EXHIBIT 10.1
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT ("Agreement"), made and entered into
as of the _______ day of October, 2001 (the "Effective Date") by and between
PHYCOR, INC., a Tennessee corporation with principal offices in Nashville,
Tennessee ("PhyCor") and its subsidiaries known as PHYCOR OF WINTER HAVEN, INC.,
a Tennessee corporation with principal offices in Tennessee, NORTH AMERICAN
MEDICAL MANAGEMENT-KANSAS CITY, INC., a Tennessee corporation with principal
offices in Tennessee, and NORTH AMERICAN MEDICAL MANAGEMENT-ILLINOIS, INC., an
Illinois corporation with principal offices in Tennessee (herein referred to
collectively as "Guarantors") and AMSOUTH BANK ("Issuer").
W I T N E S S E T H:
WHEREAS, PhyCor has requested and Issuer has agreed to extend
indebtedness to PhyCor in the form of one or more Standby Letters of Credit not
to exceed the aggregate principal amount of TWO MILLION SIX HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($2,650,000.00) (the "Standby Letters of Credit") to
replace existing letters of credit, which Standby Letters of Credit shall be
secured by securities account number _______ at AmSouth Investment Services,
Inc. (the "Account") owned by PhyCor which shall contain an amount at any time
not less than one hundred percent (100%) of the aggregate amount of the Standby
Letters of Credit issued and outstanding at such time plus the lesser of one
hundred fifty thousand and no/100 dollars ($150,000.00) or ten percent (10%) of
the aggregate amount of the Standby Letters of Credit issued and outstanding at
such time; and
WHEREAS, the Guarantors who will receive direct benefit from the
issuance of Standby Letters of Credit have agreed to grant security interests in
the Collateral, hereafter defined, and have agreed to guarantee all obligations
of PhyCor; and
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NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, PhyCor and
Guarantors and Issuer hereby agree as follows:
ARTICLE I
AMOUNT AND TERMS OF STANDBY LETTERS OF CREDIT
1.01 STANDBY LETTERS OF CREDIT.
(a) Issuer agrees, subject to the terms and provisions of this
instrument, to issue for the account of PhyCor, one or more Standby Letters of
Credit (denominated in United States Dollars) from time to time during the
period from the Effective Date until one year from the Effective Date, at which
time all Standby Letters of Credit (whether issued or unissued) shall expire and
mature (the "Maturity Date"), in an aggregate amount not to exceed at any time
TWO MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,650,000.00) (the
"Standby Letter of Credit Liability").
(b) Issuer shall not be obligated to issue or renew any Standby Letter
of Credit if (i) after giving effect to the Issuance or renewal of such Standby
Letter of Credit, the then outstanding aggregate amount of the Standby Letters
of Credit shall exceed the Standby Letter of Credit Liability; or (ii) PhyCor
has failed to meet any of the applicable conditions set forth in Article III of
this Agreement.
1.02 PURPOSE AND USE OF STANDBY LETTERS OF CREDIT. The Standby Letters
of Credit shall be issued solely for the purpose of replacing seven (7) existing
letters of credit previously issued by Citibank, N.A. described as follows:
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L/C Number Beneficiary PhyCor Subsidiary Amount
-------------------------------------------------------------------------------------------------
NY-03076-30007826 Continental PhyCor of Winter Haven, Inc. $ 250,000.00
Casualty Company
NY-03076-30007827 Continental PhyCor of Vero Beach, Inc. $ 100,000.00
Casualty Company
NY-03076-30010314 Continental PhyCor of Jacksonville, Inc. $ 100,000.00
Casualty Company
NY-03076-30020429 American Casualty PhyCor of Jacksonville, Inc. $ 300,000.00
Co. of Reading, Pa.,
CNA Insurance
NY-03076-30024711 Humana of Kansas North American Medical $ 400,000.00
City, Inc. and Management - Kansas City, Inc.
Humana Health
Plan, Inc.
NY-03076-30028020 Continental North American Medical $1,000,000.00
Casualty Co. Management - Illinois, Inc.
CNA Surety
Corporation
NY-03076-30028022 Continental North American Medical $ 500,000.00
Casualty Co. Management - Desert Region, Inc.
CNA Surety
Corporation
(The foregoing letters of credit are herein referred to collectively as the
"Existing Letters of Credit").
1.03 PAYMENT OF UPFRONT FEE. PhyCor agrees to pay to Issuer an Upfront
Fee on the Effective Date, equal to one fourth of one percent (0.25%) of the
Standby Letter of Credit Liability, such fee being in the amount of SIX THOUSAND
SIX HUNDRED TWENTY-FIVE AND NO/100 DOLLARS ($6,625.00) (the "Upfront Fee"). The
Upfront Fee shall be in addition to the Letter of Credit Fee payable on issuance
or renewal of a Standby Letter of Credit as set forth herein.
1.04 ISSUANCE OF STANDBY LETTERS OF CREDIT.
(a) General Terms. Each Standby Letter of Credit shall be issued on at
least five business days' notice from PhyCor to the Issuer specifying the date,
amount, expiration date, and
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beneficiary thereof, accompanied by such application and agreement for letter of
credit, control agreement, deposit agreement, and other documents as the Issuer
may specify to PhyCor, each in form and substance satisfactory to the Issuer. On
the date specified by PhyCor in such notice and upon fulfillment of the
applicable conditions set forth in Section 1.01 and Article III of this
Agreement, the Issuer shall issue such Standby Letter of Credit in the form
specified in such notice and such application and agreement for letter of
credit. In the event and to the extent that any provision of an application and
agreement for a Standby Letter of Credit shall conflict with this Agreement, the
provisions of this Agreement shall govern.
(b) Letter of Credit Fee. PhyCor shall pay to the Issuer a Letter of
Credit Fee equal to one and six tenths percent (1.6%) of the face amount of each
Standby Letter of Credit for the number of months or any fraction thereof that
such Standby Letter of Credit is outstanding (the "Letter of Credit Fee")
payable in arrears on the last business day of each March, June, September, and
December prior to the expiration of such Standby Letter of Credit. The Letter of
Credit Fee is in addition to the Upfront Fee.
1.05 REIMBURSEMENT OBLIGATIONS.
(a) Notwithstanding any provisions to the contrary in any application
and agreement for letter of credit applicable to any Standby Letter of Credit,
PhyCor shall:
(i) Pay to the Issuer an amount equal to, and in reimbursement
for, each amount which Issuer pays under any Standby Letter of Credit on
or before the earlier of (A) the time specified therefor in the
application and agreement for letter of credit applicable to such
Standby Letter of Credit or (B) the date which occurs one business day
after payment of such amount by Issuer under such Standby Letter of
Credit; and
(ii) Pay to the Issuer interest on any amount remaining unpaid
under clause (i) above from the date on which such Issuer pays such
amount under any Standby Letter of
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Credit until such amount is reimbursed in full to Issuer pursuant to
clause (i) above at the Default Rate as defined in Section 6.02
hereinbelow.
