EXHIBIT 10.38
LOAN AGREEMENT
THIS AGREEMENT, made as of this 31st day of July, 2001, is by and among
Bank of America, N.A., a national banking association (the "Bank"), SYMBION,
INC., a Tennessee corporation (the "Borrower"), and SYMBION AMBULATORY RESOURCE
CENTRES, INC., a Tennessee corporation (the "Guarantor").
RECITALS
Borrower has requested that the Bank make a loan in the amount of
$5,900,000 to Borrower, the proceeds of which Borrower will loan, through a
series of wholly-owned subsidiaries, to its wholly-owned subsidiary SARC/Ft.
Xxxxx, Inc., a Tennessee corporation ("SARC/Ft. Xxxxx"), to finance the
acquisition by SARC/Ft. Xxxxx of a fifty-one percent (51%) limited liability
company interest in Physicians Surgery Center, LLC, a Delaware limited liability
company (the "Surgery Center"). The Bank is willing to make such loan to
Borrower on the terms and conditions set forth in this Agreement.
SECTION 1. DEFINITIONS
As used herein:
"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.
"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 Borrower.
"AGREEMENT" means this Loan 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.
"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 any Person 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
such Person in accordance with generally accepted accounting principles
consistently applied.
"CAPITALIZED LEASE" means a lease that is required to be capitalized
for financial reporting purposes in accordance with generally accepted
accounting principles.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
generally accepted accounting principles.
"CASH FLOW" means Net Income (or deficit) for the immediately preceding
Quarterly Period plus (A) federal and state income taxes for such period
deducted in the determination of Net Income, (B) Interest Expense for such
period deducted in the determination of Net Income, (C) Rental Expense for such
period deducted in the determination of Net Income, (D) depreciation for such
period deducted in the determination of Net Income, (E) amortization for such
period deducted in the determination of Net Income (F) non-cash or non-recurring
charges for such period deducted in the determination of Net Income, and (G) 50%
of the management fees paid by the Surgery Center to ARC Management Services,
Inc., for such period deducted in the determination of Net Income during such
period, less the lesser of actual or budgeted maintenance Capital Expenditures
for such period.
"CHANGE OF CONTROL" means the occurrence of any transaction or series
of transactions that results in Borrower, directly or indirectly, owning and
having the right to vote (i) less than 51% of the limited liability company
interests of the Surgery Center or (ii) less than all of the stock of SARC/Ft.
Xxxxx.
"CLOSING" means the valid execution and delivery of the Note, this
Agreement, and Collateral Documents to the Bank.
"CLOSING FEE" is defined in Paragraph 2.3.
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"COLLATERAL" means the limited liability company interests in the
Surgery Center pledged pursuant to the Pledge Agreement described in Paragraph
3.1.
"COLLATERAL DOCUMENTS" means the documents specified in Paragraphs
3.1(b) through (e).
"CONSOLIDATED FUNDED DEBT" means, at any date, with respect to Borrower
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 Borrower 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 such Person's charter,
certificate of incorporation, Articles of Organization, Operating Agreement,
Regulations, Limited Liability Company Agreement, certificate of limited
partnership, or Partnership Agreement, as the case may be.
"DEBT SERVICE" means $245,833 (the imputed principal amortization
associated with the Loan) plus the sum of the following incurred by the Surgery
Center during any particular fiscal quarter: (A) scheduled principal payments on
Indebtedness, (B) Rental Expense, and (C) Interest Expense paid to any party
other than Guarantor.
"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.
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"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 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.
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"FISCAL YEAR" means, with respect to the Borrower, the calendar year
period of January 1 through December 31.
"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
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make payment of such indebtedness or to assure the owner of the indebtedness
against loss; or (3) to supply funds to or in any other manner invest in the
debtor;
(c) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(d) All indebtedness incurred as the lessee of facilities, goods or
services under leases that, in accordance with generally accepted accounting
principles consistently applied, should be reflected on such Person's balance
sheet.
"INTEREST EXPENSE" means, with respect to any Person for any period of
determination, the gross interest expenses of such Person determined in
accordance with generally accepted accounting principles consistently applied as
shown on its income statement.
