetition Lenders pursuant to Section 2.15(c) and the Orders.
6.17 Reorganization Plan. Fail to (a) file with the Bankruptcy
Court by September 30, 1998 a Reorganization Plan consistent in all material
respects with the Plan Term Sheet and, otherwise, in form and substance
reasonably satisfactory to the Administrative Agent and the Lenders, (b) obtain
approval by the Bankruptcy Court, pursuant to Section 1125 of the Bankruptcy
Code, by November 15, 1998 of the disclosure statement prepared in connection
with such Reorganization Plan or (c) consummate, by December 31, 1998, the
transactions contemplated by such Reorganization Plan.
6.18 Minimum EBITDA. The Borrower shall not permit cumulative
aggregate EBITDA of the Core Businesses for the period from August 1, 1998
through the last day of any fiscal month set forth below to be less than the
amount set forth opposite such fiscal month:
41
48
Cumulative
Period Ending EBITDA
------------- ------
August, 1998 $1,000,000
September, 1998 $3,000,000
October, 1998 $5,500,000
November, 1998 $8,000,000
December, 1998 $10,000,000
6.19 Minimum Net Cash Flow From Operations. The Borrower and
the Guarantors shall not permit actual cumulative Net Cash Flow from Operations
of (a) the Borrower and the Guarantors, taken as a whole, (b) each Core Business
(other than HPI), and (c) the Borrowers and the Guarantors that are not part of
a Core Business, for the period from the Filing Date through each of (i) July
31, 1998, (ii) August 28, 1998, (iii) September 25, 1998, (iv) October 31, 1998,
(v) November 30, 1998 and (vi) December 31, 1998, to be less than 85% of the
projected Net Cash Flow from Operations if cumulative Net Cash Flow from
Operations is a positive number or not to exceed 115% of cumulative Net Cash
Flow from Operations if cumulative Net Cash Flow from Operations is a negative
number for all applicable entities, all as set forth for each such period on the
Budget delivered on the Closing Date, except that, for any period set forth
above, if the aggregate cumulative variance from the Filing Date through the end
of the applicable period (in Dollars) from projected Net Cash from Operations
for all of the entities described in clauses (b) and (c) above that fail to
satisfy the applicable percentage required above is less than $1,000,000, such
entities shall be deemed to be in compliance with this provision.
6.20 Minimum Receipts. The Borrower and the Guarantors shall
not permit actual aggregate cash receipts of (a) the Borrower and the
Guarantors, taken as a whole, (b) each Core Business (other than HPI), and (c)
the Borrowers and the Guarantors that are not part of a Core Business for the
period from the Filing Date through each of (i) July 31, 1998, (ii) August 28,
1998, (iii) September 25, 1998, (iv) October 31, 1998, (v) November 30, 1998 and
(vi) December 31, 1998, to be less than 85% of its projected aggregate cash
receipts for the applicable entities as set forth for each such period on the
Budget delivered on the Closing Date, provided that payments made by payors to
third party claimants with respect to post-Filing claims on behalf of the
Borrower or any Guarantor, as the case may be, shall be deemed to be cash
receipts for purposes of this provision to the extent reflected as such on the
Budget for the applicable entity, provided, however, that for any period set
forth above, if the aggregate cumulative variance from the Filing Date through
the end of the applicable period (in Dollars) from projected cash receipts for
all of the entities described in clauses (b) and (c) above that fail to satisfy
the applicable percentage required above is less than $1,000,000, such entities
shall be deemed to be in compliance with this provision.