1.06 INDEMNIFICATION; NATURE OF THE ISSUER'S DUTIES.
(a) PhyCor and Guarantors agree to indemnify and save harmless Issuer
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which Issuer
may incur or be subject to as a consequence, direct or indirect, of, or in
connection with, (i) the issuance of any Standby Letter of Credit or (ii) any
action or proceeding relating to a court order, injunction, or other process or
decree that restrains or seeks to restrain or may, in Issuer's judgment, seek to
restrain Issuer from paying any amount under any Standby Letter of Credit,
including without limitation any bankruptcy case or similar proceeding to which
PhyCor or any Guarantor may be a party.
(b) The obligations of PhyCor and the Guarantors hereunder with respect
to Standby Letters of Credit shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms hereof under all circumstances,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Standby Letter
of Credit or Credit Document, as hereinafter defined, or any agreement
or instrument relating thereto;
(ii) the existence of any claim, setoff, defense or other right
which PhyCor may have at any time against the beneficiary, or any
transferee, of any Standby Letter of Credit, or Issuer, or any other
person or entity;
(iii) any draft, certificate, or other document presented under
any Standby Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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(iv) any lack of validity, effectiveness, or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any Standby Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part;
(v) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Standby Letter of
Credit or of the proceeds thereof;
(vi) any misapplication by the beneficiary of any Standby Letter
of Credit of the proceeds of any drawing under such Standby Letter of
Credit;
(vii) any other circumstances or happening whatsoever, whether
or not similar to the foregoing; or
(viii) any exchange, release or non-perfection of any Collateral
(as hereinafter defined) or other collateral;
provided that, notwithstanding the foregoing, Issuer shall not be relieved of
any liability it may otherwise have as a result of its gross negligence or
willful misconduct.
1.07 INCREASED COSTS IF CHANGE IN LAW. If any change in any law or
regulation or in the interpretation thereof by any court or administrative
governmental authority charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against Standby Letters of Credit issued by Issuer or (ii) impose on
Issuer any other condition regarding Standby Letters of Credit and the result of
any event referred to in the preceding clause (i) or (ii) shall be to increase
the cost to Issuer, then, upon demand by Issuer, PhyCor and Guarantors shall
immediately pay to Issuer from time to time as specified by Issuer additional
amounts which shall be to compensate Issuer for such increased cost. Each
certificate as to such increased cost, and amount thereof, incurred by Issuer as
a result of any event mentioned in clause (i) or (ii) above, submitted by Issuer
to PhyCor and/or
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Guarantors, shall set out in reasonable detail the calculation of such amounts
and shall be conclusive and binding for all purposes, absent manifest error.
1.08 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice for
Documentary Credits UCP 500 published by the International Chamber of Commerce
("UCP") shall-in all respects be deemed a part of this Article I as if
incorporated herein and shall apply to and govern the Standby Letters of Credit.
1.09 REIMBURSEMENT OF PHYCOR. If, subsequent to the Effective Date, any
Standby Letter of Credit expires or is terminated without Issuer's having to pay
the full face amount of such Standby Letter of Credit, then Issuer shall
reimburse PhyCor, within two (2) business days of the date of such expiration or
termination, an amount equal to the full face amount of such Standby Letter of
Credit less any amount paid by Issuer to the beneficiary thereunder and less any
sums then due from PhyCor and/or Guarantors in excess of the aggregate amount of
the Standby Letters of Credit issued and outstanding at such time.
ARTICLE II
SECURITY
2.01 SECURITY.
(a) As security for the Secured Obligations, as hereinafter defined,
PhyCor and Guarantors hereby grant to Issuer a security interest in all of their
right, title and interest in and to each of the following, wherever located,
whether now or hereafter existing or now owned or hereafter acquired or arising:
(i) all PhyCor's and Guarantors' interest in the Account, which
shall be maintained in an amount not less than one hundred percent
(100%) of the aggregate amount of the then issued and outstanding
Standby Letters of Credit, plus the lesser of (aa)
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$150,000.00 or (bb) ten percent (10%) of the aggregate amount of the
then issued and outstanding Standby Letters of Credit; and
(ii) any and all renewals, extensions, modifications,
substitutions, replacements, accessions, products and proceeds
(including, without limitation, insurance proceeds) of the foregoing
(including, but not limited to, any claims to any items referred to in
this definition, and any claims against third parties for loss of,
damage to or destruction of any or all of the above) in whatsoever,
form, including, but not limited to, cash, deposit accounts, securities
accounts, accounts, notes, negotiable instruments and other instruments
for the payment of money, chattel paper, electric chattel paper, general
intangibles, payment intangibles, investment property and other
documents.
(b) All items set forth in Sections 2.01 (a) (i) and (ii) above are
collectively referred to herein as "Collateral."
(c) This Agreement and any other instruments, documents or agreements
now or hereafter securing the Secured Obligations, as hereinafter defined, are
herein collectively referred to as the "Security Instruments". The Security
Instruments, together with any other instruments and documents now or hereafter
evidencing, securing, providing for reimbursement of, or in any way related to
the Standby Letters of Credit, specifically including any application and
agreement for standby letter of credit, are herein individually referred to as a
"Credit Document" and collectively referred to as the "Credit Documents".
2.02 SECURED OBLIGATIONS.
(a) Without limiting any of the provisions thereof, the Security
Instruments shall secure:
(i) The full and timely payment and performance of all
obligations of PhyCor and/or any or all of the Guarantors to Issuer
under the Credit Documents, together with
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interest thereon, and any extensions, modifications and/or renewals
thereof and any instruments or other obligations given in payment
thereof;
(ii) The full and prompt payment of all costs and expenses of
whatever kind incident to the collection, enforcement or protection of
the indebtedness and obligations evidenced by the Credit Documents, the
enforcement or protection of the security interest created by the
Security Instruments or the exercise by Issuer of any rights or remedies
of Issuer with respect to the indebtedness or obligations evidenced by
the Credit Documents, including but not limited to reasonable attorneys'
fees and court costs incurred by Issuer, all of which PhyCor and
Guarantors agree to pay to Issuer upon demand; and
(iii) The full and prompt payment and performance of any and all
other indebtedness and obligations of PhyCor and/or any or all of
Guarantors to Issuer, if any, whether direct or contingent (including
but not limited to obligations incurred as endorser, guarantor or
surety), however evidenced or denominated, and however and whenever
incurred, including but not limited to indebtedness incurred pursuant to
any present or future commitment of Issuer to PhyCor and/or any or all
of Guarantors.
(b) All property, rights and interest of PhyCor or any of Guarantors
which now or hereafter serves as collateral security for any indebtedness owed
to Issuer by PhyCor or any of Guarantors shall hereafter secure all indebtedness
and obligations now or hereafter owing by PhyCor or any of Guarantors to Issuer,
whether now existing or hereafter arising, including but not limited to the
indebtedness evidenced by or arising from Standby Letters of Credit, including
any renewals, extensions, replacements and modifications thereof.
(c) All of the foregoing indebtedness and other obligations are herein
collectively referred to as the "Secured Obligations".
