EXHIBIT 10.17
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, made this 16th day of November, 1998, is by and among
NationsBank of Tennessee, N.A., a national banking association (the "Bank"), ARC
Kentucky, LLC, a Tennessee limited liability company (the "Borrower"), and
Ambulatory Resource Centres, Inc., a Tennessee corporation (the "Guarantor").
RECITALS
Borrower has requested that the Bank make a term loan available to
Borrower for the purpose of consummating the acquisition of substantially all of
the assets of Xxxx II Limited Partnership. The Bank is willing to make such loan
available to Borrower on the terms and conditions set forth in this Agreement.
SECTION 1. DEFINITIONS
As used herein:
"ACCOUNTS", "CHATTEL PAPER", DOCUMENTS", "EQUIPMENT", "GENERAL
INTANGIBLES", "INVENTORY" and "INSTRUMENTS" shall have the same respective
meanings as are given to those terms in the UCC.
"ACQUISITION" means any transaction, or any series of related
transactions, by which any Person, in the transaction or as of the most recent
transactions in a series of transactions, directly or indirectly acquires any
going concern or all or a substantial part of the assets of any corporation,
partnership or other entity or any division of any such entity, or any such
entity or any division of any such entity becomes a Subsidiary of such Person.
"ADJUSTED EBITDA" means EBITDA of Guarantor plus Minority Interest
Expense of Guarantor.
"AFFILIATES" means as to any Person (A) any Person which, directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person, or (B) any Person who is a director or
executive officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (A) above. For purposes of this
definition, "control" of a Person shall mean the power, direct or indirect, (i)
to vote or direct the voting of more than twenty five percent (25%) of the
outstanding shares of voting stock of such Person, or (ii) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise. In no event shall the Bank be deemed to an Affiliate of the
Borrower.
"AGREEMENT" means this Loan and Security Agreement, as it may be
amended, restated, renewed or extended from time to time.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated
October 13, 1998, by and between Borrower and Xxxx II, Limited Partnership,
excluding any amendments thereto.
"BANK" means NationsBank of Tennessee, N.A. and its successors and
assigns.
"BORROWER DISTRIBUTIONS" means (i) any dividend or other distribution,
whether in cash, in kind, or otherwise, on account of or with respect to, or
(ii) the application of any of funds, property or assets to the purchase,
redemption or other retirement of, any of Borrower's equity interests or any
warrants, options or other rights with respect to any of Borrower's equity
interests.
"BUSINESS DAY" means any day on which the state banks and national
banking associations in Nashville, Tennessee and New York, New York are open for
the conduct of ordinary business; provided however, that when used in connection
with determining the LIBO Rate or notices in connection therewith, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in U.S. Dollar deposits in the London Interbank Market.
"CAPITAL EXPENDITURE" means all amounts paid by the Borrower in
connection with the purchase of property, plant, machinery, equipment or other
similar expenditures (including capital leases of any of the foregoing), which
would be required to be capitalized and shown on a consolidated balance sheet of
Borrower in accordance with generally accepted accounting principles
consistently applied.
"CAPITALIZED LEASE" means a lease that is required to be capitalized
for financial reporting purposes in accordance with generally accepted
accounting principles.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
generally accepted accounting principles.
"CASH FLOW" means Net Income (or deficit) for the immediately preceding
Quarterly Period plus (A) federal and state income taxes for such period
deducted in the determination of Net Income, (B) Interest Expense for such
period deducted in the determination of Net Income, (C) Rental Expense for such
period deducted in the determination of Net Income, (D) depreciation for such
period deducted in the determination of Net Income, (E) amortization for such
period deducted in the determination of Net Income (F) non-cash or non-recurring
charges for such period deducted in the determination of Net Income, and (G) 50%
of the management fees
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paid by Borrower to ARC Management Services, Inc., for such period deducted in
the determination of Net Income during such period, less the lesser of actual or
budgeted maintenance Capital Expenditures for such period.
"CHANGE OF CONTROL" means the occurrence of any transaction or series
of transactions that results in Guarantor owning and having the right to vote
50% or less of the membership interests of Borrower.
"CLOSING" means the valid execution and delivery of the Note, this
Agreement, and Collateral Documents to the Bank.
"COLLATERAL" has the meaning set forth in Paragraph 4.1.
"COLLATERAL DOCUMENTS" means the documents specified in Paragraphs 3.1
(b) through (j).
"CONSTITUENT DOCUMENTS" means, with respect to any Person, the
governing legal documents of such Person, such as Person's charter, certificate
of incorporation, Articles of Organization or Operating Agreement.
"CURRENT ASSETS" and "Current Liabilities" mean, for any Person at any
time, all assets or liabilities, respectively, that, in accordance with
generally accepted accounting principles consistently applied, should be
classified as current assets or current liabilities, respectively, on a balance
sheet of such Person.
"DEFAULT RATE" means a rate per annum equal to the LIBO Rate plus four
hundred and fifty basis points (4.5%).
"DEBT SERVICE" means $154,000 (the imputed principal amortization
associated with the Loan) plus the sum of the following incurred by Borrower
during any particular fiscal quarter: (A) scheduled principal payments on
Indebtedness, (B) Rental Expense, and (C) Interest Expense paid to any party
other than Guarantor.
"EBITDA" means, for any Person and for any period of determination, the
Net Income for such period plus (A) Interest Expense for such period deducted in
the determination of Net Income, (B) federal and state taxes for such period
deducted in the determination of Net Income, (C) depreciation deducted in the
determination of Net Income, (D) amortization deducted in the determination of
Net Income, and (E) non-cash or non-recurring charges for such period deducted
in the determination of Net Income, all as determined in accordance with
generally accepted accounting principles consistently applied.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) and the Superfund Amendments and
Reauthorization Act (XXXX); the Resource Conservation and
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Recovery Act (RCRA); the Emergency Planning and Community Right to Know Act; the
Clean Water Act (Federal Water Pollution Control Act); the Safe Drinking Water
Act; the Clean Air Act; the Surface Mining Control and Reclamation Act; the
Coastal Zone Management Act; the Noise Control Act; the Occupational Safety and
Health Act; the Toxic substances Control Act (TSCA); the Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA); any so-called "Superfund" or "Superlien"
law; or any other federal, state or local statute, law, ordinance, code, rule,
regulations, order, decree or other requirements of any governmental body
regulating, relating to or imposing liability or standards of conduct concerning
any Hazardous Materials or toxic or dangerous chemical, waste, substance or
material.
"EURODOLLAR LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means the reserve percentage
applicable during any Interest Period under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for banks with
respect to liabilities or assets consisting of or including Eurodollar
Liabilities having a term equal to such Interest Period.
"EVENT OF DEFAULT" has the meaning set forth in Paragraph 8.1.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day and (b) if such rate is not so published for any
Business Day, the Federal Funds Rate for such Business Day shall be the average
rate charged to the Bank on such Business Day on such transactions as determined
in good faith by the Bank.
"FINANCIAL STATEMENTS" means [describe f/s submitted in connection with
underwriting]
"FINANCING STATEMENTS" means any one or more filings made pursuant to
the UCC to perfect the security interests in the Collateral granted to Bank
pursuant to Section 4 hereof.
"FISCAL YEAR" means, with respect to the Borrower, the calendar year
period of January 1 through December 31.
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"FUNDED DEBT" means at any date, with respect to the Guarantor, all of
the following obligations (without duplication) as of such date: (a) all
obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations to pay the
deferred purchase price of property, except trade accounts payable or other
short term liabilities other than indebtedness for borrowed money arising in the
ordinary course of business, (d) all obligations as lessee under capitalized
leases, (e) all obligations to purchase securities or other property which arise
out of or in connection with the sale of the same or substantially similar
securities or property, such as bankers acceptances or similar instruments, (f)
all contingent and non-contingent obligations to reimburse any bank or other
person in respect of amounts payable or paid under a letter of credit or similar
instrument, (g) all debt of others secured by a lien on any asset of the
Borrower and/or Guarantor, whether or not such debt is assumed, and (h) all
Guarantee Obligations, less the amount, if any, by which (i) the sum of actual
cash and cash equivalents on hand (as defined from the Guarantor's most current
consolidated balance sheet) exceeds (ii) two weeks of actual operating expenses
of Guarantor.
"GUARANTEE OBLIGATION" means with respect to any Person, any contract,
agreement or understanding of such Person pursuant to which such Person
guarantees, or in effect guarantees, any Indebtedness of any other person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, agreements (a) to purchase such Indebtedness or any asset
constituting security therefor, (b) to advance or supply funds for the purchase
or payment of such Indebtedness or to maintain net worth or working capital or
other balance sheet conditions, or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness, (c) with the holder of such
Indebtedness to purchase an asset or service primarily for the purpose of
assuring such holder of the ability of the primary obligor to make payment of
the Indebtedness, or (d) otherwise to assure the holder of the Indebtedness of
the primary obligor against loss with respect thereto; provided, however, that
such term shall not include the endorsement of negotiable instruments or
documents 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 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.
"GUARANTY" means the Guaranty and Suretyship Agreement in the form
attached as Exhibit A to be executed by the Guarantor at the closing.
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"HAZARDOUS MATERIALS" means any hazardous, toxic or dangerous chemical,
substance, waste or material defined as such in any of the Environmental Laws,
and petroleum, petroleum products, oil, asbestos and PCB's.
"INDEBTEDNESS" means, as to any Person, all items of indebtedness
whether matured or unmatured, liquidated or unliquidated, direct or contingent,
joint or several, including without limitation:
(a) All indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(b) All indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise: (1) to purchase such indebtedness;
or (2) to purchase, sell or lease (as lessee or lessor) property, products,
materials or supplies or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or (3) to supply funds to or in any
other manner invest in the debtor;
(c) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(d) All indebtedness incurred as the lessee of facilities, goods
or services under leases that, in accordance with generally accepted accounting
principles consistently applied, should be reflected on Such Person's balance
sheet.