"INTEREST PAYMENT DATE" shall mean the last day of each Interest
Period.
"INTEREST PERIOD" shall mean, initially, the period commencing on the
date hereof and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) of the next calendar month, and
thereafter shall mean the period commencing on the date immediately following
the last day of the preceding Interest Period and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) of the next calendar month; provided, however, that (x) if any Interest
Period would end on a day that shall not be a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless, such next
succeeding Business Day would fall in the next calendar month, in which case
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.
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"LIBO RATE" means, for each Interest Period, the rate per annum
appearing on the Telerate Page 3750 (or successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London Time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBO Rate" shall mean, for each Interest Period the rate
per annum appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"LOAN" means the loan in the amount of $5,900,000 made to Borrower by
Bank hereunder.
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents, or any other document executed or delivered by or on behalf of the
Borrower, Guarantor, SARC/Ft. Xxxxx or any of their respective Affiliates
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.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business or conditions (financial or otherwise) or in the result of operations
of the Surgery Center, Borrower, SARC/Ft. Xxxxx 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 Borrower:
(a) To pay the principal of and interest on the Note in accordance
with the terms thereof and to satisfy all Borrower's other liabilities to the
Bank hereunder,
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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;
(b) To repay the Bank all amounts advanced by the Bank hereunder
on behalf of 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 or rent; 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 the Surgery Center, Borrower, Guarantor or
SARC/Ft. Xxxxx 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;
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(c) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(d) Liens of mechanics, materialmen, warehousemen, carriers, or
other like liens, securing obligations in the ordinary course of business that
are not yet delinquent;
(e) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(f) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property by Borrower, Guarantor, the Surgery Center or SARC/Ft.
Xxxxx 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 the Surgery
Center, Borrower, Guarantor or SARC/Ft. Xxxxx;
(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 a Borrower,
the Surgery Center, Guarantor or SARC/Ft. Xxxxx, as applicable, 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.
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"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.
"PRO-FORMA EFFECT" means, in making any calculation to determine if
Borrower is in compliance with Paragraph 6.14, 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 Borrower 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 Borrower 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.
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"QUARTERLY PERIOD" means (a) the Period from the Closing Date to the
next succeeding Quarterly Date and (b) thereafter, any period from the first day
after a Quarterly Date to the next succeeding Quarterly Date.
"REAL PROPERTY" means any real property now owned or leased or
hereafter acquired or leased by the Surgery Center, Borrower, Guarantor or
SARC/Ft. Xxxxx, as applicable.
"RECORDS" means correspondence, memoranda, tapes, books, discs, paper,
magnetic storage and other documents or information of any type, whether
expressed in ordinary or machine language.
"RENTAL EXPENSE" means, with respect to any Person for any period, the
gross real estate rental expenses of such Person for such period (excluding all
personal property rental expense), net of rental income of such Person for such
period, each determined in accordance with generally accepted accounting
principles consistently applied.
"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.
"SARC/FT. XXXXX" is defined in the Recitals.
"SARC/FT. XXXXX GUARANTY" means the Guaranty and Suretyship Agreement
in the form attached as Exhibit A-2 to be executed by SARC/Ft. Xxxxx at the
Closing.
"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 AGREEMENT" means the Subordination Agreement to be
delivered pursuant to Paragraph 3.1 hereof.
"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.
"SURGERY CENTER" is defined in the Recitals.
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"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 Borrower 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.
"UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default
SECTION 2. THE LOAN.
2.1 The Loan. Subject to the terms and conditions of and relying
on the representations, warranties and covenants contained in this Agreement,
Bank agrees to fund to the Borrower an aggregate maximum principal amount not to
exceed $5,900,000 to be further loaned to SARC/Ft. Xxxxx to fund the acquisition
by SARC/Ft. Xxxxx of a fifty-one percent (51%) membership interest in the
Surgery Center. Subject to the terms and conditions of the Agreement, Bank shall
fund the Loan in one advance on the date of this Agreement, net of reasonable
fees and expenses of Bank, including, without limitation, the reasonable fees of
counsel to Bank.
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.
