EXHIBIT 10.34
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, made as of this 15th day of June, 2001, is by and
among Bank of America, N.A., a national banking association (the "Bank"),
JACKSONVILLE BEACH SURGERY CENTER, L.P., a Tennessee limited partnership (the
"Borrower"), and SYMBION AMBULATORY RESOURCE CENTRES, INC., a Tennessee
corporation (the "Guarantor").
RECITALS
Borrower has requested that the Bank make a non-revolving line of
credit available to Borrower to finance equipment purchases for and tenant
improvements to improved real property leased by Borrower located in
Jacksonville, Florida. 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.
"ADVANCE" is defined in Section 2.1.
"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.
"ARC GUARANTY" means the Guaranty and Suretyship Agreement in the form
attached as Exhibit A-1 to be executed by the Guarantor at the closing.
"BANK" means Bank of America, 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.
"BORROWING NOTICE" is defined in Section 2.1.
"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.
"CHANGE OF CONTROL" means the occurrence of any transaction or series
of transactions that results in Guarantor, directly or indirectly, owning and
having the right to vote (i) less than all of the general partnership interests
of Borrower or (ii) 50% or less of the limited partnership interests of
Borrower.
"CLOSING" means the valid execution and delivery of the Note, this
Agreement, and Collateral Documents to the Bank.
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"CLOSING FEE" is defined in Section 2.3.
"COLLATERAL" has the meaning set forth in Paragraph 4.1.
"COLLATERAL DOCUMENTS" means the documents specified in Paragraphs
3.1(b) through (g).
"CONSOLIDATED FUNDED DEBT" means, at any date, with respect to Symbion
and its Subsidiaries, 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) Capitalized
Leases Obligations, (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 Symbion and/or any of its Subsidiaries, whether or not
such debt is assumed, and (h) all Guarantee Obligations.
"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, Operating Agreement, certificate of
limited partnership, or Partnership Agreement.
"DEFAULT RATE" means a rate per annum equal to the LIBO Rate plus four
hundred and fifty basis points (4.5%).
"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 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
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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.
"EXCESS CASH" means, at any date, for any Person, such Person's cash
on hand less the amount of Required Cash Availability at such date.
"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 the financial statements submitted to
Bank in connection with the Loan.
"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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"GENERAL PARTNER" means SARC/Jacksonville, Inc., a Tennessee
corporation.
"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.
"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;
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(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 such Interest 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
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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 non-revolving line of credit loan in the amount of
$3,000,000 made available 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, Guarantor or Symbion evidencing or securing the Obligations.
"LOAN TERMINATION DATE" means the earlier to occur of October 30, 2002
or the date of the Syndicated Facility Closing.
"MAJORITY LIMITED PARTNER" means Ambulatory Resource Centres
Investment Company, Inc., a Washington corporation.
"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, Symbion 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 such Person, or might
materially impair the value of the Collateral.
"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 or contingent, joint or several, including any
extension, modifications, and renewals thereof and substitutions therefor;
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(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, Guarantor or
Symbion 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;
(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;
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(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, Guarantor or Symbion 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) Statutory and common law landlord's liens arising under any
lease;
(h) The interests of lessees of any property of Borrower,
Guarantor or Symbion;
(i) 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 thereon have been stayed and continue to be stayed; if Borrower,
Guarantor or Symbion 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
(j) Purchase Money Liens securing Purchase Money Indebtedness
incurred in compliance with Paragraph 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.
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"PLEDGED INTEREST" means the interests pledged pursuant to the Pledge
Agreements described in Paragraph 3.1.
"PRO-FORMA EFFECT" means, in making any calculation to determine if
Symbion is in compliance with Subparagraph 6.15(b), 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 Symbion 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 Symbion 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 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 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.
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"REAL PROPERTY" means any real property now owned or leased or
hereafter acquired or leased by Borrower, Guarantor or Symbion, 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.
"REQUIRED CASH AVAILABILITY" means, at any date, for any Person, an
amount equal to such Person's anticipated operating expenses for the succeeding
two weeks.
"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 the Subordination Agreements to be
delivered pursuant to Section 3.1 hereof, 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.