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ARTICLE III
CONDITIONS OF ISSUER'S OBLIGATIONS
3.01. CONDITIONS PRECEDENT TO ISSUER'S ISSUANCE OF STANDBY LETTER OF
CREDIT. The obligation of Issuer to issue any Standby Letter of Credit, shall be
subject to the following conditions precedent:
(a) that on the date of issuance the following statements shall be true,
accurate, complete and not misleading in any material respect, and the Issuer
shall have received a certificate signed by a duly authorized officer of PhyCor
and Guarantors dated the date of such issuance, stating that such statements are
true, accurate, complete and not misleading in any material respect (and the
issuance of such Standby Letter of Credit shall constitute a representation and
warranty by such parties that on the date of such issuance such statements are
true, accurate, complete and not misleading in any material respect);
(i) that on the date of issuance the representations and
warranties contained in Article IV of this Agreement, and in all other
Credit Documents are true, correct and complete in all material respects
on and as of the date of such issuance, before and after giving effect
to such issuance and to the application of the proceeds therefrom, as
though made on and as of such date; and
(ii) that on the date of issuance no event has occurred and is
continuing, or would result from such issuance or from the application
of the proceeds therefrom that constitutes an Event of Default or would
constitute an Event of Default;
(b) that on the date of issuance the Issuer has received and approved
evidence satisfactory to the Issuer as to the power and authority of the PhyCor
and Guarantors to participate in the issuance of a Standby Letter of Credit and
any proposed transaction;
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(c) that on the date of issuance the Issuer is satisfied with all
material terms and conditions of all necessary documents (including supporting
documentation such as corporate charters, bylaws, resolutions and certificates
in addition to all Credit Documents), and the execution, delivery and, where
applicable, public recordation of all documents required by the Issuer;
(d) that PhyCor and Guarantors, as of the date of the issuance of a
Standby Letter of Credit, are in compliance with each covenant in Article V;
(e) that PhyCor, Guarantors and any depositary bank, broker or
securities intermediary holding Collateral (including Issuer acting as a
depositary bank, if required by Issuer), shall have executed a control agreement
and/or a deposit agreement and/or application and reimbursement agreement, and
any other documents or instruments reasonably requested by Issuer, each in form
and substance satisfactory to Issuer and Issuer shall have a valid and
perfected, first-priority security interest in the Collateral, in the sole
judgment of Issuer;
(f) that, prior to the date of issuance of a Standby Letter of Credit
and prior to release of an Existing Letter of Credit by a beneficiary thereof,
funds will be deposited into the Account in the amount required by the Issuer
pursuant to Section 2.01 (a)(i) of this Agreement; and
(g) that, if PhyCor or any Guarantor shall have commenced a case under
Title 11 of the United States Code prior to the date of issuance, Issuer will be
provided with evidence (satisfactory in the sole judgment of Issuer) that PhyCor
and any such Guarantor is fully authorized by final court order to obtain credit
or incur debt secured by a first-in-priority lien on property of the estate to
be deposited in the Account pursuant to Section 2.01(a)(i) of this Agreement.
3.02 CONDITIONS PRECEDENT TO OBLIGATIONS OF ISSUER UNDER THIS AGREEMENT.
The obligations of Issuer hereunder are subject to the following additional
conditions precedent:
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(a) The Issuer shall have received the following documents, each in form
and substance satisfactory to the Issuer:
(i) If requested by Issuer, a control agreement and/or a deposit
agreement, each duly executed by PhyCor and any depositary bank, broker,
securities intermediary or other entity holding Collateral, in form and
substance satisfactory the Issuer.
(ii) Absolute and Continuing Guaranty Agreements duly executed
by each Guarantor, in a form acceptable to the Issuer, guaranteeing
PhyCor's obligations pursuant to the terms of this Agreement.
(iii) Certified copies of the (aa) resolutions of the Board of
Directors or other governing body of PhyCor and each Guarantor approving
all documents executed pursuant to this Agreement, and of all documents
evidencing other necessary corporate, limited liability company or
partnership action and governmental approvals, if any, with respect to
each such document, (bb) all documents evidencing other corporate,
limited liability company or partnership action or governmental
approvals, if any, necessary or, in the reasonable opinion of the
Issuer, advisable in connection with the execution, delivery and
performance of each such document; (cc) certified copies of the
certificate or articles of incorporation, by-laws or other constituent
instruments of PhyCor and each Guarantor, that such certificate or
articles of incorporation, bylaws or other constituent instruments have
not been amended or otherwise modified as of the Effective Date and (dd)
to the extent reasonably obtainable, good standing certificates with
respect to PhyCor and each Guarantor from the Secretary of State (or
similar official) of the state in which PhyCor or each Guarantor is
incorporated or organized.
(iv) A certificate of the Secretary or an Assistant Secretary of
PhyCor and each Guarantor certifying the names and true signatures of
the officers of PhyCor and each
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Guarantor authorized to sign each document pursuant to the terms of this
Agreement and the other documents to be delivered hereunder.
(v) the Security Instruments and documentation related thereto,
including without limitation:
(aa) financing statements executed, if so requested by
Issuer, and filed in all jurisdictions necessary or desirable in
order to perfect the liens and security interests created under
this Agreement, covering the Collateral in which a security
interest can be perfected by such a filing;
(bb) evidence that all other action that the Issuer or
Issuer's counsel may deem necessary or desirable in order to
perfect and protect the liens and security interests created
under this Agreement has been taken;
(vi) a legal opinion of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, special
counsel for PhyCor and Guarantors, in form and substance satisfactory to
Issuer and Issuer's counsel;
(b) such other agreements, certificates, consents and other documents
that the Issuer may reasonably request;
(c) payment of the Upfront Fee; and
(d) payment of all legal fees of Issuer's counsel and other out of
pocket expenses of Issuer incurred in connection with this Agreement, which such
fees shall not exceed thirty five thousand and no/ 100 dollars ($35,000.00);
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
PhyCor and Guarantors represent and warrant to Issuer as follows:
4.01 CORPORATE STATUS.
(a) PhyCor. PhyCor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Tennessee and has the corporate
power to own and operate its properties, to carry on its business as now
conducted and to enter into and to perform its obligations under this Agreement
and the other Credit Documents to which it is a party. PhyCor is duly qualified
to do business and in good standing in each state in which a failure to be so
qualified would have a material adverse effect on PhyCor's financial position or
its ability to conduct its business in the manner now conducted.
(b) Guarantors. Each Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of its state of organization stated
above and has the corporate power to own and operate its properties, to carry on
its business as now conducted and to enter into and to perform its obligations
under this Agreement and the other Credit Documents to which it is a party. Each
Guarantor is duly qualified to do business and in good standing in each state in
which a failure to be so qualified would have a material adverse effect on any
Guarantor financial position or its ability to conduct its business in the
manner now conducted.
4.02 AUTHORIZATION.
(a) PhyCor. PhyCor has full legal right, power and authority to conduct
its business and affairs in the manner contemplated by the Credit Documents, and
to enter into and perform its obligations thereunder, without the consent or
approval of any other person, firm, governmental agency or other legal entity.
The execution and delivery of this Agreement, the borrowing hereunder, the
execution and delivery of each Credit Document to which PhyCor is a
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party, and the performance by PhyCor of its obligations thereunder are within
the corporate powers of PhyCor and have been duly authorized by all necessary
corporate action properly taken, have received all necessary governmental and
regulatory approvals, if any were required, and do not and will not contravene
or conflict with any provision of law, any applicable judgment, ordinance,
regulation or order of any court or governmental agency or regulatory authority,
the charter or by-laws of PhyCor, or any agreement binding upon PhyCor or its
properties. The officer(s) executing this Agreement, all of the other Credit
Documents to which PhyCor is a party are duly authorized to act on behalf of
PhyCor.