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(d) The Borrower shall pay to Bank, if and so long as
Bank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurodollar Liabilities, additional interest on
the unpaid principal amount of the Loan, from such time as Bank is so required
to maintain reserves until said principal amount is paid in full, at an interest
rate per annum equal at all times to the remainder obtained by subtracting (i)
the LIBO Rate for the Interest Period from (ii) the rate obtained by dividing
the LIBO Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period, payable on each date on which interest is
payable. Such additional interest shall be determined by Bank who shall notify
Borrower thereof.
(e) From time to time, the Bank shall send the Borrower
statements of all amounts due hereunder which statements, absent manifest error,
shall be considered correct and conclusively binding on the Borrower unless a
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 among 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 account number
003782866886.
13
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.
2.3 Closing Fee. An aggregate nonrefundable fee (the "Closing
Fee") shall be due and payable in full on the earlier of (i) October 31, 2001,
or (ii) the date of the Syndicated Facility Closing. If the Syndicated Facility
Closing does not occur before October 31, 2001, the Closing Fee shall be
$30,000, and it shall be due on October 31, 2001. If the Syndicated Facility
Closing occurs before October 31, 2001, the Closing Fee shall be due on the date
of the Syndicated Facility Closing, and the Closing Fee shall be equal to
Number of days from July 31, 2001
to the date of Syndicated Facility Closing
$30,000 * -------------------------------------------
92
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
14
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 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 Borrower 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
15
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
(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 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 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
Loan based on the LIBO Rate, 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.
16
(c) Upon prepayment of the Loan on a date other than the
relevant Interest Payment Date (other than prepayment due to the Syndicated
Facility Closing), 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 subparagraph 2.7(c) to the contrary
notwithstanding, the premiums payable upon any such prepayment shall not exceed
the amount, if any, reasonably determined by Bank to be the difference between
the rate of interest then applicable to the Loan and the yield that Bank could
receive upon reinvestment in the "Floor Reinvestment" of so much of the Loan as
is prepaid. For purposes hereof, "Floor Reinvestment" shall mean an investment
for the time period from the date of such prepayment to the end of the current
Interest Period applicable to the Loan at an interest rate per annum equal to
the Federal Fund Rate "offered" as published in the Wall Street Journal on the
date of such prepayment. All determinations, estimates, assumptions, allocations
and the like required for the determination of such premiums shall be made by
Bank in good faith and shall be presumed correct absent demonstrable error.
SECTION 3. CONDITIONS PRECEDENT
The obligation of the Bank to fund the Loan is subject to the following
conditions precedent:
3.1 Documents Required for the Closing. The Borrower shall have
delivered to the Bank prior to the initial disbursement of the Loan the
following:
(a) The Note;
(b) The ARC Guaranty, duly executed by the Guarantor, and
the SARC/Ft. Xxxxx Guaranty, duly executed by SARC/Ft. Xxxxx;
(c) The Pledge Agreement in the form attached hereto as
Exhibit D-1 duly executed by SARC/Ft. Xxxxx, and the Pledge Agreement in the
form attached hereto as Exhibit D-2 duly executed by ARC Financial Services
Corporation;
(d) Subordination Agreement, in form and substance
acceptable to Bank, duly executed by ARC Management Services, Inc.;
(e) Landlord's Lien Waiver, Estoppel, and Agreement in
form and substance acceptable to Bank, duly executed by Borrower's Landlord;
(f) Copies of the resolutions of the board of directors
of Borrower, of the board of directors of the Guarantor, and of the board of
directors of SARC/Ft.
17
Xxxxx, respectively, certified by the corporate secretary or assistant secretary
of each as of the date of Closing, authorizing the execution, delivery and
performance of this Agreement and, as applicable, the Note, the Loan Documents,
and each other document to be delivered pursuant hereto;
(g) A copy of the Constituent Documents of the Borrower,
the Surgery Center, SARC/Ft. Xxxxx and Guarantor, certified as of the most
recent date practicable, by the applicable Secretary of State or by the
secretary of such Person, as applicable;
(h) A certificate dated the date of the Closing of the
secretary of Borrower, the Guarantor and SARC/Ft. Xxxxx as to the incumbency and
signatures of their respective officers executing this Agreement, the Note, the
ARC Guaranty, the SARC/Ft. Xxxxx Guaranty, the Collateral Documents, and each
other document to be delivered pursuant hereto;
(i) With respect to Borrower, the Surgery Center,
SARC/Ft. Xxxxx 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;
(j) A written opinion of counsel to the Borrower,
SARC/Ft. Xxxxx and Guarantor dated the date of the Closing, in form satisfactory
to the Bank.
