<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995, commission file number 0-13364
-------------- ----------------
SURGICAL CARE AFFILIATES, INC.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- -----------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
62-1149229
- -----------------------------------------------------------------------------
(I. R. S. Employer Identification No.)
Registrant's telephone number, including area code (615) 385-3541
--------------------------
102 Woodmont Blvd, Suite 610, Nashville, TN 37205
-------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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
--- ---
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. All adjustments necessary to a fair
statement of the results of this period reported have been included. 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 disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this report.
Common stock, par value $.25 per share, shares outstanding 38,955,085 at March
31, 1995.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SURGICAL CARE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
------------ -------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash $ 39,060,301 $ 31,222,963
Marketable securities 294,639 294,639
Accounts receivable, less allowance for doubtful
accounts of $4,452,372 in 1995 and $4,160,260
in 1994 31,929,368 34,801,079
Other receivables 772,224 701,965
Supplies 4,681,043 4,562,518
Prepaid expenses and other current assets 1,701,826 742,911
Deferred income taxes 9,260,259 9,260,259
------------ ------------
Total current assets 87,699,660 81,586,334
------------ ------------
Property & equipment, including leased properties:
Land & improvements 32,244,504 31,972,686
Building 67,177,472 66,289,162
Equipment, furniture and fixtures 108,915,721 106,690,800
Construction in progress 2,188,462 1,998,495
------------ ------------
210,526,159 206,951,143
Less: accumulated depreciation and amortization (61,550,158) (57,969,075)
------------ ------------
Net property & equipment 148,976,001 148,982,068
Other assets:
Excess of cost over fair value of net assets
acquired 114,300,992 109,149,364
Other assets 592,733 625,828
------------ ------------
$351,569,386 $340,343,594
============ ============
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
<PAGE> 3
SURGICAL CARE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
------------ ------------
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable - trade $ 5,577,805 $ 5,889,642
Accrued liabilities 12,578,044 15,658,612
Accrued loss on disposal of surgery centers 1,703,208 5,629,000
Current portion of long-term obligations and notes
payable 10,119,162 10,119,162
Income taxes payable 18,380,290 14,737,873
Distributable to minority interests 4,500,000 4,500,000
------------ ------------
Total current liabilities 52,858,509 56,534,289
------------ ------------
Long-term obligations:
Notes payable & other long-term debt 47,442,913 42,269,224
Capital lease obligations - related parties 4,067,635 7,447,761
------------ ------------
Total long-term obligations 51,510,548 49,716,985
------------ ------------
Deferred income taxes 3,845,939 3,845,939
------------ ------------
Minority interests 32,965,595 33,623,872
------------ ------------
Shareholders' equity:
Common stock, par value $.25, 100,000,000
shares authorized, 39,427,485 and
39,110,622 shares issued, and 38,955,085
and 38,638,222 shares outstanding in 1995 and
1994, respectively 9,856,872 9,777,656
Treasury stock at cost,472,400 shares in 1995
and 1994, respectively (6,094,078) (6,114,778)
Additional paid in capital 95,996,839 91,159,880
Retained earnings 110,629,162 101,799,751
------------ ------------
Total shareholders' equity 210,388,795 196,622,509
------------ ------------
$351,569,386 $340,343,594
============ ============
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
<PAGE> 4
SURGICAL CARE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1994
------------ ------------
<S> <C> <C>
Net revenue $65,106,351 $52,148,320
Operating costs:
Costs of providing healthcare services (34,168,337) (28,142,003)
Depreciation and amortization (4,338,978) (3,900,668)
Provision for doubtful accounts (921,983) (980,017)
----------- -----------