42
49
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan or any other amount payable
hereunder or under any other Loan Document, within two Business Days
after any such interest or other amount becomes due in accordance with
the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in (i) Sections
5.1 or 5.2 of this Agreement and such default shall continue unremedied
for a period of five (5) Business Days or (ii) Section 6 of this
Agreement in any material respect; or
(d) The Borrower or any of its Subsidiaries shall default in
the observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of ten (10) Business Days; or
(e) (i) Any of the Cases shall be dismissed or converted to a
case under Chapter 7 of the Bankruptcy Code or (ii) a trustee under
Chapter 11 of the Bankruptcy Code shall be appointed in any of the
Cases; or
(f) (i) An order of the Bankruptcy Court shall be entered
granting another Super-priority Claim or Lien pari passu with or senior
to that granted (x) to the Administrative Agent and the Lenders
pursuant to this Agreement and the Orders, or (y) to the Prepetition
Lenders pursuant to the Orders (other than pursuant to clause (x)
above), (ii) an order of a court of competent jurisdiction shall be
entered reversing, staying, vacating or rescinding either of the
Orders, (iii) an order of a court of competent jurisdiction shall be
entered amending, supplementing or otherwise modifying either of the
Orders, (iv) the Prepetition Lenders' Cash Collateral shall be used in
a manner inconsistent with the Orders, or (v) an order of a court of
competent jurisdiction shall be entered terminating the use of the
Prepetition Lenders' Cash Collateral; or
43
50
(g) An order of the Bankruptcy Court shall be entered in any
of the Cases appointing an examiner having enlarged powers relating to
the operation of the business of the Borrower and the Guarantors
(powers beyond those set forth under Sections 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; or
(h) The Borrower or any Guarantor shall make any payments of
Indebtedness relating to pre-Filing Date obligations other than (i) as
permitted under the Orders, (ii) prepetition wages and benefits and
other employee-related claims which are payable with the approval of
the Bankruptcy Court and sales tax and employee withholding taxes which
have been collected by the Borrower but not yet paid, (iii) as
otherwise permitted under this Agreement, payment of certain other
pre-Filing Date claims, including payments to physician providers, that
are authorized by the Bankruptcy Court pursuant to orders described in
Section 4.1(e), or (iv) in connection with the assumption of any
contract or lease approved by the Bankruptcy Court, in each case to the
extent consistent with the Budget; or
(i) The entry of an order granting relief from the automatic
stay so as to allow a third party to proceed against any asset or
assets of the Borrower or any Guarantor which have a value in excess of
$1,000,000 in the aggregate; or
(j) The filing of any pleading by the Borrower or any
Guarantor seeking, or otherwise consenting to, any of the matters set
forth in paragraphs (e) through (i); or
(k) There shall occur any event after the Filing Date which
results in a Material Adverse Effect; or
(l) The entry of the Final Order shall not have occurred
within 30 days after the Filing Date; or
(m) It shall be determined (whether by the Bankruptcy Court or
by any other judicial or administrative forum) that the Borrower or any
of its Subsidiaries is liable for the payment of claims arising out of
any failure to comply (or to have complied) with applicable
Environmental Laws or regulations the payment of which could have a
Material Adverse Effect; or
(n) The Borrower or any Guarantor files any pleading seeking,
or otherwise consenting to, (i) the invalidation, subordination or
other challenging of the Liens granted to secure the Obligations or
(ii) any relief under Section 506(c) of the Bankruptcy Code with
respect to any Property which secures the Prepetition Obligations; or
(o) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any
44
51
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the
Borrower, a Subsidiary or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely
to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Borrower, a Subsidiary or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could, in the sole judgment of the
Required Lenders, reasonably be expected to have a Material Adverse
Effect; or
(p) One or more judgments or decrees shall be entered after
the Filing Date against the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not paid or fully covered by
insurance) of $500,000 or more, and all such judgments or decrees shall
not have been vacated, discharged, stayed or bonded pending appeal
within the time required by the terms of such judgment or applicable
law; or
(q) The termination or resignation of any two Key Employees
unless prior to such termination or resignation a replacement for each
such Key Employee acceptable to the Required Lenders has been employed;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Administrative Agent may, and, at the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower (with a copy
to counsel for any statutory committee of unsecured creditors appointed in the
Cases and to the United States Trustee), take one or more of the following
actions, at the same or different times (provided, that with respect to clause
(z) below, the Administrative Agent shall provide the Borrower (with a copy to
counsel for any statutory committee of unsecured creditors appointed in the
Cases and to the United States Trustee) with five Business Days' written notice
prior to taking the action contemplated thereby): (w) terminate forthwith the
Commitments; (x) declare the Loans then outstanding to be forthwith due and
payable, whereupon the principal of the Loans, together with accrued interest
thereon and any unpaid accrued fees and all other Obligations of the Borrower
accrued hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower, anything
contained herein or in any other Loan Document to the contrary notwithstanding;
(y) set-off amounts in any account of the Borrower maintained at the
Administrative Agent or any
45
52
Lender and apply such amounts to the Obligations of the Borrower hereunder and
under the other Loan Documents; and (z) exercise any and all remedies under this
Agreement, the Orders, and applicable law available to the Administrative Agent
and the Lenders.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
46
53
8.4 Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
8.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of a Loan Party or any Affiliate of a Loan Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
Affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender
47
54
also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Loan Party or any Affiliate of a Loan Party which may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements which result from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section 8.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to its Loans made or renewed by it and any
Note issued to it, and the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
8.9 Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent in such capacity,
48
55
which successor agent, so long as no Default or Event of Default shall have
occurred and be continuing, shall have been approved by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent hereunder. Effective upon such appointment and approval,
the terms "Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as such shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 9. GUARANTEE
9.1 Guarantee. (a) Each of the Guarantors unconditionally and
irrevocably guarantees the due and punctual payment and performance by the
Borrower of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and it will remain bound upon this guarantee
notwithstanding any extension or renewal of any of the Obligations. The
Obligations of the Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The Obligations of the Guarantors hereunder
shall not be affected by (i) the failure of either the Administrative Agent or a
Lender to assert any claim or demand or to enforce any right or remedy against
the Borrower or any other Guarantor under the provisions of this Agreement or
any other Loan Document or otherwise; (ii) any extension or renewal of any
provision hereof or thereof; (iii) any rescission, waiver, compromise,
acceleration, amendment or modification of any of the terms or provisions of any
of the Loan Documents; (iv) the release, exchange, waiver or foreclosure of any
security held by the Administrative Agent for the Obligations or any of them;
(v) the failure of either of the Administrative Agent or a Lender to exercise
any right or remedy against any other Guarantor; or (vi) the release or
substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guarantee
constitutes a guarantee of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by either of
the Administrative Agent or a Lender to any security held for payment of the
Obligations or to any balance of any deposit, account or credit on the books of
either of the Administrative Agent or a Lender in favor of the Borrower or any
other Guarantor, or to any other Person.