"SYMBION" means Symbion, Inc., a Tennessee corporation.
"SYMBION GUARANTY" means the Guaranty and Suretyship Agreement in the
form attached as Exhibit A-2 to be executed by Symbion at the closing.
"SYNDICATED FACILITY CLOSING" means the closing of the funding, on the
terms set forth on the term sheet attached hereto as Exhibit C, of the
financing currently under discussion between Symbion and Bank.
"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.
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"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, on a non-revolving basis beginning on the
date hereof and ending on December 14, 2001, an aggregate maximum principal
amount not to exceed $3,000,000 to finance Borrower's acquisition of equipment
for and tenant improvements to certain real property leased by Borrower in
Jacksonville, Florida. Subject to the terms and conditions of the Agreement,
Bank shall fund the Loan in multiple advances (each, an "Advance") of not less
than $200,000 each (other than the first Advance). The first Advance shall be
made on the date of this Agreement, and shall be in the amount of
$_____________________, net of the Closing Fee and reasonable fees and expenses
of Bank, including, without limitation, the reasonable fees of counsel to Bank.
For each subsequent Advance, Borrower shall give the Bank irrevocable written
notice (the "Borrowing Notice") not later than 10:00 a.m. Nashville time at
least three (3) business days prior to the date of such Advance, specifying the
requested date of such Advance, which must be a Business Day and must be prior
to December 14, 2001.
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.
(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
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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 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.
(h) Borrower has elected to authorize Bank to effect
payment of sums due under this Note by means of debiting Borrower's account
number ______________________________. This authorization shall not affect the
obligation of Borrower to pay such sums when due, without notice, if there are
insufficient funds in such account to make such payment in full on the due date
thereof, or if Bank fails to debit the account.
13
2.3 Closing Fee. An aggregate nonrefundable fee of $15,000 (the
"Closing Fee") shall be due and payable in full at Closing to the Bank. If the
Syndicated Facility Closing occurs prior to July 31, 2001, the Bank will refund
part of the Closing Fee to Borrower as follows:
Number of days between the date of
Amount Refunded = Closing Fee * Syndicated Facility Closing and July 31, 2001
---------------------------------------------
Number of days between the date of this
Agreement and July 31, 2001
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 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 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 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
14
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:
(i) Any change in applicable Laws giving rise
to increased costs occurs after the date of this Agreement; and
15
(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 Paragraph 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
until the end of such Interest Period. Anything in this Paragraph 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
16
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 and Initial Advance. The
Borrower shall have delivered to the Bank prior to the initial disbursement of
the Loan the following:
(a) The Note;
(b) The ARC Guaranty, duly executed by the Guarantor,
and the Symbion Guaranty, duly executed by Symbion;
(c) The Pledge Agreements in the forms attached hereto
as Exhibit D-1 and Exhibit D-2 duly executed by the General Partner and the
Majority Limited Partner;
(d) Subordination Agreement, in form and substance
acceptable to Bank, duly executed by ARC Management Services, Inc.
(e) Subordination Agreement, in form and substance
acceptable to Bank, duly executed by Symbion;
(f) [intentionally omitted];
(g) Collateral Assignment of Lease, in form and
substance acceptable to Bank, duly executed by Borrower;
(h) The Financing Statements required by Section 4;
(i) Copies of the resolutions of the board of directors
of the General Partner, of the board of directors of the Majority Limited
Partner, of the board of directors of the Guarantor, and of the board of
directors of Symbion, 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
17
and, as applicable, the Note, the Loan Documents, and each other document to be
delivered pursuant hereto;
(j) A copy of the Constituent Documents of the Borrower,
Symbion, Guarantor, the General Partner and the Majority Limited Partner,
certified as of the most recent date practicable, by the applicable Secretary
of State or by the secretary of such Person, as applicable;
(k) A certificate dated the date of the Closing of the
secretary of the General Partner, the Majority Limited Partner, the Guarantor
and Symbion as to the incumbency and signatures of their respective officers
executing this Agreement, the Note, the ARC Guaranty, the Symbion Guaranty, the
Collateral Documents, and each other document to be delivered pursuant hereto;
(l) With respect to Borrower, the General Partner, the
Majority Limited Partner, Symbion and Guarantor, certificates, as of the most
recent dates practicable, issued by the Secretary of State of the state in
which such Person was incorporated or formed as to the existence and/or good
standing of such Person, and with respect to Borrower a certificate, as of the
most recent date practicable, issued by the Secretary of State of the State of
Florida, as to Borrower's qualification to conduct business in Florida;
(m) A written opinion of the Borrower's, Symbion's and
Guarantor's counsel, dated the date of the Closing, in form satisfactory to the
Bank.