"INTEREST EXPENSE" means, with respect to any Person for any period of
determination, the gross interest expenses of such Person determined in
accordance with generally accepted accounting principles consistently applied as
shown on its income statement.
"INTEREST PAYMENT DATE" shall mean the last day of each Interest
Period.
"INTEREST PERIOD" shall mean, initially, the period commencing on the
date hereof and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) of the next calendar month, and
thereafter shall mean the period commencing on the date immediately following
the last day of the preceding Interest Period and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) of the next calendar month; provided, however, that (x) if any Interest
Period would end on a day that shall not be a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless, such next
succeeding Business Day would fall in the next calendar month, in which case
which Interest
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Period shall end on the next preceding Business Day and (y) no Interest Period
with respect to any Loan shall end later than the Loan Termination Date.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
"INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS" means interest rate and
foreign exchange swap agreements, interest rate cap agreements, interest rate
collar agreements, interest rate and foreign exchange insurance and other
agreements or arrangements designed to provide protection against fluctuations
in interest rates and currency exchange rates.
"LAWS" means all ordinances, statutes, rules, regulations, order,
injunctions, writs or decrees of any government or political subdivision or
agency thereof, or any court of similar entity established by any thereof.
"LIBO RATE" means, for each Interest Period, the rate per annum
appearing on the Telerate Page 3750 (or successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London Time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBO Rate" shall mean, for each Interest Period the rate
per annum appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"LOAN" means the term loan in the amount of $4,312,000 made to Borrower
by Bank hereunder.
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents, or any other document executed or delivered by or on behalf of the
Borrower or Guarantor evidencing or securing the Obligations.
"LOAN TERMINATION DATE" means November ___, 2001.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business or conditions (financial or otherwise) or in the result of operations
of the Borrower or the Guarantor or in the value of the Collateral.
"MATERIAL ADVERSE EFFECT" means, when referring to the taking of an
action or the omission to take an action, that such action, if taken, or
omission, would have a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Borrower or the
Guarantor, or might materially impair the value of the Collateral.
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"MINORITY INTEREST EXPENSE" means the amount reflected as such on the
financial statements of Guarantor submitted to Bank in accordance with Section
6.2 hereof.
"NET INCOME" means, for any period of determination, net income of a
Person, determined in accordance with generally accepted accounting principles
consistently applied.
"NOTE" means a promissory note substantially in the form of Exhibit B
attached hereto, duly executed and delivered to Bank by Borrower, as it may be
renewed, extended or modified from time to time.
"OBLIGATIONS" means all of the obligations of the Borrower:
(a) To pay the principal of and interest on the Note in accordance
with the terms thereof and to satisfy all the Borrower's other liabilities to
the Bank hereunder, whether now existing or hereafter incurred, matured or
unmatured, direct of contingent, joint or several, including any extension,
modifications, and renewals thereof and substitutions therefor;
(b) To repay the Bank all amounts advanced by the Bank hereunder
on behalf of the Borrower, including, but without limitation, amounts owed under
Interest Rate and Foreign Exchange Contracts to the Bank, and advances for
overdrafts, principal or interest payments to prior secured parties, mortgagees,
or lienors, or for taxes, levies, insurance, rent, repairs to or maintenance or
storage of any of the Collateral; and
(c) To reimburse the Bank, on demand, for all of the Bank's
reasonable out-of-pocket expenses and costs, including the reasonable fees and
expenses of its counsel, in connection with the enforcement of this Agreement
and the documents required hereunder, including, without limitation, any
proceeding brought or threatened to enforce payment of any of the obligations
referred to in the foregoing paragraphs (a) and (b), or any suits or claims
against Bank whatsoever as a result of Bank's execution of this Agreement and
making of its Loan, all as more specifically set forth in Paragraphs 9.4 and 9.7
hereof; and in addition, to reimburse the Bank for its expenses and reasonable
attorneys' fees in connection with the preparation, administration, amendment,
modification or waiver of the Agreement and the other Loan Documents.
"PERMITTED INVESTMENTS" means all expenditures made and all liabilities
incurred (contingent or otherwise) by Borrower or Guarantor for:
(a) obligations issued or guaranteed as to principal and interest
by the United States of America and having a maturity of not more than twelve
(12) months from the date of purchase;
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(b) certificates of deposit, issued by banks organized under the
laws of the United States of America or any State thereof and foreign
subsidiaries of such banks, having a rating of not less than A or its equivalent
by Standard & Poor's Corporations, or its successor; and
(c) commercial paper or finance company paper which is rated not
less than prime-one or A-1 or their equivalents by Xxxxx'x Investor Services,
Inc. or Standard & Poor's Corporation or their successors.
"PERMITTED LIENS" means:
(a) Liens in favor of the Bank;
(b) Liens for taxes, assessments, or similar charges, incurred in
the ordinary course of business that are not yet delinquent;
(c) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(d) Liens of mechanics, materialmen, warehousemen, carriers, or
other like liens, securing obligations in the ordinary course of business that
are not yet delinquent;
(e) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(f) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property by the Borrower or Guarantor in the operations of its
business, and none of which is violated in any material respect by existing or
proposed structures or land use;
(g) Existing liens set forth or described on Exhibit C, attached
hereto and made a part hereof, and renewals thereof;
(h) Statutory and common law landlord's liens arising under any
lease;
(i) The interests of lessees of any property of Borrower or
Guarantor;
(j) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long as levy
and execution
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thereon have been stayed and continue to be stayed; if Borrower or Guarantor has
posted such security as may be required by Laws or as is reasonably satisfactory
to Bank:
(i) Claims or liens for taxes, assessments or charges due
and payable and subject to interest or penalty;
(ii) Claims, liens and encumbrances upon, and defects of
title to, real or personal property, including any attachment of personal or
real property or other legal process prior to adjudication of a dispute on the
merits;
(iii) Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens; and
(iv) Adverse judgments on appeal; and
(k) Purchase Money Liens securing Purchase Money Indebtedness
incurred in compliance with Section 7.4.
"PERSON" means any individual, corporation, partnership, association,
joint-stock company, estate, trust, unincorporated organization, limited
liability company, joint venture, court or government or political subdivision
or agency thereof.
"PLEDGED INTEREST" means the interests pledged pursuant to the Pledge
Agreement described in Paragraph 3.1.
"PRIME RATE" means the rate announced by NationsBank of Tennessee, N.A.
from time to time as the NationsBank Prime Rate. No representation is made
herein that the NationsBank Prime Rate is the lowest rate at which Bank will
lend to its customers.
"PRO-FORMA EFFECT" means, in making any calculation to determine if the
Guarantor is in compliance with Subparagraph 6.15(d), that the calculation will
be made assuming that (a) any Acquisition made during the three-month period
ending on the date of determination (the "Reference Period"), and (b) any
Indebtedness associated with (a) incurred during the Reference Period or to be
incurred as of the date of determination, were made or incurred on the first day
of the Reference Period. Any funds to be used by Guarantor or any Subsidiary in
consummating an Acquisition will be assumed to have been used for that purpose
as of the first day of the Reference Period. If EBITDA for the Reference Period
associated with the assets acquired or to be acquired in any Permitted
Acquisition is greater than $0, such EBITDA will be included in the calculation
of EBITDA for Guarantor and its Subsidiaries, and any Indebtedness to be
incurred by Borrower or any Subsidiary in connection with the consummation of
any Acquisition will be assumed to have been incurred on the first day of the
Reference Period. Interest
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Expense with respect to such Indebtedness assumed to have been incurred on the
first day of the Reference Period which bears interest at a floating rate shall
be calculated at the current rate under the agreement governing such
Indebtedness. Any Interest Expense incurred during the Reference Period which
was or is to be refinanced with the proceeds of Indebtedness assumed to have
been incurred as of the first day of the Reference Period will be excluded from
the calculation for which a Pro-Forma Effect is being given.
"PURCHASE MONEY INDEBTEDNESS" means
(a) Indebtedness created to secure the payment of all or any part
of the purchase price of any property,
(b) any Indebtedness incurred at the time of or within 30 days
prior to or after the acquisition of any property for the purpose of financing
all or any part of the purchase price there-of, and
(c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time of any such
renewal, extension or refinancing.
"PURCHASE MONEY LIEN" means any lien securing Purchase Money
Indebtedness, but only if such lien shall at all times be confined solely to the
property the purchase price of which was financed through the incurrence of the
Purchase Money Indebtedness secured by such lien.
"QUARTERLY DATES" means the last day of each March, June, September and
December.
"QUARTERLY PERIOD" means (a) the Period from the Closing Date to the
next succeeding Quarterly Date and (b) thereafter, any period from the first day
after a Quarterly Date to the next succeeding Quarterly Date.
"REAL PROPERTY" means any real property now owned or hereafter acquired
by Borrower or Guarantor, as applicable.
"RECORDS" means correspondence, memoranda, tapes, books, discs, paper,
magnetic storage and other documents or information of any type, whether
expressed in ordinary or machine language.
"RENTAL EXPENSE" means, with respect to any Person for any period, the
gross real estate rental expenses of such Person for such period (excluding all
personal property rental expense), net of rental income of such Person for such
period, each determined in accordance with generally accepted accounting
principles consistently applied.
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"SHAREHOLDERS' EQUITY" means, for any person, at any time, the accounts
required to be set forth in a balance sheet of such Person, prepared in
accordance with generally accepted accounting principles consistently applied,
including but not limited to: (A) the par or stated value of all outstanding
capital stock or membership interests (as applicable); (B) capital surplus,
including additional paid-in capital; and (C) retained earnings.