49
56
(d) Each of the Guarantors hereby waives any defense that it
might have based on a failure to remain informed of the financial condition of
the Borrower and of any other Guarantor and any circumstances affecting the
ability of the Borrower to perform under this Agreement.
(e) Each Guarantor's guarantee shall not be affected by the
genuineness, validity, regularity or enforceability of the obligations, the
Notes or any other instrument evidencing any obligations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or by
any other circumstance relating to the Obligations which might otherwise
constitute a defense to this Guarantee. Neither the Administrative Agent, nor
any of the Lenders makes any representation or warranty in respect to any such
circumstances or shall have any duty or responsibility whatsoever to any
Guarantor in respect of the management and maintenance of the Obligations.
(f) Subject to the grace periods provided by Section 7, upon
the Obligations becoming due and payable (by acceleration or otherwise), the
Lenders shall be entitled to immediate payment of such Obligations by the
Guarantors upon written demand by the Administrative Agent, without further
application to or order of the Bankruptcy Court.
9.2 No Impairment of Guarantee. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than payment in full),
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations. Without limiting the
generality of the foregoing, the obligations of the Guarantors hereunder shall
not be discharged or impaired or otherwise affected by the failure of either the
Administrative Agent or a Lender to assert any claim or demand or to enforce any
remedy under this Agreement or any other agreement, by any waiver or
modification of any provision thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the Obligations are paid in full.
9.3 Subrogation. Until the Obligations guaranteed hereby have
been indefeasibly paid in full, each Guarantor hereby waives all rights of
subrogation or contribution, whether arising by contract or operation of law.
50
57
SECTION 10. REMEDIES; APPLICATION OF PROCEEDS
10.1 Remedies; Obtaining the Collateral Upon Default. Upon the
occurrence and during the continuance of an Event of Default, to the extent any
such action is not inconsistent with the Orders and Section 7 (including the
notice provisions described therein), the Agent, in addition to any rights now
or hereafter existing under applicable law, and without application to or order
of the Bankruptcy Court, shall have all rights as a secured creditor under the
Uniform Commercial Code in all relevant jurisdictions and may:
(a) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from the Borrower,
any Guarantor or any other Person who then has possession of any part
thereof with or without notice or process of law (but subject to any
Requirements of Law), and for that purpose may enter upon the
Borrower's or any Guarantor's premises where any of the Collateral is
located and remove the same and use in connection with such removal any
and all services, supplies, aids and other facilities of the Borrower
or such Guarantor;
(b) instruct the obligor or obligors on any agreements,
instrument or other obligation constituting the Collateral to make any
payment required by the terms of such instrument or agreement directly
to the Concentration Account;
(c) withdraw all monies, securities and instruments in the
Concentration Account for application to the Obligations;
(d) sell, assign or otherwise liquidate, or direct the
Borrower or any Guarantor to sell, assign or otherwise liquidate, any
or all of the Collateral or any part thereof, and take possession of
the proceeds of any such sale or liquidation;
(e) take possession of the Collateral or any part thereof, by
directing the Borrower and any Guarantor in writing to deliver the same
to the Administrative Agent at any place or places designated by the
Administrative Agent, in which event the Borrower and such Guarantor
shall at its own expense:
(i) forthwith cause the same to be moved to the
place or places so designated by the Administrative Agent and
there delivered to the Administrative Agent,
(ii) store and keep any Collateral so delivered to
the Administrative Agent at such place or places pending
further action by the Administrative Agent as provided in
Section 10.2, and
51
58
(iii) while the Collateral shall be so stored and
kept, provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition; and
it being understood that the Borrower's and each Guarantor's obligation so to
deliver the Collateral is of the essence of this Agreement and that,
accordingly, upon application to the Bankruptcy Court, the Administrative Agent
shall be entitled to a decree requiring specific performance by the Borrower or
such Guarantor of such obligation.