(b) Guarantors. Each Guarantor has full legal right, power and authority
to conduct its business and affairs in the manner contemplated by the Credit
Documents, and to enter into and perform its obligations thereunder, without the
consent or approval of any other person, firm, governmental agency or other
legal entity. The execution and delivery of this Agreement, the borrowing
hereunder, the execution and delivery of each Credit Document to which any
Guarantor is a party, and the performance by a Guarantor of its obligations
thereunder are within the corporate powers of each Guarantor and have been duly
authorized by all necessary corporate action properly taken, have received all
necessary governmental and regulatory approvals, if any were required, and do
not and will not contravene or conflict with any provision of law, any
applicable judgment, ordinance, regulation or order of any court or governmental
agency or regulatory authority, the charter or by-laws of each Guarantor, or any
agreement binding upon any Guarantor or its properties. The officer(s) executing
this Agreement and all of the other Credit Documents to which a Guarantor is a
party are duly authorized to act on behalf of such Guarantor.
4.03 VALIDITY AND BINDING EFFECT. This Agreement and the other Credit
Documents, are the legal, valid and binding obligations of PhyCor and the
Guarantors, enforceable against each of PhyCor and the Guarantors in accordance
with their respective terms.
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4.04 OTHER TRANSACTIONS. There are no prior loans, liens, security
interest, agreements or other financing upon which PhyCor or any Guarantor is
obligated or by which PhyCor or any Guarantor is bound that will in any way
permit any third person to have or obtain priority over Issuer as to any of the
Collateral granted to Issuer pursuant to this Agreement and the other Security
Instruments. Neither execution of this Agreement, consummation of the
transactions hereby contemplated nor the performance of the obligations of
PhyCor or any Guarantor under and by virtue of the Credit Documents to which
PhyCor or any Guarantor is a party will result in any breach of, or constitute a
default under, any mortgage, security deed or agreement, deed of trust, lease,
loan or credit agreement, corporate charter or by-laws, agreement or certificate
of limited partnership, partnership agreement, license, franchise or any other
instrument or agreement to which PhyCor or any Guarantor is a party or by which
PhyCor or its properties may be bound or affected or by which any Guarantor or
its properties may be bound or affected.
4.05 PLACES OF BUSINESS.
(a) The records with respect to all property constituting a part of the
collateral security for the Secured Obligations are maintained at PhyCor's
principal place of business and chief executive office, both of which have the
address of 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000.
Upon execution of this Agreement, PhyCor and Guarantors shall provide to Issuer
certain information, as required by Lender including but not limited to
information regarding tax identification number, organization number and other
information required by Issuer. PhyCor's federal tax identification number is
00-0000000. PhyCor's organization number is 0199147.
(b) The chief executive office and the principal places of business of
each Guarantor are as follows:
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Guarantor Chief Executive Office Tax ID Nos.
-------------------------------------------------------------------------------------
PhyCor of Winter Haven, Inc. 00 Xxxxxx Xxxxx Xxxxxxxxx 00-0000000
Xxxxx 000
Xxxxxxxxx, XX 00000
North American Medical Management- 00 Xxxxxx Xxxxx Xxxxxxxxx 00-0000000
Kansas, Inc. Xxxxx 000
Xxxxxxxxx, XX 00000
North American Medical Management- 00 Xxxxxx Xxxxx Xxxxxxxxx 00-0000000
Illinois, Inc. Xxxxx 000
Xxxxxxxxx, XX 00000
4.06 LITIGATION. Except as set forth in that certain side letter, dated
October 9, 2001 between the parties and attached hereto and made a part hereof,
there are no actions, suits or proceedings pending, or, to the knowledge of
PhyCor or any Guarantor, threatened, against or affecting PhyCor or any
Guarantor or involving the validity or enforceability of any of the Credit
Documents or the priority of the security interests or liens thereof, at law or
in equity, or before any governmental or administrative agency, except actions,
suits and proceedings that have been previously disclosed to Issuer and are
fully covered by insurance and that, if adversely determined, would not impair
the ability of PhyCor or any Guarantor to perform each and every one of its or
their obligations under and by virtue of the Credit Documents, and to PhyCor's
knowledge, each of PhyCor and the Guarantors is not in default with respect to
any order, writ, injunction, decree or demand of any court or any governmental
authority.
4.07 FINANCIAL STATEMENTS. The financial statements of PhyCor and
Guarantors heretofore delivered to Issuer were true and correct in all respects
as of the date delivered, have been prepared in accordance with generally
accepted accounting principles consistently applied, and fairly present the
financial conditions of the subjects thereof as of the dates thereof. No
material
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adverse change has occurred in the financial condition of PhyCor or Guarantors
since the dates of such financial statements.
4.08 NO DEFAULTS. Other than (i) failure to make interest payments on
February 15, 2001 and August 15, 2001 under the Indenture dated as of February
15, 1996, related to the 4.5% Convertible Subordinated Debentures due 2003, and
(ii) those defaults described in any documents filed by PhyCor with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
which are made a part hereof, no default or Event of Default by PhyCor or
Guarantors exists under this Agreement or any of the other Credit Documents, or
under any other instrument or agreement to which PhyCor or any Guarantor is a
party or by which PhyCor or any Guarantor or its or their properties may be
bound or affected, and no event has occurred and is continuing that with notice
or the passage of time or both would constitute a default or event of default
thereunder.
4.09 COMPLIANCE WITH LAW. PhyCor and Guarantors have obtained all
necessary licenses, permits and governmental approvals and authorizations
necessary or proper in order to conduct their business and affairs as heretofore
conducted and as hereafter intended to be conducted. PhyCor and Guarantors are
in compliance with all laws, regulations, decrees and orders applicable to it
(including but not limited to laws, regulations, decrees and orders relating to
environmental, occupational and health standards and controls, antitrust,
monopoly, restraint of trade or unfair competition), except to the extent that
noncompliance, in the aggregate, cannot reasonably be expected to have a
material adverse effect on its business, operations, property or financial
condition and will not materially adversely affect its ability to perform its
obligations under the Credit Documents. PhyCor and Guarantors have not received,
and do not expect to receive, any order or notice of any violation or claim of
violation of any law, regulation, decree, rule, judgment or order of any
governmental authority or agency relating to the ownership and/or operation of
its or their properties, as to which the cost of compliance is or might be
material and the
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consequences of noncompliance would or might be materially adverse to its or
their business, operations, property or financial condition, or which would or
might impair its ability to perform its obligations under the Credit Documents.
4.10 ENVIRONMENTAL MATTERS.
(a) PhyCor and Guarantors make the following representations and
warranties to Issuer with respect to the Environmental Laws, as herein defined:
(i) All property of PhyCor and Guarantors is being operated in
material compliance with the Environmental Laws, and all approvals,
consents, certificates, licenses and permits required by the
Environmental Laws have been obtained, maintained and are in good
standing with respect to all property of PhyCor and Guarantors.
(ii) All property of PhyCor and Guarantors is and will remain
free of all Hazardous Materials, except as used in the ordinary course
of business of such properties and in material compliance with
Environmental Laws. PhyCor and Guarantors have not caused or permitted,
and will not cause or permit any of such property to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in material
compliance with the Environmental Laws and except where the consequences
of failure to comply fully would not be materially adverse to its
business operations or financial condition.