"SUBORDINATION AGREEMENTS" means any two or more of: the Subordination
Agreement of even date herewith between Bank and Xxxx II Limited Partnership,
the Subordination Agreement of even date herewith between Bank and Guarantor and
the Subordination Agreement of even date herewith between the Bank and ARC
Management Services, Inc., and "SUBORDINATION AGREEMENT" means any one of such
agreements.
"SUBSIDIARY" of a Person means any Person of which more than 50% of the
outstanding voting securities or other equity interests in such Person shall, at
the time of determination, be owned directly or indirectly through one or more
Persons, and "SUBSIDIARIES" means more than one of such Persons.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Tennessee, as it may be amended from time to time; provided that
if by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of a security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Tennessee, "UCC" means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default
SECTION 2. THE LOAN.
2.1 The Loan. Subject to the terms and conditions of and relying
on the representations, warranties and covenants contained in this Agreement,
Bank agrees to fund to the Borrower an aggregate maximum principal amount of
$4,312,000 to be used for the acquisition of substantially all of the assets of
Xxxx II Limited Partnership.
2.2 Interest Rates and Payments.
(a) Interest shall be charged and paid on the Loan from
the date of the initial advance until the Loan is paid at a rate equal to the
LIBO Rate plus two hundred fifty basis points (2.5%), to be adjusted at the
beginning of each Interest Period.
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(b) Interest shall be computed on the basis of a 360-day
year counting the actual number of days elapsed, and shall be due and payable
without notice on each Interest Payment Date.
(c) Notwithstanding the foregoing, upon the occurrence of
an Event of Default interest may be charged at the Default Rate as defined and
set forth in the Note if the Bank so elects, regardless of whether the Bank has
elected to exercise any other remedies under Section 8 hereof, including,
without limitation, acceleration of the maturity of the outstanding principal of
the Note. All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default to the extent any right to cure is
given.
(d) The Borrower shall pay to Bank, if and so long as
Bank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurodollar Liabilities, additional interest on
the unpaid principal amount of the Loan, from such time as Bank is so required
to maintain reserves until said principal amount is paid in full, at an interest
rate per annum equal at all times to the remainder obtained by subtracting (i)
the LIBO Rate for the Interest Period from (ii) the rate obtained by dividing
the LIBO Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period, payable on each date on which interest is
payable. Such additional interest shall be determined by Bank who shall notify
Borrower thereof.
(e) From time to time, the Bank shall send the Borrower
statements of all amounts due hereunder which statements, absent manifest error,
shall be considered correct and conclusively binding on the Borrower unless the
Borrower notifies the Bank to the contrary within one hundred eighty (180) days
of its receipt of any statement to which it objects. All sums payable to the
Bank hereunder shall be paid in immediately available funds prior to 12:00 noon,
Nashville time, on the date when such sums are due and payable. Any amounts
received by the Bank after 12:00 noon Nashville time on any Business Day shall
be deemed to have been received on the next Business Day.
(f) The entire principal balance of the Loan, together
with all interest accrued thereon, shall be due and payable in full on the Loan
Termination Date.
(g) All agreements herein made are expressly limited so
that in no event whatsoever shall the interest and loan charges agreed to be
paid to the Bank for the use of the money advanced or to be advanced pursuant to
this Agreement exceed the maximum amounts collectible under applicable laws in
effect from time to time. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the Loan shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then, ipso facto, the obligation to
13
pay such interest and/or loan charges shall be reduced to the maximum amounts
collectible under applicable laws in effect from time to time, and any amounts
collected by the Bank that exceeds such maximum amounts shall be applied to the
reduction of the principal balance of the Loan and/or refunded to Borrower so
that at no time shall the interest or loan charges paid or payable in respect of
the Loan exceed the maximum amounts permitted from time to time by applicable
law. This provision shall control every other provision herein and in any and
all other agreements and instruments now existing or hereafter arising between
Borrower and the Bank with respect to the Loan.
2.3 Closing Fee. An aggregate nonrefundable Closing Fee of $25,000
shall be due and payable in full at Closing to the Bank.
2.4 Alternate Rate of Interest.
(a) In the event, and on such occasion, that on the date
of commencement of any Interest Period for a Loan, Bank shall have reasonably
determined:
(i) That dollar deposits in the amount of the
requested principal amount of the Loan are not generally available to
first-class banks in the London Interbank Market;
(ii) That the rate at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to Bank of
making or maintaining the Loan during such Interest Period; or
(iii) That reasonable means do not exist for
ascertaining the LIBO Rate generally,
Bank shall, as soon as practicable thereafter, give written or telephonic notice
of such determination to the Borrower. In the event of any such determination,
the Loan shall thereafter bear interest at a rate based upon such other
comparable reference rate as reasonably determined by Bank.
2.5 Change in Circumstances.
(a) Notwithstanding any other provision herein, if after
the date of this Agreement any change in applicable Laws or regulations or in
the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall change the basis of taxation (but not the rates) of
payments to a Bank under any Loan made by Bank or any other fees or amounts
payable hereunder (other than taxes imposed on the overall net income or net
profits of Bank by the country in which Bank is located, or by the jurisdiction
in which Bank has its principal office, or by any political subdivision or
taxing authority therein), or shall
14
impose, modify, or deem applicable any reserve requirement, special deposit,
insurance charge (including FDIC insurance on Eurodollar deposits) or similar
requirements against assets of, deposits with or for the account of, or credit
extended by, Bank or shall impose on Bank or the London Interbank Market any
other condition affecting this Agreement or Loan made by Bank, and the result of
any of the foregoing shall be to increase the cost to Bank of making or
maintaining its Loan or to reduce the amount of any sum received or receivable
by Bank for any of its Loan hereunder (whether of principal, interest or
otherwise) by an amount reasonably deemed by Bank to be material, then the
Borrowers will pay to Bank such additional amount or amounts as will reasonably
compensate Bank for such additional costs.
b. If either:
(i) The introduction of, or any change in, or in
the interpretation of, any United States or foreign law, rule or regulation; or
(ii) Compliance with any directive, guidelines or
request from any central bank or other United States or foreign governmental
authority (whether or not having the force of law) promulgated or made after the
date hereof (but excluding, however, any law, rule, regulation, interpretation,
directive, guideline or request contemplated by or resulting from the report
dated July, 1988, entitled "International Convergence of Capital Measurement and
Capital Standards" issued by the Basic Committee on Banking Regulations and
Supervisory Practices), affects or would affect the amount of capital required
or expected to be maintained by Bank (or any lending office of Bank) or any
corporation directly or indirectly owning or controlling Bank (or any lending
office of Bank) based upon the existence of this Agreement, and Bank shall have
determined that such introduction, change or compliance has or would have the
effect of reducing the rate of return on Bank's capital or on the capital of
such owning or controlling corporation as a consequence of its obligations
hereunder to a level below that which Bank or such owning or controlling
corporation could have achieved but for such introduction, change or compliance
(after taking into account Bank's policies or the policies of such owning or
controlling corporation, as the case may be, regarding capital adequacy) by an
amount deemed by Bank (in its sole discretion) to be material, then the Borrower
will pay to Bank such additional amount or amounts as will compensate Bank for
such reduction attributable to making, funding and maintaining the Loan.
c. A certificate of Bank setting forth such amount or
amounts as shall be necessary to compensate Bank (or its participating banks or
other entities pursuant to this Agreement), as specified in Paragraph (a) or (b)
above, as the case may be, shall be delivered to Borrower and shall be
conclusive absent manifest error; provided, however, that the Borrower shall be
responsible for compliance herewith and the payment of increased costs only to
the extent:
15
(i) Any change in applicable Laws giving rise to
increased costs occurs after the date of this Agreement; and
(ii) Such change in Laws or the application
thereof applies generally to the banking industry and is not the result of the
Bank having inadequate or substandard capital as determined by its regulators;
and
(iii) The affected Bank gives notice of the change
giving rise to increased costs within one hundred eighty (180) Business Days
after the date on which Bank has, or with reasonable diligence should have had,
knowledge of the change, or else Bank can only collect costs from and after the
date of the notice.
Subject to the foregoing, the Borrower shall pay the affected Bank the amount
shown as due on any such certificate within ten (10) days after its receipt of
such certificate.
d. The protection of this Section 2.5 shall be available
to Bank regardless of any possible contention of invalidity or inapplicability
of the law, regulation or condition that shall have been imposed.
2.6 Change in Legality. Notwithstanding anything to the contrary
herein contained, if any change in any law or regulation or in interpretation
thereof by any governmental authority charged with the administration or
interpretation thereof shall make it unlawful for Bank to make or maintain a
Eurodollar Loan, then, by written notice to the Borrower, the Loan shall
thereafter bear interest at a rate based upon such other comparable reference
rate as reasonably determined by Bank.
2.7 Optional Prepayment - Premiums in Certain Events.
(a) The Borrower may, upon three (3) Business Day's prior
written notice to the Bank, and upon payment of all premiums set forth in
Subparagraph (c) below, prepay the Loan prior to the next Interest Payment Date,
in whole or in part.
(b) Each notice of prepayment of the Loan shall specify
the date and amount of such prepayment and shall be irrevocable. Each partial
prepayment of the Loan shall be in an aggregate principal amount which is the
lesser of $100,000.00 or an integral multiple thereof. Interest on the amount
prepaid accrued to the prepayment date shall be paid on such date.