10.2 Remedies; Disposition of the Collateral. Upon the
occurrence and during the continuance of an Event of Default, and to the extent
not inconsistent with the Orders and Section 8, without application to or order
of the Bankruptcy Court, any Collateral repossessed by the Administrative Agent
under or pursuant to Section 10.1 or the Orders or otherwise, and any other
Collateral whether or not so repossessed by the Administrative Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Administrative Agent may, in
compliance with any Requirements of Law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Administrative
Agent or after any overhaul or repair which the Administrative Agent shall
determine to be commercially reasonable. Any such disposition which shall be a
private sale or other private proceeding permitted by applicable Requirements of
Law shall be made upon not less than 10 days' written notice to the Borrower
specifying the time at which such disposition is to be made and the intended
sale price or other consideration therefor, and shall be subject, for the 10
days after the giving of such notice, to the right of the Borrower or any
nominee of the Borrower to acquire the Collateral involved at a price or for
such other consideration at least equal to the intended sale price or other
consideration so specified. Any such disposition which shall be a public sale
permitted by applicable Requirements of Law shall be made upon not less than 10
days' written notice to the Borrower specifying the time and place of such sale
and, in the absence of applicable Requirement of Law, shall be by public auction
(which may, at the Administrative Agent's option, be subject to reserve), after
publication of notice of such auction not less than 10 days prior thereto in two
newspapers in general circulation in New York City. Subject to Section 10.4, to
the extent permitted by any such Requirement of Law, the Administrative Agent on
behalf of the Lenders may bid for and become the purchaser of the Collateral or
any item thereof, offered for sale in accordance with this Section 10.2 without
accountability to the Borrower or any Guarantor or the Prepetition Lenders
(except to the extent of surplus money received). If, under mandatory
Requirements of Law, the Administrative Agent shall be required to make
disposition of the Collateral within a period of time which does not permit the
giving of notice to the Borrower as hereinabove specified, the Administrative
Agent need give the Borrower only such notice of disposition as shall be
reasonably practicable.
52
59
10.3 Application of Proceeds. (a) Notwithstanding anything to
the contrary contained in this Agreement or any other Loan Document, (i) if the
Administrative Agent takes action under clause (w) or (x) of Section 7 upon the
occurrence and during the continuance of an Event of Default, any payment by the
Borrower or any Guarantor on account of principal of and interest on the Loans
and any proceeds arising out of any realization (including after foreclosure)
upon the Collateral shall be applied, subject to the Carve-Out, as follows:
first, to the payment in full of all costs and expenses (including without
limitation, reasonable attorneys' fees and disbursements) paid or incurred by
the Administrative Agent or any of the Lenders in connection with any such
realization upon the Collateral, second, as a permanent reduction of the
Commitments, pro rata to the payment in full of the Loans (including any accrued
and unpaid interest thereon, and any fees and other Obligations in respect
thereof), third, to the payment in full of the Prepetition Obligations, and (ii)
any payments or distributions of any kind or character, whether in cash,
property or securities, made by the Borrower or any Guarantor or otherwise in a
manner inconsistent with clause (i) of this Section 10.3(a) shall be held in
trust and paid over or delivered to the Administrative Agent so that the
priorities and requirements set forth in such clause (i) are satisfied.
(b) It is understood that the Borrower and the Guarantors
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the amount of the Obligations.
10.4 WAIVER OF CLAIMS. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE BORROWER AND THE GUARANTORS HEREBY WAIVE, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE
ADMINISTRATIVE AGENT'S TAKING POSSESSION OR THE AGENT'S DISPOSITION OF ANY OF
THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE
BORROWER WOULD OTHERWISE HAVE UNDER ANY REQUIREMENT OF LAW AND THE BORROWER
HEREBY FURTHER WAIVES, TO THE EXTENT PERMITTED BY LAW:
(a) all damages occasioned by such taking of possession
except any damages which are the direct result of the Administrative
Agent's or any Lender's gross negligence or wilful misconduct;
(b) all other requirement to the time, place and terms
of sale or other requirements with respect to the enforcement of the
Administrative Agent's rights hereunder; and
(c) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any
53
60
portion thereof, and the Borrower and each Guarantor, for itself and
all who may claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such laws.