(iii) Neither PhyCor nor Guarantors have received notice (and
has no knowledge) of any noncompliance with or violation of any of the
Environmental Laws with respect to its property. PhyCor and Guarantors
shall provide Issuer with written notice of receipt of any such notice
or obtaining of such knowledge within five (5) business days of receipt
of such notice or obtaining such knowledge.
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(iv) In the event Hazardous Materials are discovered on or are
brought onto any property of PhyCor or Guarantors, PhyCor or Guarantors
shall cause the Hazardous Materials to be immediately removed and
disposed of in full compliance with the Environmental Laws. PhyCor or
Guarantors shall provide Issuer prior written notice of such removal and
disposal actions.
(v) PhyCor and Guarantors will comply with the Environmental
Laws in all jurisdictions in which PhyCor and Guarantors operate now or
in the future and will comply with all Environmental Laws that in the
future become applicable to any such property.
(b) "Environmental Laws" shall mean any applicable federal, state,
regional, county, or local laws, statutes, rules, regulations or ordinances,
including without limitation, the Comprehensive Environmental Response
Compensation Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 43 U.S.C. ss. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous
Amendments of 1984, 42 U.S.C. ss. 6901 et seq. ("RCRA"), and any rules and
regulations promulgated or published thereunder, and any state, regional county
or local statute, law, rule, regulation or ordinance relating to public health,
safety or the discharges, emissions, or disposals to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyles (PCB's), asbestos or urea formaldehyde,
to the treatment, storage, disposal or management of Hazardous Materials, to
exposure to Hazardous Materials, to the transportation, storage, disposal,
management or release of gaseous or liquid substances, and any regulation,
order, injunction, judgment, declaration, or notice or demand issued thereunder.
(c) "Hazardous Materials" shall mean all hazardous, toxic or dangerous
materials, substances, chemicals, waste or pollutants that are from time to time
defined by or pursuant to or are regulated under any of the Environmental Laws,
including without limitation, asbestos, PCB's,
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petroleum, petroleum derivatives or by-products, or other hydrocarbons,
including without limitation all materials, substances, pollutants or waste that
are defined as hazardous wastes under RCRA or defined as a hazardous substance
under CERCLA.
4.11 NO BURDENSOME RESTRICTIONS. No instrument, document or agreement to
which PhyCor or any Guarantor is a party or by which PhyCor or Guarantors or its
or their properties may be bound or affected, materially adversely affects, or
may reasonably be expected to so affect, the business, operations, property or
financial condition thereof.
4.12 TAXES. PhyCor and Guarantors have filed or caused to be filed all
tax returns that to its/their knowledge are required to be filed (except for
returns that have been appropriately extended), and have paid all taxes shown to
be due and payable on said returns and all other taxes, impositions,
assessments, fees or other charges imposed on it/them by any governmental
authority, agency or instrumentality, prior to any delinquency with respect
thereto (other than taxes, impositions, assessments, fees and charges currently
being contested in good faith by appropriate proceedings, for which appropriate
amounts have been reserved). No tax liens have been filed against PhyCor or any
of the property thereof.
4.13 OWNERSHIP OF COLLATERAL. Upon execution of the Credit Documents,
and at all times prior to reimbursement and expiration of the Standby Letters of
Credit, PhyCor shall be vested with title to the Collateral. That portion of
Collateral consisting of cash, cash equivalent accounts or securities accounts
is owned solely by PhyCor, and PhyCor has full right, power and authority to
grant to Issuer a valid and enforceable security interest therein. Issuer's
security interest in the Collateral consisting of cash, cash equivalent accounts
or securities accounts constitutes a first and prior lien upon and security
interest in the Collateral, and no other person or entity has any right, title,
interest, security interest, claim or lien with respect thereto.
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4.14 TRUE AND COMPLETE DISCLOSURE. All exhibits, reports and other
factual information heretofore or contemporaneously furnished by or on behalf of
PhyCor or Guarantors in writing to Issuer (including all information contained
in this Agreement and the other Credit Documents) for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and
all other such factual information hereafter furnished by or on behalf of PhyCor
or Guarantors in writing to Issuer will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information not
misleading at such time in light of the circumstances under which such
information was provided.
ARTICLE V
FURTHER COVENANTS OF PHYCOR AND GUARANTORS
PhyCor and Guarantors covenant and agree that during the term of this
Agreement:
5.01 PAYMENT OF SECURED OBLIGATIONS. PhyCor and Guarantors shall timely
pay or perform, as the case may be, all of the Secured Obligations.
5.02 SALES OF AND ENCUMBRANCES ON COLLATERAL. PhyCor and Guarantors will
not sell, exchange, lease, negotiate, pledge, assign or grant any security
interest in or otherwise dispose of the Collateral described in the Security
Instruments to anyone other than Issuer, or permit any other lien or security
interest of any kind to attach thereto, nor permit same to be attached to or
commingled with other goods. Any purported transfer, encumbrance or grant of a
security interest in violation of this section shall be void.
5.03 FURTHER ASSURANCES. PhyCor and Guarantors will take all actions
requested by Issuer to further evidence the transactions contemplated hereby and
to create and maintain in Issuer's favor valid liens upon, security titles to
and/or perfected security interests in the Collateral and all other security for
the Secured Obligations now or hereafter held by or for Issuer. Without
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limiting the foregoing, PhyCor and Guarantors agree to execute such further
instruments (including financing statements, if necessary, and continuation
statements) as may be required or permitted by any law relating to notices of,
or affidavits in connection with, the perfection of Issuer's security interests,
and to cooperate with Issuer in the filing or recording and renewal thereof.
5.04 FINANCIAL STATEMENTS. PhyCor and Guarantors shall furnish to Issuer
(i) as soon as practicable and in any event within ninety (90) days after the
end of each fiscal year of PhyCor and Guarantors, consolidated financial
statements of PhyCor and its subsidiaries as of the close of such fiscal year in
form and substance satisfactory to Issuer, consolidated balance sheets of PhyCor
and its subsidiaries as of the close of such fiscal year, the related
consolidated statements of operations, cash flow, and shareholders' equity for
such fiscal year and all notes to such financial statements, all in reasonable
detail, prepared on a consolidated basis in accordance with generally accepted
accounting principles consistently applied and audited by independent certified
public accountants satisfactory to Issuer, and accompanied by a certificate of
the chief executive or chief financial officer of PhyCor or the appropriate
Guarantor, stating that to the best of the knowledge of such officer, PhyCor and
Guarantors have kept, observed, performed and fulfilled each covenant, term and
condition of this Agreement and the other Credit Documents during the preceding
fiscal year and that no Event of Default hereunder has occurred and is
continuing (or if an Event of Default has occurred and is continuing, specifying
the nature of same, the period of existence of same and the action PhyCor and
Guarantors propose to take in connection therewith); (ii) as soon as practicable
and in any event within forty-five (45) days after the end of each fiscal
quarter of PhyCor and Guarantors, consolidated balance sheets of PhyCor and its
subsidiaries as of the close of such quarter, and the related consolidated
statements of operation and cash flow, all in reasonable detail, and prepared in
accordance with generally accepted accounting principles consistently applied,
and accompanied by a certificate of the chief executive or chief financial
officer of PhyCor and
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Guarantors stating that to the best of the knowledge of such officer, PhyCor and
Guarantors have kept, observed, performed and fulfilled each covenant, term and
condition of this Agreement and the other Credit Documents during the preceding
quarter, and that no Event of Default hereunder has occurred and is continuing
(or if an Event of Default has occurred and is continuing, specifying the nature
of same, the period of existence of same and the action PhyCor and Guarantors
propose to take in connection therewith); and (iii) with reasonable promptness,
such other financial data of PhyCor and Guarantors as Issuer may reasonably
request.
