<PAGE> 1
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............to..........
Commission file number 0-10454
UNIVERSAL HEALTH SERVICES, INC.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 23-2077891
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
---------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (610) 768-3300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common shares outstanding, as
of July 31, 1994.
Class A 1,090,527
Class B 13,062,174
Class C 109,622
Class D 23,506
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Page One of Twelve Pages
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UNIVERSAL HEALTH SERVICES, INC.
I N D E X
<TABLE>
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PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE NO.
--------
Item 1. Financial Statements
Condensed Consolidated Statements of Income -
Three Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . Three
Six Months Ended June 30, 1994 and 1993
Condensed Consolidated Balance Sheets - June 30, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Four
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . Five
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . Six & Seven
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . . . . Eight, Nine & Ten
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eleven
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Twelve
</TABLE>
Page Two of Twelve Pages
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PART I. FINANCIAL INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's omitted except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- --------------------------
1994 1993 1994 1993
------------------------- --------------------------
<S> <C> <C> <C> <C>
Net revenues $ 192,199 $ 187,453 $ 386,631 $ 382,758
Operating charges:
Operating expenses 158,665 157,944 316,070 320,017
Depreciation and amortization 10,316 9,196 20,236 18,327
Lease and rental expense 8,505 8,480 16,996 16,826
Interest expense 1,356 2,098 3,178 4,733
----------- ----------- ----------- -----------
178,842 177,718 356,480 359,903
----------- ----------- ----------- -----------
Income before income taxes 13,357 9,735 30,151 22,855
Provision for income taxes 5,204 3,257 11,711 7,766
----------- ----------- ----------- -----------
NET INCOME $ 8,153 $ 6,478 $ 18,440 $ 15,089
=========== =========== =========== ===========
Earnings per common
and common equivalent share: $ 0.57 $ 0.46 $ 1.29 $ 1.06
=========== =========== =========== ===========
Weighted average number of
common shares and equivalents: 14,395 14,862 14,578 14,875
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financia
Page Three of Twelve Pages
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UNIVERSAL HEALTH SERVICES,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------- -----------
1994 1993
---- -----
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,658 $ 569
Accounts receivable, net 77,979 78,605
Supplies 13,370 12,617
Deferred income taxes 14,424 7,733
Other current assets 2,799 2,475
------------- -------------
Total current assets 112,230 101,999
------------- -------------
Property and equipment 559,076 533,941
Less: accumulated depreciation (248,563) (231,509)
------------- -------------
310,513 302,432
------------- -------------
OTHER ASSETS:
Excess of cost over fair value of net
assets acquired 36,021 38,089
Deferred charges 1,449 1,697
Other 20,787 16,205
------------- -------------
58,257 55,991
------------- -------------
$ 481,000 $ 460,422
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 4,940 $ 4,313
Accounts payable and accrued liabilities 82,297 79,639
Federal and state taxes 0 2,547
------------- -------------
Total current liabilities 87,237 86,499
------------- -------------
Deferred income taxes 3,863 3,863
------------- -------------
Other noncurrent liabilities 72,284 70,491
------------- -------------
Long-term debt, net of current maturities 54,884 75,081
------------- -------------
COMMON STOCKHOLDERS' EQUITY:
Class A Common Stock, 1,090,527 shares
outstanding in 1994, 1,139,123 in 1993 11 11
Class B Common Stock, 13,091,284 shares
outstanding in 1994, 12,171,454 in 1993 131 122
Class C Common Stock, 109,622 shares
outstanding in 1994, 114,482 in 1993 1 1
Class D Common Stock, 23,697 shares
outstanding in 1994, 26,223 in 1993 0 0
Capital in excess of par, net of deferred
compensation of $554,000 in 1994
and $291,000 in 1993 100,673 80,878
Retained earnings 161,916 143,476
------------- -------------
262,732 224,488
------------- -------------
$ 481,000 $ 460,422
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
Page Four of Twelve Pages
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UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30,
--------
(000'S UNAUDITED)
-------------------
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $18,440 $15,089
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 20,236 18,327
Provision for self-insurance reserves 5,857 12,050
Reserve for loss on disposition of businesses 0 2,929
Changes in assets & liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable 661 4,265
Accrued interest (2,107) (1,593)
Accrued and deferred income taxes (9,238) (6,944)
Other working capital accounts 5,507 8,214
Other assets and deferred charges (924) (3,283)
Other 3,468 484
Payments made in settlement of self-insurance claims (6,724) (5,643)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 35,176 43,895
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (21,358) (23,735)
Acquisition of property previously leased 0 (3,218)
Acquisition of businesses (1,898) (668)
Advances under long-term notes receivable (4,147) 0
Disposition of assets 500 3,500
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (26,903) (24,121)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings 10,614 0
Reduction of long-term debt (16,195) (25,407)
Issuance of common stock 397 68
Repurchase of common shares 0 (701)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (5,184) (26,040)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,089 (6,266)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 569 6,686
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $3,658 $420
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $5,285 $6,326
========== ==========
Income taxes paid, net of refunds $20,949 $14,710
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page Five of Twelve Pages
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UNIVERSAL HEALTH SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments which, in the opinion of
the Company, are necessary to fairly present results for the interim periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the accompanying disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements, accounting
policies and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
(2) EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common shares
outstanding during the year adjusted to give effect to common stock
equivalents. In April of 1994, the Company called for the redemption of the
$29.9 million, 7 1/2% convertible bonds, of which $10.6 million were redeemed
at par for cash and $19.3 million were converted to 820,103 newly issued shares
of the Company's Class B Common Stock. The bond redemption reduced the
Company's fully diluted number of shares outstanding by 451,233. Prior to this
redemption, the earnings per share were historically adjusted to reflect the
assumed conversion of the Company's convertible debentures. Accordingly, the
earnings per share for the first three months of the six month period ended
June 30, 1994 and the three and six months ended June 30, 1993 have been
adjusted to reflect the assumed conversion of the Company's convertible
debentures.
(3) 1994 AND 1993 UNUSUAL ITEMS
Included in net revenues for the three month period ended June 30, 1994 is $3.0
million of additional revenues received from special Medicaid reimbursement
programs. Included in operating expenses for the three months ended June 30,
1994 is a $2.8 million write-down recorded against the book value of the real
property of a psychiatric hospital owned by the Company and leased to an
unaffiliated third party, which is currently in default under the terms of the
lease. Also included in operating expenses during the second quarter of 1994
is a $1.1 million favorable adjustment made to reduce the Company's worker's
compensation reserves.
Included in net revenues for the three month period ended June 30, 1993 is $4.6
million of additional revenues received from special Medicaid reimbursement
programs. Included in operating expenses for the three months ended June 30,
1993 is a $3.2 million increase in the reserves for the Company's professional
and general liability self-insurance reserves.
Included in net revenues for the six month period ended June 30, 1994 is $6.0
of additional revenues received from special Medicaid reimbursement programs.
Included in operating expenses for the six months ended June 30, 1994 is the
$2.8 million property write-down and the $1.1 million favorable adjustment made
to reduce the Company's workers' compensation reserves, as mentioned above, and
$2.5 million of expenses related to the disposition of businesses.
Included in net revenues for the six month period ended June 30, 1993 is $9.2
million of additional revenues received from a special Medicaid reimbursement
program. Included in operating expenses for the six months ended June 30, 1993
is approximately $4.1 million of expense related to the disposition of
ancillary businesses and a $3.2 million increase in the reserves for the
Company's general and professional self-insurance reserves.
Page Six of Twelve Pages
<PAGE> 7
(4) OTHER LIABILITIES
Other noncurrent liabilities include the long-term portion of the Company's
professional and general liability and workers' compensation reserves.
(5) COMMITMENTS AND CONTINGENCIES
Under certain agreements, the Company has committed or guaranteed an aggregate
of $24,000,000 related principally to the Company's self- insurance programs
and as support for various debt instruments and loan guarantees.
(6) ACQUISITIONS
During the second quarter of 1994, the Company acquired majority interests in
partnerships which own and operate two radiation therapy centers located in
Indiana for $1.9 million in cash. One of these centers is currently operating
and the other center, which is currently under construction, is scheduled to
commence operations during the third quarter of 1994. Also during the second
quarter, the Company advanced $4.1 million in loans and entered into
contractual arrangements to manage, (with the intent of acquiring majority
interest in partnerships which will own and operate), four radiation therapy
centers located in Kentucky. Two of these centers are currently operating and
the other two, which are currently being constructed, are scheduled to commence
operations during the fourth quarter of 1994 and the first quarter of 1995.
(7) SUBSEQUENT EVENTS
Subsequent to June 30, 1994, the Company agreed to acquire a 112 bed acute care
hospital for approximately $14 million and invest up to an additional $20
million to $30 million to renovate the existing facility and construct an
additional facility in Edinburg, Texas. This acquisition is expected to be
finalized during the third or fourth quarter of 1994. The Company also
purchased a majority interest in a partnership which will own and operate an
ambulatory surgery center in California. Additionally, the Company merged the
operations of an additional ambulatory surgery center into its majority owned
partnership which owns and operates an existing ambulatory surgery center
located in California.
Page Seven of Twelve Pages
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the three and six months ended June 30, 1994 increased 11% and
9%, respectively, over the comparable 1993 periods at facilities owned during
both years after excluding the effects of additional revenues received from
special Medicaid reimbursement programs. Despite the continued shift in the
delivery of healthcare services to outpatient care, the Company's acute care
hospitals owned during both periods experienced a 13% and 11% increase in net
revenues resulting from an 11% and 10% increase in admissions and an 8%
increase in patient days during the three and six month period ended June 30,
1994 as compared to the comparable 1993 periods, respectively, due to the
expansion of service lines at many of its hospitals and additional capacity at
two of the Company's larger facilities. Gross outpatient revenues at the
Company's acute care hospitals owned during both periods increased 13% for the
three months ended June 30, 1994 and 16% for the six month period ended June
30, 1994 over the comparable prior year periods and continues to comprise 24%
of gross patient revenues for the three months ended June 30, 1994 and 1993 and
23% for the six months ended June 30, 1994 and 1993. Advances in medical
technologies permit more services to be provided on an outpatient basis, and
there is increased pressure from Medicare, Medicaid, health maintenance
organizations (HMOs), preferred provider organizations (PPOs) and insurers to
reduce hospital stays and provide services, when possible, on a less expensive
outpatient basis.
To take advantage of the trend toward increased outpatient services, the
Company has continued to invest in the acquisition and development of
outpatient surgery and radiation therapy centers. The Company currently
operates or manages fifteen ambulatory treatment centers, which have
contributed to the increase in the Company's outpatient revenue. The Company
expects the growth in outpatient services to continue, although the rate of
growth may be moderated in the future.
Net revenues at the Company's psychiatric hospitals decreased approximately 4%
and 7%, for the three and six months ended June 30, 1994 as compared to the
comparable 1993 periods, respectively. These decreases were primarily due to a
2% and 5% decrease in patient days at the Company's psychiatric hospitals for
the three and six months ended June 30, 1994 as compared to the comparable 1993
periods, respectively. Although admissions at the Company's psychiatric
facilities increased 16% and 12% for the three and six months ended June 30,
1994 over the comparable 1993 periods, the average length of stay at these
facilities decreased 15% in both of the 1994 periods as compared to the
comparable 1993 periods due to increased emphasis on outpatient treatment
programs. The shift to outpatient care was reflected in higher revenues from
outpatient services, as gross outpatient revenues at the Company's psychiatric
hospitals increased 19% for the three months ended June 30, 1994 and 17% for
the six month period ended June 30, 1994 over the comparable prior year periods
and now comprise 15% and 14% of gross psychiatric patient revenues for the
three and six months ended June 30, 1994, respectively, as compared to 14% and
13% in the comparable 1993 periods, respectively. The trend in outpatient
treatment for psychiatric patients is expected to continue as a result of
advances in patient care and continued cost containment pressures from payors.
The Company received $3.0 million and $4.5 million for the three months ended
June 30, 1994 and 1993 and $6.0 million and $9.1 million for the six months
ended June 30, 1994 and 1993, respectively, from the special Medicaid
reimbursement programs mentioned above. These programs are scheduled to
terminate in August, 1994 and the Company cannot predict whether these programs
will continue beyond the scheduled termination date.
An increased proportion of the Company's revenue is derived from fixed payment
services, including Medicare and Medicaid which accounted for 46% and 40% of
the Company's net patient revenues for the three months ended June 30, 1994 and
1993, respectively and 44% and 40% of the Company's net patient revenues for
the six months ended June 30, 1994 and 1993, respectively, excluding the
additional
Page Eight of Twelve Pages
<PAGE> 9
revenues received from special Medicaid reimbursement programs. The Company
expects Medicare and Medicaid revenues to continue to increase due to the
general aging of the population and expansion of state Medicaid programs. In
addition to the Medicare and Medicaid programs, other payors continue to
actively negotiate the amounts they will pay for services performed. In
general, the Company expects the percentage of its business from managed care
programs, including HMOs and PPOs, to continue to grow. The consequent growth
in managed care networks and the resulting impact of these networks on the
operating results of the Company's facilities vary among the markets in which
the Company operates.