(k) A certificate, dated the date of the Closing, signed
by the president, vice president, chief financial officer, or corporate
controller of the Borrower 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.
SECTION 4. COLLATERAL SECURITY
Intentionally omitted.
18
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 corporation
duly organized, validly existing and in good standing under the Laws of the
State of Tennessee; Guarantor is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Tennessee; SARC/Ft. Xxxxx is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Tennessee; the Surgery Center is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware; ARC Financial Services Corporation is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Tennessee; SARC/Ft. Xxxxx does not own any interests in any Person other than
the Surgery Center; the Surgery Center does not own any interest in any other
Person; the Borrower, the Surgery Center, Guarantor and SARC/Ft. Xxxxx 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.
5.2 No Conflicting Agreement. None of the Borrower, the Surgery
Center, the Guarantor or SARC/Ft. Xxxxx 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 Borrower, the Surgery Center, the Guarantor, ARC Financial Services
Corporation or SARC/Ft. Xxxxx, or violate any Laws, or result in a default under
any material contract, agreement, or instrument to which Borrower, the Surgery
Center, the Guarantor, ARC Financial Services Corporation or SARC/Ft. Xxxxx is a
party or by which Borrower, the Surgery Center, Guarantor or SARC/Ft. Xxxxx 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 Borrower, the
Surgery Center, the Guarantor or SARC/Ft. Xxxxx except in favor of the Bank;
5.3 Capacity. The Borrower, the Guarantor, ARC Financial Services
Corporation and SARC/Ft. Xxxxx 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
19
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 Capitalization. The Borrower owns all of the issued and
outstanding stock of Guarantor; Guarantor owns all of the issued and outstanding
stock of ARC Financial Services Corporation; ARC Financial Services Corporation
owns all of the issued and outstanding stock of SARC/Ft. Xxxxx; SARC/Ft. Xxxxx
owns a fifty-one percent (51%) limited liability company interest in the Surgery
Center; all of such stock and limited liability company interests 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 Limited Liability Company Operating Agreement of the Surgery
Center;
5.6 Litigation. There is no pending or threatened order, notice,
claim, litigation, proceeding or investigation against or affecting Borrower,
the Surgery Center, the Guarantor or SARC/Ft. Xxxxx, except where the same could
not be reasonably expected to have a Material Adverse Effect;
5.7 Title. SARC/Ft. Xxxxx and the Surgery Center each 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, the Surgery Center or SARC/Ft. Xxxxx 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, neither SARC/Ft. Xxxxx nor the Surgery Center has any Indebtedness of any
nature;
5.10 Taxes. The Borrower, the Surgery Center, the Guarantor and
SARC/Ft. Xxxxx have filed all federal, state and local tax returns and other
reports
20
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 Surgery Center, the Guarantor and SARC/Ft. Xxxxx have complied with all
applicable Laws with respect to: (1) any licenses, restrictions, specifications,
or other requirement pertaining to services that such Person 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 Borrower, the Surgery Center, the
Guarantor or SARC/Ft. Xxxxx in connection with the execution and delivery of the
Loan Documents or the undertaking or performance of any obligation thereunder
has been duly obtained or effected; further, no authorization, consent, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery or performance by
Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx 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 Borrower,
the Guarantor or SARC/Ft. Xxxxx contained herein or in any certificate or other
document furnished in connection with the Loan, in light of the circumstances in
which they were made, by Borrower, the Guarantor or SARC/Ft. Xxxxx pursuant to
this Agreement contains any untrue statement of material fact;
5.14 Environmental Compliance. Borrower, the Surgery Center, the
Guarantor or SARC/Ft. Xxxxx 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 date of the Closing, neither SARC/Ft. Xxxxx nor the Surgery
Center has 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
21
equipment leases); all parties to all such material real estate leases,
contracts and other commitments to which Borrower or the Surgery Center is a
party have to the best of Borrower's knowledge complied with the provisions of
such leases, contracts and other commitments; no party is in default under any
provision thereof; and no event has occurred which, but for the giving of notice
or the passage of time, or both, would constitute a default;
5.16 No Commissions. Other than with respect to the fees payable to
the Bank hereunder, neither the Borrower nor any of its Affiliates has made any
agreement or has taken any action which may cause anyone to become entitled to a
commission or finder's fee as a result of the making of the Loan;
5.17 ERISA. Neither the Borrower nor any of its Affiliates 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 Related Party Payments. Except as set forth on Schedule 5.18,
neither SARC/Ft. Xxxxx nor the Surgery Center is obligated to make any payments
to any of their respective Affiliates.