5.05 MAINTENANCE OF BOOKS AND RECORDS; INSPECTION. PhyCor and Guarantors
shall maintain their books, accounts and records in accordance with generally
accepted accounting principles consistently applied, and permit any person
designated by Issuer in writing, at Issuer's expense, to visit and inspect any
of its or their properties (including but not limited to the Collateral
described in the Security Instruments), corporate books and financial records,
and to discuss its or their account, affairs and finances with PhyCor or
Guarantors or the principal officers of PhyCor or Guarantors during reasonable
business hours, all at such times as Issuer may reasonably request. PhyCor and
Guarantors shall not make any changes in accounting practices during the term of
this Agreement unless required by generally accepted accounting principles.
5.06 INSURANCE. Without limiting any of the requirements of any of the
other Credit Documents, PhyCor and Guarantors shall maintain, in amounts and
with companies satisfactory to Issuer (i) public liability insurance, (ii)
worker's compensation insurance (or maintain a legally sufficient amount of self
insurance against worker's compensation liabilities, with adequate reserves,
under a plan approved by Issuer), (iii) fire and extended coverage insurance on
its properties, against such hazards as is customary in PhyCor's and Guarantors'
business and for not less than full replacement value thereof as determined by
Issuer, and (iv) rent or business interruption insurance
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against loss of income arising out of damage or destruction by such hazards as
presently are included in so-called "extended coverage".
5.07 TAXES AND ASSESSMENTS; TAX INDEMNITY. PhyCor and Guarantors shall
(a) file all tax returns and appropriate schedules thereto that are required to
be filed under applicable law, prior to the date of delinquency, (b) pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
PhyCor and Guarantors, upon its or their income and profits or upon any
properties belonging to it or them, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its or their
properties; provided, however, that PhyCor or Guarantors in good faith may
contest any such tax, assessment, governmental charge or levy so long as
appropriate reserves are maintained with respect thereto. If any tax is or may
be imposed by any governmental entity in respect of sales of PhyCor's or
Guarantors' inventory or the merchandise that is the subject of such sales, or
as a result of any other transaction of PhyCor or Guarantor, which tax Issuer is
or may be required to withhold or pay, PhyCor and Guarantors agree to indemnify
Issuer and hold Issuer harmless in connection with such taxes, and PhyCor and
Guarantors shall immediately reimburse Issuer for any such taxes paid by Issuer
and added to the Secured Obligations pursuant to the terms hereof.
5.08 CORPORATE EXISTENCE. PhyCor and each Guarantors shall maintain its
respective corporate existence and good standing in the state of its
incorporation on the date of this Agreement, and its qualification and good
standing as a foreign corporation in each jurisdiction in which such
qualification is necessary pursuant to applicable law.
5.09 COMPLIANCE WITH LAW AND OTHER AGREEMENTS. PhyCor and Guarantors
shall maintain its business operations and property owned or used in connection
therewith in compliance with (i) all applicable federal, state and local laws,
regulations and ordinances governing such
25
business operations (including all environmental laws and regulations) and the
use and ownership of such property, and (ii) all agreements, licenses,
franchises, indentures and mortgages to which PhyCor or any Guarantor is a party
or by which PhyCor or Guarantors or any of its or their properties may be bound.
Without limiting the foregoing, PhyCor and Guarantors shall pay all of its
indebtedness promptly in accordance with the terms thereof.
5.10 NOTICE OF DEFAULT. PhyCor and Guarantors shall give written notice
to Issuer of the occurrence of any Event of Default under this Agreement or any
other Credit Document promptly upon the occurrence thereof.
5.11 NOTICE OF LITIGATION. PhyCor or Guarantors shall give notice, in
writing, to Issuer of (i) any actions, suits or proceedings wherein the amount
at issue is in excess of $100,000.00, and is not fully covered by PhyCor's or
Guarantors' insurance, instituted by any persons whomsoever against PhyCor or
Guarantors, or affecting any of PhyCor's or Guarantors' assets in connection
with any applicable federal, state or local laws or regulations, and (ii) any
dispute, not resolved within sixty (60) days of the commencement thereof,
between PhyCor or Guarantors on the one hand and any governmental regulatory
body on the other hand, which dispute might interfere with the normal operations
of PhyCor or Guarantors.
5.12 ERISA PLAN. If PhyCor or any Guarantor has in effect, or hereafter
institutes (with Issuer's consent, as hereinafter provided), a pension plan that
is subject to the requirements of Title IV of the Employee Retirement Income
Security Act of 1974, Pub. L. No. 93-406, September 2, 1974, 00 Xxxx. 000, 00
X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time ("ERISA"), then
the following warranty and covenants shall be applicable during such period as
any such plan (the "Plan") shall be in effect: (i) PhyCor and Guarantors hereby
warrant that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United States
District Court of a trustee to administer the Plan, exists at the time of
26
execution of this Agreement, (ii) PhyCor and Guarantors hereby covenant that
throughout the existence of the Plan, their respective contributions under the
Plan will meet the minimum funding standards required by ERISA and PhyCor and
Guarantors will not institute a distress termination of the Plan, (iii) PhyCor
and Guarantors hereby covenant that the Plan's annual financial and actuarial
statements and the Plan's annual Form 5500 information return will be timely
filed with the Internal Revenue Service and a copy delivered to Issuer within
thirty (30) days of the preparation thereof, and (iv) PhyCor and PhyCor and
Guarantors covenant that it or they will send to Issuer a copy of any notice of
a reportable event (as defined in ERISA) required by ERISA to be filed with the
Labor Department or the Pension Benefit Guaranty Corporation, at the time that
such notice is so filed.
No Plan shall be instituted by PhyCor or Guarantors unless Issuer shall
have given its written consent thereto.
5.13 PLACES OF BUSINESS; MANAGEMENT, OWNERSHIP; CONTINUATION OF TARP
XXXXX'X EMPLOYMENT WITH PHYCOR, INC. PhyCor, Inc. shall continue to employ Tarp
Xxxxx as an executive officer of PhyCor. Tarp Xxxxx must remain directly
involved in the daily management of PhyCor until expiration or reimbursement of
all Standby Letters of Credit. The employment by PhyCor of Tarp Xxxxx and
participation in daily management of PhyCor and Guarantors by Tarp Xxxxx are
material factors in Issuer's willingness to institute and maintain a
relationship with PhyCor.
5.14 MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SALES. Without the prior
express written consent of Issuer, PhyCor and Guarantors shall not (a) be a
party to any merger, consolidation or corporate reorganization (other than
PhyCor's and/or a Guarantor's filing a petition under Xxxxx 00, Xxxxxx Xxxxxx
Code, which shall not require Issuer's consent), nor (b) purchase or otherwise
acquire all or substantially all of the assets or stock of, or any partnership
or joint venture interest in, any other person, firm or entity, nor (c) sell,
transfer, convey, grant a security interest in
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or lease all or any substantial part of its assets, nor (d) create any
subsidiaries nor convey any of its assets to any subsidiary.