Excluding the effects of the unusual revenue items describe above and the
unusual expense items included in the three and six month periods ended June
30, 1994 and 1993 described below, operating expenses as a percentage of net
revenues decreased to 83% and 82% for the three and six months ended June 30,
1994 as compared to 85% and 84% for the three and six months ended June 30,
1993. Included in operating expenses for the three and six months ended June
30, 1994 is a $2.8 million write-down recorded against the book value of the
real property of a psychiatric hospital owned by the Company and leased to an
unaffiliated third party, which is currently in default under the terms of
the lease, and a $1.1 million favorable adjustment made to reduce the Company's
workers' compensation reserves. Also included in operating expenses for the
six months ended June 30, 1994 is approximately $2.5 million of expenses
related to the disposition of businesses. Included in operating expenses for
the three and six months ended June 30, 1993 is a $3.2 million increase in the
reserves for the Company's professional and general liability self-insurance
reserves and also included in operating expenses for the six months ended June
30, 1993 is approximately $4.1 million of expenses related to the disposition
of ancillary businesses. The increase in the operating margin for the three
and six months ended June 30, 1994 over the comparable 1993 periods is
partially due to the sale of two low margin hospitals during 1993 and lower
insurance costs in 1994. Although the rate of inflation has not had a
significant impact on the results of operations, pressure on operating margins
is expected to continue because, while Medicare fixed payment rates are indexed
for inflation annually, the increases have historically lagged behind actual
inflation.
In addition to the trends described above that continue to have an impact on
operating results, there are a number of other, more general factors affecting
the Company's business. The Company and the healthcare industry as a whole
face increased uncertainty with respect to the level of payor payments because
of national and state efforts to reform healthcare. These efforts include
proposals at all levels of government to contain healthcare costs while making
quality, affordable health services available to more Americans. The Company
is unable to predict which proposals will be adopted or the resulting
implications for providers at this time. However, the Company believes that
the delivery of primary care, emergency care, obstetrical and psychiatric
services will be an integral component of any strategy for controlling
healthcare costs and it also believes it is well positioned to provide these
services.
Interest expense decreased 35% and 33% for the three and six months ended June
30, 1994 as compared to the comparable 1993 periods due to lower average
outstanding borrowings.
Depreciation and amortization expense increased 12% and 10% for the three and
six months ended June 30, 1994 as compared to the comparable 1993 periods due
primarily to increased depreciation and amortization expense related to the
Company's acquisitions of ambulatory treatment centers.
The effective tax rate was 39.0% and 33.5% for the three months ended June 30,
1994 and 1993, respectively, and 38.8% and 34.0% for the six months ended June
30, 1994 and 1993, respectively. The increase in the effective rate during the
1994 periods as compared to the 1993 periods was due primarily to the 1993
periods including a reduction in the state tax provision.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1994, net cash provided by operating activities
was $35.2 million as compared to $43.9 million in the comparable 1993 period.
The decrease during the 1994 period as compared to the 1993 period was
primarily due to a $3.2 million decrease in the revenues from special Medicaid
reimbursement programs, and a $6.2 million increase in income tax payments.
Page Nine of Twelve Pages
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During the first six months of 1994, the Company used $21.4 million of its
operating cash flow to finance capital expenditures, $4.1 million to advance
loans to its managed radiation therapy centers located in Kentucky, $1.9
million to acquire majority interest in partnerships which own and operate
ambulatory treatment centers and $5.6 million to reduce outstanding debt.
Subsequent to June 30, 1994, the Company replaced its existing $72.4 million
revolving credit agreement with a new $125 million revolving credit agreement.
The new agreement, which expires in August of 1999, provides for interest, at
the Company's option, at the prime rate, the certificate of deposit rate plus
5/8% to 1 1/8% or the Euro-dollar rate plus 1/2% to 1%. The margins over the
certificate of deposit and the Euro-dollar rates are based upon certain
leverage and coverage ratios. A commitment fee ranging from 1/8% to 3/8% is
required on the unused portion of this commitment. At June 30, 1994, the
Company had approximately $10 million of unused borrowing capacity under its
commercial paper program and $123 million of unused borrowing capacity under
the terms of its new $125 million revolving credit facility.
Page Ten of Twelve Pages
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PART II. OTHER INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The following information relates to matters submitted to the stockholders
of Universal Health Services, Inc. (the "Company") at the Annual Meeting of
Stockholders held on May 18, 1994.
(b) Not applicable.
(c) At the meeting, the following proposals, as described in the proxy
statement delivered to all the Company's stockholders were approved by the
votes indicated:
Adoption of the Amendment to the Company's 1989 Non-Employee Director Stock
Option Plan
Votes cast in favor 13,644,098
Votes cast against 24,815
Votes abstained 2,324
Broker non-votes 0
Adoption of the Company's 1994 Executive Incentive Plan:
Votes cast in favor 13,621,936
Votes cast against 44,467
Votes abstained 4,834
Broker non-votes 0
Election by Class A & Class C stockholders of Class I Directors, Dr. Martin
Meyerson and Mr. John H. Herrell:
Martin Meyerson John H. Herrell
--------------- ---------------
Votes cast in favor 1,251,140 1,251,140
Votes withheld 0 0
(d) Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit:
10.1 Credit Agreement dated as of August 2, 1994 among Universal Health
Services, Inc., Certain Participating Banks and Morgan Guaranty Trust Company
of New York, as Agent.
11. Statement re computation of per share earnings is set forth on Page Six in
Note 2 of the Notes to Condensed Consolidated Financial Statements.
All other items of this Report are inapplicable.
Page Eleven of Twelve Pages
<PAGE> 12
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Universal Health Services, Inc.
(Registrant)
Date: August 11, 1994 /s/ Kirk E. Gorman
-----------------------------------------
Kirk E. Gorman, Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer).
Page Twelve of Twelve Pages
<PAGE> 13
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
10.1 Credit Agreement dated as of August 2, 1994 among
Universal Health Services, Inc., Certain
Participating Banks and Morgan Guaranty Trust
Company of New York, as Agent.
<PAGE> 1
CONFORMED COPY
$125,000,000
CREDIT AGREEMENT
dated as of
August 2, 1994
among
Universal Health Services, Inc.
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
----------------------
J.P. Morgan Securities Inc.,
Arranger
<PAGE> 2
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.02. Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.03. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.04. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.05. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.06. Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.07. Participation, Arrangement and Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.08. Optional Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.09. Mandatory Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.10. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.11. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.12. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.13. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.02. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.02. Corporate and Governmental Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.04. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.06. Ownership of Capital Stock of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.07. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.08. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.10. Not an Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.02. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.03. Maintenance of Property; Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.04. Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.05. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.06. Inspection of Property, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.07. Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.08. Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.09. EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.10. Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.12. Restricted Payments; Prepayments of Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.13. Consolidations, Mergers, Sales of Assets, Dissolutions, Reorganizations, etc . . . . . . . . . . . . . . 37
SECTION 5.14. Subsidiary Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.15. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.16. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.17. Termination of the Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.18. Additional Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.04. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.06 Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.04. Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.05. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.07. Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.08. Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.09. Counterparts; Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
Pricing Schedule
Schedule 1 -- Subsidiaries
Schedule 2 -- Insurance
Exhibit A - Note
Exhibit B-1 - Opinion of Counsel for the Borrower
Exhibit B-2 - Opinion of the General Counsel of the Borrower
Exhibit C - Opinion of Special Counsel for the
Agent
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Subsidiary Guarantee Agreement
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<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of August 2, 1994 among UNIVERSAL HEALTH
SERVICES, INC., the BANKS listed on the signature pages hereof and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Acceptable Insurer" means an insurance company (i) having an
A.M. Best rating of "A" or better and being in a financial size category of "X"
or larger (as such category is defined as of the date hereof) or (ii) otherwise
reasonably acceptable to the Required Banks.
"Adjusted CD Rate" has the meaning set forth in Section
2.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Agent and
submitted to the Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks under the Loan Documents, and its successors in
such capacity.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.05(b).
<PAGE> 7
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan to be made by a Bank as a Base
Rate Loan pursuant to the applicable Notice of Borrowing or Article VIII.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means Universal Health Services, Inc., a Delaware
corporation, and its successors.
"Borrower's 1993 Form 10-K" means the Borrower's annual report
on Form 10-K for 1993, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended March 31, 1994, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower at the same time by the Banks pursuant to Article II. A
Borrowing is a "Domestic Borrowing" if such Loans are Domestic Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A Domestic
Borrowing is a "CD Borrowing" if such Domestic Loans are CD Loans or a "Base
Rate Borrowing" if such Domestic Loans are Base Rate Loans.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
"CD Loan" means a Loan to be made by a Bank as a CD Loan
pursuant to the applicable Notice of Borrowing.
2
<PAGE> 8
"CD Margin" has the meaning set forth in Section 2.05(b).
"CD Reference Banks" means Chemical Bank, Continental Bank and
Morgan Guaranty Trust Company of New York.
"Collateral Documents" has the meaning set forth in the
Existing Credit Agreement.
"Commitment" means, with respect to each Bank, the amount of
such Bank's Commitment, as such amount is set forth opposite the name of such
Bank on the signature pages hereof, as such amount may be reduced from time to
time pursuant to Sections 2.08 and 2.09.
"Consolidated Capital Expenditures" means, for any period, the
gross additions to property, plant and equipment and other capital expenditures
of the Borrower and its Consolidated Subsidiaries for such period.
"Consolidated Debt" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"Consolidated EBIT" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) to the extent deducted in the
determination thereof, Consolidated Interest Expense, Consolidated Rental
Expense and provision for income taxes plus (or minus) (iii) the amount of any
material nonrecurring items of loss (or gain), adjusted to eliminate the effect
of any such item on the provision for income taxes for such period.
"Consolidated EBITDA" means, for any period, the sum of
Consolidated EBIT for such period plus, to the extent deducted in the
determination thereof, depreciation and amortization expense.
"Consolidated Finance Liabilities" means, at any date, the sum
of (i) Consolidated Debt at such date plus (ii) eight times Consolidated Rental
Expense for the period of four consecutive fiscal quarters most recently ended
on or prior to such date.
"Consolidated Interest Expense" means, for any period, the
interest expense (net of interest income) of the Borrower and its Consolidated
Subsidiaries determined on a consolidated basis for such period.
3
<PAGE> 9
"Consolidated Net Income" for any period means the
consolidated net income of the Borrower and its Consolidated Subsidiaries
determined on a consolidated basis for such period.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined as of such date.
"Consolidated Net Tangible Assets" means, at any date, the Net
Tangible Assets of the Borrower and its Consolidated Subsidiaries determined on
a consolidated basis as of such date.
"Consolidated Rental Expense" means, for any period, the lease
and rental expense of the Borrower and its Consolidated Subsidiaries under all
leases (other than capital leases), determined on a consolidated basis for such
period.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations (and, for purposes of Section 5.16 and the
definitions of Material Debt and Material Financial Obligations, all contingent
obligations) of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all Debt of others Guaranteed
by such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
4
<PAGE> 10
"Derivatives Obligations" of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.05(b).
"EBITDA Ratio" means, at any date, the ratio of Consolidated
Finance Liabilities at such date to Consolidated EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or
5
<PAGE> 11
releases of pollutants, contaminants, Hazardous Substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made by a Bank as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
2.05(c).
"Euro-Dollar Reference Banks" means the principal London
offices of Chemical Bank, Continental Bank and Morgan Guaranty Trust Company of
New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
6
<PAGE> 12
"Existing Credit Agreement" means the Amended and Restated
Credit Agreement dated as of August 21, 1992 among the Borrower, the banks
parties thereto and Morgan Guaranty Trust Company of New York, as agent, as
amended to the Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th 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 Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions as determined by the
Agent.
"Fixed Charge Coverage Ratio" means, at any date, the ratio of
Consolidated EBIT for the period of four consecutive fiscal quarters most
recently ended on or prior to such date to Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum of Consolidated
Interest Expense and Consolidated Rental Expense for such period.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the
7
<PAGE> 13
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guaranty Agreement" means the Guaranty Agreement, dated as of
the date hereof between the Subsidiary Guarantors and the Agent, such Guaranty
Agreement to be substantially in the form of Exhibit E hereto, and as the same
may from time to time be amended, supplemented or otherwise modified.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Intercreditor Agreement" has the meaning set forth in the
Existing Credit Agreement.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
8
<PAGE> 14
(2) with respect to each CD Borrowing, the period commencing on the date of
such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Borrower
may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Leverage Ratio" means, at any date, the ratio of (i)
Consolidated Finance Liabilities at such date to (ii) the sum of such
Consolidated Finance Liabilities plus Consolidated Net Worth at such date.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan and "Loans"
means Domestic Loans or Euro-Dollar Loans or both.
9
<PAGE> 15
"Loan Documents" means this Agreement, the Notes and the
Guaranty Agreement.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Material Debt" means Debt (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal exceeding $1,000,000.
"Material Financial Obligation" means a principal or face
amount of Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations of the Borrower and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, exceeding in the
aggregate $1,000,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Net Tangible Assets" means, as to any Person or other
business unit, its gross assets, net of depreciation and other proper reserves,
less its goodwill and other intangible assets.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
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"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Receivables Financing" means a financing arrangement among
the Borrower, certain Subsidiaries of the Borrower, including a wholly-owned
special purpose Subsidiary of the Borrower and certain other parties pursuant
to which Subsidiaries of the Borrower will sell substantially all of their
accounts receivable from time to time to the special purpose Subsidiary of the
Borrower which will, in turn, sell or pledge such receivables to certain
investors for an aggregate purchase price outstanding not at any time in excess
of $85,000,000.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and "Reference Bank"
means any one of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
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"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the Commitments shall
have been terminated, holding Notes evidencing at least 66 2/3% of the
aggregate unpaid principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its common stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of the
Borrower's capital stock (except shares acquired upon the conversion thereof
into shares of its common stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Revolving Credit Period" means the period from and including
the Effective Date to but excluding the Termination Date.