(c) Upon prepayment of the Loan on a date other than the
relevant Interest Payment Date, Borrower shall pay to Bank, in addition to all
other payments then due and owing the Bank, premiums which shall be equal to an
amount, if any, reasonably determined by Bank to be the difference between the
rate of interest then applicable to the Loan and the yield Bank receives upon
reinvestment of so much of the Loan as is prepaid from the date of prepayment
16
until the end of such Interest Period. Anything in this Section 2.7(c) to the
contrary notwithstanding, the premiums payable upon any such prepayment shall
not exceed the amount, if any, reasonably determined by Bank to be the
difference between the rate of interest then applicable to the Loan and the
yield that Bank could receive upon reinvestment in the "Floor Reinvestment" of
so much of the Loan as is prepaid. For purposes hereof, "Floor Reinvestment"
shall mean an investment for the time period from the date of such prepayment to
the end of the current Interest Period applicable to the Loan at an interest
rate per annum equal to the Federal Fund Rate "offered" as published in the Wall
Street Journal on the date of such prepayment. All determinations, estimates,
assumptions, allocations and the like required for the determination of such
premiums shall be made by Bank in good faith and shall be presumed correct
absent demonstrable error.
SECTION 3. CONDITIONS PRECEDENT
The obligation of the Bank to fund the Loan is subject to the following
conditions precedent:
3.1 Documents Required for the Closing. The Borrower shall have
delivered to the Bank prior to the initial disbursement of the Loan the
following:
(a) The Note;
(b) The Pledge Agreement in the form attached hereto as
Exhibit D, duly executed by the Guarantor;
(c) The Pledge Agreement in the form attached hereto as
Exhibit E, duly executed by Xxxxx X. Xxxx, Xx., M.D.;
(d) The Pledge Agreement in the form attached hereto as
Exhibit F, duly executed by Xxxxxx X. Xxxx, M.D.
(e) The Guaranty, duly executed by the Guarantor;
(f) A Subordination Agreement, in form and substance
acceptable to Bank, duly executed by Guarantor;
(g) A Subordination Agreement, in form and substance
acceptable to Bank, duly executed by ARC Management Services, Inc;
(h) A Subordination Agreement, in form and substance
acceptable to Bank, duly executed by Xxxx II Limited Partnership;
(i) A Landlord's Lien Waiver, Consent and Estoppel, in
form and substance acceptable to Bank, duly executed by XXXX and KOBY, a
Kentucky general partnership;
17
(j) A Collateral Assignment of Lease, in form and
substance acceptable to Bank, duly executed by Borrower;
(k) The Financing Statements required by Section 4;
(l) Copies of the resolutions of the board of governors
of the Borrower and of the board of directors of the Guarantor, respectively,
certified by the corporate secretary or assistant secretary of each as of the
date of Closing, authorizing the execution, delivery and performance of this
Agreement and, as applicable, the Note, the Loan Documents, and each other
document to be delivered pursuant hereto;
(m) A copy, certified as of the most recent date
practicable, by the Tennessee Secretary of State of Borrower's and Articles of
Organization and of the Guarantor's Charter, together with a certificate dated
the date of the Closing of Borrower's and Guarantor's respective secretaries to
the effect that such documents have not been amended since the date of the
aforesaid Secretary of State certifications;
(n) A copy of Borrower's Operating Agreement certified by
Borrower's secretary as of the date of the Closing;
(o) A copy of the by-laws of Guarantor certified by
Guarantor's secretary as of the date of Closing;
(p) A certificate dated the date of the Closing of the
secretary of each of the Borrower and Guarantor as to the incumbency and
signatures of their respective officers executing this Agreement, the Note, the
Collateral Documents, and each other document to be delivered pursuant hereto;
(q) Certificates, as of the most recent dates
practicable, of the Tennessee Secretary of State and the Secretary of State of
each state in which Borrower is qualified as a foreign company as to the good
standing of Borrower;
(r) Certificates, as of the most recent date practicable,
of the Secretaries of State in each state where Guarantor is organized as to the
good standing of Guarantor;
(s) A written opinion of Borrower's counsel, dated the
date of the Closing, in the form attached hereto as Exhibit G and otherwise
satisfactory to the Bank.
(t) Consummation of the transactions contemplated by the
Asset Purchase Agreement, in accordance with the terms thereof;
18
(u) A certificate, dated the date of the Closing, signed
by the president, vice president, chief financial officer, or corporate
controller of the Borrower and to the effect that:
(i) The representations and warranties set forth
within Section 5 are true as of the date of the Closing;
(ii) No Event of Default or Unmatured Default has
occurred as of such date;
(iii) All of the Collateral Documents are in full
force and effect.
(v) A Federal Reserve Form (or Forms) U-1, duly completed
and executed by the Borrower.
3.2 Legal Matters. At the time of the Closing and thereafter, all
legal matters incidental to the Loan shall be satisfactory to Bank and its
counsel.
SECTION 4. COLLATERAL SECURITY
4.1 Composition of the Collateral. The property in which a
security interest is granted pursuant to the provisions of Paragraphs 4.2 and
4.3 is herein collectively called the "Collateral." The Collateral, together
with all of the Borrower's other property of any kind, both real and personal,
held by, assigned to, mortgaged to or conveyed in favor of the Bank, shall stand
as one general, continuing collateral security for all Obligations and may be
retained by the Bank until all Obligations have been satisfied in full.
4.2 Rights in Property Held by the Bank. As security for the
prompt satisfaction of all Obligations and all Guaranties of the Obligations,
the Borrower hereby assigns, transfers and sets over to the Bank all of its
right, title and interest in and to, and grants the Bank a lien on and a
security interest in, all amounts that may be owing from time to time by the
Bank to the Borrower in any capacity, including, but without limitation, any
balance or share belonging to the Borrower of any deposit or other account with
the Bank, which lien and security interest shall be independent of any right of
set-off which the Bank may have.
4.3 Rights in Property of the Borrower. As further security for
the prompt satisfaction of all Obligations, the Borrower hereby collaterally
assigns to the Bank all of its right, title and interest in and to, and grants
the Bank a lien upon and security interest in, all of the following, wherever
located, whether now owned or hereafter acquired, together with all
substitutions, replacements, improvements, accessions or appurtenances thereto,
and proceeds (including, without limitation, insurance proceeds) thereof:
19
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) Equipment;
(e) General Intangibles;
(f) Instruments;
(g) Inventory; and
(h) All Records pertaining thereto or to any other
Collateral; and
(i) any other personal property, whether tangible or
intangible, now owned or hereafter acquired by Borrower.
4.4 Priority of Liens. The foregoing liens shall be first and
prior liens except for any Permitted Liens on assets which have priority or
would have priority by the operation of Laws.
4.5 Financing Statements.
(a) The Borrower will:
(i) Join with the Bank in executing such
additional Financing Statements (including amendments thereto and continuation
statements thereof) in form satisfactory to the Bank;
(ii) pay or reimburse the Bank for all costs and
taxes of filing or recording the same in such public offices as the Bank may
designate, and reimburse the Bank for performing subsequent verification
searches following Closing in each applicable jurisdiction.
(b) A carbon, photographic, or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.
(c) To the extent lawful, the Borrower hereby appoints
the Bank as its attorney-in-fact (without requiring the Bank to act as such) to
execute any Financing Statement in the name of the Borrower and to perform all
other acts that the Bank deems appropriate to perfect and continue the Bank's
security interest in, and to protect and preserve, the Collateral.
