EXHIBIT 10.26
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT, made this 12th day of April, 2000, is by and
among Bank of America, N.A. (the "Bank"), ARC Worcester Center, L.P., a
Tennessee limited partnership (the "Borrower") and Symbion Ambulatory Resource
Centres, Inc., a Tennessee corporation (the "Guarantor").
RECITALS
Bank has previously made a loan to the Borrower, an Affiliate of
Guarantor, pursuant to a Loan and Security Agreement dated November 9, 1999 (as
amended from time to time, the "Loan Agreement"). Capitalized terms not
otherwise defined in this First Amendment shall have the meaning provided in
the Loan Agreement. Borrower has requested that Bank make certain changes to
the Loan Agreement. The Bank is willing to do so, subject, among other things,
to the execution of this Amendment and compliance with the terms hereof.
NOW, THEREFORE, the parties to this First Amendment hereby agree as
follows:
Article I. Amendment to Loan Agreement. The parties hereto amend the Loan
Agreement as follows:
Section 1.1. The following definitions are hereby added to Section
1 of the Loan Agreement in appropriate alphabetical order:
"COMPLIANCE DATE" means, provided no Event of Default occurs between
April 12, 2000 and such date and provided no Unmatured Default exists at such
date, the date on which Borrower has delivered certificates to Bank evidencing
to Bank's reasonable satisfaction, for two consecutive Quarterly Periods (the
second of which must be a Quarterly Period ending at or after September 30,
2000), that (A) Borrower has complied with the covenants set forth in Paragraph
6.15(b) through (e), and (B) the ratio of Borrower's Cash Flow to Borrower's
Debt Service has been greater than 1.10:1.00.
"COMPLIANCE QUARTER" means the second of the two consecutive Quarterly
Periods referenced above in the definition of Compliance Date.
"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,
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debentures, notes or other similar instruments, (c) all obligations to pay the
deferred purchase price of property, except trade accounts payable or other
short term liabilities other than indebtedness for borrowed money arising in
the ordinary course of business, (d) all obligations as lessee under
capitalized leases, (e) all obligations to purchase securities or other
property which arise out of or in connection with the sale of the same or
substantially similar securities or property, such as bankers acceptances or
similar instruments, (f) all contingent and non-contingent obligations to
reimburse any bank or other person in respect of amounts payable or paid under
a letter of credit or similar instrument, (g) all debt of others secured by a
lien on any asset of Symbion and/or any of its Subsidiaries, whether or not
such debt is assumed, and (h) all Guarantee Obligations.
"DE NOVO LOSSES" means, at any date, the aggregate, cumulative losses
of each Subsidiary operating a surgery center which has been accepting patients
for less than nine (9) months.
"EXCESS CASH" means, at any date, for any Person, such Person's cash
on hand less the amount of the Required Cash Availability at such date.
"NON-RECOURSE DEBT" means, at any date, that portion of Consolidated
Funded Debt which is not a corporate obligation of Symbion, and is included
within the definition of Consolidated Funded Debt solely because it is
Indebtedness of a Subsidiary.
"QUARTERLY COMPLIANCE DATE" means the last day of the second
consecutive Quarterly Period referenced above in the definition of Compliance
Date.
"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.'
Section 1.2 Section 6.15 of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:
"6.15 Financial Ratios. The Borrower will maintain or
cause to be maintained, the following financial ratios and covenants:
(a) for each Quarterly Period, (i) beginning
with the Quarterly Period ending December 31, 1999, a ratio
of Borrower's Cash Flow to the sum of Borrower's Debt Service
minus $17,857, of not less than 1.05:1.00, and (ii) beginning
with the first Quarterly Period ending after the Compliance
Quarter, a ratio of Borrower's Cash Flow to the sum of
Borrower's Debt Service of not less than 1.10:1.00;
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(b) At all times, Borrower's cash on hand shall
be greater than Borrower's Required Cash Availability.