"Subordinated Debt" of any Person means all Debt which (i) by
its terms is not required to be repaid, in whole or in part, before the
Termination Date, (ii) bears interest at rates not greater than such Person
shall reasonably determine to be the prevailing market rate, at the time such
Subordinated Debt is issued, for interest on comparable subordinated debt
issued by comparable issuers, (iii) is subordinated in right of payment to such
Person's indebtedness, obligations and liabilities to the Banks under the Loan
Documents pursuant to payment and subordination provisions satisfactory in form
and substance to the Required Banks and (iv) is issued pursuant to loan
documents having covenants and events of default that are satisfactory in form
and substance to the Required Banks but that in no event are less favorable,
including with respect to rights of acceleration, to the Borrower than the
terms hereof.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
The term "Subsidiary" shall include, without limitation, each partnership in
which the Borrower or one of its Subsidiaries is a partner which operates
surgical care centers or other health care facilities and each partnership or
other joint venture Person referred to in Section 5.13(b) hereof, except that
any such Person and UHS Receivables Corporation, a
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Delaware corporation, shall not be required to become a Subsidiary Guarantor.
"Subsidiary Guarantors" means the Subsidiaries of the Borrower
party to the Guaranty Agreement.
"Termination Date" means August 2, 1999, or, if such day is
not a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in which
case the Termination Date shall be the next preceding Euro-Dollar Business Day.
"UHRIT" means Universal Health Realty Income Trust, a real
estate investment trust organized under the laws of the State of Maryland.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to
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the Banks; provided that, if the Borrower notifies the Agent that the Borrower
wishes to amend any covenant in Article V to eliminate the effect of any change
in generally accepted accounting principles on the operation of such covenant
(or if the Agent notifies the Borrower that the Required Banks wish to amend
Article V for such purpose), then the Borrower's compliance with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required
Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the Revolving
Credit Period each Bank severally agrees, on the terms and conditions set forth
in this Agreement, to make Loans to the Borrower from time to time in amounts
not to exceed in the aggregate at any one time outstanding the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the aggregate amount of the unused
Commitments) and shall be made from the several Banks ratably in proportion to
their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, repay, or to the extent permitted by Section 2.10,
prepay Loans and reborrow at any time during the Revolving Credit Period under
this Section.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall
give the Agent notice (a "Notice of Borrowing") not later than 11:00 A.M. (New
York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
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(iii) whether the Loans comprising such Borrowing are to be CD
Loans, Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) The provisions of subsection (a) above notwithstanding,
if the Borrower shall not have given a Notice of Borrowing in the manner
provided in subsection (a) above at least one Domestic Business Day before the
last day of the Interest Period applicable to an outstanding Borrowing, then,
unless the Borrower notifies the Agent at least one Domestic Business Day
before such date that it elects not to borrow on such date, the Agent shall be
deemed to have received a Notice of Borrowing specifying (i) that the date of
the proposed Borrowing shall be the last day of the Interest Period applicable
to such outstanding Borrowing, (ii) that the aggregate amount of the proposed
Borrowing shall be the amount of such outstanding Borrowing (reduced to the
extent necessary to reflect any reduction of the Commitments on or prior to the
date of the proposed Borrowing), and (iii) that the Loans comprising the
proposed Borrowing are to be Base Rate Loans.
(c) Upon receipt of a Notice of Borrowing, the Agent
shall promptly (but in any event on the same day) notify each Bank of the
contents thereof and of such Bank's ratable share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(d) Not later than 12:00 Noon (New York City time) on the
date of each Borrowing, each Bank shall (except as provided in subsection (e)
of this Section) make available its ratable share of such Borrowing, in Federal
or other funds immediately available in New York City, to the Agent at its
address referred to in Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at the
Agent's aforesaid address.
(e) If any Bank makes a new Loan hereunder on a day on
which the Borrower is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such repayment
and only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made
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available by such Bank to the Agent as provided in subsection (d) of this
Section, or remitted by the Borrower to the Agent as provided in Section 2.11,
as the case may be.
(f) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Agent such Bank's share of such Borrowing, the Agent may assume that
such Bank has made such share available to the Agent on the date of such
Borrowing in accordance with subsections (d) and (e) of this Section 2.02 and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Bank shall
not have so made such share available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher
of the Federal Funds Rate and the interest rate applicable thereto pursuant to
Section 2.05 and (ii) in the case of such Bank, the Federal Funds Rate. If
such Bank shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such Borrowing for
purposes of this Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(a), the Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, type and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Borrower with respect
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thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding; provided that the failure of any Bank to make
any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.05. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from
the date such Loan is made until it becomes due, at a rate per annum equal to
the Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of or overdue interest
on any Base Rate Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the CD Margin for such day
plus the Adjusted CD Rate applicable to such Interest Period; provided that if
any CD Loan or any portion thereof shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of or overdue interest on any CD Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the higher of (i) the sum of the CD Margin for such
day plus the Adjusted CD Rate applicable to the Interest Period for such Loan
and (ii) the rate applicable to Base Rate Loans for such day.
"CD Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
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The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of new non-personal time deposits in dollars in New
York City having a maturity comparable to the related Interest Period and in an
amount of $100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the Domestic
Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately
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capitalized and within supervisory subgroup "A" (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. Section
327.3(e) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States.
The Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar
Margin for such day plus the Adjusted London Interbank Offered Rate applicable
to such Interest Period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference
Bank to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which
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the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin
for such day plus the Adjusted London Interbank Offered Rate applicable to the
Interest Period for such Loan and (ii) the sum of 2% plus the Euro-Dollar
Margin for such day plus the quotient obtained (rounded upward, if necessary,
to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
three months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the rate applicable to Base Rate Loans for such
day).
(e) The Agent shall determine each interest rate applicable
to the Loans hereunder. The Agent shall give prompt notice to the Borrower and
the Banks of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated hereby. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available
on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.06. Commitment Fees. During the Revolving Credit
Period, the Borrower shall pay to the Agent for the account of each Bank a
commitment fee at the Commitment Fee Rate (determined in accordance with the
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Pricing Schedule) on the unused portion of such Bank's Commitment. Such
commitment fees shall accrue from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety) and shall be payable quarterly in arrears on
each March 31, June 30, September 30 and December 31 during the Revolving
Credit Period and on the Termination Date.
SECTION 2.07. Participation, Arrangement and Administrative
Fees. (a) The Borrower shall pay to the Agent, as a condition to the
effectiveness of this Agreement in accordance with Section 3.01, for the
account of the Banks in proportion to their respective Commitments,
participation fees in an amount equal to .075% of the aggregate amount of the
Commitments.
(b) The Borrower shall pay to the Agent for its own account,
as a condition to the effectiveness of this Agreement in accordance with
Section 3.01, a management fee in an amount previously agreed upon between
them.
(c) The Borrower shall pay to the Agent for its own account,
at the times and rates previously agreed between them, an administrative fee.
SECTION 2.08. Optional Termination or Reduction of
Commitments. During the Revolving Credit Period, the Borrower may, upon at
least three Domestic Business Days' notice to the Agent, terminate at any time,
or proportionately reduce from time to time by an aggregate amount of
$5,000,000 or any larger multiple of $1,000,000, the unused portions of the
Commitments. If the Commitments are terminated in their entirety, all accrued
commitment fees shall be payable on the effective date of such termination.
SECTION 2.09. Mandatory Termination or Reduction of
Commitments. (a) The Commitments shall terminate on the Termination Date, and
any Loans then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
(b) If the Borrower or any of its Subsidiaries sells,
leases or otherwise disposes of any of its assets (except Inventory sold in the
ordinary course of business, receivables sold pursuant to the Receivables
Financing and Temporary Cash Investments) in a single transaction or series of
related transactions, the Commitments shall be ratably reduced, effective on
the day falling nine months
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after the date of consummation of such disposition (or, if such day is not a
Euro-Dollar Business Day, on the next succeeding Euro- Dollar Business Day) by
an aggregate amount equal to 50% of the Net Consideration received for such
disposition; provided that, if all or any part of such Net Consideration is
received in a form other than cash and such non-cash consideration shall not
have been converted to cash by the time the related reduction of the
Commitments would otherwise be required hereunder, the reduction of the
Commitments attributable to such non-cash consideration shall be deferred until
such non-cash consideration is converted to cash; provided further that no
Commitment reduction shall be required as a result of the receipt of the first
$25,000,000 of Net Consideration received after the Effective Date. As used
herein, "Net Consideration" means the consideration received by the Borrower or
any of its Subsidiaries from any sale, lease or other disposition of assets
(except Inventory sold in the ordinary course of business, receivables sold
pursuant to the Receivables Financing and Temporary Cash Investments), less (A)
the amount required to pay or provide for (i) all out-of-pocket expenses of
such transaction, (ii) any Debt secured by such assets and (iii) all income and
other taxes payable by the Borrower and its Subsidiaries with respect to such
transaction and (B) the amount of Consolidated Capital Expenditures (or other
expenditures for the acquisition outside the ordinary course of business of
tangible assets) during the twelve-month period commencing three months prior
to the date of consummation of such disposition and ending nine months
thereafter, to the extent such Consolidated Capital Expenditures (or other
expenditures) have not previously been applied to the reduction of Net
Consideration pursuant to this clause (B).
(c) The Borrower shall deliver to the Agent, not later than
the close of business on the third Euro-Dollar Business Day preceding each day
on which the Commitments will be reduced pursuant to subsection (b) of this
Section, a certificate signed by its chief financial officer and its chief
accounting officer setting forth in reasonable detail (i) a description of the
transaction or occurrence in connection with which reduction is expected to
occur and (ii) any calculation necessary to determine the amount of such
reduction.
(d) Upon receipt of any notice pursuant to subsection (c) of
this Section, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share of any related reduction of Commitments.
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(e) Except as otherwise provided in Section 9.05, on each
date when Commitments shall be reduced pursuant to subsection (b) of this
Section, the Borrower shall repay such principal amounts (together with accrued
interest thereon) of each Bank's outstanding Loans, if any, as may be necessary
so that, after such repayment, the unpaid principal amount of such Bank's Loans
does not exceed the amount of such Bank's Commitment as then reduced.
SECTION 2.10. Optional Prepayments. (a) The Borrower may,
upon at least one Domestic Business Day's notice to the Agent, prepay any Base
Rate Borrowing in whole at any time, or from time to time in part in amounts
aggregating $5,000,000 or any larger multiple of $1,000,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) Subject to Section 2.12, the Borrower may, upon at least
two Domestic Business Days' notice to the Agent, prepay any CD Borrowing or
upon at least three Euro-Dollar Business Days' notice to the Agent, prepay any
Euro-Dollar Borrowing in each case in whole at any time, or from time to time
in part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000,
by paying the principal amount to be prepaid together with accrued interest
thereon to the date of prepayment. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks included in such
Borrowing.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of commitment and participation fees hereunder, not later than 12:00 Noon
(New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its address referred to
in Section 9.01. The Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Agent for the account of the Banks.
Whenever any payment of principal
23
<PAGE> 29
of, or interest on, the Domestic Loans or of commitment fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
If the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to Article
II, VI or VIII or otherwise) on any day other than the last day of the Interest
Period applicable thereto, or the last day of an applicable period fixed
pursuant to Section 2.05(d), or if the Borrower fails to borrow or prepay any
Fixed Rate Loans after notice has been given to any Bank in accordance with
Section 2.02(b) or 2.09(b), the Borrower shall reimburse each Bank within 15
days after demand for any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the related Loan), including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period after any such
payment or failure to borrow or prepay, provided that such Bank shall have
delivered to the Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest
error.
SECTION 2.13. Computation of Interest and Fees. Interest
based on the Prime Rate hereunder shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and commitment fees shall be computed on the
24
<PAGE> 30
basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which the Agent shall have
received each of the following documents, each dated the Effective Date unless
otherwise indicated:
(a) counterparts hereof signed by each of the parties
hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex, facsimile transmission or
other written confirmation from such party of execution of a
counterpart hereof signed by such party);
(b) a duly executed Note for the account of each Bank dated
on or before the Effective Date complying with the provisions of
Section 2.03;
(c) counterparts of the Guaranty Agreement, duly executed
by each of the Subsidiaries listed on the signature pages thereof;
(d) an opinion of Fulbright & Jaworski, substantially in the
form of Exhibit B-1 hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(e) an opinion of the General Counsel of the Borrower,
substantially in the form of Exhibit B-2 hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(f) an opinion of Davis Polk & Wardwell, special counsel for
the Agent, substantially in the form of Exhibit C hereto and covering
such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
25
<PAGE> 31
(g) all documents the Agent may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of the Loan Documents, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent; and
(h) evidence satisfactory to the Agent of the payment of
(i) all principal of and interest on any loans outstanding under, and
all accrued commitment fees under, the Existing Credit Agreement and
(ii) the fees referred to in Section 2.07 (a) and (b).
The Agent shall promptly notify the Borrower and the Banks of the Effective
Date, and such notice shall be conclusive and binding on all parties hereto.
The Borrower and the Banks party to the Existing Credit Agreement, comprising
the "Required Banks" as defined therein, hereby agree that (i) the commitments
of the banks under the Existing Credit Agreement shall terminate in their
entirety immediately and automatically upon the effectiveness of this
Agreement, without further action by any party to the Existing Credit
Agreement, (ii) all accrued commitment fees under the Existing Credit Agreement
shall be due and payable at such time and (iii) subject to Section 2.12 of the
Existing Credit Agreement, the Borrower may prepay any and all loans
outstanding thereunder on the date of effectiveness of this Agreement.