5.15 DIVIDENDS, ETC. PhyCor and Guarantors shall not declare or pay any
dividend of any kind, in cash or in property, on any class of the capital stock
of PhyCor or any Guarantor, nor purchase, redeem, retire or otherwise acquire
for value any shares of such stock, nor make any distribution of any kind in
respect thereof, nor make any return of capital to shareholders, nor make any
payments in respect of any pension, profit sharing, retirement, stock option,
stock bonus, incentive compensation or similar plan (except as required or
permitted hereunder or except with respect to such plans now maintained or
hereafter established by PhyCor or Guarantors for the benefit of its employees),
without the prior written consent of Issuer.
5.16 LOANS. PhyCor and Guarantors shall not make any loan, guarantee,
advance or extend credit to any person, whether directly or indirectly, other
than in the normal course of its business.
ARTICLE VI
DEFAULT AND REMEDIES
6.01 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default ("Event of Default") hereunder:
(a) Default in the performance by PhyCor or any Guarantor of any
undertaking to the Issuer under the Credit Documents, including, without
limitation, a failure by PhyCor or any Guarantor to reimburse Issuer in
accordance with the terms of the Credit Documents; or
(b) Any misrepresentation by PhyCor or any Guarantor as to any material
matter hereunder or under any of the other Credit Documents, or delivery by
PhyCor or any Guarantor of any schedule, statement, resolution, report,
certificate, notice or writing to Issuer that is untrue in any material respect
on the date as of which the facts set forth therein are stated or certified; or
28
(c) PhyCor or any of Guarantors (i) shall make an assignment for the
benefit of creditors or petition or apply to any tribunal for the appointment of
a custodian, receiver or trustee for it or them or a substantial part of its or
their assets; or (ii) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or (iii)
shall have had any such petition or application filed or any such proceeding
commenced against it or them in which an order for relief is entered or an
adjudication or appointment is made; or (iv) shall indicate, by any act or
omission, consent to, approval of or acquiescence in any such petition,
application, proceeding or order for relief or the appointment of a custodian,
receiver or trustee for it or them or a substantial part of its or their assets;
or (v) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of thirty (30) days or more; or
(d) PhyCor or any Guarantor be liquidated, dissolved, suspended,
partitioned or terminated, or any charter or certificate of authority thereof
shall expire or be revoked or otherwise lose its legal existence; or
(e) A default or event of default shall occur under any of the other
Credit Documents; or
(f) PhyCor or any Guarantor shall default in the timely payment or
performance of any indebtedness or obligation now or hereafter owed to Issuer in
connection with any other indebtedness of PhyCor or any Guarantor now or
hereafter owed to Issuer; or
(g) The attachment or distraint of any of PhyCor's or any of Guarantors'
funds which may be in, or come into, the Issuer's possession or under the
Issuer's control, or that of any third party acting for the Issuer, or of the
same becoming subject at any time to any mandatory order of court or other legal
process; or
(h) Notwithstanding anything contained in this Section 6.01 to the
contrary, it shall not be an Event of Default hereunder if PhyCor were to become
the subject of a case under Title 11 of
29
the United States Code and were immediately to seek entry of an order of the
court having jurisdiction over such case authorizing the continuation of this
Agreement; provided that it must use its best efforts in continuing to seek such
an order; and provided further that such relief shall not be denied by an order
of such court that shall become final without a pending appeal.
6.02 ACCELERATION OF MATURITY; DEFAULT RATE OF INTEREST; REMEDIES. Upon
the occurrence of any Event of Default described in Section 6.01 hereof, the
Issuer shall have the right to accelerate and make immediately due and payable
in full all of PhyCor's and Guarantors' obligations to the Issuer under the
Credit Documents (including without limitation the obligations evidenced by any
outstanding (but undrawn upon) Standby Letter of Credit and/or by acceptances
which have not matured), all without notice of any kind; provided, however, that
if subsequent to an Event of Default hereunder any Standby Letter of Credit
expires or is terminated without Issuer's having to pay the full face amount of
such Standby Letter of Credit, then Issuer shall reimburse PhyCor, within two
(2) business days of the date of such expiration or termination, an amount equal
to the full face amount of such Standby Letter of Credit less any amount so paid
by Issuer to the beneficiary thereunder and less any sums then due from PhyCor
and/or Guarantors in excess of the aggregate amount of the Standby Letters of
Credit issued and outstanding at such time.
Upon the occurrence of any such Event of Default, the aggregate amount
outstanding of any drawn and unreimbursed Standby Letters of Credit, and, to the
extent permitted by law, any accrued interest and other sums accrued under the
Credit Documents, shall bear, after default or maturity, interest at the lesser
of (i) the highest lawful rate then in effect pursuant to applicable law, or
(ii) the rate that is six percentage points (6%) in excess of the Lender's Prime
Rate, as it varies from time to time (the "Default Rate").
Upon the occurrence of any such Event of Default and the acceleration of
the maturity of the indebtedness:
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(a) any obligation of Issuer to issue any theretofore unissued Standby
Letters of Credit shall immediately cease and be of no further force nor effect,
and Issuer shall be immediately entitled to exercise any and all rights and
remedies possessed by Issuer pursuant to the terms of the Security Instruments
and all of the other Credit Documents;
(b) Issuer shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as adopted in the State of Tennessee; and
(c) Issuer shall have any and all other rights and remedies that Issuer
may now or hereafter possess hereunder at law, in equity or by statute.
6.03 RIGHT OF SETOFF AND RECOUPMENT. Without limitation of the
foregoing, upon the occurrence and during the continuance of any Event of
Default, Issuer is hereby authorized at any time and from time to time, without
notice to PhyCor or any Guarantor (any such notice being expressly waived by
PhyCor), to setoff or recoupment and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by Issuer or any
of its affiliates, and any other indebtedness at any time owing by Issuer or its
affiliates to or for the credit or the account of PhyCor or Guarantors, against
any and all of PhyCor's or Guarantors' obligations to Issuer, irrespective of
whether Issuer shall have made any demand under this Agreement or any other
Credit Document and although such obligations may be unmatured. Issuer agrees to
notify PhyCor and Guarantors within a reasonable time after any such setoff and
application; provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of Issuer under this Section
6.03 are in addition to any other rights and remedies (including, without
limitation, other rights of setoff and recoupment) that Issuer may have.
6.04 REMEDIES CUMULATIVE; NO WAIVER. No right, power or remedy conferred
upon or reserved to Issuer by this Agreement or any of the other Credit
Documents is intended to be exclusive of any other right, power or remedy, but
each and every such right, power and remedy
31
shall be cumulative and concurrent and shall be in addition to any other right,
power and remedy given hereunder, under any of the other Credit Documents or now
or hereafter existing at law, in equity or by statute. No delay or omission by
Issuer to exercise any right, power or remedy accruing upon the occurrence of
any Event of Default shall exhaust or impair any such right, power or remedy or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein, and every right, power and remedy given by this Agreement
and the other Credit Documents to Issuer may be exercised from time to time and
as often as may be deemed expedient by Issuer.