10.5 Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Administrative Agent shall be in
addition to every other right, power and remedy specifically given under this
Agreement, the Orders or the other Loan Documents or now or hereafter existing
at law or in equity, or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time or simultaneously and as often and in such order as may be deemed
expedient by the Administrative Agent. All such rights, powers and remedies
shall be cumulative and the exercise or the beginning of exercise of one shall
not be deemed a waiver of the right to exercise of any other or others. No delay
or omission of the Administrative Agent in the exercise of any such right, power
or remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Default
or Event of Default or an acquiescence therein. In the event that the
Administrative Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Administrative Agent
may recover reasonable expenses, including attorney's fees, and the amounts
thereof shall be included in such judgment.
10.6 Discontinuance of Proceedings. In case the Administrative
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Administrative Agent, then and in every
such case the Borrower, the Administrative Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Administrative Agent
and the Lenders shall continue as if no such proceeding had been instituted.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The
Required Lenders or (with the written consent of the Required Lenders), the
Administrative Agent and each Loan Party to the relevant Loan Document may, from
time to time, (a) enter into written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Loan Parties hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders or the
Administrative Agent (at the direction of the Required Lenders), as the case may
be, may specify in such instrument, any of the requirements of this
54
61
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the principal amount or extend the
final scheduled date of maturity of any Loan, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof or increase the amount or extend the expiration date of any Lender's
Commitments, or modify the Super-priority Claim status of the Lenders in
respect of any Lender's Loans, or waive a Default or Event of Default under
paragraph f(ii) of Section 7, in each case, without the consent of each Lender
directly affected thereby, (ii) amend, modify or waive any provision of this
Section 11.1 or reduce any percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by any Loan Party of any of
its rights and obligations under this Agreement and the other Loan Documents, or
release all or substantially all or any material part of the Collateral owned by
Core Businesses or any material guarantee of the Obligations, in each case
without the written consent of all the Lenders, or (iii) amend, modify or waive
any provision of Section 8 without the written consent of the Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Loan Parties,
the Lenders, the Administrative Agent and all future holders of the Notes. In
the case of any waiver, the Loan Parties, the Lenders and the Administrative
Agent shall be restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower, the Guarantors and
the Administrative Agent, as set forth in Schedule I in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
The Borrower
and the Guarantors: FPA Medical Management, Inc.
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, M.D.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
55
62
with a copy to: FPA Medical Management, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx Xx. Xxxxxx, Jr.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Mail Code 01-06-01
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.7 or 2.11 shall not be effective until
received. Any notice or delivery to or from or consent required of the Borrower
hereunder or pursuant to any other Loan Document may be made to or by the
Borrower.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
56
63
11.4 Survival. All representations and warranties made
hereunder, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the Notes and the making of the
Loans hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Administrative Agent, Xxxxxx Commercial Paper Inc. and Xxx
Xxxxxx American Capital Prime Rate Income Trust (or any of its Affiliates that
are Lenders) for their respective reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of,
administration and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of (i) separate counsel to each of the
Administrative Agent, Xxxxxx Commercial Paper Inc. and Xxx Xxxxxx American
Capital Prime Rate Income Trust (or any of its Affiliates that are Lenders) and
(ii) financial advisors to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all their out-of-pocket costs and
expenses incurred in connection with the enforcement, administration or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel to each Lender and counsel and any financial advisor to
the Administrative Agent or any other outside professional engaged by any such
Lender or the Administrative Agent, (c) to pay, indemnify, and hold each Lender
and the Administrative Agent harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, (d) to pay all the actual and reasonable expenses of the
Administrative Agent related to this Agreement, the other Loan Documents or the
Loans in connection with the Cases (including, without limitation, the on-going
monitoring by the Administrative Agent of the Cases, including attendance by the
Administrative Agent and counsel or financial advisors to the Administrative
Agent at meetings, hearings or other proceedings and the on-going review of
documents filed with the Bankruptcy Court) and (e) to pay, indemnify, and hold
each Lender and the Administrative Agent and their respective officers,
directors, trustees, employees, affiliates, agents and controlling persons
(each, an "indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Borrower shall
have
57
64
no obligation hereunder to any indemnitee with respect to indemnified
liabilities to the extent such indemnified liabilities resulted from the gross
negligence or willful misconduct of such indemnitee. The agreements in this
Section 11.5 shall survive repayment of the Loans and all other amounts payable
hereunder and the termination of the Commitments and, in the case of any Lender
that may assign any interest in its Commitments or Loans hereunder, shall
survive the making of such assignment, notwithstanding that such assigning
Lender may cease to be a "Lender" hereunder.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks, financial institutions or funds that
regularly invest in loans and/or loan participations or, with the consent of the
Administrative Agent (which shall not be unreasonably withheld or delayed), any
other entities (each, a "Participant") participating interests in any Loan owing
to such Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender hereunder and under the other Loan Documents.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent is in respect of any issues requiring the approval of 100% of
the Lenders pursuant to Section 11.1. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 11.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.12 and 2.13 with
respect to its participation in the Commitments and the Loans outstanding from
time to time as if it was a Lender; provided that, in the case of Section 2.13,
such Participant shall have complied with the requirements of said Section and
provided, further,
58
65
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred. No sale may be made to
an entity that is substantially engaged in the health care business.