SECTION 3.02. Borrowings. The obligation of any Bank to make
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) receipt (or deemed receipt) by the Agent of a Notice of
Borrowing as required by Section 2.02;
(b) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed
the aggregate amount of the Commitments;
(c) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a
Refunding Borrowing, the representation and warranty set forth in
Section 4.04(c) as to any material adverse change which has
theretofore been disclosed in writing by the Borrower
26
<PAGE> 32
to the Banks) shall be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower
and each of its corporate Subsidiaries are corporations duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation, and have all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on their business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes and by the Subsidiaries party thereto of the Guaranty
Agreement are within the Borrower's and such Subsidiaries' respective corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Borrower or of such Subsidiaries or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower and each Note, when executed and
delivered in accordance with this Agreement, will constitute a valid and
binding obligation of the Borrower, in each case enforceable in accordance with
its terms. The Guaranty Agreement constitutes a valid and binding agreement of
each Subsidiary that is a party thereto, enforceable against it in accordance
with its terms.
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<PAGE> 33
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1993 and the related consolidated
statements of income, common stockholders' equity and cash flows for the fiscal
year then ended, reported on by Arthur Andersen & Co. and set forth in the
Borrower's 1993 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of March 31, 1994 and the related
unaudited consolidated statements of income, common stockholders' equity and
cash flows for the three months then ended, set forth in the Borrower's Latest
Form 10-Q, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such three-month period (subject to normal
year-end adjustments).
(c) Since March 31, 1994, there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity of any of the
Loan Documents.
28
<PAGE> 34
SECTION 4.06. Ownership of Capital Stock of Subsidiaries.
The Subsidiaries of the Borrower existing on the date hereof are listed on
Schedule 1 hereto. All shares of the capital stock of each Subsidiary of the
Borrower are owned by the Borrower, directly or indirectly through
Subsidiaries, free and clear of all Liens, except Liens created by the
Collateral Documents.
SECTION 4.07. Compliance with ERISA. Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards
of ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.08. Environmental Matters. In the ordinary course
of its business, the Borrower reviews when and as appropriate the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law
or as a condition of any license, permit or contract, any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
29
<PAGE> 35
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.09. Taxes. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate.
SECTION 4.10. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, a consolidated and
consolidating balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income and common
stockholders' equity and consolidated statement of cash flows for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner
acceptable to the Securities and Exchange Commission by Arthur
Andersen & Co. or other independent public accountants of nationally
recognized standing or, in the case of the consolidating financial
statements, certified as to fairness of presentation, generally
accepted accounting principles and consistency by the Borrower's chief
financial officer or chief accounting officer, except that the
consolidating financial statements with respect to the special purpose
Subsidiary referred to in the definition of
30
<PAGE> 36
"Receivables Financing" need not be so certified as to generally
accepted accounting principles;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Borrower, a consolidated and consolidating balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated and consolidating statements of
income and common stockholders' equity and consolidated statement of
cash flows for such quarter and for the portion of the Borrower's
fiscal year ended at the end of such quarter, setting forth in each
case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer or the chief accounting officer of the
Borrower, except that the consolidating financial statements with
respect to the special purpose Subsidiary referred to in the
definition of "Receivables Financing" need not be so certified as to
generally accepted accounting principles;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower setting forth (i) in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.07 to 5.16, inclusive, on the date of such
financial statements, (ii) the Leverage Ratio as at the date of such
financial statements and the Fixed Charge Coverage Ratio for the
period of four consecutive fiscal quarters then ended and (iii)
stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe
that any Default existed on the date of such statements and (ii)
confirming the calculations
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<PAGE> 37
set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any officer of the Borrower
obtains knowledge of any Default, if such Default is then continuing,
a certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Securities and Exchange Commission;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or
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<PAGE> 38
Benefit Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take;
(i) (x) no later than the end of each fiscal year an
executive summary report of Johnson & Higgins or any other nationally
recognized actuary selected by the Borrower with the consent of the
Required Banks (which consent will not be unreasonably withheld) of
the Borrower's estimated cost of insurance, including self-insurance,
for the following fiscal year (provided that the Borrower will deliver
to the Agent the full report at the same time), and (y) by the end of
each fiscal year, a certificate of the chief financial officer of the
Borrower to the effect that, to provide for the insurance cost
allocation, the Borrower has debited its income statement for such
fiscal year in accordance with the recommendations set forth in the
summary report of Johnson & Higgins (or other actuary referred to
above) concerning such fiscal year; and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. Payment of Obligations. (a) The Borrower will
pay and discharge, and will cause each Subsidiary to pay and discharge, at or
before maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the same.
(b) The Borrower will, and will cause each Subsidiary to,
comply with the provisions of each material lease to which it is a party.
(c) The Borrower shall not permit any Subsidiary to
agree to any amendment or modification of any lease which would be adverse to
the interests of such Subsidiary, the Borrower or the Banks.
33
<PAGE> 39
SECTION 5.03. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Subsidiary to keep, all property useful
and necessary to its business in good working order and condition, ordinary
wear and tear excepted.
(b) The Borrower will maintain, and will cause each
Subsidiary to maintain (either in the name of the Borrower or in such
Subsidiary's own name), insurance policies against such risks, in at least such
amounts and upon such terms as are set forth in Schedule 2 hereto; provided
that the Borrower shall not be required to maintain insurance specified in the
preceding sentence (i) if an independent insurance broker, insurance agent or
other insurance representative reasonably satisfactory to the Required Banks
shall certify to the Banks that such requirement with respect to such insurance
cannot be complied with in a recognized insurance market by reason of the
unavailability to companies of established repute engaged in the same or a
similar business of insurance with respect to one or more risks so required to
be insured against or the amount of insurance so required to be maintained or
(ii) in respect of any assets sold by the Borrower, for events occurring after
the sale of such assets. The Borrower may replace any insurance company named
in Schedule 2 hereto with an Acceptable Insurer, and may decrease the amount of
insurance not constituting self-insurance carried with the consent of the
Required Banks. The Borrower may self-insure for professional and general
liability claims, including, without limitation, workers compensation, so long
as the Borrower shall maintain, and make additions to, reserves not less than
such amounts as may be necessary so as to permit the Borrower to make the
statement required in the chief financial officer's certificate pursuant to
Section 5.01(i). The Borrower will furnish to the Banks (i) upon request of
any Bank through the Agent from time to time, full information as to the
insurance carried, including the full report referred to in Section 5.01(i),
(ii) within five days of receipt of notice from any insurer, a copy of any
notice of cancellation or material change in coverage from that existing on the
date of this Agreement and (iii) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower. The Borrower will change its current
self-insurance arrangements only with the consent of the Required Banks, except
to the extent that the Borrower obtains new insurance (or arranges for
self-insurance) for the specific purpose of covering the claims arising from a
business not in existence on the date hereof.
34
<PAGE> 40
SECTION 5.04. Conduct of Business and Maintenance of
Existence. Except as permitted by Section 5.14 the Borrower will continue, and
will cause each Subsidiary to continue, to engage in business of the same
general type as now conducted by the Borrower and its Subsidiaries, and will
preserve, renew and keep in full force and effect, and, except as permitted by
Section 5.14, will cause each Subsidiary to preserve, renew and keep in full
force and effect their respective corporate or partnership existence and their
respective rights, privileges and franchises necessary or desirable in the
normal conduct of business.
SECTION 5.05. Compliance with Laws. The Borrower will
comply, and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
generally accepted accounting principles shall be made of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.07. Leverage Ratio. The Leverage Ratio will not,
at any time during any period set forth below, exceed the ratio set forth below
opposite such year:
35
<PAGE> 41
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through
December 30, 1994 .67 to 1.00
December 31, 1994 through
December 30, 1995 .64 to 1.00
December 31, 1995 through
December 30, 1996 .62 to 1.00
December 31 1996 through
December 30, 1997 .62 to 1.00
December 31, 1997 and thereafter .60 to 1.00
</TABLE>
SECTION 5.08. Minimum Consolidated Net Worth. Consolidated
Net Worth will at no time be less than the sum of $200,000,000 plus 50% of
Cumulative Positive Net Income. For purposes of this Section, "Cumulative
Positive Net Income" means, as of any date, the sum of Consolidated Net Income
for each fiscal year ending after the Effective Date and on or prior to such
date for which such Consolidated Net Income is a positive amount, disregarding
any fiscal year for which Consolidated Net Income is a negative amount.
SECTION 5.09. EBITDA Ratio. The EBITDA Ratio will not, at
the last day of any fiscal quarter during any fiscal year set forth below,
exceed the ratio set forth below opposite such year:
<TABLE>
<CAPTION>
Fiscal Year Ending Ratio
------------------ -----
<S> <C>
December 31, 1994 5.0 to 1
December 31, 1995 4.8 to 1
December 31, 1996
and thereafter 4.5 to 1
</TABLE>
SECTION 5.10. Fixed Charge Coverage. The Fixed Charge
Coverage Ratio will not, at the last day of any fiscal quarter, be less than
1.80 to 1.
SECTION 5.11. Capital Expenditures. The Borrower will not
permit Consolidated Capital Expenditures to exceed in any fiscal year an amount
equal to the sum of (i) $90,000,000 plus (ii) the lesser of (A) $90,000,000 or
(B) the amount (if any) by which (x) the aggregate Consolidated Capital
Expenditures for all fiscal years ended after the Effective Date and prior to
such fiscal year are less than
36
<PAGE> 42
(y) the product of $90,000,000 times the number of such fiscal years.
SECTION 5.12. Restricted Payments; Prepayments of
Subordinated Debt. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) declare or make any Restricted Payment or (ii) prepay,
purchase, redeem or otherwise acquire for value (except in compliance with
compulsory amortization or sinking fund requirements (including, without
limitation, purchases thereof made to fulfill sinking fund requirements within
12 months of any sinking fund payment date) or any other mandatory prepayment
provisions and in compliance with the subordination provisions of such
Subordinated Debt), or make any payment of interest or deposit funds with any
paying agent therefor more than five business days before the time such payment
or deposit is due with respect to, or agree to the modification or amendment of
any of the terms of subordination or payment of, or amortization or sinking
fund requirements applicable to, any Subordinated Debt; provided that, so long
as no Default has occurred and is continuing, the Borrower may make Restricted
Payments so long as the aggregate amount of Restricted Payments made pursuant
to this proviso after the Effective Date does not exceed the sum of (i)
$50,000,000 plus (ii) 50% of Consolidated Net Income of the Borrower and its
Consolidated Subsidiaries for the period from March 31, 1994 through the end of
the Borrower's then most recent fiscal quarter (treated for this purpose as a
single accounting period).
SECTION 5.13. Consolidations, Mergers, Sales of Assets,
Dissolutions, Reorganizations, etc. (a) The Borrower will not, nor will it
permit any Subsidiary to, enter into any transaction of merger or
consolidation, reorganize, liquidate, dissolve or wind up (or suffer any
reorganization, liquidation, dissolution or winding up) or convey, sell, lease
or otherwise dispose of, in one or a series of related transactions,
substantially all of its property, assets or business, except:
(i) the Borrower and its Subsidiaries may sell their
inventory in the ordinary course of business;
(ii) any Subsidiary of the Borrower may be voluntarily
liquidated, dissolved or wound up or merged into or consolidated with,
or may convey all or any part of its property, assets or business to,
the Borrower or any Wholly-Owned Consolidated Subsidiary; provided
that (A) if a Subsidiary of the Borrower is merged into or
consolidated with the Borrower or any Wholly-Owned Consolidated
Subsidiary, the Borrower or
37
<PAGE> 43
such Wholly-Owned Consolidated Subsidiary, as the case may be, shall
be the surviving corporation and (B) no disposition of assets referred
to above in this clause (ii) of this Section shall be permitted if,
immediately after giving effect thereto, a Default shall have occurred
and be continuing; and
(iii) any Subsidiary of the Borrower may sell substantially
all of its accounts receivable to the special purpose Subsidiary
referred to in the definition of "Receivables Financing" pursuant to
the Receivables Financing and such Subsidiary may obtain financing of
up to $85,000,000 by selling or pledging substantially all such
accounts receivable to certain investors.
Notwithstanding the foregoing and except as provided by subsection (b) of this
Section, (X) the Borrower may permit any Subsidiary to enter into any
transaction of merger or consolidation, reorganize, liquidate, dissolve or wind
up (or suffer any reorganization, liquidation, dissolution or winding up of
such Subsidiary) or convey, sell, lease or otherwise dispose of, in one or a
series of related transactions, substantially all of its property, assets or
business, provided that the Borrower ensures that any Net Consideration (as
defined in Section 2.09(b)) received from any of the above-mentioned
transactions is applied to reduce the Commitments to the extent required by
Section 2.09(b), and (Y) the Borrower may trade or exchange (through formation
of joint ventures or otherwise), the assets of any Subsidiary for similar
assets, provided that the aggregate amount of Net Tangible Assets so exchanged
during the term of this Agreement shall not exceed 15% of Consolidated Net
Tangible Assets, determined as of the last day of the fiscal quarter most
recently ended on or prior to the date of consummation of the most recent such
trade or exchange.