5.19 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:
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 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) with respect to the Surgery Center and the Guarantor and within 45 days
after the close of each calendar month (except for the end of each fiscal
quarter) with respect to the Borrower: (i) income statements of the Surgery
Center for such monthly period; (ii) balance sheets of the Surgery Center 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 Borrower for such monthly period; and (vi) consolidated balance
sheets of Borrower as of the end of such monthly period; - all in reasonable
detail, subject to year-end audit adjustments and certified by the
22
president or principal financial officer of the Surgery Center, Guarantor or
Borrower, 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): (i) statements of cash flows of the Surgery Center for such
quarterly year-to-date period; (ii) income statements of the Surgery Center for
such quarterly period; (iii) balance sheets of the Surgery Center 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 Borrower for such quarterly year-to-date period; (viii)
consolidated and consolidating income statements of Borrower for such quarterly
period; and (ix) consolidated and consolidating balance sheets of Borrower 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 Surgery Center, Guarantor or Borrower (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 Surgery Center, the Guarantor or
Borrower (as applicable): (i) statements of cash flows of the Surgery Center for
such Fiscal Year; (ii) income statements of Borrower for such Fiscal Year; (iii)
balance sheets of the Surgery Center 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 Borrower for such Fiscal Year; (viii)
consolidated income statements of Borrower for such Fiscal Year; (ix) balance
sheets of Borrower 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 Borrower shall be audited by independent certified public
accountants selected by the Borrower 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 Surgery Center 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;
23
(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 SARC/Ft. Xxxxx (on
behalf of the Surgery Center), the Guarantor and Borrower (as applicable)
stating that: (i) such officer has individually reviewed the provisions of this
Agreement; (ii) a review of the activities of the Surgery Center, the Guarantor
and Borrower 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 Surgery Center, the Guarantor and Borrower have
fulfilled their respective obligations under this Agreement; and (iii) to the
best of such officers' knowledge, the Guarantor and Borrower 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
Guarantor or Borrower 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 6.14, 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 the Surgery
Center, the Guarantor or Borrower, copies of all management letters and any
other reports which are submitted to the Surgery Center, the Guarantor or
Borrower by its independent accountants in connection with any annual or interim
audit of the Records of the Surgery Center, the Guarantor or Borrower by such
accountants;
(f) On or before April 30 of each year, a proforma budget
for Borrower, Guarantor and the Surgery Center (including both projected
maintenance Capital Expenditures and other Capital Expenditures) for such Fiscal
Year, in form reasonably satisfactory to the Bank; and
(g) From time to time such additional information
regarding the financial condition or business of the Surgery Center, the
Borrower, the Guarantor or SARC/Ft. Xxxxx as the Bank may reasonably request.
6.3 Good Condition. The Borrower, the Surgery Center, the
Guarantor and SARC/Ft. Xxxxx 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 Surgery Center, the
Guarantor and SARC/Ft. Xxxxx 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 (other than the Surgery Center's policy)
shall name the
24
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 Surgery Center,
the Guarantor and SARC/Ft. Xxxxx 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 Surgery
Center, the Guarantor and SARC/Ft. Xxxxx 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 SARC/Ft. Xxxxx (on its
own behalf and on behalf of the Surgery Center) will furnish the Bank with
copies of federal income tax returns filed.