(n) A certificate, dated the date of the Closing, signed
by the president, vice president, chief financial officer, or corporate
controller of the General Partner and the Guarantor 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.
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.
3.3 Conditions to Subsequent Advances. Each Advance after the
Closing shall be subject to the following conditions:
(a) No Defaults. No Event of Default or Unmatured
Default shall then exist.
18
(b) Borrowing Notice. Borrower shall have delivered the
Borrowing Notice.
(c) Expenses. Borrower shall have paid all fees and
expenses Borrower is obligated to pay pursuant to the terms hereof.
(d) Accuracy of Warranties. The representations and
warranties set forth in this Agreement and the Collateral Documents shall have
been true and correct in all material respects as of the date made, and shall
be true and correct in all material respects of the date of such Advance.
(e) No Litigation. No action, suit or proceeding shall
have been instituted against any Borrower or materially affecting any of the
assets of Borrower which in the reasonable opinion of Bank, constitutes a
Material Adverse Event, and no dispute between Borrower and any governmental or
regulatory body shall have been instituted, which in the reasonable opinion of
Bank, constitutes a Material Adverse Event.
(f) No Material Adverse Change. In the reasonable
opinion of Bank, no Material Adverse Change shall have occurred since the date
of this Agreement.
(g) No Change in Law. No change shall have occurred in
applicable law or regulations, including interpretations thereof by a court or
governmental authority, which in the reasonable judgment of Bank, would make it
illegal or unlawful for Bank to make such Advance.
(h) Collateral Documents. All of the Collateral
Documents shall be in full force and effect.
(i) Initial Conditions. If any condition listed in
Section 3.1 was waived in connection with the initial funding of the Loan, such
condition(s) shall have been satisfied.
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 and pursuant to the Collateral Documents 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
19
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:
(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 and will cause the General Partner
and Majority Limited Partner to:
(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.
20
(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 prior written 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 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
partnership duly organized, validly existing and in good standing under the
Laws of the State of Tennessee and is qualified to transact business in
Florida; Guarantor is a corporation duly organized, validly existing and in
good standing under the Laws of the state of Tennessee; Symbion 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,
Guarantor and Symbion 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; Florida is the only state in which the Borrower is qualified
21
to do business as of the Closing Date; and the addresses of all places of
business of the Borrower and of the chief executive office of the General
Partner and Majority Limited Partner as of the Closing Date are as set forth in
Schedule 5.1;
5.2 No Conflicting Agreement. None of the Borrower, the Guarantor
or Symbion 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, the General Partner, the Guarantor or Symbion, or violate any
Laws, or result in a default under any material contract, agreement, or
instrument to which the Borrower, the Guarantor or Symbion is a party or by
which the Borrower, Guarantor or Symbion or any of their respective property is
bound; or
(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, the Guarantor and Symbion 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 Guarantor owns all of the issued and
outstanding capital stock of the General Partner and the Majority Limited
Partner; the General Partner owns a two percent (2%) general partnership
interest in the Borrower; the Majority Limited Partner owns a 79.5% limited
partnership interest in Borrower; the capital stock of the General Partner and
the Majority Limited Partner and the Pledged Interest all have been duly
issued, are fully paid and non-assessable, and are free of all claims, security
interests, liens, charges and encumbrances other than transfer restrictions set
forth in the Partnership Agreement of Borrower;
5.6 Litigation. There is no pending or threatened order, notice,
claim, litigation, proceeding or investigation against or affecting the
Borrower, the
22
Guarantor or Symbion, 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, Guarantor and Symbion 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, 2000 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;
5.10 Taxes. The Borrower, the Guarantor and Symbion 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,
the Guarantor and Symbion have complied with all applicable Laws with respect
to: (1) any licenses, restrictions, specifications, or other requirement
pertaining to services that the Borrower, the Guarantor or Symbion 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, the Guarantor or Symbion
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;
23
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, the Guarantor
or Symbion 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, the Guarantor or Symbion contained herein or in any certificate or