(b) The Borrower will not convey, sell, lease or otherwise
dispose of, in one or a series of related transactions, assets comprising more
than 25% of the Net Tangible Assets of any of the McAllen Medical Center, the
Valley Hospital Medical Center, the Auburn General Hospital or the River Oaks
Hospital, provided that the Borrower may sell or contribute such assets to a
partnership or other joint venture Person operating in the same geographical
and professional markets so long as the Borrower shall control the management
of such Person.
SECTION 5.14. Subsidiary Debt. The Borrower will not, after
the date of this Agreement, permit any of its Subsidiaries to incur, assume or
suffer to exist any Debt
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except (A) Debt existing on the date hereof, (B) Debt owing to the Borrower or
a Wholly-Owned Consolidated Subsidiary, (C) other Debt not exceeding
$15,000,000 in aggregate principal amount outstanding for all Subsidiaries, (D)
non-recourse financing approved in advance in writing by the Required Banks,
(E) Debt secured by Liens permitted pursuant to Section 5.16 and (F) Guarantees
of letter of credit reimbursement obligations of the Borrower in an aggregate
amount (contingent and non-contingent) at no time exceeding $30,000,000.
SECTION 5.15. Use of Proceeds. The proceeds of the Loans
made under this Agreement will be used by the Borrower for its general
corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock" within the meaning of Regulation U;
provided, that up to $6,000,000 of such proceeds may be used to purchase shares
of UHRIT, provided further that in no event shall any proceeds of Loans made
under this Agreement be used in violation of Regulation U or any other
applicable law or regulation.
SECTION 5.16. Negative Pledge. The Borrower will not, and
will not permit any Subsidiary to, create, assume or suffer to exist any Lien
on any asset (including the stock and assets of any Subsidiary) now owned or
hereafter acquired by it, except:
(a) for a period from the Effective Date up to and
including the date that is 60 days after the Effective Date, Liens
created by the Collateral Documents;
(b) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $5,000,000;
(c) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement, in an aggregate principal
amount not exceeding $46,000,000;
(d) any Lien existing on any asset of any Person at the time
such Person becomes a Subsidiary and not created in contemplation of
such event;
(e) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset; provided that such
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Lien attaches to such asset concurrently with or within 90 days after
the acquisition thereof;
(f) any Lien on any asset of any Person existing at the time
such Person is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(g) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in
contemplation of such acquisition;
(h) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section; provided that such Debt is
not increased and is not secured by any additional assets;
(i) Liens arising in the ordinary course of its business which
(i) do not secure Debt or Derivatives Obligations, (ii) do not secure
obligations exceeding $20,000,000 in aggregate amount and (iii) do not
in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(j) Liens arising out of the Receivables Financing; and
(k) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any
time outstanding not to exceed 5% of Consolidated Net Worth.
SECTION 5.17. Termination of the Intercreditor Agreement.
The Borrower will deliver to the Agent as soon as available and in any event
within 60 days after the Effective Date, evidence satisfactory to the Agent of
the termination of the Intercreditor Agreement and the release of all
collateral under the Collateral Documents.
SECTION 5.18. Additional Guarantors. The Borrower represents
and warrants that, as of the date of this Agreement, the Guarantors set forth
on the signature pages of the Guaranty Agreement constitute all Subsidiaries
(except as contemplated by the definition of the term "Subsidiary"). The
Borrower agrees, within ten days after any Person hereafter becomes a
Subsidiary, to cause such Person to become a Guarantor (as defined in the
Guaranty Agreement) under the Guaranty Agreement, and in connection therewith
to deliver such opinions of counsel and other
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documents relating to such Guarantor and its obligations thereunder as the
Agent may reasonably request.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
or interest on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower or any of its Subsidiaries shall fail to
observe or perform any covenant contained in Sections 5.07 to 5.18,
inclusive;
(c) the Borrower or any of its Subsidiaries shall fail to
observe or perform any covenant or agreement contained in this
Agreement (other than those covered by clause (a) or (b) above) or the
Guaranty Agreement for 10 days after notice thereof has been given to
the Borrower or such Subsidiary by the Agent at the request of any
Bank;
(d) any representation, warranty, certification or statement
made by the Borrower or any of its Subsidiaries in the Loan Documents
or in any certificate, financial statement or other document delivered
pursuant hereto or thereto shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the
holder of such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall commence a
voluntary case or other proceeding seeking
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liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $1,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $1,000,000;
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(j) a judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Borrower or any Subsidiary
and such judgment or order shall continue unsatisfied and unstayed for
a period of 10 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
(except a person that has or a group of persons each of which has as
of the date hereof more than 10% of such voting common stock) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act)
of 25% or more of the outstanding shares of voting common stock of
the Borrower; or, during any period of 24 consecutive calendar months,
individuals who were directors of the Borrower on the first day of
such period shall cease to constitute a majority of the board of
directors of the Borrower;
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, and (ii) if requested by the Required Banks, by notice to
the Borrower declare the Notes (together with accrued interest thereon) to be,
and the Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events
of Default specified in clause (g) or (h) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Borrower under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under the Loan
Documents as any other Bank and may exercise or refrain from exercising the
same as though it were not the Agent, and Morgan Guaranty Trust Company of New
York and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any Subsidiary or affiliate
of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
under the Loan Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any
of its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
the Loan Documents (i) with the consent or at the request of the Required Banks
or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with the Loan Documents or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
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agreements of the Borrower or any of its Subsidiaries; (iii) the satisfaction
of any condition specified in Article III, except receipt of items required to
be delivered to the Agent; or (iv) the validity, effectiveness or genuineness
of the Loan Documents or any other instrument or writing furnished in
connection therewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile transmission or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Loan Documents or any
action taken or omitted by such indemnitees thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent or any other Bank,
and on the basis of such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and on the basis of such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under the Loan
Documents.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent with (so long as no Default shall have occurred and be continuing) the
consent of the Borrower, which consent shall not be unreasonably withheld. If
no successor Agent shall have been so appointed by the Required Banks with the
Borrower's consent, and shall have accepted such appointment, within 60 days
after the retiring Agent gives notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the
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acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for any
Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate or the Adjusted
London Interbank Offered Rate, as the case may be, as determined by
the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may
be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless
the Borrower notifies the Agent at least two Domestic Business Days before the
date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously
been given that it elects not to borrow on such date, such Borrowing shall
instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the
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interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund any of its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give notice thereof
to the other Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section,
such Bank shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank
shall determine that it may not lawfully continue to maintain and fund any of
its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan, the Borrower
shall borrow a Base Rate Loan in an equal principal amount from such Bank (on
which interest and principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and such Bank shall make such a
Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on
or after the date hereof, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding (i) with respect to any CD Loan any such requirement included in
an applicable Domestic Reserve Percentage and (ii) with respect to any
Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment (excluding, with
respect to any CD Loan, any such requirement reflected in an applicable
Assessment Rate) or similar requirement against assets of, deposits with or for
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the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or on
the United States market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans, its Note or its
obligation to make Fixed Rate Loans and the result of any of the foregoing is
to increase the cost to such Bank (or its Applicable Lending Office) of making
or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received
or receivable by such Bank (or its Applicable Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
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Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) For purposes of this Section
8.04, the following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrower or any Subsidiary pursuant to any Loan Document, and
all liabilities with respect thereto, excluding (i) in the case of each Bank
and the Agent, taxes imposed on its income, net worth or gross receipts and
franchise or similar taxes imposed on it, by a jurisdiction under the laws of
which such Bank or the Agent (as the case may be) is organized or in which its
principal executive office is located or, in the case of each Bank, in which
its Applicable Lending Office is located and (ii) in the case of each Bank, any
United States withholding tax imposed on such payments but only to the extent
that such Bank is subject to United States withholding tax at the time such
Bank first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or from the execution or delivery of, or otherwise with respect to, any Loan
Document.
(b) Any and all payments by the Borrower to or for the
account of any Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.04) such Bank or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the
Agent for the full amount of Taxes or Other Taxes
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(including, without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 8.04) paid by such Bank
or the Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Bank or the Agent (as
the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the case
of each other Bank, and from time to time thereafter if requested in writing by
the Borrower (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income tax treaty to
which the United States is a party which exempts the Bank from United States
withholding tax or reduces the rate of withholding tax on payments of interest
for the account of such Bank or certifying that the income receivable pursuant
to this Agreement is effectively connected with the conduct of a trade or
business in the United States.
(e) For any period with respect to which a Bank has
failed to provide the Borrower with the appropriate form pursuant to Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States; provided
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts
to or for the account of any Bank pursuant to this Section 8.04, then such Bank
will change the jurisdiction of its Applicable Lending Office if, in the
judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
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SECTION 8.05. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has
been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its CD Loans or
Euro-Dollar Loans and the Borrower shall, by at least three Euro-Dollar
Business Days' prior notice to such Bank through the Agent, have elected that
the provisions of this Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as
CD Loans or Euro-Dollar Loans, as the case may be, shall be made
instead as Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal which would
otherwise be applied to repay such Fixed Rate Loans shall be applied
to repay its Base Rate Loans instead.
SECTION 8.06 Substitution of Bank. If any Bank has demanded
compensation under Section 8.03 or 8.04, the Borrower shall have the right,
with the assistance of the Agent, to seek a mutually satisfactory substitute
bank or banks (which may be one or more of the Banks) to purchase the Note and
assume the Commitment of such Bank.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address, facsimile
number or telex number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if
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<PAGE> 57
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received, (ii) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (iii) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege under the Loan
Documents shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower
shall pay (i) all out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in connection with the
preparation of the Loan Documents, any waiver or consent thereunder or any
amendment thereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the Agent and
each Bank, including fees and disbursements of counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or
52
<PAGE> 58
willful misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the
Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for termination
of any Commitment, (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement, (v) change this Section 9.05
or (vi) permit the subordination of any payment or right of payment due to the
Banks under the Loan Documents. Notwithstanding the
53
<PAGE> 59
foregoing, if the Borrower is required to make a repayment pursuant to Section
2.09(e) as a result of a reduction of Commitments pursuant to Section 2.09(b),
the Borrower shall not be required to repay any Fixed Rate Loan prior to the
maturity thereof (and, to the extent required to comply with this exception,
the aggregate principal amount of Fixed Rate Loans outstanding under any such
Commitment may temporarily exceed the amount of such Commitment,
notwithstanding any provision to the contrary elsewhere in this Agreement);
provided (x) that the Borrower requests application of this sentence by notice
to the Banks at least five Euro-Dollar Business Days preceding the day on which
the Commitments will be reduced pursuant to Section 2.09(b) and that (y) the
Required Banks consent in writing to such request.
SECTION 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon notice
to the Borrower and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under the Loan Documents. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower under the Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision thereof; provided that such participation agreement may provide that
such Bank will not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section 9.05 without the
consent of the Participant. The Borrower agrees that each Participant shall,
to the extent provided in its participation agreement, be entitled to the
benefits of Article VIII with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent
of a participating interest granted in accordance with this subsection (b).
54
<PAGE> 60
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under the Loan Documents, and such Assignee shall
assume such rights and obligations, pursuant to an Assignment and Assumption
Agreement in substantially the form of Exhibit D hereto executed by such
Assignee and such transferor Bank, with (and subject to) the subscribed consent
of the Borrower and the Agent, which consents shall not be unreasonably
withheld; provided that if an Assignee is an affiliate of such transferor Bank
or was a Bank immediately prior to such assignment, no such consent shall be
required. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price
agreed between such transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Agent
an administrative fee for processing such assignment in the amount of $2,500.
If the Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under Section
8.03 or 8.04 than such Bank would have been entitled to receive with respect to
the rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
55
<PAGE> 61
SECTION 9.07. Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction.
This Agreement and each Note shall be governed by and construed in accordance
with the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
56
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
UNIVERSAL HEALTH SERVICES, INC.
By /s/ Kirk E. Gorman
----------------------------
Title: Senior Vice President,
Treasurer & CFO
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA 19406
Facsimile number: (610) 768-3336
57
<PAGE> 63
Commitments
<TABLE>
<S> <C>
$20,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Michael Ciszewski
----------------------------
Title: Vice President
$20,000,000 CHEMICAL BANK
By /s/ Christopher C. Wardell
----------------------------
Title: Managing Director
$20,000,000 CONTINENTAL BANK
By /s/ W. Russ Covode
----------------------------
Title: Vice President
$17,500,000 NATIONSBANK OF NORTH CAROLINA, N.A.
By /s/ Bill Manley, Sr.
----------------------------
Title: Senior Vice President
$12,500,000 FIRST FIDELITY BANK, N.A.
By /s/ Charles K. Harmer
----------------------------
Title: Vice President
$12,500,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Oscar C. Jazdowski
----------------------------
Title: Managing Director
</TABLE>
58
<PAGE> 64
Commitments
<TABLE>
<S> <C>
$12,500,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Philip G. DeBaun
----------------------------
Title: Vice President
$10,000,000 CORESTATES BANK, N.A.
By /s/ Jennifer W. Leibowitz
----------------------------
Title: Commercial Officer
- -----------------
Total Commitments
$125,000,000
=================
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Michael Ciszewski
----------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Telex number: 177615 MGT
Facsimile number: (212) 648-5018
</TABLE>
59
<PAGE> 65
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Commitment Fee
Rate" for any day are the respective percentages set forth below in the
applicable row under the column corresponding to the Status that exists on such
day:
<TABLE>
<CAPTION>
=================================================================================
Level Level Level Level
Status I II III IV
=================================================================================
<S> <C> <C> <C> <C>
Euro-Dollar 0.500% 0.625% 0.750% 1.00%
Margin
- ---------------------------------------------------------------------------------
CD Margin 0.625% 0.750% 0.875% 1.125%
- ---------------------------------------------------------------------------------
Commitment Fee Rate 0.125% 0.1875% 0.250% 0.375%
=================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the
following meanings:
"Level I Status" exists at any date if, at such date, the
Applicable Leverage Ratio is less than 0.45 and the Applicable Coverage Ratio
is greater than 2.40.