Promptly following a request from Bank, Borrower shall
provide evidence reasonably satisfactory to Bank to document
compliance with this covenant;
(c) At all times, the sum of Borrower's
Shareholder's Equity plus the outstanding principal balance
of all Indebtedness for money borrowed from Guarantor by
Borrower shall be greater than $400,000;
(d) At all times, the Shareholders' Equity of
Symbion, calculated on a consolidated basis, shall be greater
than $25,000,000 plus eighty-five percent (85%) of (i) the
aggregate amount of any new equity raised by Symbion after
June 25, 1999 and (ii) the aggregate, cumulative, positive
Net Income of Symbion (without any credit or deduction in the
event Net Income is a negative number) after June 25, 1999;
(e) At the end of each Quarterly Period,
beginning with the Quarterly Period ending September 30, 1999
and continuing through and including the Quarterly Period
ending September 30, 2000, the ratio of (i) the sum of (A)
Symbion's Consolidated Funded Debt less (B) Symbion's Excess
Cash to (ii) the sum of (X) EBITDA for such Quarterly Period,
plus (Y) the lesser of (1) $125,000 or (2) the De Novo Losses
at such date, giving Pro-Forma Effect to any Acquisition made
and any Indebtedness incurred therewith as of the date of
determination, shall be less than 3.75:1.00; and
(f) At the end of each Quarterly Period
beginning with the Quarterly Period ending December 31, 2000
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; provided,
however, if the result of such ratio is greater than or equal
to 3.50:1.00 and less than 3.75:1.00, the Borrower shall be
in compliance with this covenant for such Quarterly Period if
the ratio of (i) the sum of (A) Symbion's Consolidated Funded
Debt less (B) Symbion's Excess Cash less (C) Symbion's
Non-Recourse Debt 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."
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Section 1.3. The following is hereby added to the Loan Agreement
as Section 6.17:
"6.17 Cash Collateral. On or before April 21, 2000
Borrower shall purchase a certificate of deposit issued by Bank in the
amount of not less than $500,000, and Borrower shall maintain such
certificate of deposit until no longer required to do so pursuant to
this Paragraph 6.17. Borrower hereby acknowledges that Bank shall be
entitled to exercise full rights of setoff with respect to the
certificate of deposit. Provided no Event of Default occurs between
April 12, 2000 and the Compliance Date and provided no Unmatured
Default exists at the Compliance Date, upon the Compliance Date,
Borrower shall no longer be required to maintain the certificate of
deposit, and this Paragraph 6.17 shall be inapplicable and such funds
shall be returned to Borrower in full. Until the Compliance Date,
Borrower shall not make any payment of principal or interest owed on
any indebtedness of Borrower to Guarantor, Symbion or any other
Affiliate of Borrower."
Section 1.4. The following is hereby added to the Loan Agreement
as Section 6.18:
"6.18 Symbion Financing. If, after April 12, 2000, Symbion
enters into any financing arrangement which imposes covenants upon
Symbion that are more restrictive than, or in addition to, the
covenants imposed by the Loan Agreement, Borrower will promptly notify
Bank, and Borrower, Guarantor and Symbion will promptly execute any
documentation reasonably requested by Bank to add such covenants to
the Loan Agreement."
Article II. General.
Section 2.1 Loan Agreement. Except as amended hereby, the
provisions of the Loan Agreement shall remain in full force and effect.
References in the Loan Agreement and the other Loan Documents shall be
references to the Loan Agreement as amended by this First Amendment.
Section 2.2 Symbion Indebtedness. If Symbion enters into any
financing arrangement after April 12, 2000 which imposes covenants upon Symbion
that are more restrictive than, or in addition to, the covenants imposed by the
Loan Agreement, such covenants shall be incorporated by reference into the Loan
Agreement, unless, within ten (10) days after Symbion enters into such
financing arrangement, Borrower, Guarantor and Symbion execute the
documentation referenced in Section 1.5 of this First Amendment.
Section 2.3 Governing Law. This First Amendment shall be governed
by and construed in accordance with the laws of the State of Tennessee without
reference to its choice of law rules.
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Section 2.4 Execution in Counterparts. This First Amendment may
be executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties and delivered to each of the parties.
Section 2.5 Representations. Borrower hereby makes the following
representations and warranties:
(a) as of the date hereof, Borrower has no defense
against payment of any or all of the Obligations;
(b) as of the date hereof, no Event of Default or
Unmatured Default has occurred or is continuing (after giving effect to this
Amendment).
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BANK OF AMERICA, N.A. ARC WORCESTER CENTER, L.P., a
Tennessee Limited Partnership
By: Ambulatory Resource Centres of
Massachusetts, Inc., its General Partner
BY: BY:
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TITLE: TITLE:
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SYMBION AMBULATORY RESOURCE
CENTRES, INC.
BY:
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TITLE:
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