Operating income 25,677,053 19,125,632
General, administrative and development expenses (1,561,131) (1,153,772)
Interest and other expenses (1,162,284) (2,057,544)
Interest and other income 477,582 847,909
Gain on sale of MCA stock 0 3,419,612
----------- -----------
Income before minority interests and income taxes 23,431,220 20,181,837
Minority interests in (earnings) of partnerships (6,100,441) (4,416,546)
----------- -----------
Income before income taxes and cumulative effect
of change in accounting principle 17,330,779 15,765,291
Income tax provision (6,932,312) (7,686,116)
----------- -----------
Income before cumulative effect of change in
accounting principle 10,398,467 8,079,175
Cumulative effect of change in accounting
principle, net of income tax benefit of
$1,403,437 0 (2,105,155)
----------- -----------
Net income $10,398,467 $ 5,974,020
=========== ===========
Net Income Per Common & Common Equivalent Share
Before cumulative effect of change in
accounting principle $ 0.27 $ 0.21
Cumulative effect of change in accounting
principle 0.00 (0.05)
----------- -----------
$ 0.27 $ 0.16
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 39,091,979 38,876,222
=========== ===========
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
<PAGE> 5
SURGICAL CARE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
MARCH 31, MARCH 31,
1995 1994
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $10,398,467 $ 5,974,020
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Cumulative Effect of Change in Accounting Principle 0 2,105,155
Depreciation and Amortization 4,338,978 3,900,668
Provisions for Losses on Accounts Receivable 921,983 980,017
Minority Interests in Earnings of Partnerships 6,100,441 4,416,546
Deferred Income Taxes 0 858,127
Changes in Assets and Liabilities
Net of Effect of Acquisitions:
Decrease in Accounts Receivable 1,949,728 1,688,367
(Increase) Decrease in Other Receivables (70,259) 3,309,552
(Increase) Decrease in Supplies (118,525) 113,936
Increase in Prepaid Expenses and Other Current Assets (958,915) (1,125,118)
Decrease (Increase) in Other Assets 33,095 (464,182)
Increase in Excess of Cost over Fair Value of Net Assets Acquired (1,815,995) (2,722,175)
Decrease in Accounts Payable - Trade (311,837) (1,157,750)
Decrease in Accrued Liabilities (3,080,568) (512,763)
Decrease in Accrued Loss on Disposal of Surgery Centers (3,925,792) 0
Increase in Income Taxes Payable 3,642,417 6,777,359
----------- -----------
Net Cash Provided by Operating Activities 17,103,218 24,141,759
----------- -----------
Cash Flows From Investing Activities:
Decrease in Temporary Investments 0 31,108
Decrease in Marketable securities 0 7,010,219
Capital Expenditures (3,575,016) (9,820,427)
Acquisitions less Cash Acquired of $0 in 1995, $ 75,000 in 1994 0 (4,363,371)
----------- -----------
Net Cash Used in Investing Activities (3,575,016) (7,142,471)
----------- -----------
Cash Flows From Financing Activities:
Net Borrowings Under Line-of-Credit Agreement 31,076,792 0
Payments on Long-Term Obligations (29,283,229) (9,613,361)
Proceeds From Long-Term Obligations 0 1,334,290
Proceeds From Issuance of Common Stock 822,647 830,481
Dividends on Common Stock for the Treasury 20,700 0
Dividends Paid (1,569,056) (1,551,167)
Distributions to Minority Interests (6,110,734) (5,131,341)
Decrease in Distributable to Minority Interests 0 (261,219)
(Decrease) Increase in Minority Interests (647,984) 594,720
----------- -----------
Net Cash Used in Financing Activities (5,690,864) (13,797,597)
----------- -----------
Net Increase in Cash & Cash Equivalents 7,837,338 3,201,691
Cash & Cash Equivalents at Beginning of Period 31,222,963 23,877,186
----------- -----------
Cash & Cash Equivalents at End of Period $39,060,301 $27,078,877
=========== ===========
For purposes of the statements of cash flows, the Company
considers all certificates of deposits and highly liquid
marketable securities with a maturity of three months or
less to be cash equivalents.
Cash & Cash Equivalents at End of Period $39,060,301 $27,078,877
Temporary Investments 0 5,254,675
----------- -----------
Cash and Temporary Investments $39,060,301 $32,333,552
=========== ===========
</TABLE>
The notes to consolidated financial statements are an integral part of these
statements.