4.6 Collection of Notes and Receivables. Following the occurrence
of any Event of Default and for so long as such Event of Default remains
uncured, upon demand of the Bank, Borrower shall deposit or cause to be
deposited, all checks, drafts, cash, and other remittances received in payment
of services rendered or in payment or on account of its accounts and notes
receivable, immediately upon receipt thereof with Bank in a special "lockboxed"
bank account maintained with Bank, over which the Bank alone shall have power or
withdrawal. The funds in said special bank account shall be held by the Bank as
security for all loans made
20
hereunder and all other Obligations. Said proceeds shall be deposited in
precisely the form received, except for the endorsement of Borrower where
necessary to permit collection, which endorsement Borrower agrees to make and
which Bank also hereby is irrevocably authorized to make on its behalf. Pending
such deposit, Borrower agrees that it will not commingle any such checks,
drafts, cash and other remittances with any of its funds or property, but will
hold them separate and apart therefrom and upon an express trust for the Bank
until deposit thereof is made in the said special bank account. On a daily
basis, Bank will apply the whole or any part of the collected funds on deposit
in the said special bank account against the principal and/or interest of any
loans made hereunder and/or on Borrower's other Obligation's secured hereby, the
order and method of such application to be in the discretion of the Bank. Any
portion of said funds on deposit in the special bank account that the Bank
elects not to apply will be paid over by Bank to Borrower.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower and
Guarantor, jointly and severally, represent and warrant to Bank as follows:
5.1 Due Organization and Qualification. Borrower is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Tennessee and is qualified to transact business in
Kentucky; Guarantor is a corporation duly organized, validly existing and in
good standing under the Laws of the state of Tennessee; Borrower has no
Subsidiaries; the Borrower and Guarantor have the lawful power to own their
properties and to engage in the business they conduct, and each is duly
qualified and in good standing in the jurisdictions wherein the nature of the
business transacted by it or property owned by it is both material and makes
such qualification necessary; the states in which the Borrower is qualified to
do business as of the Closing Date are set forth in Schedule 5.1; and the
addresses of all places of business of the Borrower and of the chief executive
office of the Guarantor as of the Closing Date are as set forth in Schedule 5.1;
5.2 No Conflicting Agreement. Neither the Borrower nor the
Guarantor is in default with respect to any existing Indebtedness, and the
making and performance of this Agreement, the Note and the Collateral Documents
will not (immediately, or with the passage of time or the giving of notice, or
both):
(a) Violate any provisions of the Constituent Documents
of the Borrower or the Guarantor, or violate any Laws, or result in a default
under any material contract, agreement, or instrument to which the Borrower or
is a party or by which the Borrower or its property is bound; or
21
(b) Result in the creation or imposition of any security
interest in, or lien or encumbrance upon, any of the assets of the Borrower
except in favor of the Bank;
5.3 Capacity. The Borrower and Guarantor have the power and
authority to enter into and perform this Agreement, the Note and the Collateral
Documents, as applicable, and to incur the Obligations herein and therein
provided for, and have taken all action necessary to authorize the execution,
delivery, and performance of this Agreement, the Note and the Collateral
Documents;
5.4 Binding Obligations. This Agreement and the Collateral
Documents are, and the Note when delivered will be, valid, binding, and
enforceable in accordance with their respective terms subject to the general
principles of equity (regardless of whether such question is considered in a
proceeding in equity or at law) and to applicable bankruptcy, insolvency,
moratorium, fraudulent or preferential conveyance and other similar laws
affecting generally the enforcement of creditors' rights;
5.5 Pledged Interests. The Pledged Interest constitutes all of
Guarantor's membership interest in the Borrower; and such Pledged Interest has
been duly issued, is fully paid and non-assessable, and is free of all claims,
security interests, liens, charges and encumbrances other than transfer
restrictions set forth in the Operating Agreement of Borrower;
5.6 Litigation. There is no pending or threatened order, notice,
claim, litigation, proceeding or investigation against or affecting the
Borrower, and there is no pending or threatened order, notice, claim,
litigation, proceeding or investigation against or affecting the Guarantor,
except where the same could not be reasonably expected to have a Material
Adverse Effect;
5.7 Title. The Borrower has good and marketable title to all of
its assets, subject to no security interest, encumbrance or lien, or the claims
of any other Person except for Permitted Liens and other liens securing
Indebtedness, in the aggregate, of less than $25,000;
5.8 Financial Statements. The Financial Statements, including any
schedules and notes pertaining thereto, have been prepared in accordance with
generally accepted accounting principles consistently applied, and fully and
fairly present (subject, in case interim Financial Statements to normal,
year-end adjustments and the absence of notes) the financial condition of the
Borrower and Guarantor at the dates thereof and the results of operations for
the periods covered thereby, and there has been no Material Adverse Change from
December 31, 1997 to the date hereof;
5.9 No Additional Indebtedness. Except as set forth on Schedule
5.9, the Borrower has no Indebtedness of any nature;
22
5.10 Taxes. The Borrower and the Guarantor have filed all federal,
state and local tax returns and other reports they are required by Laws to file
prior to the date hereof and which are material to the conduct of their
respective businesses, have paid or caused to be paid all taxes, assessments and
other governmental charges that are due and payable prior to the delinquency
thereof, and have made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable and have no knowledge
of any deficiency or additional assessment in connection with any taxes,
assessments or charges not provided for on its books;
5.11 Licenses; Compliance with Laws. Except to the extent that the
failure to comply would not result in a Material Adverse Effect, the Borrower
and the Guarantor have complied with all applicable Laws with respect to: (1)
any licenses, restrictions, specifications, or other requirement pertaining to
services that the Borrower or the Guarantor performs; (2) the conduct of their
respective businesses; (3) the use, maintenance, and operation of the real and
personal properties owned or leased by them in the conduct of their respective
businesses; and (4) health, safety, worker's compensation, and equal employment
opportunity;
5.12 Consents; Governmental Approvals. Each consent, approval or
authorization of, or filing, registration or qualification with, any Person
required to be obtained or effected by the Borrower or the Guarantor in
connection with the execution and delivery of the Loan Documents or the
undertaking or performance of any obligation thereunder has been duly obtained
or effected; further, no authorization, consent, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery or performance by the Borrower or
the Guarantor of any Loan Documents to which it is or will be a party, except
for approvals which have been obtained and are in full force and effect;
5.13 Full Disclosure. No representation or warranty by the Borrower
or the Guarantor contained herein or in any certificate or other document
furnished, in light of the circumstances in which they were made, by the
Borrower or the Guarantor pursuant to this Agreement contains any untrue
statement of material fact;
5.14 Environmental Compliance. The Borrower and the Guarantor and
their respective assets and operations are in compliance in all material
respects with all Environmental Laws;
5.15 Material Contracts. Except as described on Schedule 5.15
hereto, as of the Closing Date, the Borrower has no material real estate leases,
contracts, commitments of any kind (such as shareholder agreements; options;
employment agreements; collective bargaining agreements; powers of attorney;
bonus, pension and retirement plans; or insurance and welfare agreements but
specifically
23
excluding all provider agreements, and equipment leases); all parties (including
the Borrower) to all such material real estate leases, contracts and other
commitments to which the Borrower is a party have to the best of Borrower's
knowledge complied with the provisions of such leases, contracts and other
commitments; no party is in default under any provision thereof; and no event
has occurred which, but for the giving of notice or the passage of time, or
both, would constitute a default;
5.16 No Commissions. Other than with respect to the fees payable to
the Bank hereunder, neither the Borrower nor the Guarantor has made any
agreement or has taken any action which may cause anyone to become entitled to a
commission or finder's fee as a result of the making of the Loan;
5.17 ERISA. Neither Borrower nor the Guarantor has any Defined
Benefit Pension Plans, as defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), as of the date hereof;
5.18 Survival. All of the representations and warranties set forth
in Section 5 shall survive until all Obligations are satisfied in full.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower and the Guarantor, jointly and severally, covenant as
follows:
6.1 Use of Proceeds. The Borrower will use the proceeds of the
Loan only for the purposes permitted in Paragraph 2.1, and will furnish the Bank
such evidence as it may reasonably require with respect to such use.
6.2 Financial Statements and Reports. The Borrower and the
Guarantor will furnish the Bank:
(a) As soon as available and in any event within 30 days
after the close of each calendar month (except for the end of each fiscal
quarter) in each Fiscal Year of Borrower or Guarantor (as applicable): (i)
income statements of the Borrower for such monthly period; (ii) balance sheets
of the Borrower as of the end of such monthly period; (iii) consolidated income
statements of the Guarantor for such monthly period; and (iv) consolidated
balance sheets of the Guarantor as of the end of such monthly period; - all in
reasonable detail, subject to year-end audit adjustments and certified by the
president or principal financial officer of the Borrower or Guarantor, as
applicable, to have been prepared in accordance with generally accepted
accounting principles consistently applied, except for any inconsistencies
explained in such certificate;
(b) As soon as available and in any event within 45 days
after the close of each fiscal quarter (except for the fourth (4th) quarter of
each Fiscal Year) in each Fiscal Year of Borrower or Guarantor (as applicable):
(i) statements of cash flows of the Borrower for such quarterly year-to-date
period; (ii) income statements
24
of the Borrower for such quarterly period; (iii) balance sheets of the Borrower
as of the end of such quarterly period; (iv) consolidated and consolidating
statements of cash flows of the Guarantor for such quarterly year-to-date
period; (v) consolidated and consolidating income statements of the Guarantor
for such quarterly period; (vi) consolidated and consolidating balance sheets of
the Guarantor as of the end of such quarterly period - all in reasonable detail,
subject to year-end audit adjustments and certified by the president or
principal financial officer of the Borrower or Guarantor (as applicable) to have
been prepared in accordance with generally accepted accounting principles
consistently applied, except for any inconsistencies explained in such
certificate;
(c) As soon as available and in any event within 120 days
after the close of each Fiscal Year of Borrower or Guarantor (as applicable):
(i) statements of cash flows of the Borrower for such Fiscal Year; (ii) income
statements of the Borrower for such Fiscal Year; (iii) balance sheets of the
Borrower as of the end of such Fiscal Year; (iv) consolidated statements of cash
flows of the Guarantor for such Fiscal Year; (v) consolidated income statements
of the Guarantor for such Fiscal Year; and (vi) balance sheets of the Guarantor
as of the end of such Fiscal Year - all in reasonable detail, including all
supporting schedules, notes and comments; the statements and balance sheets of
Guarantor shall be audited by independent certified public accountants selected
by the Guarantor and acceptable to the Bank, and audited by such accountants to
have been prepared in accordance with generally accepted accounting principles
consistently applied, except for any inconsistencies explained in such
certificate. In addition, within 120 days after the close of such Fiscal Year,
the Borrower shall provide to Bank its written statement that it has no
knowledge of any Event of Default, or disclosing all Events of Default of which
it has obtained knowledge. Bank shall have the right, from time to time, to
discuss such financial statements and related business issues directly with such
accountants;
(d) Contemporaneously with each quarterly and Fiscal
Year-end financial report required by the foregoing paragraphs (b) and (c), a
certificate of the president or chief financial officer of the Borrower and
Guarantor (as applicable) stating that: (i) such officer has individually
reviewed the provisions of this Agreement; (ii) a review of the activities of
the Borrower and the Guarantor during such year or quarter-annual period, as the
case may be, has been made by such officer or under such officer's supervision,
with a view to determining whether the Borrower and the Guarantor have fulfilled
their respective obligations under this Agreement; and (iii) to the best of such
officers' knowledge, the Borrower and the Guarantor have observed and performed
each undertaking contained in this Agreement and is not in default in the
observance or performance of any of the provisions hereof or, if the Borrower or
the Guarantor shall be so in default, specifying all such defaults and events of
which such officer may have knowledge. Such certificate shall further set forth
the calculations of the financial ratios and
25
covenants set forth in Paragraph 6.15, including, without limitation, any
antecedent calculations and the source of any information that was used in such
calculations;
(e) Immediately upon receipt of the same by Borrower or
the Guarantor, copies of all management letters and any other reports which are
submitted to the Borrower or the Guarantor by its independent accountants in
connection with any annual or interim audit of the Records of the Borrower or
the Guarantor by such accountants;
(f) On or before April 30 of each year, a proforma budget
(including both projected maintenance Capital Expenditures and other Capital
Expenditures) for such Fiscal Year, in form reasonably satisfactory to the Bank;
(g) From time to time such additional information
regarding the financial condition or business of the Borrower and or the
Guarantor as the Bank may reasonably request.