6.6 Records and Inspection. The Borrower, the Surgery Center, the
Guarantor and SARC/Ft. Xxxxx 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 Surgery Center, the Guarantor and SARC/Ft. Xxxxx 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 Payment of Indebtedness. The Borrower, the Surgery Center, the
Guarantor and SARC/Ft. Xxxxx 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 Borrower, the Surgery Center, the Guarantor or
SARC/Ft. Xxxxx 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 such Person and
be reimbursed by such Person therefor.
6.9 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
25
Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx 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 Borrower, the Surgery Center, the
Guarantor or SARC/Ft. Xxxxx.
6.10 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 Borrower or any
Affiliate to observe any of their respective undertakings under any of the Loan
Documents.
6.11 Notice of Changes. The Borrower will notify Bank thirty (30)
days in advance of any change in (i) the name of SARC/Ft. Xxxxx, or (ii) the
state of organization of SARC/Ft. Xxxxx, by merger or otherwise. Prior to the
Surgery Center establishing any new place of business, if requested by Bank,
Borrower will deliver to Bank a Landlord's Lien Waiver, Estoppel and Agreement
in the same form as executed at the Closing.
6.12 Environmental Compliance. If the Bank has reason to believe
that Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx has failed to
comply with any material 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 Surgery Center, the Guarantor or SARC/Ft. Xxxxx 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' 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' 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.
6.13 Notice of Environmental Action. If Borrower, the Surgery
Center, the Guarantor or SARC/Ft. Xxxxx shall:
(a) receive written notice that any material violation of
any Environmental Laws may have been committed or is about to be committed by
Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx;
26
(b) receive written notice that any administrative or
judicial complaint or order has been filed or is about to be filed against
Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx alleging any
material violation of any Environmental Laws or requiring Borrower, the Surgery
Center, the Guarantor or SARC/Ft. Xxxxx 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 Borrower, the
Surgery Center, the Guarantor or SARC/Ft. Xxxxx is liable or responsible for
costs associated with the response to cleanup, stabilization or neutralization
of any environmental activity;
then the Borrower, the Guarantor or SARC/Ft. Xxxxx (on its own behalf and on
behalf of the Surgery Center), as applicable, shall provide the Bank with a copy
of such notice within ten (10) Business Days of receipt thereof. Subject to the
right of the Borrower, the Surgery Center, the Guarantor or SARC/Ft. Xxxxx to
contest in good faith any such actions or proceedings, the Borrower, the Surgery
Center, the Guarantor and/or SARC/Ft. Xxxxx 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 Surgery Center, the Guarantor
or SARC/Ft. Xxxxx.
6.14 Financial Ratios. The Borrower will maintain or cause to be
maintained, the following financial ratios and covenants:
(a) Beginning with the Quarterly Period ending September
30, 2001, a ratio of the Surgery Center's Cash Flow to the Surgery Center's Debt
Service of not less than 1.10:1.00.
(b) At all times, the Shareholders' Equity of Borrower,
calculated on a consolidated basis, shall be greater than the sum of (1) ninety
percent (90%) of the shareholder's equity of Borrower at December 31, 2000, plus
(2) eighty-five percent (85%) of the sum of (a) the aggregate amount of equity
capital contributed to Borrower after December 31, 2000, plus (b) the aggregate
cumulative positive net income (without deduction for any negative net income)
of Borrower after December 31, 2000, all computed in accordance with GAAP.
(c) 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) Borrower's
Consolidated Funded Debt less (B) Borrower's Excess Cash to (ii) Borrower's
consolidated EBITDA for such Quarterly Period, giving Pro-Forma Effect to any
Acquisition
27
made and any Indebtedness incurred therewith as of the date of determination,
shall be less than 3.50:1.00.
(d) At all times, the sum of the Surgery Center's
Shareholder's Equity plus the outstanding principal balance of all Indebtedness
for money borrowed from Guarantor by the Surgery Center shall be greater than
$2,000,000.