other document furnished, in light of the circumstances in which they were
made, by the Borrower, the Guarantor or Symbion pursuant to this Agreement
contains any untrue statement of material fact;
5.14 Environmental Compliance. The Borrower, the Guarantor or
Symbion 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 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, none of the Borrower, the Guarantor or Symbion 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. None of the Borrower, the Guarantor or Symbion 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 be true and correct when made and shall survive until all
Obligations are satisfied in full.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower and the Guarantor, jointly and severally, covenant as
follows:
24
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, Symbion 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) and
within 45 days after the close of each calendar month (except for the end of
each fiscal quarter) in each Fiscal Year of Symbion: (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; (iv) consolidated balance sheets of the
Guarantor as of the end of such monthly period; (v) consolidated income
statements of Symbion for such monthly period; and (vi) consolidated balance
sheets of Symbion 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, Guarantor or Symbion, 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, Guarantor or Symbion (as
applicable): (i) statements of cash flows of the Borrower for such quarterly
year-to-date period; (ii) income statements 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; (vii) consolidated and consolidating statements
of cash flows of Symbion for such quarterly year-to-date period; (viii)
consolidated and consolidating income statements of Symbion for such quarterly
period; and (ix) consolidated and consolidating balance sheets of Symbion 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, Guarantor or Symbion (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 the Borrower, the Guarantor or
Symbion (as applicable): (i) statements of cash flows of the Borrower for such
Fiscal Year; (ii) income
25
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; (vi) balance sheets of the
Guarantor as of the end of such Fiscal Year; (vii) consolidated statements of
cash flows of Symbion for such Fiscal Year; (viii) consolidated income
statements of Symbion for such Fiscal Year; (ix) balance sheets of Symbion 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
Symbion shall be audited by independent certified public accountants selected
by the Symbion 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, the
Guarantor and Symbion (as applicable) stating that: (i) such officer has
individually reviewed the provisions of this Agreement; (ii) a review of the
activities of the Borrower, the Guarantor and Symbion 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, the Guarantor and Symbion have fulfilled their respective obligations
under this Agreement; and (iii) to the best of such officers' knowledge, the
Borrower, the Guarantor and Symbion 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, Guarantor
or Symbion 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 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,
the Guarantor or Symbion, copies of all management letters and any other
reports which are submitted to the Borrower, the Guarantor or Symbion by its
independent accountants in connection with any annual or interim audit of the
Records of the Borrower, the Guarantor or Symbion 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; and
26
(g) From time to time such additional information
regarding the financial condition or business of the Borrower, the Guarantor or
Symbion as the Bank may reasonably request;
6.3 Good Condition. The Borrower, the Guarantor and Symbion 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, the Guarantor and
Symbion 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, the Guarantor and
Symbion 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, the Guarantor and Symbion 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, the Guarantor and Symbion will furnish the Bank with copies of
federal income tax returns filed.
6.6 Records and Inspection. The Borrower, the Guarantor and
Symbion 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 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, the Guarantor and Symbion 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
27
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, the Guarantor and
Symbion 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, the Guarantor or Symbion 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, the Guarantor or Symbion and be reimbursed by the
Borrower, the Guarantor or Symbion 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, the Guarantor or Symbion 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, the
Guarantor or Symbion.
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, the
Guarantor or Symbion to observe any of its undertakings hereunder.
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,
the Guarantor or Symbion, (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. Prior to establishing any new
place of business, if requested by Bank, Borrower will deliver to Bank a
Landlord's Lien Waiver, Consent and Attornment in the same form as executed
upon the Closing.