<PAGE> 6
SURGICAL CARE AFFILIATES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, "Interim Financial
Statements," and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The financial statements have been prepared in conformity with accounting
principles and practices (including consolidation practices) reflected in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, and
in the opinion of management, include all adjustments (consisting only of
normal recurring adjustments), necessary for a fair presentation of the
Company's financial position as of March 31, 1995, and results of its
operations and cash flows for the three months ended March 31, 1995 and 1994.
The results of operations for the three months ended March 31, 1995 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 1995. All significant intercompany balances and transactions have
been eliminated in the consolidated financial statements. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
NOTE 2 - RECLASSIFICATIONS
Reclassifications of certain amounts in the 1994 consolidated
financial statements have been made to conform to the 1995 presentation of
accounts.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF ITS FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
Surgical Care Affiliates, Inc. operates 63 outpatient surgery centers,
nine of which were acquired or built in 1994. The Company began the quarter
with 65 centers but closed two of them in the first quarter.
RESULTS OF OPERATIONS - FIRST QUARTER
Revenue for the first quarter increased 25% to $65.1 million.
Earnings per share before cumulative effect of change in accounting principle
increased 29% to $.27 compared to $.21 in 1994.
The increase in revenue of 25% is due primarily to a 16% rise in same
center revenue. The remaining growth in revenue came from new centers. The
same center revenue increase is comprised of a 12% growth in volume and 4%
increase in pricing and the intensity of surgical procedures performed. The
16% increase is the largest quarterly increase experienced in same center
revenue in several years. The increase is partially the result of an increase
in activity at centers joint ventured with hospitals. The case volume in the
first quarter of 1994 was also reduced by bad weather. Management expects
total same center revenue to increase by 6 - 10% for the remainder of 1995.
The costs of providing healthcare services increased 21%. The
increase is due to the addition of 5 new centers and the increase of 16% in
same center revenues since the first quarter of 1994.
Interest and other expenses decreased from $2.1 million in 1994 to
$1.2 million in 1995. In the first quarter of 1994, the Company recorded an
expense of $950,000 to relocate two surgery centers.
Interest and other income decreased because the Company did not record
any development fee revenue during the first quarter of 1995 that is earned
when new centers are developed.
General and administrative expenses increased due to an increase in
corporate staffing and other activities to manage the growth in surgery
centers.
During the first quarter of 1994, the Company sold shares of stock in
Medical Care America at a pre-tax gain of $3.4 million. All of the stock was
sold in 1994.
Effective January 1, 1994, the Company changed its accounting policy
for deferred development and pre-opening costs. As a result of the change, the
Company recorded a cumulative effect of change in accounting principle of $2.1
million for the first quarter of 1994. The Company now expenses deferred
development and pre-opening costs as incurred. The change in accounting for
deferred development and pre-opening costs did not have a material impact on
the Company's net income for the first quarter of 1995.
<PAGE> 8
The Company's effective tax rate was 49% in the first quarter of 1994
compared to 40% in 1995. The decrease occurred because of a $1 million charge
to provide for certain income tax contingencies in 1994.
BALANCE SHEET AMOUNTS
The Company's cash position increased by $8 million from year end.
The increase is due to net income earned in the first quarter. The Company did
not make any acquisitions in the first quarter which historically has been the
largest use of cash.
Accounts receivable decreased since December 31, 1994, due to seasonal
fluctuations. The Company's receivables typically rise before year end due to
the high volume of surgery in the fourth quarter.
Excess of cost over fair value of net assets acquired (goodwill)
increased due to the payment of deferred purchase price consideration incurred
from past acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to open four to five surgery centers in 1995 that
currently are or will be under construction. The Company also expects to
acquire four centers that should close before the end of the second quarter.
The Company expects to pay cash to purchase these centers. Funding will be
provided from operations or from draws on the Company's lines of credit.
As in previous periods, the principal source of the Company's cash is
generated from its operations. The Company believes that it has ready access
to third party resources (primarily banks) to finance its growth to the extent
that the growth requirements exceed cash generated from operations.