6.15 Symbion Financing. If, after the date hereof, Borrower enters
into any financing arrangement which imposes covenants upon Borrower that are
more restrictive than, or in addition to, the covenants imposed hereby, Borrower
will promptly notify Bank, and Borrower, Guarantor, and SARC/Ft. Xxxxx will
promptly execute any documentation reasonably requested by Bank to add such
covenants to this Agreement.
SECTION 7. NEGATIVE COVENANTS
Borrower and Guarantor hereby covenant and agree, jointly and
severally, as follows:
7.1 Merger or Reorganization. None of the Guarantor, SARC/Ft.
Xxxxx, or the Surgery Center will enter into any merger, consolidation,
reorganization or recapitalization, except that (i) one or more Subsidiaries of
Guarantor (other than SARC/Ft. Xxxxx or the Surgery Center) 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.
7.2 Sale of Assets. None of the Borrower, the Surgery Center,
Guarantor or SARC/Ft. Xxxxx will sell, transfer, lease or otherwise dispose of
all or any material part of its assets; provided, however, Borrower, the Surgery
Center, Guarantor and SARC/Ft. Xxxxx 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. Neither SARC/Ft. Xxxxx nor the Surgery Center
will: (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 the Surgery Center may make such covenant or agreement
with respect to
28
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. SARC/Ft. Xxxxx will not incur,
create, assume, or permit to exist any Indebtedness except existing Indebtedness
as set forth in Schedule 5.9. The Surgery Center will not incur, create, assume,
or permit to exist any Indebtedness except: (1) existing Indebtedness as set
forth in Schedule 5.9; (2) trade Indebtedness incurred in the ordinary course of
business; (3) contingent Indebtedness permitted by Paragraph 7.8; (4)
Indebtedness secured by Permitted Liens; and (5) 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, the Surgery Center,
Guarantor or SARC/Ft. Xxxxx 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, the Surgery Center,
Guarantor or SARC/Ft. Xxxxx will 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. Neither SARC/Ft. Xxxxx nor the Surgery Center
will 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. Neither SARC/Ft. Xxxxx nor the Surgery
Center will 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 incurred in the ordinary course of business and (3)
the obligations pursuant to the SARC/Ft. Xxxxx Guaranty.
7.9 Subsidiary. Except for Permitted Investments, neither SARC/Ft.
Xxxxx nor the Surgery Center will form any Subsidiary or make any investment in
or make any loan in the nature of any investment to any Person.
7.10 Loans and Advances. None of the Borrower, the Surgery Center,
Guarantor or SARC/Ft. Xxxxx 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.
29
7.11 Investments. None of the Borrower, the Surgery Center,
Guarantor or SARC/Ft. Xxxxx 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; (3) operating assets that hereafter
become non-operating assets; and (4) with respect to SARC/Ft. Xxxxx, its limited
liability company interests in the Surgery Center.
7.12 Acquisitions. Neither SARC/Ft. Xxxxx nor the Surgery Center
will make an Acquisition of any Person.
7.13 Affiliate Transactions. None of the Borrower, the Surgery
Center, Guarantor or SARC/Ft. Xxxxx 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 such Person than those that
would be obtainable at the time from any Person who is not an Affiliate.
7.14 ERISA Compliance. Neither the Borrower nor any of its
Affiliates will establish or set up any Defined Benefit Pension Plans, except
for a Defined Benefit Pension Plan assumed by SARC/Ft. Xxxxx in connection with
an Acquisition.
7.15 Symbion Merger or Reorganization. Borrower will not enter into
any merger, consolidation, reorganization or recapitalization.
7.16 SARC/Ft. Xxxxx Assets. SARC/Ft. Xxxxx will not own any assets
other than its limited liability company interest in the Surgery Center.
7.17 Surgery Center Organic Documents. Borrower will not suffer or
permit any amendment to the Certificate of Formation or Limited Liability
Company Agreement of the Surgery Center or enter into any agreement that would
limit or change the rights of SARC/Ft. Xxxxx with respect thereto.
SECTION 8. DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) The Borrower shall fail to pay within three (3)
business days of the date when due any installment of principal or interest
payable hereunder, or shall fail to pay within five (5) business days of written
notice any fee payable hereunder.