6.3 Good Condition. The Borrower and the Guarantor will maintain
their respective Equipment, Real Property and other properties in good condition
and repair (normal wear and tear excepted), and will pay and discharge or cause
to be paid and discharged when due, the cost of repairs to or maintenance of the
same, and will pay or cause to be paid all rental or mortgage payments due on
such Equipment or Real Property.
6.4 Insurance; Reinsurance. The Borrower and the Guarantor will
maintain, public liability, medical malpractice, and fire and extended coverage
insurance in such form and amounts as are consistent with industry practices and
with such insurers as may be satisfactory to the Bank. Such policies shall name
the Bank as an additional insured and loss payee, as its interests may appear,
and shall contain a provision whereby they cannot be canceled except after
thirty (30) days' written notice to the Bank.
6.5 Taxes; Copies of Returns. The Borrower and the Guarantor will
pay, prior to delinquency, all taxes, assessments and charges or levies imposed
upon them or on any of their property or which any of them is required to
withhold or pay over, except where contested in good faith by appropriate
proceedings with adequate security therefor having been set aside in a manner
satisfactory to Bank. The Borrower and the Guarantor will pay or cause to be
paid, all such taxes, assessments, charges or levies forthwith whenever
foreclosure on any lien that attaches (or security therefor) appears imminent.
Within ten (10) days of Bank's request therefor, the Borrower and the Guarantor
will furnish the Bank with copies of federal income tax returns filed.
6.6 Records and Inspection. The Borrower and the Guarantor will,
when requested so to do, make available during regular business hours any of
their business Records for inspection by duly authorized representatives of the
Bank, and
26
will furnish the Bank any information regarding their business affairs and
financial condition within a reasonable time after written request therefor.
6.7 Maintenance of Existence; Compliance with Laws; Licenses. The
Borrower and the Guarantor will take all necessary steps to renew, keep in full
force and effect, and preserve their corporate existence, good standing, and
franchises, and will comply in all respects with all present and future Laws
applicable to them except to the extent that a failure to do so would not have
or cause to occur a Material Adverse Effect.
6.8 Ordinary Course; Pledge of Notes. The Borrower will keep
accurate and complete Records of its Accounts, consistent with sound business
practices. The Borrower will collect its Accounts only in the ordinary course of
business. If any Accounts with aggregate principal balances in excess of $10,000
should be evidenced by promissory notes, then the Borrower shall immediately
deliver the same to Bank, appropriately endorsed to Bank's order. The Borrower
hereby waives presentment, demand, notice of dishonor, protest, notice of
protest, and all other notices with respect thereto.
6.9 Payment of Indebtedness. The Borrower and the Guarantor will
pay when due from such Person (or within applicable grace periods) all
Indebtedness for borrowed money (whether direct or indirect, including Guarantee
Obligations) due any Person, except when the amount thereof is being contested
in good faith by appropriate proceedings and with adequate security therefor
being set aside in a manner satisfactory to the Bank. If default is made by the
Borrower or the Guarantor in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Bank shall have the
right, in its discretion, to pay such interest or principal for the account of
the Borrower or the Guarantor and be reimbursed by the Borrower or the Guarantor
therefor.
6.10 Notice of Litigation. The Borrower will give immediate notice
to the Bank and provide copies to the Bank of: (1) any litigation or proceeding
in which the Borrower or the Guarantor is a party if an adverse decision therein
would require them to pay over more than $100,000.00 or deliver assets the value
of which exceeds such sum (if such claim is not considered to be covered by
insurance) or pay over more than $250,000.00 (if such claim is considered to be
covered by insurance); and (2) the institution of any other suit or proceeding
involving any of them, or the overt threat thereof, that might have a Material
Adverse Effect on the Borrower or the Guarantor.
6.11 Notice of Default. The Borrower will notify Bank immediately
if it becomes aware of the occurrence of any Event of Default or of any fact,
condition or event that only with the giving of notice or passage of time or
both, could become an Event of Default, or of the failure of the Borrower or
Guarantor to observe any of its undertakings hereunder.
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6.12 Notice of Name Change or Location. The Borrower will notify
Bank thirty (30) days in advance of any change in (i) the name of the Borrower
or Guarantor, (ii) the location of any of the Borrower's places of business,
(iii) of the establishment of any new, or the discontinuance of any existing,
place of business of the Borrower, or (iv) any change in the location of the
chief executive office of the Guarantor.
6.13 Environmental Compliance. If the Bank has reason to believe
that the Borrower or the Guarantor has failed to comply with any material
Environmental Laws, or there exists a threat of material harm to the environment
or Persons, the Bank of their agents shall have the right, but no obligation, at
any time during business hours and upon reasonable written notice, to enter upon
any property operated by a Borrower or the Guarantor and conduct or cause to be
conducted an Environmental Phase I audit (or an update of any audit completed in
connection with the execution of this Agreement) at Borrower's sole expense and
if such Phase I audit (or update) recommends further testing, then the Bank or
their agents may require, but shall not be obligated to require, upon reasonable
written notice, such further testing at Borrower's sole expense. The Bank or
their agents shall use their best efforts to invoke and maintain all applicable
privileges over all audit information generated pursuant to this provision.
6.14 Notice of Environmental Action. If the Borrower or the
Guarantor shall:
(a) receive written notice that any material violation of
any Environmental Laws may have been committed or is about to be committed by
the Borrower or the Guarantor;
(b) receive written notice that any administrative or
judicial complaint or order has been filed or is about to be filed against the
Borrower or the Guarantor alleging any material violation of any Environmental
Laws or requiring the Borrower or the Guarantor to take any action in connection
with the release or threatened release of Hazardous Substances or solid waste
into the environment; or
(c) receive written notice from a federal, state, foreign
or local governmental agency or private party alleging that the Borrower or the
Guarantor is liable or responsible for costs associated with the response to
cleanup, stabilization or neutralization of any environmental activity; then it
shall provide the Bank with a copy of such notice within ten (10) Business Days
of the Borrower's or the Guarantor's receipt thereof. Subject to the right of
the Borrower or the Guarantor to contest in good faith any such actions or
proceedings, the Borrower and/or the Guarantor shall as promptly as possible
resolve, cure and/or have dismissed with prejudice any such actions or
proceedings, to the reasonable satisfaction of the Bank. The Borrower shall
monitor compliance with
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Environmental Laws by any and all owners or operators of real property owned or
leased by a Borrower or the Guarantor.
6.15 Financial Ratios. The Borrower will maintain or cause to be
maintained, the following financial ratios and covenants:
(a) Fixed Charge Ratio. A ratio of Borrower's Cash Flow
to Borrower's Debt Service for the applicable Quarterly Periods as set forth
below:
Quarterly Periods Ending Ratio
------------------------ -----
June 30, 1999
September 30, 1999 and not less than 1.15:1.00
December 31, 1999
March 31, 2000 and thereafter not less than 1.25:1.00
(b) At all times, Borrower's cash on hand shall be
greater than Borrower's anticipated operating expenses for the succeeding two
weeks. Promptly following request by Bank, Borrower shall provide evidence
reasonably satisfactory to Bank to document compliance with this covenant.
(c) At all times, the sum of Borrower's Shareholder's
Equity plus the outstanding principal balance of all Indebtedness for money
borrowed from Guarantor by Borrower shall be greater than $2,500,000.
(d) At the end of each Quarterly Period beginning with
the Quarterly Period ending June 30, 1999 and continuing through the Quarterly
Period ending June 30, 2000, the Guarantor's ratio of Funded Debt to Adjusted
EBITDA, giving Pro-Forma Effect to any Acquisition made and any Funded Debt
incurred in connection therewith as of the date of determination, calculated on
a consolidated basis, shall be no greater than 3.5:1.00.
(e) At the end of each Quarterly Period beginning with
the Quarterly Period ending September 30, 2000, the Guarantor's ratio of Funded
Debt to EBITDA, giving Pro-Forma Effect to any Acquisition made and any Funded
Debt incurred in connection therewith as of the date of determination,
calculated on a consolidated basis, shall be no greater than 3.5:1.00.
(f) At all times, the Shareholder's Equity of Guarantor,
calculated on a consolidated basis, shall be greater than $10,000,000.
(g) At all times, Guarantor's ratio of Current Assets to
Current Liabilities, calculated on a consolidated basis, shall be no less than
1.50:1.00.
6.16 Year 2000 Compliance. By January 31, 1999, the Borrower will
(i) initiate a review and assessment of all areas within its business and
operations
29
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower (or its suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii)
implement that plan in accordance with that timetable. The Borrower will
promptly notify the Bank if Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
its business and operations will not be Year 2000 compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to cause
a Material Adverse Effect.
6.17 Guarantor Loan. Between the date hereof and April 2, 1999, the
Guarantor will make a bridge financing available to Borrower in an aggregate
amount outstanding at any one time not to be less than $700,000 and not to
exceed $1,300,000 (the "Bridge Financing"), which indebtedness will bear
interest at a rate not to exceed the rate at which interest accrues hereunder
and shall otherwise be on terms and conditions acceptable to Bank. On or before
Xxxxx 0, 0000, Xxxxxxxxx will replace the Bridge Financing with an unsecured
term loan of at least $700,000, which indebtedness will bear interest at a rate
not to exceed the rate at which interest accrues hereunder and shall otherwise
be on terms and conditions acceptable to Bank. On or before April 2, 1999,
Borrower and Guarantor will provide Bank with documentation reasonably
satisfactory to Bank to evidence such indebtedness, which documentation shall
include a promissory note.