(c) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time and from time to time assign to
any Lender or any affiliate thereof or, with the consent of the Administrative
Agent (which shall not be unreasonably withheld or delayed), to any other bank,
financial institution or other entity (an "Assignee") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit F, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Administrative Agent) and
delivered to the Administrative Agent for its acceptance and recording in the
Register; provided that no such assignment to an Assignee (i) shall be in an
aggregate principal amount of less than $1,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement and the Notes);
(ii) shall be to any Assignee who, after giving effect to such assignment, is
not (together with any affiliate or other entity for which it acts as agent) an
Prepetition Lender holding Loans under, and as defined in, the Prepetition
Credit Agreement in an aggregate principal amount equal to at least the
principal amount of the Loans and/or Commitments hereunder held by such
Assignee; and (iii) shall be permitted if, after giving effect to such
assignment, the assigning Lender (together with any affiliate or other entity
for which it acts as agent) would not be an Prepetition Lender holding Loans
under, and as defined in the Prepetition Credit Agreement in an aggregate
principal amount equal to at least the principal of the Loans and/or Commitments
hereunder held by such Lender. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding the
provisions of this paragraph (c), no assignment may be made to any entity that
is substantially engaged in the health care business.
(d) A Note and the obligation(s) evidenced thereby may be
assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer of such Note and the obligation(s) evidenced thereby
on the Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of such obligation(s) and the Note(s) evidencing the
same shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note(s) evidencing such obligation(s), accompanied
by an Assignment and Acceptance duly executed by the holder of such Note(s), and
thereupon one or
59
66
more new Note(s) in the same aggregate principal amount shall be issued to the
designated Assignee(s) and the old Notes(s) shall be returned by the
Administrative Agent to the Borrower marked "cancelled." No assignment of a Note
and the obligation(s) evidenced thereby shall be effective unless it has been
recorded in the Register as provided in this Section 11.6(d).
(e) The Administrative Agent shall maintain at its address
referred to in Section 11.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time and the registered owners of the
obligation(s) evidenced by the Note(s). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loan or the obligation evidenced by
a Note recorded therein for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof or a Person under common management
with such Lender, by the Administrative Agent) together with payment to the
Administrative Agent of a registration and processing fee of $2,000 (except that
no such registration and processing fee shall be payable in the case of an
Assignee which is already a Lender or is an affiliate of a Lender or a Person
under common management with a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower. On or prior to such effective date, the Borrower, at its own
expense, upon request, shall execute and deliver to the Administrative Agent (in
exchange for the Note, of the assigning Lender) a new Note to the order of such
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
upon request, a new Note, to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder. Such new Notes shall be dated
the Closing Date and shall otherwise be in the form of the Note replaced
thereby.
(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
which agrees to be bound by the provisions of Section 11.16 as if such
prospective Transferee were a Lender, any and all financial information in such
Lender's possession concerning the Borrower and its Affiliates which has been
delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
60
67
(h) Nothing herein shall prohibit or restrict any Lender from
(i) pledging or assigning any Note to any Federal Reserve Bank in accordance
with applicable law or (ii) with the prior consent of the Administrative Agent
and the Borrower (which, in each case, shall not be unreasonably withheld or
delayed or conditioned), pledging its rights in connection with any Loan or Note
to any other Person.
11.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its Loans owing
to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender's Loans, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a participating
(or, at the option of such Lender, a direct) interest in such portion of each
such other Lender's Loan or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) Subject to (i) the Carve-Out and (ii) the giving of the
notice as described Section 7, notwithstanding the provisions of Section 362 of
the Bankruptcy Code and any other rights and remedies of the Lenders provided by
law, each Lender shall have the right upon the occurrence of an Event of Default
to set-off and apply against any indebtedness, whether matured or unmatured, of
the Borrower under this Agreement, any amount owing from such Lender to the
Borrower, at or at any time after, the happening of any Event of Default,
subject in each case to Section 7 of this Agreement.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Guarantors, the Administrative
Agent and the Lenders with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Administrative
Agent or any Lender, or by the Borrower or any Guarantor,
61
68
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.