6.13 Environmental Compliance. If the Bank has reason to believe
that the Borrower, the Guarantor or Symbion has failed to comply with any
material
28
Environmental Laws, or there exists a threat of material harm to the
environment or Persons, the Bank or 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, the Guarantor or
Symbion 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, the
Guarantor or Symbion 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, the Guarantor or Symbion;
(b) receive written notice that any administrative or
judicial complaint or order has been filed or is about to be filed against the
Borrower, the Guarantor or Symbion alleging any material violation of any
Environmental Laws or requiring the Borrower, the Guarantor or Symbion to take
any action in connection with the release or threatened release of Hazardous
Materials 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, the Guarantor or Symbion 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, the Guarantor or Symbion 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 Environmental Laws by any and all owners
or operators of real property owned or leased by a Borrower, the Guarantor or
Symbion.
6.15 Financial Ratios. The Borrower will maintain or cause to be
maintained, the following financial ratios and covenants:
(a) At all times, the Shareholders' Equity of Symbion,
calculated on a consolidated basis, shall be greater than the sum of (1) ninety
percent (90%) of the shareholder's equity of Symbion at December 31, 2000, plus
(2) eighty-five percent
29
(85%) of the sum of (a) the aggregate amount of equity capital contributed to
Symbion after December 31, 2000, plus (b) the aggregate cumulative positive net
income (without deduction for any negative net income) of Symbion after
December 31, 2000, all computed in accordance with GAAP.
(b) At the end of each Quarterly Period beginning with
the Quarterly Period ending March 31, 2001 and continuing through each
Quarterly Period ending thereafter, the ratio of (i) the sum of (A) Symbion's
Consolidated Funded Debt less (B) Symbion's Excess Cash to (ii) Symbion's
consolidated EBITDA for such Quarterly Period, giving Pro-Forma Effect to any
Acquisition made and any Indebtedness incurred therewith as of the date of
determination, shall be less than 3.50:1.00.
(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 $750,000.
6.16 Symbion Financing. If, after the date hereof, Symbion enters
into any financing arrangement which imposes covenants upon Symbion that are
more restrictive than, or in addition to, the covenants imposed hereby,
Borrower will promptly notify Bank, and Borrower, Guarantor and Symbion will
promptly execute any documentation reasonably requested by Bank to add such
covenants to this Agreement.
6.17 Landlord Lien Waiver. On or before July 13, 2001, Borrower
shall deliver to Bank a Landlord's Lien Waiver, Consent ad Estoppel Agreement
in the form attached hereto as Exhibit E, duly executed by MedJax Associates,
Ltd.
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/or (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.
30
7.2 Sale of Assets. None of the Borrower, Guarantor or Symbion
will sell, transfer, lease or otherwise dispose of all or any material part of
its assets; provided, however, Borrower, Guarantor and Symbion may in the
ordinary course of business (i) replace 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 Paragraph 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; and
(6) Capitalized Lease Obligations and/or Purchase Money Indebtedness not to
exceed, in the aggregate at any one time, $100,000.
7.5 Untrue Certificate. None of the Borrower, Guarantor or
Symbion 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. None of the Borrower, Guarantor or Symbion 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.
31
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 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. None of the Borrower, Guarantor or
Symbion 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. None of the Borrower, Guarantor or Symbion 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. None of the Borrower, Guarantor or
Symbion 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, Guarantor or Symbion than those
that would be obtainable at the time from any Person who is not an Affiliate.
7.14 ERISA Compliance. None of the Borrower, Guarantor or Symbion
will establish or set up any Defined Benefit Pension Plans, except for a
Defined Benefit Pension Plan assumed by Symbion in connection with an
Acquisition.
7.15 Borrower Distributions. The aggregate of all Borrower
Distributions for any Fiscal Year of Borrower shall not, for two consecutive
Fiscal Years of Borrower, exceed the sum of Net Income of Borrower for such
Fiscal Year plus federal and state income taxes deducted in determining such
Net Income.
7.16 Symbion Merger or Reorganization. Symbion will not enter into
any merger, consolidation, reorganization or recapitalization.
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:
32
(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.
(b) The failure to achieve any of the financial
covenants contained in Paragraph 6.15.