"Level II Status" exists at any date if, at such date, (i) the
Applicable Leverage Ratio is less than 0.55 and the Applicable Coverage Ratio
is greater than 2.15 and (ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date, (i)
the Applicable Leverage Ratio is less than 0.65 and the Applicable Coverage
Ratio is greater than 1.85 and (ii) neither Level I Status nor Level II Status
exists.
"Level IV Status" exists at any date if, at such date, no
other Status exists.
"Applicable Coverage Ratio" means, with respect to each day
during any Quarter, the Fixed Charge Coverage Ratio for the period of four
consecutive Quarters ending with the second preceding Quarter (e.g. the
Applicable Coverage Ratio for each day during the Quarter ending on March 31,
1995 shall be the Fixed Charge Coverage Ratio for the four consecutive Quarters
ending on September 30, 1994).
<PAGE> 66
"Applicable Leverage Ratio" means, for each day during any
Quarter, the Leverage Ratio as at the last day of the second preceding Quarter
(e.g. the Applicable Leverage Ratio for each day during the Quarter ending on
March 31, 1995 shall be the Leverage Ratio as at September 30, 1994).
"Quarter" means each period of three consecutive calendar
months consisting of (i) January, February and March; (ii) April, May and June;
(iii) July, August and September and (iv) October, November and December.
"Status" refers to the determination of which of Level I
Status, Level II Status, Level III Status or Level IV Status exists at any
date.
2
<PAGE> 67
SCHEDULE 1
Subsidiaries
<PAGE> 68
SCHEDULE 1
<TABLE>
<CAPTION>
JURISDICTION
------------
NAME OF ENTITY OF ORGANIZATION
- -------------- ---------------
<S> <C>
ASC of Canton, Inc. Georgia
ASC of Corona, Inc. California
ASC of Las Vegas, Inc. Nevada
ASC of Littleton, Inc. Colorado
ASC of Midwest City, Inc. Oklahoma
ASC of New Albany, Inc. Indiana
ASC of Palm Springs, Inc. California
ASC of Ponca City, Inc. Oklahoma
ASC of Springfield, Inc. Missouri
ASC of St. George, Inc. Utah
The Arbour, Inc. * Massachusetts
The BridgeWay, Inc. * Arkansas
Charleston Medical Properties, Nevada
Limited Partnership
Charleston Surgery Center, L.P. Delaware
Children's Hospital of McAllen, Inc. Texas
Comprehensive Occupational and Delaware
Clinical Health, Inc.
Dallas Family Hospital, Inc. Texas
Del Amo Hospital, Inc. California
Doctors' General Hospital, Ltd. Florida
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
JURISDICTION
------------
NAME OF ENTITY OF ORGANIZATION
- -------------- ---------------
<S> <C>
Doctors' Hospital of Hollywood, Inc. Florida
Doctors' Hospital Internal Medicine, Inc. Louisiana
Forest View Psychiatric Hospital, Inc. * Michigan
Glen Oaks Hospital, Inc. Texas
Health Care Finance & Construction Corp. Delaware
Hope Square Surgical Center, L.P. Delaware
HRI Clinics, Inc. Massachusetts
HRI Hospital, Inc. Massachusetts
La Amistad Residential Treatment Center, Inc. * Florida
McAllen Medical Center, Inc. Texas
Meridell Achievement Center, Inc. Texas
Merion Building Management, Inc. Delaware
Relational Therapy Clinic, Inc. Louisiana
River Crest Hospital, Inc. Texas
River Oaks, Inc. Louisiana
River Parishes Internal Medicine, Inc. Louisiana
St. George Surgical Center, L.P. Delaware
Southwest Dallas Hospital, Inc. Texas
Sparks Family Hospital, Inc. Nevada
Sparks Reno Partnership, L.P. Delaware
</TABLE>
- 2 -
<PAGE> 70
<TABLE>
<CAPTION>
JURISDICTION
------------
NAME OF ENTITY OF ORGANIZATION
- -------------- ---------------
<S> <C>
Surgery Center of Canton, L.P. Delaware
Surgery Center of Littleton, L.P. Delaware
Surgery Center of Midwest City, L.P. Delaware
Surgery Center of Odessa, L.P. Delaware
Surgery Center of Ponca City, L.P. Delaware
Surgery Center of Springfield, L.P. Delaware
Tonopah Health Services, Inc. Nevada
Turning Point Care Center, Inc. Georgia
Two Rivers Psychiatric Hospital, Inc. Delaware
UHS International, Inc. Delaware
UHS of Auburn, Inc., d/b/a Auburn General Hospital Washington
UHS of Belmont, Inc. Delaware
UHS of Bethesda, Inc. Delaware
UHS of De La Ronde, Inc. Louisiana
UHS of Columbia, Inc. District of Columbia
UHS of Delaware, Inc. Delaware
UHS of Florida, Inc. Florida
UHS Holding Company, Inc. Nevada
UHS Las Vegas Properties, Inc. Nevada
UHS of London, Inc. Delaware
</TABLE>
- 3 -
<PAGE> 71
<TABLE>
<CAPTION>
JURISDICTION
------------
NAME OF ENTITY OF ORGANIZATION
- -------------- ---------------
<S> <C>
UHS of Maitland, Inc. Florida
UHS of New Orleans, Inc. * Louisiana
d/b/a Chalmette Hospital
UHS of Odessa, Inc. Texas
UHS of Plantation, Inc. Florida
UHSR Corporation * Delaware
UHS Receivables Corp. Delaware
UHS of River Parishes, Inc. Louisiana
UHS of Riverton, Inc. Washington
UHS of Shreveport, Inc., d/b/a Doctors' Louisiana
Hospital of Shreveport
UHS of Springfield, Inc. Missouri
UHS of Vermont, Inc. Vermont
Universal Health Network, Inc. Nevada
Universal Health Pennsylvania Pennsylvania
Properties, Inc.
Universal Health Recovery Centers, Inc., Pennsylvania
d/b/a Keystone Center
Universal Health Services of Cedar Hill, Inc. Texas
Universal Health Services of Concord, Inc. California
Universal Health Services of Inland Valley, Inc., California
d/b/a Inland Valley Regional Medical Center
</TABLE>
- 4 -
<PAGE> 72
<TABLE>
<CAPTION>
JURISDICTION
------------
NAME OF ENTITY OF ORGANIZATION
- -------------- ---------------
<S> <C>
Universal Health Services of Nevada, Inc., Nevada
d/b/a Valley Hospital Medical Center
Universal Treatment Centers, Inc. Delaware
Victoria Regional Medical Center, Inc. Texas
Wellington Regional Medical Center Florida
Incorporated
Westlake Medical Center, Inc. California
</TABLE>
* Articles of Amendment filed as follows:
- The Arbour, Inc., name changed from UHS of Massachusetts, Inc.
on March 15, 1994.
- The BridgeWay, Inc., name changed from UHS of Arkansas on
November 23, 1993.
- Forest View Psychiatric Hospital, Inc., name changed from UHS
of Michigan, Inc. on January 5, 1993.
- La Amistad Residential Treatment Center, Inc., name changed
from UHS of Maitland, Inc. on December 11, 1992.
- UHS of New Orleans, Inc., name changed from Chalmette General
Hospital, Inc. on November 30, 1993.
- UHSR Corporation, name changed from UHS Receivables
Corporation on November 3, 1993.
- 5 -
<PAGE> 73
SCHEDULE 2
Insurance
<PAGE> 74
UNIVERSAL HEALTH SERVICES RISK MANAGEMENT MANUAL
- --------------------------------------------------------------------------------
1994 PROPERTY AND CASUALTY INSURANCE PROGRAM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROJECTED
STATES ULTIMATE
POLICY CARRIER COVERED POLICY LIMITS RATING PLAN COST
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROPERTY Industrial Risk All $890,000,000 and various Guaranteed Cost $ 402,000
Insurers sublimits
Navigators California & $7,500,000 Part of Guaranteed Cost $ 41,250
Sparks, Nevada $20,000,000
excess of $5,000,000
N.Y. Marine & California & $2,500,000 Part of Guaranteed Cost $ 13,750
General Sparks, Nevada $20,000,000
excess of $5,000,000
Subscription
Policy:
* North Shore California & $5,000,000 Part of Guaranteed Cost $ 27,500
Sparks, Nevada $20,000,000
excess of $5,000,000
* Western Re California & $5,000,000 Part of Guaranteed Cost $ 27,500
Sparks, Nevada $20,000,000
excess of $5,000,000
- -------------------------------------------------------------------------------------------------------------------------------
PRIMARY GENERAL AND Self-Insured All CGL - $5,000,000 Self-Insured $ 6,936,416
HOSPITAL PROFESSIONAL each occurrance
LIABILITY HPL - $25,000,000
each medical
incident
- -------------------------------------------------------------------------------------------------------------------------------
LOUISIANA PATIENTS State of Louisiana Louisiana $400,000 excess of State Fund $ 326,647
COMPENSATION FUND $100,000 per claim
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 75
UNIVERSAL HEALTH SERVICES RISK MANAGEMENT MANUAL
- --------------------------------------------------------------------------------
1994 PROPERTY AND CASUALTY INSURANCE PROGRAM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROJECTED
STATES ULTIMATE
POLICY CARRIER COVERED POLICY LIMITS RATING PLAN COST
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRIMARY GENERAL Farmers McAllen $25,000,000 each Guaranteed Cost $2,000,000
AND HOSPITAL occurrence
PROFESSIONAL
LIABILITY
- -------------------------------------------------------------------------------------------------------------------------------
PRIMARY GENERAL Western World La Amistad & CGL - $1,000,000 Guaranteed Cost $ 31,178.76
AND HOSPITAL Keystone Center each occurrence
PROFESSIONAL HPL - $1,000,000
LIABILITY annual aggregate -
each entity
- -------------------------------------------------------------------------------------------------------------------------------
PRIMARY GENERAL Western World Turning Point CGL & HPL Guaranteed Cost $ 17,822
AND HOSPITAL and Mt. Vernon Primary - $1,000,000
PROFESSIONAL aggregate
LIABILITY Excess - $4,000,000
aggregate
- -------------------------------------------------------------------------------------------------------------------------------
PRIMARY GENERAL Scottsdale Meridell CGL - Guaranteed Cost $ 40,657
AND HOSPITAL Primary -
PROFESSIONAL $1,000,000 aggregate
LIABILITY Excess -
$4,000,000 aggregate
HPL -
Primary -
$1,000,000 aggregate
Excess -
$4,000,000 aggregate
Sexual Abuse -
$25,000 per program
$50,000 aggregate
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[JOHNSON & HIGGINS LOGO]
<PAGE> 76
UNIVERSAL HEALTH SERVICES RISK MANAGEMENT MANUAL
- --------------------------------------------------------------------------------
1994 PROPERTY AND CASUALTY INSURANCE PROGRAM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROJECTED
STATES ULTIMATE
POLICY CARRIER COVERED POLICY LIMITS RATING PLAN COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BUSINESS AUTO INCL. Transportation All $5 million for auto Actual Paid Loan $475,506 Variable
GARAGEKEEPERS liability Costs
$1 million for Retro $142,035 Fixed
garagekeepers Costs
- ------------------------------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION Transportation WC - All except WC - Statutory Budgeted Paid $3,910,000
AND EMPLOYER'S NV, WA, LA, EL - $2,000,000 Loss Retro Performance Budget
LIABILITY FL & CA Policy limit - $500,000 $1,399,105
----------
EL - All except Loss Limitation Fixed Costs
WA and/or Large Loss $5,309,105
Deductible Program - Expense
$500,000 deductible
State Industrial NV (Sparks) WC - Statutory Guaranteed Cost Paid directly by
Insurance System EL - Not Covered hospital.
Self-Insurance FL,LA,WA, CA WC - Statutory Guaranteed Cost over $1,700,041
and Republic & NV* EL - $2,000,000 Self-Insured Retention Variable Loss
Western of $400,000 All self- Costs
insured states $ 687,074 Fixed
----------
Costs
*Valley Hospital $2,387,115 Total
- ------------------------------------------------------------------------------------------------------------------------------------
EXCESS GENERAL, AUTO, Zurich Re UK All $20 million annual Guaranteed Cost $276,899.70
& EMPLOYER'S Ltd. aggregate excess of
LIABILITY, HELIPAD $5 million each loss
AND NON-OWNED AIRCRAFT
LIABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE CRIME Federal All $3 million policy limit Guaranteed Cost $ 39,100
- ------------------------------------------------------------------------------------------------------------------------------------
FIDUCIARY LIABILITY Federal All $5 million aggregate Guaranteed Cost $ 10,650
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL ACCIDENT Federal All $1 million Guaranteed Cost $ 900
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[JOHNSON & HIGGINS LOGO]
<PAGE> 77
UNIVERSAL HEALTH SERVICES RISK MANAGEMENT MANUAL
- --------------------------------------------------------------------------------
1994 PROPERTY AND CASUALTY INSURANCE PROGRAM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROJECTED
STATES ULTIMATE
POLICY CARRIER COVERED POLICY LIMITS RATING PLAN COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DIRECTORS' & OFFICERS' CODA All $5 million aggregate Guaranteed Cost $ 65,000
LIABILITY
- ---------------------------------------------------------------------------------------------------------------------------------
AIRPORT PREMISES The America's All $100 million Guaranteed Cost $ 45,390
LIABILITY & NON-OWNED and London
AIRCRAFT LIABILITY
- ---------------------------------------------------------------------------------------------------------------------------------
J & H FEE* N/A All N/A N/A $ 290,000
Casualty
$ 65,000
PROPERTY
----------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL: $18,971,421.46
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: All premiums shown above are based upon projected losses and/or are
subject to audit. The above costs do not include Texas surplus line
taxes.