11.12 Submission To Jurisdiction; Waivers. Each of the
Borrower and the Guarantors hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
Bankruptcy Court and, if the Bankruptcy Court does not have (or
abstains from) jurisdiction, to the non-exclusive general jurisdiction
of the Courts of the State of New York, and the courts of the United
States for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower or such Guarantor, as the case may be, at its
address set forth in Section 11.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section 11.12 any special, exemplary, punitive or
consequential damages.
11.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
62
69
(b) neither any Agent nor any Lender has any fiduciary
relationship with or duty to or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between the Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
11.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Absence of Prejudice to the Prepetition Lenders with
Respect to Matters Before the Bankruptcy Court. The Administrative Agent or any
Lender, in its capacity as the Prepetition Agent, the Sterling Agent, an
Prepetition Lender or a Sterling Lender under the Prepetition Credit Agreement
and the Sterling Credit Agreement, respectively, shall be free to bring, oppose
or support any matter before the Bankruptcy Court no matter how treated in this
Agreement, and the fact that the Administrative Agent is also the Prepetition
Agent and the Sterling Agent and a Lender is also an Prepetition Lender or a
Sterling Lender shall in no way prejudice the rights of such entities under, or
in respect of, the Prepetition Credit Agreement, the Sterling Credit Agreement
or hereunder.
11.16 Confidentiality. Each of the Administrative Agent and
the Lenders agree to keep confidential all non-public information provided to it
by any Loan Party pursuant to this Agreement that is designated by such Loan
Party as confidential; provided that nothing herein shall prevent the
Administrative Agent or any Lender from disclosing any such information (a) to
the Administrative Agent, any other Lender or any affiliate of any Lender, (b)
to any Transferee or prospective Transferee which agrees to comply with the
provisions of this Section 11.16, (c) to the employees, directors, agents,
attorneys, accountants and other professional advisors of such Lender or its
affiliates, (d) upon the request or demand of any Governmental Authority having
jurisdiction over the Administrative Agent or such Lender, (e) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required to do
so in connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 11.16 or (h) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
11.17 Conflict with Orders. To the extent of any conflict
between any provision of this Agreement and the Orders, the provisions of the
Orders shall govern.
63
70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
FPA MEDICAL MANAGEMENT, INC.
By: _____________________________________
Title:
AHI HEALTHCARE SYSTEMS, INC.
AHI (TEXAS) HEALTHCARE SYSTEMS, INC.
AMG MANAGEMENT COMPANY
AMERICAN HEALTH MEDICAL GROUP, XXXXXX,
INC.
AVANTI HEALTH SYSTEMS OF TEXAS, INC.
BHP IPA, INC.
XXXXXXX HILLS/WEST LOS ANGELES MEDICAL
NETWORK, A MEDICAL GROUP, INC.
CENTURY FAMILY MEDICAL GROUP, INC.
CINCINNATI HEALTH PARTNERS, INC.
COMPREHENSIVE PRIMARY CARE MSO, INC.
CONNEKT, LLC
CORNERSTONE PHYSICIANS CORPORATION
CORNERSTONE PHYSICIANS OF PHOENIX, INC.
FHC IPA, INC.
FHMG/TDMC MEDICAL GROUP, A PROFESSIONAL
CORPORATION
FAMILY PRACTICE ASSOCIATES OF SOUTHERN
CALIFORNIA, A MEDICAL CORP.
FPA ACQUISITION CORPORATION
FPA AXMINSTER MEDICAL GROUP, INC.
FPA HOLDING COMPANY OF CALIFORNIA, INC.
FPA INDEPENDENT PRACTICE ASSOCIATION,
A MEDICAL CORP.
FPA MEDICAL GROUP OF CALIFORNIA, INC.
FPA MEDICAL GROUP OF FLORIDA, INC.
FPA MEDICAL GROUP OF GEORGIA, P.C.
FPA MEDICAL GROUP OF KENTUCKY, INC.
FPA MEDICAL GROUP OF NORTHERN
CALIFORNIA, INC.
64
71
FPA MEDICAL GROUP OF TEXAS, A TEXAS
PROFESSIONAL ASSOCIATION
FPA MEDICAL GROUP OF THE GREATER BAY
AREA, INC.
FPA MEDICAL GROUP, P.A.
FPA MEDICAL MANAGEMENT OF ARIZONA, INC.
FPA MEDICAL MANAGEMENT OF FLORIDA, INC.
FPA MEDICAL MANAGEMENT OF GEORGIA, INC.
FPA MEDICAL MANAGEMENT OF ILLINOIS, INC.
FPA MEDICAL MANAGEMENT OF KENTUCKY,
INC.
FPA MEDICAL MANAGEMENT OF LOUISIANA,
INC.
FPA MEDICAL MANAGEMENT OF MISSOURI, INC.