(c) The Borrower, Symbion 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, the breach of the covenant
contained in Paragraph 6.17, or the breach of any negative covenant in Section
7 of this Agreement, Borrower, Symbion 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.
(d) The Borrower, Symbion 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
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,
Symbion or Guarantor that results in a Material Adverse Change in the financial
condition of the Borrower, Symbion or Guarantor, as determined by Bank in its
reasonable discretion.
(f) Any financial statement, representation, warranty or
certificate made or furnished by Borrower, Symbion 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, Symbion 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, Symbion 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,
Symbion or Guarantor, or
33
shall be commenced against the Borrower, Symbion 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, Symbion 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 Borrower, Symbion or Guarantor, or the Borrower,
Symbion or Guarantor shall discontinue business or materially change the nature
of any of their respective businesses.
(j) A judgment creditor of the Borrower, Symbion or
Guarantor shall obtain possession of any Collateral or other assets by any
means, including, but without limitation, levy, distraint, replevin or
self-help.
(k) Any proceeding shall be instituted against the
Borrower, Symbion 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.
(l) The Borrower, Symbion 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.
(m) A Change of Control shall have occurred.
(n) Any payment or distribution by Borrower in
contravention of any provision of any of the Subordination Agreements.
(o) Any event which results in the principal executive
management functions of Symbion and its Subsidiaries being vested in, and the
responsibility of, less than four of Xxxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxx and Xxxxxxx X. X. Xxxx.
(p) An event or series of events shall occur by which:
(i) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) shall
become the "beneficial owner" (within the meaning of Rule 13d-3 and /or Rule
13d-5 under the Securities Exchange Act of 1934, except that a Person shall be
deemed to have "beneficial ownership" of all shares that such Person has the
right to acquire without condition, other than the passage of time, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of thirty percent (30%) or more of the combined voting
power of all securities of Symbion entitled to vote in the election of
directors, other than securities having such power
34
only by reason of the happening of a contingency (other than the passage of
time), excluding, however, any such person or group that is a record of
"beneficial owner" of such securities in any amount on the date of this
Agreement; or
(ii) individuals who at the beginning of any
period of two (2) consecutive calendar years constituted the Board of Directors
(together with any new directors whose election by such Board of Directors or
whose nomination for election by Symbion's shareholders was approved by a vote
of at least two-thirds (2/3) of the members of the Board of Directors then
still in office who either were members of the Board of Directors at the
beginning of such period or whose election or nomination for election was
previously so approved) shall cease for any reason to constitute a majority of
the members of the Board of Directors then in office.
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 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
35
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;
(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, Guarantor
and Symbion 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
36
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.
(a) If to the Borrower, Symbion or Symbion, Inc.
Guarantor: 0000 Xxxx Xxx Xxxxxx Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxx Xxxxxxxx
Telecopy: (000) 000-0000
with a copy (which Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC
shall not constitute 000 Xxxxx Xxxxxx, Xxxxx 0000
notice) to: Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
(b) If to the Bank: Bank of America, N.A.
Xxx Xxxx xx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
with a copy (which Xxxxxxxx & Xxx, PLC
shall not constitute 000 Xxxxxx Xxxxxx, Xxxxx 0000
notice) to: Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
9.6 Waiver and Release. To the maximum extent permitted by
applicable Laws, the Borrower:
37
(a) Waives: (1) protest of all commercial paper at any
time held by the Bank on which the Borrower, Guarantor or Symbion 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, Guarantor or Symbion,
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 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.
38
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 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
39
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, Guarantor and Symbion acknowledge
that Bank shall retain its common law right of setoff with respect to any of
the Obligations.
(Remainder of Page Intentionally Left Blank)
40
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BANK: BORROWER:
BANK OF AMERICA, N.A. JACKSONVILLE BEACH SURGERY CENTER, L.P.
By: /s/ Xxxxxx Xxxxxxx
----------------------------- By: SARC/Jacksonville, Inc., its
Title: Sr. Vice President general partner
-------------------------
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Title: President
----------------------------------
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Title: Secretary
----------------------------------
GUARANTOR:
SYMBION AMBULATORY RESOURCE
CENTRES, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Title: President
----------------------------------
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Title: Secretary
----------------------------------
41