(b) The failure to achieve any of the financial covenants
contained in Paragraph 6.14.
30
(c) The Borrower, SARC/Ft. Xxxxx 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 6.14, or the breach of any negative
covenant in Section 7 of this Agreement, Borrower, SARC/Ft. Xxxxx 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, the Surgery Center, SARC/Ft. Xxxxx 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 Borrower, the
Surgery Center, SARC/Ft. Xxxxx or Guarantor that results in a Material Adverse
Change in the financial condition of Borrower, the Surgery Center or Guarantor,
as determined by Bank in its reasonable discretion.
(f) Any financial statement, representation, warranty or
certificate made or furnished by Borrower, the Surgery Center, SARC/Ft. Xxxxx 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) Borrower, the Surgery Center, SARC/Ft. Xxxxx 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, the Surgery Center, SARC/Ft. Xxxxx 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 Borrower, the Surgery Center, SARC/Ft. Xxxxx or Guarantor,
or shall be commenced against Borrower, the Surgery Center, SARC/Ft. Xxxxx or
Guarantor, and not dismissed within sixty (60) days of such an involuntary
filing.
(i) A receiver or trustee shall be appointed for
Borrower, the Surgery Center, SARC/Ft. Xxxxx or Guarantor or for any substantial
part of their respective assets, or any proceedings shall be instituted for the
dissolution or the
31
full or partial liquidation of Borrower, the Surgery Center, SARC/Ft. Xxxxx or
Guarantor, or Borrower, the Surgery Center, SARC/Ft. Xxxxx or Guarantor shall
discontinue business or materially change the nature of any of their respective
businesses.
(j) A judgment creditor of Borrower, the Surgery Center,
SARC/Ft. Xxxxx 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 Borrower,
the Surgery Center, SARC/Ft. Xxxxx 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) Borrower, the Surgery Center, SARC/Ft. Xxxxx 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 or any
Affiliate in contravention of any provision of the Subordination Agreement.
(o) Any event which results in the principal executive
management functions of SARC/Ft. Xxxxx 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 Borrower entitled to vote in the election of directors, other than
securities having such power 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
32
(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 Borrower'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 applicable jurisdiction. 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 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 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 Borrower hereby agrees shall be reasonable
notice of such sale or other disposition. 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
33
Collateral, free from any right of redemption on the part of 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 Borrower, exclude
therefrom 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 SARC/Ft. Xxxxx 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' and the Surgery Center's operations, business and condition
9.3 Enforcement and Waiver by the Bank. The Bank shall have the
right at all times to enforce the provisions of the Loan Documents in strict
accordance with the terms thereof, notwithstanding any conduct or custom on the
part of the Bank in refraining from so doing at any time or times. The failure
of the Bank at any time or times to enforce their rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of the Loan
Documents or as having in any way or manner modified or waived the same. All
rights and remedies of the
34
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, SARC/Ft. Xxxxx,
the Surgery Center or
Guarantor: Symbion, Inc.
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, Borrower:
(a) Waives: (1) protest of all commercial paper at any
time held by the Bank on which Borrower, Guarantor or SARC/Ft. Xxxxx is in any
way liable;
35
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 Borrower, Guarantor or SARC/Ft. Xxxxx, 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. Borrower has
any 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.
36
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, at
Bank's election, in the city of 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
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help remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
9.14 Right of Setoff. Borrower, Guarantor and SARC/Ft. Xxxxx
acknowledge that Bank shall retain its common law right of setoff with respect
to any of the Obligations.
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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. SYMBION, INC.
BY: /s/ Xxxxx Xxxxxxx BY: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------- ---------------------------
TITLE: Sr. Vice President TITLE: Assistant Secretary
------------------------------------ -----------------------
SYMBION AMBULATORY RESOURCE
CENTRES, INC.
BY: /s/ Xxxxxxx X.X. Xxxx
------------------------------------
TITLE: Chief Development Officer and Sr. VP
------------------------------------
BY: /s/ Xxxxxx X. Xxxxx
------------------------------------
TITLE: Chief Financial Officer and Secretary
------------------------------------
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