Includes J&H*STARS
[JOHNSON & HIGGINS LOGO]
<PAGE> 78
EXHIBIT A
NOTE
New York, New York
August , 1994
For value received, Universal Health Services, Inc., a
Delaware corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the Interest Period
relating to such Loan. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be
recorded by the Bank and, if the Bank so elects in connection with any transfer
or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be endorsed by
the Bank on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the failure of the Bank to
make any such recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit
Agreement dated as of August 2, 1994 among the Borrower, the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
Agent (as the same may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the
<PAGE> 79
Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
UNIVERSAL HEALTH SERVICES, INC.
By
------------------------
Title:
2
<PAGE> 80
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
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3
<PAGE> 81
EXHIBIT B-1
[Opinion of Fulbright & Jaworski,
Counsel for the Borrower]
August 2, 1994
To the Banks Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Re: Credit Agreement dated as of August 2, 1994,
among Universal Health Services, Inc., the banks
named therein (the "Banks") and Morgan Guaranty
Trust Company of New York (the "Agent"),
as agent for such banks
------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Universal Health Services, Inc., a
Delaware corporation (the "Company"), and its existing corporate Subsidiaries,
in connection with (a) the Credit Agreement referred to above (the "Credit
Agreement"), which provides for the extension of loans to the Company by the
Banks in an aggregate principal amount not exceeding $125,000,000 at any one
time outstanding, and (b) the Guaranty Agreement dated as of August 2, 1994
among the Subsidiaries of the Company named therein and the Agent (the
"Guaranty Agreement"). All terms defined in the Credit Agreement are used
herein with their defined meanings unless the context otherwise requires.
In connection with our acting as counsel to the Company and its
existing corporate Subsidiaries, we have examined such certificates of officers
of the Company and its Subsidiaries and originals or copies certified to our
satisfaction of such corporate documents and resolutions of the Company and its
Subsidiaries and other corporate records as we have deemed relevant and
necessary as the basis for our opinion hereinafter set forth. We have relied
upon (i) such certificates of officers of the Company and its Subsidiaries with
respect to the accuracy of factual matters contained therein and (ii) certain
certificates of public officials.
<PAGE> 82
On the basis of the foregoing, we are of the opinion that:
1. Each of the Company and its existing corporate Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified as a
foreign corporation and in good standing in each other jurisdiction in which
the conduct of its business or the ownership of its property requires such
qualification.
2. Each of the Company and its existing Subsidiaries has all
corporate powers required to own its properties and conduct its business as now
conducted. The Company has the corporate power and authority to execute,
deliver and perform the Credit Agreement and the Notes and to borrow under the
Credit Agreement. The Company has taken all necessary corporate action to
authorize the borrowings under the Credit Agreement and to authorize the
execution, delivery and performance of the Credit Agreement and the Notes.
Each of the Credit Agreement and the Notes has been duly executed and delivered
by the Company and constitutes a valid and binding agreement or obligation of
the Company, as the case may be, enforceable against the Company in accordance
with its terms. No consent of any other Person (including stockholders of the
Company) and no license, approval or authorization of, exemption by, or
registration or declaration with, any governmental body is required in
connection with the execution, delivery or performance by the Company, or the
validity or enforceability against the Company of the Credit Agreement and the
Notes.
3. The execution, delivery and performance by the Company of the
Credit Agreement and the Notes and by the Subsidiaries that are party thereto
of the Guaranty Agreement will not violate any provision of any existing law or
regulation or the Restated Certificate of Incorporation, as amended, or By-Laws
of the Company or the charter or by-laws of any such Subsidiary or, to the best
of our knowledge after due inquiry, of any judgment, order, decree or award of
any court, arbitrator or governmental body, any mortgage, indenture, security
agreement, contract, undertaking or other agreement to which the Company or any
Subsidiary is a party or that is or may be binding upon any of them or any of
their respective properties or assets and of which we have knowledge and will
not result in the imposition or creation of any Lien on any thereof pursuant
to the provisions of any such mortgage, indenture, security agreement,
contract, undertaking or other agreement to which the Company or any Subsidiary
is a party or that is or may
2
<PAGE> 83
be binding upon any of them or any of their respective properties or assets and
of which we have knowledge.
4. Each Subsidiary that is a party to the Guaranty Agreement has
taken all necessary corporate action to authorize the execution and delivery of
the Guaranty Agreement and the Guaranty Agreement has been duly executed and
delivered by each such Subsidiary. The Guaranty Agreement is a valid and
binding agreement of each Subsidiary party thereto enforceable against each
such Subsidiary in accordance with its terms.
5. No consent of any other Person and no license, approval or
authorization of, exemption by, or registration or declaration with, any
governmental body is required in connection with the execution, delivery,
performance, validity or enforceability of the Guaranty Agreement.
6. To the best of our knowledge after due inquiry, except as set
forth on Exhibit A hereto, and as described in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, which has previously been
delivered to the Banks, there are no actions, suits or proceedings pending or
threatened against or affecting the Company or any Subsidiary or any of their
respective properties in any court or before any arbitrator of any kind or
before or by any governmental body, except actions, suits or proceedings of the
character normally incident to the kind of business conducted by the Company
and its Subsidiaries that (a) would not materially impair the right or ability
of the Company or any Subsidiary to carry on its business substantially as now
conducted and (b) would not have a material adverse effect on the consolidated
financial condition of the Company and its Subsidiaries, and there are no
actions, suits or proceedings pending or threatened that relate to or which in
any manner draw into question the validity of any of the transactions
contemplated by the Credit Agreement or the Guaranty Agreement.
7. Neither the Company nor any of its Subsidiaries is an "investment
company" or an "affiliated person" thereof, within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of (i) the Company's
obligations under the Credit Agreement and the Notes and (ii)
each of the Subsidiaries
3
<PAGE> 84
obligations under the Guaranty Agreement is subject to the
effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally;
(b) We express no opinion as to the availability of the
equitable remedy of specific performance (other than with
respect to obligations for the payment of money) or injunctive
relief;
(c) With respect to permits, licenses, approvals and
governmental authorizations required for the Company and the
Subsidiaries to own their respective properties and conduct
their respective businesses, we have relied solely upon
certificates of officers of the Company and the Subsidiaries;
(d) With respect to the organization, existence,
qualification and good standing of the Company's Subsidiaries,
and the matters set forth in Item 6, we have, with your
permission relied solely upon certificates of officers of the
Company and such Subsidiaries and the opinion of Bruce R.
Gilbert, General Counsel of the Company;
(e) Nothing herein shall constitute an opinion as to
the laws of any jurisdiction other than the laws of the State
of New York, the General Corporation Law of the State of
Delaware and the Federal laws of the United States; and
(f) We express no opinion as to the applicability
(and, if applicable, the effect) of Section 548 of the United
States Bankruptcy Code or any comparable provision of state
law or other state fraudulent conveyance laws to the questions
addressed in paragraph 4 or the conclusions expressed with
respect thereto.
Very truly yours,
4
<PAGE> 85
EXHIBIT B-2
[Opinion of General Counsel of the Borrower]
August 2, 1994
To the Banks Referred to Below Fulbright & Jaworski
c/o Morgan Guaranty Trust Company 666 Fifth Avenue
of New York, as Agent New York, NY 10103
60 Wall Street
New York, New York 10260-0060
Re: Credit Agreement dated as of August 2, 1994,
among Universal Health Services, Inc., the banks
named therein (the "Banks") and Morgan Guaranty
Trust Company of New York (the "Agent"),
as agent for such banks
------------------------------------------------
Ladies and Gentlemen:
I am General Counsel to Universal Health Services, Inc., a Delaware
corporation (the "Company"), and its existing corporate Subsidiaries, and I am
rendering this opinion in connection with (a) the Credit Agreement referred to
above (the "Credit Agreement"), which provides for the extension of loans to
the Company by the Banks in an aggregate principal amount not exceeding
$125,000,000 at any one time outstanding, and (b) the Guaranty Agreement dated
as of August 2, 1994 among the Subsidiaries of the Company named therein and
the Agent (the "Guaranty Agreement"). All terms defined in the Credit
Agreement are used herein with their defined meanings unless the context
otherwise requires.
In connection with this opinion I have examined such certificates of
officers of the Company and its Subsidiaries and originals or copies certified
to my satisfaction of such corporate documents and resolutions of the Company
and its Subsidiaries and other corporate records as I have deemed relevant and
necessary as the basis for my opinion hereinafter set forth. I have relied
upon
<PAGE> 86
(i) such certificates of officers of the Company and its Subsidiaries with
respect to the accuracy of factual matters contained therein with respect to
the operations and properties of the Company and its Subsidiaries and (ii)
certain certificates of public officials.
On the basis of the foregoing, I am of the opinion that:
1. Each of the Company and its existing corporate Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified as a
foreign corporation and in good standing in each other jurisdiction in which
the conduct of its business or the ownership of its property requires such
qualification.
2. Each of the Company and its existing Subsidiaries has all
corporate powers required to own its properties and conduct its business as now
conducted. The Company has the corporate power and authority to execute,
deliver and perform the Credit Agreement and the Notes and to borrow under the
Credit Agreement. The Company has taken all necessary corporate action to
authorize the borrowings under the Credit Agreement and to authorize the
execution, delivery and performance of the Credit Agreement and the Notes.
3. The execution, delivery and performance by the Company of the
Credit Agreement and the Notes and by the Subsidiaries that are party thereto
of the Guaranty Agreement will not violate any provision of any existing law or
regulation or the Restated Certificate of Incorporation, as amended, or By-Laws
of the Company or the charter or by-laws of any such Subsidiary or, to the best
of my knowledge after due inquiry, of any judgment, order, decree or award of
any court, arbitrator or governmental body, any mortgage, indenture, security
agreement, contract, undertaking or other agreement to which the Company or any
Subsidiary is a party or that is or may be binding upon any of them or any of
their respective properties or assets and of which I have knowledge and will
not result in the imposition or creation of any Lien on any thereof pursuant to
the provisions of any such mortgage, indenture, security agreement, contract,
undertaking or other agreement to which the Company or any Subsidiary is a
party or that is or may be binding upon any of them or any of their respective
properties or assets and of which I have knowledge.
4. Each Subsidiary that is a party to the Guaranty Agreement has
taken all necessary corporate action
2
<PAGE> 87
to authorize the execution and delivery of the Guaranty Agreement and the
Guaranty Agreement has been duly executed and delivered by each such
Subsidiary. The Guaranty Agreement is a valid and binding agreement of each
Subsidiary party thereto enforceable against each such Subsidiary in accordance
with its terms.
5. No consent of any other Person and no license, approval or
authorization of, exemption by, or registration or declaration with, any
governmental body is required in connection with the execution, delivery,
performance, validity or enforceability of the Guaranty Agreement.
6. To the best of my knowledge after due inquiry, except as
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, which has previously been delivered to the Banks, there are
no actions, suits or proceedings pending or threatened against or affecting the
Company or any Subsidiary or any of their respective properties in any court or
before any arbitrator of any kind or before or by any governmental body, except
actions, suits or proceedings of the character normally incident to the kind of
business conducted by the Company and its Subsidiaries that (a) would not
materially impair the right or ability of the Company or any Subsidiary to
carry on its business substantially as now conducted and (b) would not have a
material adverse effect on the consolidated financial condition of the Company
and its Subsidiaries, and there are no actions, suits or proceedings pending or
threatened that relate to or which in any manner draw into question the
validity of any of the transactions contemplated by the Credit Agreement or the
Guaranty Agreement.
The opinions set forth above are subject to the following
qualifications:
(a) The enforceability of (i) the Company's
obligations under the Credit Agreement and the Notes and (ii)
each of the Subsidiaries obligations under the Guaranty
Agreement are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally;
(b) I express no opinion as to the availability of
the equitable remedy of specific performance (other than with
respect to obligations for the payment of money) or injunctive
relief; and
3
<PAGE> 88
(c) I am qualified to practice law in the
Commonwealth of Pennsylvania and nothing herein shall
constitute an opinion as to the laws of any jurisdiction other
than the laws of the Commonwealth of Pennsylvania and the
federal law of the United States of America.
Very truly yours,
4
<PAGE> 89
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of August 2, 1994 among Universal
Health Services, Inc., a Delaware corporation (the "Borrower"), the banks
listed on the signature pages thereof (the "Banks") and Morgan Guaranty Trust
Company of New York, as Agent (the "Agent"), and have acted as special counsel
for the Agent for the purpose of rendering this opinion pursuant to Section
3.01(e) of the Credit Agreement. Terms defined in the Credit Agreement are
used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are within the Borrower's corporate powers
and have been duly authorized by all necessary corporate action.