6.05 PROCEEDS OF REMEDIES. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Credit Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the cost and expenses, including reasonable attorneys'
fees, incurred by Issuer in connection with the exercise of its
remedies;
Second, at the election of Issuer, in its sole discretion, to
the expenses of curing the Event of Default that has occurred, in the
event that Issuer elects, in its sole discretion, to cure the Event of
Default that has occurred;
Third, to the payment of the Secured Obligations, including but
not limited to the payment of the principal of and interest, if any, on
all indebtedness under any Standby Letter of Credit, in such order of
priority as Issuer shall determine in its sole discretion; and
Fourth, the remainder, if any, to the party lawfully thereunto
entitled.
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ARTICLE VII
MISCELLANEOUS
7.01 PERFORMANCE BY ISSUER. If PhyCor or Guarantors shall default in the
payment, performance or observance of any covenant, term or condition of this
Agreement, Issuer may, at its option, pay, perform or observe the same, and all
payments made or costs or expenses incurred by Issuer in connection therewith
(including but not limited to reasonable attorneys' fees), with interest thereon
at the Default Rate, shall be immediately repaid to Issuer by PhyCor and
Guarantors and shall constitute a part of the Secured Obligations and be secured
hereby until fully repaid. Issuer shall be the sole judge of the necessity for
any such actions and of the amounts to be paid.
7.02 SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of PhyCor or Guarantors or by or on behalf of Issuer shall bind
and inure to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
7.03 COSTS AND EXPENSES. Issuer shall not incur any cost or expense
whatsoever in connection with the issuing, making, administration, servicing or
collection of the Standby Letters of Credit or Credit Documents. PhyCor and
Guarantors agree to pay any and all such costs and expenses, including but not
limited to filing fees, recording taxes, insurance premiums and reasonable
attorneys' fees, promptly upon demand of Issuer.
7.04 ASSIGNMENT. This Agreement and the other Credit Documents may be
endorsed, assigned and/or transferred in whole or in part by Issuer, and any
such holder and/or assignee of the same shall succeed to and be possessed of the
rights and powers of Issuer under all of the same to the extent transferred and
assigned. Issuer may grant participations in all or any portion of its
33
interest in the indebtedness evidenced by the Standby Letters of Credit and this
Agreement. PhyCor and Guarantors shall not assign any of its or their rights nor
delegate any of its or their duties hereunder or under any of the other Credit
Documents without the prior written consent of Issuer.
7.05 TIME OF THE ESSENCE. Time is of the essence with respect to each
and every covenant, agreement and obligation of PhyCor and Guarantors hereunder
and under all of the other Credit Documents. Where used herein, the singular
shall refer to the plural, the plural to the singular and the masculine and
feminine shall refer to any gender.
7.06 SEVERABILITY. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.07 ARTICLE AND SECTION HEADINGS; DEFINED TERMS. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.08 NOTICES. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, or sent by certified mail or nationally recognized courier service
(such as Federal Express), to the other party at the address set forth below, or
at such other address as may be supplied by notice in writing in the same
manner. The date of personal delivery or telecopy or the date of mailing (or
delivery to such courier service), as the case may be, shall be the date of such
notice, election or demand. For the purposes of this Agreement:
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The address of Issuer is:
AmSouth Bank
3d Floor
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Gullett, Sanford, Xxxxxxxx & Xxxxxx, PLLC
000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxx, III
Fax: (000) 000-0000
The address of PhyCor and all Guarantors is:
PhyCor, Inc.
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Waller, Lansden, Xxxxxx & Xxxxx, PLLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
7.09 INTEREST AND LOAN CHARGES NOT TO EXCEED MAXIMUM AMOUNTS ALLOWED BY
LAW. Anything in this Agreement, the Security Instruments or any of the other
Credit Documents to the contrary notwithstanding, in no event whatsoever,
whether by reason of issuance of the Standby Letters of Credit, advancement of
proceeds, acceleration of the maturity of the unpaid balance of the Loan or
otherwise, shall the interest and loan charges agreed to be paid to Issuer for
the use of the money advanced or to be advanced hereunder exceed the maximum
amounts collectible under applicable laws in effect from time to time. It is
understood and agreed by the
35
parties that, if for any reason whatsoever the interest or loan charges paid or
contracted to be paid by PhyCor or Guarantors in respect of the Standby Letters
of Credit 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 Issuer
that exceed such maximum amounts shall be applied to the reduction of the
principal balance of the Loan and/or refunded to PhyCor so that at no time shall
the interest or loan charges paid or payable in respect of the Standby Letters
of Credit exceed the maximum amounts permitted from time to time by applicable
law.
7.10 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or otherwise would be within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default if such action is taken or condition
exists.
7.11 THIRD PARTY BENEFICIARIES. This Agreement and the other Credit
Documents are intended for the sole and exclusive benefit of the parties hereto
and their respective successors and permitted assigns, and shall not serve to
confer any rights or benefits in favor of any person not a party hereto. No
other person shall have any right to rely on this Agreement or the other Credit
Documents, or to derive any benefit herefrom.
7.12 INTEGRATION. This Agreement and the Credit Documents contain the
entire agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.
36
7.13 GOVERNING LAW. This Agreement and all Credit Documents shall be
construed in accordance with the laws of the State of Tennessee, unless the
parties hereto agree otherwise in writing.
7.14 AMENDMENT ONLY IN WRITING. This Agreement may be amended only in
writing or other record authenticated by all parties to be bound by such
amendment.
7.15 DUPLICATE AND ELECTRONIC RECORDS. PhyCor and Guarantors authorize
Issuer to convert any documents related to this transaction, including, without
limitation, any of the Credit Documents, into an accurate duplicate or
electronic format and to destroy the original documents and acknowledge that
such duplicates or electronic versions of the documents shall have the same
force and effect as the originals so long as they are accurate and, to the
fullest extent required by law, hereby adopt and accept such duplicate or
electronic versions as authenticated records, identifying PhyCor and/or
Guarantors as parties thereto so long as they are accurate.
7.16 INDEMNITY. PhyCor and Guarantors hereby agree to defend, indemnify,
and hold Issuer harmless from and against any and all claims, damages,
judgments, penalties, costs and expenses (including attorneys' fees and expenses
and court costs now or hereafter arising from the aforesaid enforcement of this
clause) arising directly or indirectly from the activities of PhyCor and
Guarantors, all predecessors in interests, or third parties with whom it has a
contractual relationship, or arising directly or indirectly from the violation
of any law, whether such claims are asserted by any governmental agency or any
other person. This indemnity shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
END OF PAGE
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ISSUER:
AMSOUTH BANK
By:
------------------------------------
Name:
------------------------
Title:
-----------------------
PHYCOR:
PHYCOR, INC.,
a Tennessee corporation
By:
------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief Financial Officer
GUARANTORS:
PHYCOR OF WINTER HAVEN, INC.,
a Tennessee corporation
By:
------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief Financial Officer
NORTH AMERICAN MEDICAL
MANAGEMENT-KANSAS CITY, INC.,
a Tennessee corporation
By:
------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief Financial Officer
NORTH AMERICAN MEDICAL
MANAGEMENT-ILLINOIS, INC.,
an Illinois corporation
By:
------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief Financial Officer
38