FPA MEDICAL MANAGEMENT OF NORTH
CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF SOUTH
CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF TENNESSEE,
INC.
FPA MEDICAL MANAGEMENT OF TEXAS, INC.
FPA MEDICAL MANAGEMENT OF THE
MID-ATLANTIC, INC.
FPA SURGICAL CENTER, INC.
FPA WOMEN'S CARE OF GEORGIA, INC.
FPA OF GEORGIA, INC.
FOUNDATION HEALTH IPA, A PROFESSIONAL
MEDICAL CORPORATION
G.P.M. IPA, INC.
GATEWAY IPA, INC.
GATEWAY PHYSICIANS SERVICES, INC.
GOTHAM MANAGEMENT, INC.
GOTHAM MID-TOWN MANAGEMENT, INC.
XXXXXXX XXXXXX MEDICAL GROUP, INC.
HEALTH ONE ASSOCIATES, INC.
HEALTH PARTNERS, INC.
HEALTHCAP, INC.
HEALTHCAP-MISSOURI, INC.
HEALTHCAP-NEVADA, INC.
INTERGROUP IPA, P.C.
MID-LEVEL PRACTITIONERS, INC.
MONTEBELLO PHYSICIANS MEDICAL GROUP,
INC.
65
72
NOVA HEALTHCARE MEDICAL GROUP, INC.
NOVA PHYSICIANS MEDICAL CORPORATION, INC.
OB-GYN MANAGEMENT, INC.
PHYSICIAN NETWORK OF WHITTIER MEDICAL
ASSOCIATES, INC.
PHYSICIANS MEDICAL GROUP OF FLORIDA, INC.
PRIMARY CARE MEDICAL GROUP AT LITTLE
COMPANY OF XXXX HOSPITAL, INC.
PRIVATE PHYSICIANS GROUP AT STANFORD, A
MEDICAL GROUP, INC.
SAN ANTONIO HEALTH PARTNERS, INC.
ST. XXXXXXX CARE MEDICAL GROUP
STERLING ANESTHESIA, INC.
STERLING CREDENTIALS VERIFICATION
SERVICES, INC.
STERLING EMERGENCY MEDICAL CARE, INC.
STERLING EMERGENCY TREATMENT
ASSOCIATES, INC.
STERLING HEATHCARE GROUP, INC.
STERLING HEALTHCARE MEDICAL CORP.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING MEDICAL GROUP OF MICHIGAN, P.C.
STERLING MEDNET EMERGENCY SERVICES, INC.
STERLING MIAMI, INC.
STERLING MICHIGAN, P.C.
STERLING PROFESSIONAL EMERGENCY
PHYSICIANS, LLC
STERLING RADIOLOGY, INC.
STERLING REGIONAL EMERGENCY SERVICES,
INC.
STERLING SUB TEXAS, INC.
THE DOCTORS OFFICENTER MEDICAL GROUP OF
HOUSTON, P.A.
THE DOCTORS OFFICENTER MEDICAL GROUP OF
DALLAS, P.A.
XXXXXX-XXXXX MEDICAL CENTERS, P.C.
VIP IPA, A PROFESSIONAL MEDICAL
CORPORATION
VIRGINIA HEALTH PARTNERS, INC.
VMS MEDICAL IPA, INC.
66
73
By: _______________________________________
Title:
67
74
BANKBOSTON, N.A., as Administrative Agent and as
a Lender
By: ________________________________________
Title:
68
75
XXXXXX COMMERCIAL PAPER INC.
By: ______________________________________
Title:
69
76
XXXXXXX SACHS CREDIT PARTNERS L.P.
By: _____________________________________
Title:
70
77
XXX XXXXXX AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: ___________________________________
Title:
71
78
Schedule I
LENDERS, NOTICE INFORMATION AND COMMITMENTS
===================================================================================================================
TERM LOAN LOAN
ADDRESS FOR NOTICES COMMITMENT PERCENTAGE
===================================================================================================================
BANKBOSTON, N.A. $9,500,000.00 19.00000%
000 Xxxxxxx Xxxxxx
Mail Stop 01-06-01
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
XXXXXXX XXXXX CREDIT PARTNERS $7,000,000.00 14.00000%
L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopy: 000-000-0000
Telephone 000-000-0000
-------------------------------------------------------------------------------------------------------------------
XXXXXX COMMERCIAL PAPER INC. $28,500,000.00 57.00000%
3 World Financial Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
72
79
-------------------------------------------------------------------------------------------------------------------
XXX XXXXXX AMERICAN CAPITAL $5,000,000.00 10.00000%
PRIME RATE INCOME TRUST
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
===================================================================================================================
TOTAL $50,000,000.00 100.000000%
===================================================================================================================
1