<PAGE> 90
2. The Credit Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as
to the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 91
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), UNIVERSAL HEALTH SERVICES, INC. (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of August 2, 1994 among
the Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrower in an aggregate principal amount
at any time outstanding not to exceed $___,000,000;
WHEREAS, Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement and the other Loan
Documents in respect of a portion of its Commitment thereunder in an amount
equal to $__________ (the "Assigned Amount"), together with a corresponding
portion of its outstanding Loans, and the Assignee proposes to accept
assignment of such rights and assume the corresponding obligations from the
Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
<PAGE> 92
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement
and the other Loan Documents to the extent of the Assigned Amount, and the
Assignee hereby accepts such assignment from the Assignor and assumes all of
the obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of the corresponding
portion of the principal amount of the Loans made by the Assignor outstanding
at the date hereof. Upon the execution and delivery hereof by the Assignor,
the Assignee, the Borrower and the Agent and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to perform
the obligations of a Bank under the Credit Agreement with a Commitment in an
amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds the amount heretofore agreed between them.*
It is understood that commitment fees accrued to the date hereof in respect of
the Assigned Amount are for the account of the Assignor and such fees accruing
from and including the date hereof are for the account of the Assignee. Each
of the Assignor and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other party hereto,
it shall receive the same for the account of such other party to the extent of
such other party's interest therein and shall promptly pay the same to such
other party.
- ----------------------------------
*Amount should combine principal together with accrued interest
and breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It may
be preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE> 93
SECTION 4. Consent of the Borrower and the Agent. This
Agreement is conditioned upon the consent of the Borrower and the Agent
pursuant to Section 9.06(c) of the Credit Agreement. The execution of this
Agreement by the Borrower and the Agent is evidence of this consent. Pursuant
to Section 9.06(c) the Borrower agrees to execute and deliver a Note payable to
the order of the Assignee to evidence the assignment and assumption provided
for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the
Borrower or any of its Subsidiaries, or the validity and enforceability of the
obligations of the Borrower or any of its Subsidiaries in respect of any Loan
Document. The Assignee acknowledges that it has, independently and without
reliance on the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of the
Borrower and its Subsidiaries.
SECTION 6. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
first above written.
[ASSIGNOR]
By
-------------------------
Title:
3
<PAGE> 94
[ASSIGNEE]
By
--------------------------
Title:
UNIVERSAL HEALTH SERVICES, INC.
By
--------------------------
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
--------------------------
Title:
4
<PAGE> 95
EXHIBIT E
GUARANTY AGREEMENT
AGREEMENT dated as of August 2, 1994 among each of the
Guarantors listed on the signature pages hereof under the caption "Guarantors"
and each Person that shall, at any time after the date hereof, become a
Guarantor hereunder (individually a "Guarantor" and collectively the
"Guarantors") and Morgan Guaranty Trust Company of New York, as Agent.
W I T N E S S E T H :
WHEREAS, Universal Health Services, Inc., a Delaware
corporation (the "Borrower"), of which each of the Guarantors is a Subsidiary,
has entered into a Credit Agreement (as the same may be amended from time to
time, the "Credit Agreement") dated as of August 2, 1994 with the banks listed
on the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company
of New York, as Agent, pursuant to which the Borrower is entitled, subject to
certain conditions, to borrow up to $125,000,000;
WHEREAS, the Credit Agreement provides, among other things,
that one condition to its effectiveness is the execution and delivery by the
Borrower's Subsidiaries of this Agreement; and
WHEREAS, in conjunction with the transactions contemplated by
the Credit Agreement and in consideration of the financial and other support
that the Borrower has provided, and such financial and other support as the
Borrower may in the future provide, to the Guarantors, and in order to induce
the Banks and the Agent to enter into the Credit Agreement and to make Loans
thereunder, the Guarantors are willing to guarantee the obligations of the
Borrower under the Credit Agreement and the Notes.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE> 96
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as therein defined.
In addition the following term, as used herein, has the following meaning:
"Obligations" means (i) all obligations of the Borrower in
respect of principal of and interest on the Loans and the Notes and (ii) all
renewals or extensions of the foregoing, in each case whether now outstanding
or hereafter arising. The Obligations shall include, without limitation, any
interest, costs, fees and expenses which accrue on or with respect to any of
the foregoing, whether before or after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization by the
Borrower, and whether or not allowed or allowable as a claim in any such
proceeding, any such interest, costs, fees and expenses that would have accrued
thereon or with respect thereto but for the commencement of such case,
proceeding or other action.
ARTICLE II
The Guarantee
SECTION 2.01. The Guarantee. Subject to Section 2.03, the
Guarantors hereby unconditionally, irrevocably and jointly and severally
guarantee to the Banks and the Agent, and to each of them, the due and punctual
payment of all Obligations as and when the same shall become due and payable,
whether at maturity, by declaration or otherwise, according to the terms
thereof. In case of failure by the Borrower punctually to pay any Obligation,
the Guarantors, subject to Section 2.03, hereby unconditionally agree to cause
such payment to be made punctually as and when the same shall become due and
payable, whether at maturity or by declaration or otherwise, and as if such
payment were made by the Borrower.
SECTION 2.02. Guarantees Unconditional. The obligations of
the Guarantors under this Article II shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
2
<PAGE> 97
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement or the Notes by operation of law or otherwise;
(b) any modification or amendment of or supplement to the
Credit Agreement;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any
obligation of the Borrower under the Credit Agreement or the Notes;
(d) any change in the corporate existence, structure or
ownership of the Borrower or its Subsidiaries, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Borrower or its Subsidiaries or their assets or any resulting release
or discharge of any obligation of the Borrower contained in the Credit
Agreement or the Notes;
(e) the existence of any claim, set-off or other rights which
the Guarantors may have at any time against the Borrower, the Agent or
any Bank or any other Person, whether or not arising in connection
with any of the Credit Agreement or the Notes; provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Borrower for any reason of any of the Credit Agreement, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of the principal of or interest on any Note or
any other amount payable by the Borrower under the Credit Related
Agreement or the Notes; or
(g) any other act or omission to act or delay of any kind by
the Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever that might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the
obligations of the Guarantors under this Article II.
SECTION 2.03. Limit of Liability. Each Guarantor shall be
liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.
3
<PAGE> 98
SECTION 2.04. Discharge; Reinstatement in Certain
Circumstances. The Guarantors' obligations under this Article II shall remain
in full force and effect until the Commitments are terminated and all principal
of and interest on the Notes and all other amounts payable by the Borrower
under the Credit Agreement shall have been paid in full. If at any time any
payment of the principal of or interest on any Note or any other amount payable
by the Borrower under the Credit Agreement is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, the Guarantors' obligations under this Article II with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
SECTION 2.05. Waiver of Notice. The Guarantors irrevocably
waive acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Borrower or any other Person.
SECTION 2.06. Waiver of Subrogation. The Guarantors
irrevocably waive any and all rights to which they may be entitled, by
operation of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Borrower with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the
Borrower in respect thereof.
SECTION 2.07. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by the Borrower under the Credit
Agreement is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
the Credit Agreement shall nonetheless be payable by the Guarantors hereunder
forthwith on demand by the Agent made at the request of the Required Banks.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. Unless otherwise specified herein,
all notices, requests and other communications to any party hereunder shall be
in writing (including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party at its address or telex or facsimile
number set forth on the signature pages hereof or such other address or telex
or facsimile number as such party may
4
<PAGE> 99
hereafter specify for the purpose by notice to the to the other party hereto.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
or pursuant to this Section 4.01 and the appropriate answerback is received,
(ii) if given by facsimile transmission, when such facsimile is transmitted to
the facsimile transmission number specified in or pursuant to this Section 4.01
and telephonic confirmation of receipt thereof is received, (iii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section 4.01.
SECTION 3.02. No Waiver. No failure or delay by Agent in
exercising any right, power or privilege under this Agreement or any other Loan
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and
therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 3.03. Amendments and Waivers. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Guarantors and the Agent with the prior written
consent of the Required Banks under the Credit Agreement.
SECTION 3.04. Governing Law; Submission to Jurisdiction;
Waiver of a Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
EACH GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH GUARANTOR AND THE AGENT HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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SECTION 3.05. Successors and Assigns. This Agreement is for
the benefit of the Agent and the Banks and their respective successors and
assigns and in the event of an assignment of the Loans, the Notes or other
amounts payable under the Credit Agreement, the rights hereunder, to the extent
applicable to the indebtedness so assigned, shall be transferred with such
indebtedness. All the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 3.06. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, and all of which taken together shall constitute a single instrument,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when the Agent shall have
received a counterpart hereof signed by the each Guarantor listed on the
signature page hereof and when the Credit Agreement shall become effective in
accordance with its terms. Thereafter, upon execution and delivery of a
counterpart of this Agreement on behalf on any other Guarantor, this Agreement
shall become effective with respect to such Guarantor as of the date of such
delivery.
SECTION 3.07. Severability If any provision of this Guaranty
Agreement is prohibited, unenforceable or not authorized, or to the extent that
any portion of the Obligations hereunder may be voidable or subject to
avoidance, in any jurisdiction, such provision or the Obligation shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability, non-authorization or portion so subject without invalidating
or limiting the remaining provisions hereof or remaining portion of the
Obligations or affecting the validity, enforceability or legality of such
provision or such portion of the Obligations in any other jurisdiction.
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<PAGE> 101
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent
By
-------------------------
Name:
Title:
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Telex number: 177615 MGT
Facsimile number: (212) 648-5018
GUARANTORS
----------
ASC OF CANTON, INC.
ASC OF CORONA, INC.
ASC OF LAS VEGAS, INC.
ASC OF LITTLETON, INC.
ASC OF MIDWEST CITY, INC.
ASC OF NEW ALBANY, INC.
ASC OF PALM SPRINGS, INC.
ASC OF PONCA CITY, INC.
ASC OF SPRINGFIELD, INC.
ASC OF ST. GEORGE
THE ARBOUR, INC.
THE BRIDGEWAY, INC.
CHILDREN'S HOSPITAL OF McALLEN,
INC.
COMPREHENSIVE OCCUPATIONAL AND
CLINICAL HEALTH, INC.
DALLAS FAMILY HOSPITAL, INC.
DEL AMO HOSPITAL, INC.
DOCTORS' GENERAL HOSPITAL, LTD.
DOCTORS' HOSPITAL OF HOLLYWOOD,
INC.
DOCTORS' HOSPITAL INTERNAL
MEDICINE, INC.
FOREST VIEW PSYCHIATRIC
HOSPITAL, INC.
GLEN OAKS HOSPITAL, INC.
HEALTH CARE FINANCE &
CONSTRUCTION CORP.
HRI CLINICS, INC.
7
<PAGE> 102
HRI HOSPITAL, INC.
LA AMISTAD RESIDENTIAL TREATMENT
CENTER, INC.
McALLEN MEDICAL CENTER, INC.
MERIDELL ACHIEVEMENT CENTER,
INC.
MERION BUILDING MANAGEMENT, INC.
RELATIONAL THERAPY CLINIC, INC.
RIVER CREST HOSPITAL, INC.
RIVER OAKS, INC.
RIVER PARISHES INTERNAL
MEDICINE, INC.
SOUTHWEST DALLAS HOSPITAL, INC.
SPARKS FAMILY HOSPITAL, INC.
TONOPAH HEALTH SERVICES, INC.
TURNING POINT CARE CENTER, INC.
TWO RIVERS PSYCHIATRIC HOSPITAL,
INC.
UHS HOLDING COMPANY, INC.
UHS INTERNATIONAL, INC.
UHS LAS VEGAS PROPERTIES, INC.
UHS OF AUBURN, INC.
(d/b/a AUBURN GENERAL
HOSPITAL)
UHS OF BELMONT, INC.
(d/b/a Belmont Community
Hospital)
UHS OF BETHESDA, INC.
UHS OF COLUMBIA, INC.
UHS OF De La RONDE, INC.
UHS OF DELAWARE, INC.
UHS OF FLORIDA, INC.
UHS OF LONDON, INC.
UHS OF MAITLAND, INC.
UHS OF MICHIGAN, INC.
UHS OF NEW ORLEANS
(d/b/a Chalmette Hospital)
UHS OF ODESSA, INC.
UHS OF PLANTATION, INC.
UHS OF RIVER PARISHES, INC.
(d/b/a River Parishes Medical
Center)
UHS OF RIVERTON, INC.
UHS OF SHREVEPORT, INC.
(d/b/a Doctors' Hospital of
Shreveport)
UHS OF SPRINGFIELD, INC.
UHS OF VERMONT, INC.
UHSR CORPORATION
UNIVERSAL HEALTH NETWORK, INC.
8
<PAGE> 103
UNIVERSAL HEALTH PENNSYLVANIA
PROPERTIES, INC.
UNIVERSAL HEALTH RECOVERY
CENTERS, INC.
(d/b/a KeyStone Center)
UNIVERSAL HEALTH SERVICES OF
CEDAR HILL, INC.
UNIVERSAL HEALTH SERVICES OF
CONCORD, INC.
UNIVERSAL HEALTH SERVICES OF
INLAND VALLEY, INC.
(d/b/a Inland Valley Regional
Medical Center)
UNIVERSAL HEALTH SERVICES OF
NEVADA, INC.
(d/b/a Valley Hospital
Medical Center)
UNIVERSAL TREATMENT
CENTERS, INC.
VICTORIA REGIONAL MEDICAL
CENTER, INC.
WELLINGTON REGIONAL MEDICAL
CENTER INCORPORATED
WESTLAKE MEDICAL CENTER, INC.
By
-------------------------
Name:
Title:
c/o Universal Health Services,
Inc.
367 South Gulph Road
King of Prussia, PA 19406
Facsimile number: (610) 768-3336
9