SECTION 7. NEGATIVE COVENANTS
Borrower and Guarantor hereby covenant and agree, jointly and
severally, as follows:
7.1 Merger or Reorganization. Neither the Borrower nor Guarantor
will enter into any merger, consolidation, reorganization or recapitalization,
except that (i) one or more Subsidiaries of Guarantor (other than Borrower) may
merge with one another or with Guarantor, (ii) Guarantor may enter into a merger
with another entity if (A) Guarantor will be the surviving entity, (B) the
consolidated Shareholder's Equity of the Guarantor after such merger will equal
or exceed the consolidated Shareholder's Equity of the Guarantor before such
merger, and (C) Guarantor may issue its stock in connection with a merger of a
Subsidiary with another entity if the consolidated Shareholder's Equity of the
Guarantor after such merger will equal or exceed the consolidated Shareholder's
Equity of the Guarantor before such merger.
7.2 Sale of Assets. Neither the Borrower nor Guarantor will sell,
transfer, lease or otherwise dispose of all or any material part of its assets;
provided, however, Borrower and Guarantor may in the ordinary course of business
(i) replace
30
damaged, obsolete or worn Equipment with Equipment of similar value and use, or
(ii) dispose of assets representing no more than 5% of such Person's
consolidated total assets.
7.3 Encumbrances. The Borrower will not: (1) mortgage, pledge,
grant or permit to exist a security interest in or lien upon any of its assets
of any kind, now owned or hereafter acquired, except for Permitted Liens, or (2)
covenant or agree with any Person other than the Bank not to mortgage, pledge,
or grant a security interest in or a lien upon its assets; provided that
Borrower may make such covenant or agreement with respect to assets securing
Purchase Money Indebtedness or Capitalized Lease Obligations incurred in
accordance with Section 7.4 of this Agreement.
7.4 Debts and Other Obligations. The Borrower will not incur,
create, assume, or permit to exist any Indebtedness except: (1) the Loan; (2)
existing Indebtedness as set forth in Schedule 5.9; (3) trade Indebtedness
incurred in the ordinary course of business; (4) contingent Indebtedness
permitted by Paragraph 7.8; (5) Indebtedness secured by Permitted Liens; (6)
Capitalized Lease Obligations and/or Purchase Money Indebtedness not to exceed,
in the aggregate at any one time, $100,000; and Indebtedness owed to Guarantor
and incurred pursuant to Section 6.17.
7.5 Untrue Certificate. Neither the Borrower nor the Guarantor
will furnish the Bank any certificate or other document that will contain any
untrue statement of material fact or that will omit to state a material fact
necessary to make it not misleading in light of the circumstances under which it
was furnished.
7.6 Margin Stock. The Borrower nor the Guarantor will not directly
or indirectly apply any part of the proceeds of the Loan to the purchasing or
carrying of any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, or any regulations, interpretations
or rulings thereunder.
7.7 Sale-Leaseback. The Borrower will not enter into any
sale-leaseback transaction (in a single transaction or series of transactions)
involving assets which represent more than 5% of such Person's total
consolidated assets.
7.8 Guarantee Obligation. The Borrower will not create, incur,
suffer to exist a Guarantee Obligation or otherwise become liable for any
obligation of any other Person, except: (1) the endorsement of commercial paper
for deposit or collection in the ordinary course of business, and (2) leases by
the Borrower incurred in the ordinary course of business.
7.9 Subsidiary. Except for Permitted Investments, the Borrower
will not form any Subsidiary or make any investment in or make any loan in the
nature of any investment to any Person, except that the Borrower will be
permitted to form a
31
Subsidiary upon prior written notice to Bank if the Borrower (i) pledges its
ownership in the Subsidiary as collateral security for the Obligations, and (ii)
causes such Subsidiary to pledge all of its assets as collateral security for
the Obligations.
7.10 Loans and Advances. Neither the Borrower nor the Guarantor
will make any loan or advance to any officer, shareholder, director or employee
of such Person, except for temporary advances in the ordinary course of business
not to exceed $50,000.00 in the aggregate principal amount at any time
outstanding.
7.11 Investments. Neither the Borrower nor the Guarantor will
purchase or otherwise invest in or hold securities, non-operating real estate
outside the normal course of business, or other non-operating assets, except:
(1) Permitted Investments; (2) the present or future investment in any such
assets; and (3) operating assets that hereafter become non-operating assets.
7.12 Acquisitions. The Borrower will not make an Acquisition of any
Person.
7.13 Affiliate Transactions. Neither Borrower nor Guarantor will,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate on terms that are
less favorable to the Borrower or the Guarantor than those that would be
obtainable at the time from any Person who is not an Affiliate.
7.14 ERISA Compliance. Neither the Borrower nor the Guarantor will
not establish or set up any Defined Benefit Pension Plans, except for a Defined
Benefit Pension Plan assumed by Guarantor in connection with an Acquisition.
7.15 Borrower Distributions. The aggregate of all Borrower
Distributions for any Fiscal Year of Borrower shall not exceed the sum of Net
Income of Borrower for such Fiscal Year plus federal and state income taxes
deducted in determining such Net Income for two consecutive Fiscal Years of
Borrower.
SECTION 8. DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) The Borrower shall fail to pay within three (3)
business days of the date when due any installment of principal or interest
payable hereunder, or shall fail to pay within five (5) business days of written
notice any fee payable hereunder.
32
(b) The failure to achieve any of the financial covenants
contained in Paragraph 6.15.
(c) The Borrower or Guarantor, shall fail to observe or
perform any obligation or covenant to be observed or performed by any of them,
jointly or severally, under any of the Loan Documents; provided, however, if
such failure is not related to the payment of money, the breach of a financial
covenant contained in Paragraph 6.15, or the breach of any negative covenant in
Section 7, Borrower or Guarantor (as applicable) shall have fifteen (15) days
after such Person's knowledge of such breach to cure or cause to be cured such
failure, Borrower or Guarantor (as applicable).
(d) The Borrower, or Guarantor shall fail to pay any
Indebtedness for borrowed money (whether direct or indirect, including
guarantees of borrowed money due from Subsidiaries) due any Person other than a
Bank and such failure shall continue beyond any applicable grace period and
shall equal or exceed, either individually or in the aggregate, $25,000.00 in
amount.
(e) A Material Adverse Effect shall result from any
breach of or event of default arising under any agreement binding the Borrower
or Guarantor, that results in a Material Adverse Change in the financial
condition of the Borrower or Guarantor, as determined by Bank in its reasonable
discretion.
(f) Any financial statement, representation, warranty or
certificate made or furnished by any Borrower or Guarantor in connection with
this Agreement or the Loan, or as inducement to the Bank to enter into this
Agreement, or in any separate statement or document to be delivered hereunder to
the Bank, shall be materially false, incorrect, or incomplete when made, in
light of the circumstances under which it was made.
(g) The Borrower or Guarantor, shall admit its inability
to pay debts as they mature, or shall make an assignment for the benefit of its
or any of its creditors.
(h) Proceedings in bankruptcy, or for reorganization of
Borrower or Guarantor, or for the readjustment of any of their respective debts,
under the United States Bankruptcy Code, as amended, or any part thereof, or
under any other Laws, whether state or federal, for the relief of debtors, now
or hereafter existing, shall be commenced by the Borrower or Guarantor, or shall
be commenced against the Borrower or Guarantor, and not dismissed within sixty
(60) days of such an involuntary filing.
(i) A receiver or trustee shall be appointed for the
Borrower, or Guarantor or for any substantial part of their respective assets,
or any proceedings shall be instituted for the dissolution or the full or
partial liquidation of the
33
Borrower or Guarantor shall discontinue business or materially change the nature
of its business.
(j) The Borrower or Guarantor shall suffer final
judgments for payment of money aggregating in excess of $100,000.00 (not covered
by insurance) and shall not discharge the same within a period of thirty (30)
days unless, pending further proceedings, execution has been effectively stayed.
(k) A judgment creditor of the Borrower or Guarantor
shall obtain possession of any Collateral or other assets by any means,
including, but without limitation, levy, distraint, replevin or self-help.
(l) Any proceeding shall be instituted against the
Borrower or Guarantor, which is likely (taking into account the probability of
an adverse determination and the exhausting of all appeals) to have a Material
Adverse Effect, as determined by Bank in its reasonable discretion.
(m) The Borrower or Guarantor shall default beyond any
applicable grace period in any other Indebtedness (excluding the Obligations)
owed to the Bank, or any of them, or under any other agreements for credit or
borrowed money it may have with Bank, jointly or severally, directly or
indirectly, whether matured or unmatured.
(n) A Change of Control shall have occurred.
(o) A change in the senior management of the Guarantor
which results in less than two of the four senior managers of the Borrower
continuing in the employ of the Borrower in the position set forth opposite such
person's name below and performing the duties traditionally associated with such
position. For purposes of this Agreement, the senior managers of the Borrower,
and the current respective capacities of each manager, are as follows:
Xxxxxxx X. Xxxxxx, Xx. Director
Xxxxxxx X.X. Xxxx President and CEO
Xxxxxxx X. Xxxx Chief Operating Officer
Xxxxx X. Xxxxx Chief Financial Officer
(p) Violation by Borrower of any provision of any of the
Subordination Agreements.
8.2 Acceleration. Upon the occurrence of any of such Events of
Default, the Bank may, at its option, immediately terminate the obligation to
make any further advances and/or declare the principal and interest accrued on
the Note and
34
all other Obligations to be immediately due and payable, whereupon the same
shall become forthwith due and payable, without presentment, demand, protest, or
any notice of any kind except as set forth above; provided, that in the case of
the Events of Default specified in clause (g), (h) or (i) above with respect to
Borrower, without any notice to Borrower or any act by the Bank, the Note and
all other Obligations shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
waived by the Borrower. In addition, and regardless of whether the Note has been
accelerated, the Bank may upon the occurrence of any Event of Default elect to
charge interest at the Default Rate set forth in the Note.
8.3 Remedies. After any acceleration, as provided for in Paragraph
8.2, the Bank shall have, in addition to the rights and remedies given it by the
Loan Documents, all those allowed by all applicable Laws, including, but without
limitation, the UCC as enacted in any jurisdiction in which any Collateral may
be located. Without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
specifically required by the Loan Documents) or demand whatsoever to the
Borrower, all of which are hereby expressly waived, and without advertisement,
sell at public or private sale, in any manner and at any location authorized by
Laws, or otherwise realize upon, the whole, or, from time to time, any part of
the Collateral, or any interest which the Borrower may have therein. After
deducting from the proceeds of sale or other disposition of the Collateral all
expenses (including all reasonable expenses for legal services), the Bank shall
apply such proceeds toward the satisfaction of the Obligations. Any remainder of
the proceeds after satisfaction in full of the Obligations shall be distributed
as required by applicable Laws. Notice of any sale or other disposition shall be
given to the Borrower at least ten (10) days before the time of any intended
public sale or of the time after which any intended private sale or other
disposition of the Collateral is to be made, which the Borrower hereby agrees
shall be reasonable notice of such sale or other disposition. The Borrower
agrees to assemble, or to cause to be assembled, at its own expense, the
Collateral at such place or places as the Bank shall designate. At any such sale
or other disposition, the Bank may, to the extent permissible under applicable
Laws, purchase the whole or any part of the Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby expressly waived
and released.
Without limiting the generality of any of the rights and
remedies conferred upon the Bank under this Paragraph 8.3, the Bank may, to the
full extent permitted by applicable Laws:
(a) Enter upon the premises of the Borrower, exclude
therefrom the Borrower, any Subsidiary or any officer or employee thereof, and
take immediate possession of the Collateral, either personally or by means of
a receiver appointed by a court of competent jurisdiction, using all necessary
and lawful self-help to do so;
35
(b) At the Bank's option, use, operate, manage and control the
Collateral in any lawful manner;
(c) Collect and receive all receivables, rents, income, revenue,
earnings, issues and profits therefrom; and
(d) Maintain, repair, renovate, alter or remove the Collateral as
the Bank may determine in its discretion.
SECTION 9. MISCELLANEOUS
9.1 Construction. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Bank, all of which shall be construed as
complementary to each other; provided, in the event of any inconsistency, the
provisions of this Agreement shall control. Nothing herein contained shall
prevent the Bank from enforcing any or all other notes, guaranties, pledge or
security agreements in accordance with their respective terms.
9.2 Further Assurance. From time to time, the Borrower will
execute and deliver to the Bank such additional documents and will provide such
additional information as the Bank may reasonably require to carry out the terms
of this Agreement and be informed of the Borrower's operations, business and
condition
9.3 Enforcement and Waiver by the Bank. The Bank shall have the
right at all times to enforce the provisions of the Loan Documents in strict
accordance with the terms thereof, notwithstanding any conduct or custom on the
part of the Bank in refraining from so doing at any time or times. The failure
of the Bank at any time or times to enforce their rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of the Loan
Documents or as having in any way or manner modified or waived the same. All
rights and remedies of the Bank is cumulative and concurrent and the exercise of
one right or remedy shall not be deemed a waiver or release of any other right
or remedy.
9.4 Expenses of the Bank. The Borrower will, on demand, reimburse
the Bank for all out-of-pocket expenses, including the reasonable fees and
expenses of legal counsel for the Bank, incurred by the Bank in connection with
the preparation, administration, amendment, modification, or enforcement of the
Loan Documents and the collection or attempted collection of the Note.
9.5 Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered when delivered in
person, or when sent by certified mail, postage prepaid, return receipt
requested, by overnight courier service, or by facsimile to the address and/or
telecopy number as follows, unless such address or number is changed by written
notice hereunder.
36
(a) If to the Borrower: ARC Kentucky, LLC
00 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Telecopy: (000) 000-0000
(b) If to the Guarantor: Ambulatory Resource Centres, Inc.
00 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Telecopy: (000) 000-0000
(c) If to the Bank: NationsBank of Tennessee, N.A.
Xxx XxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Walker Choppin, Senior Vice
President
Telecopy: (000) 000-0000
with a copy to: Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxx X. Xxxxx
Telecopy: (000) 000-0000
9.6 Waiver and Release. To the maximum extent permitted by
applicable Laws, the Borrower:
(a) Waives: (1) protest of all commercial paper at any
time held by the Bank on which the Borrower or Guarantor is in any way liable;
and (2) notice and opportunity to be heard, after acceleration in the manner
provided in Paragraph 8.2, before exercise by the Bank of the remedies of
self-help, set-off, or of other summary procedures permitted by any applicable
Laws or by any agreement with the Borrower or Guarantor, and, except where
required hereby or by any applicable Laws, notice of any other action taken by
the Bank; and
(b) Releases the Bank, and its officers, directors,
attorneys, employees, and agents from all claims for loss or damage caused by
any act or omission on the part of any of them except for gross negligence,
recklessness or willful misconduct.
9.7 Indemnification. Borrower hereby indemnifies and holds the
Bank, and its officers, directors, employees and agents free and harmless from
and against any and all actions, causes of action, suits, losses, liabilities
and damages, and expenses in connection therewith, including, without
limitation, reasonable counsel fees and disbursements, incurred by the Bank as a
result of, or arising out of, or
37
relating to the execution, delivery, performance or enforcement of the Loan
Documents or any instrument contemplated therein, except for the Bank's gross
negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such liabilities and
costs permitted under applicable Laws.
9.8 Applicable Laws. The Laws of the State of Tennessee, other
than its conflicts of laws rules, shall govern the construction and
interpretation of this Agreement and the validity and enforceability of this
Agreement, and of its provisions and the transactions pursuant to this
Agreement, except for those transactions for which the parties have chosen other
laws to govern or for which other mandatory choice of law rules apply.
9.9 Binding Effect, Assignment and Entire Agreement. This
Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties hereto. The Borrower
has no right to assign any of its rights or obligations hereunder without the
prior written consent of the Bank. This Agreement and the documents executed and
delivered pursuant hereto constitute the entire agreement between the parties,
and supersede all prior agreements and understandings among the parties hereto.
This Agreement may be amended only by a writing signed on behalf of each party.
9.10 Severability. If any provision of this Agreement shall be held
invalid under any applicable Laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
9.11 Counterparts. This Agreement may be executed by the parties
independently in any number of counterparts, all of which together shall
constitute but one and the same instrument which is valid and effective as if
all parties had executed the same counterpart.
9.12 Venue. It is agreed that venue for any action arising in
connection with this Agreement or the Obligations secured hereby shall lie
exclusively with courts sitting in the State of Tennessee, unless the Bank
otherwise agrees in writing.
9.13 Arbitration. Any controversy or claim between or among the
parties hereto including, but not limited to, those arising out of or relating
to this instrument, agreement or document or any related instruments, agreements
or documents, including any claim based on or arising from an alleged tort,
shall be determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the Rules of
Practice and Procedure for the Arbitration of Commercial Disputes of
J.A.M.S./Endispute or any successor
38
thereof ("J.A.M.S."), and the "Special Rules" set forth below. In the event of
any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in
the city of the Borrower's domicile at time of the execution of this instrument,
agreement or document and administered by J.A.M.S. who will appoint an
arbitrator; if J.A.M.S. is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within 90 days of the demand for
arbitration; further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for up to an additional 60
days.
(b) Reservation of Rights. Nothing in this arbitration
provision shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose and any waivers contained in this
arbitration provision; or (ii) be a waiver by the Bank of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially equivalent state law;
or (iii) limit the right of the Bank hereto (a) to exercise self help remedies
such as (but not limited to) setoff, or (b) to foreclose against any real or
personal property collateral, or (c) to obtain from a court provisional or
ancillary remedies such as (but not limited to) injunctive relief, writ of
possession or the appointment of a receiver. The Bank may exercise such self
help rights, foreclose upon such property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this instrument, agreement or document. Neither
this exercise of self help remedies nor the institution or maintenance of an
action for foreclosure or provisional or ancillary remedies shall constitute a
waiver of the right of any party, including the claimant in such action, to
arbitrate the merits of the controversy or claim occasioning resort to such
remedies.
9.14 Right of Setoff. Borrower and Guarantor acknowledge that Bank
shall retain its common law right of setoff with respect to any of the
Obligations.
(Remainder of Page Intentionally Left Blank)
39
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BANK: BORROWER:
NATIONSBANK OF TENNESSEE, N.A. ARC KENTUCKY, LLC
BY: /s/ Walker Choppin BY: /s/ Xxxxx Xxxxx
-------------------------- -----------------------------
TITLE: Senior Vice President TITLE: Chief Financial Officer
----------------------- --------------------------
GUARANTOR:
AMBULATORY RESOURCE CENTRES, INC.
BY: Xxxxx Xxxxx
-----------------------------
TITLE: Chief Financial Officer
--------------------------
40
LIST OF EXHIBITS
Exhibit A Guaranty and Suretyship Agreement
Exhibit B Promissory Note
Exhibit C Existing Liens
Exhibit D Pledge Agreement by Guarantor
Exhibit E Pledge Agreement by Xxxxx X. Xxxx, M.D.
Exhibit F Pledge Agreement by Xxxxxx X. Xxxx, M.D.
Exhibit G Opinion of Borrower's Counsel
41