In April 1995, the Company entered into an agreement to refinance
substantially all of its short and long term debt. Under the terms of the new
five year agreement, the Company will pay interest at LIBOR plus 50 basis
points, compared to the old rate of LIBOR plus 130-200 basis points. The new
loan is unsecured except for a negative pledge on assets and contains certain
financial covenants.
<PAGE> 9
SURGICAL CARE AFFILIATES, INC. AND SUBSIDIARIES
FOR THE THREE MONTHS ENDED MARCH 31, 1995
Part II. Other Information
Item 1. Legal Proceedings. - None.
Item 2. Changes in Securities. - None.
Item 3. Defaults Upon Senior Securities. - None.
Item 4. Submission of Matters to a Vote of Security Holders. - None
Item 5. Other Information. - None.
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
(1) Credit Agreement dated April 12,
1995 by and among Surgical Care Affiliates,
Inc., SCA-Management Company, SCA Investment
Company, the Lenders Listed therein and Third
National bank in Nashville as Agent
(2) Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-k. - None.
<PAGE> 10
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.
SURGICAL CARE AFFILIATES, INC.
------------------------------
(Registrant)
/s/ Tarpley B. Jones
-------------------------------
Tarpley B. Jones
Senior Vice President and Chief
Financial Officer
(Principal Financial and
Duly Authorized Officer)
On behalf of Registrant
Date: May 10, 1995
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ ----------------------------------------------------------------------------
<S> <C>
10.1 Credit Agreement dated April 12, 1995 by and among Surgical Care Affiliates,
Inc., SCA-Management Company, SCA Investment Company, the Lenders Listed
therein, and Third National Bank in Nashville as Agent
27 Financial Data Schedule (For SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
BY AND AMONG
SURGICAL CARE AFFILIATES, INC.,
SCA-MANAGEMENT COMPANY,
SCA INVESTMENT COMPANY,
THE LENDERS LISTED HEREIN,
AND
THIRD NATIONAL BANK IN NASHVILLE
AS AGENT
$85,000,000 REVOLVING CREDIT LOAN
APRIL 12, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Accounting Terms and Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.03 Other Definitional Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.04 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.01 Revolving Credit Loan Commitment and Swing Line Loan Commitment . . . . . . . . . . . . . . . . . . . . . 14
Section 2.02 Lenders Not Permitted or Required To Make Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.03 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.06 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.07 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.08 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.09 Use Of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.10 Repayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11 Voluntary Prepayments of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.12 Voluntary Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.13 Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.14 Interest Rate Not Ascertainable, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.15 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.16 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.17 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.18 Apportionment of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.19 Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.20 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.21 Relationship of Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.02 Corporate Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.03 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Section 3.04 No Legal Bar or Resultant Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.05 No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.06 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.07 Investments, Advances, and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.09 Taxes; Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.10 Title, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.11 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.12 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.13 Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.15 Subsidiaries, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.16 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.18 Securities Act, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.19 Use of Proceeds; Purpose of the Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.20 Personal Holding Company; Subchapter S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.21 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.22 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.23 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.24 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.25 Intercompany Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.26 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.27 Payment or Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.01 Conditions Preceding to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.02 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.01 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.02 Auditor's No Default Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.03 Taxes and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.04 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.06 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.07 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.08 Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.09 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.10 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<TABLE>
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Section 5.11 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.12 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.13 Additional Credit Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.14 Intercompany Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.01 Debts, Guaranties, and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.02 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.03 Investments, Loans, and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.04 Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.05 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.06 Acquisitions, Mergers, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.07 Asset Dispositions, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.08 Proceeds of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.09 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.10 Prepayments of Other Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.12 Additional Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.13 Limitation on Payment Restrictions Affecting Consolidated Companies . . . . . . . . . . . . . . . . . . . 44
Section 6.14 Actions Under Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.15 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.03 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.01 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.02 Authorization of Agent with Respect to the Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.03 Agent's Duties Limited; No Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.04 No Reliance on the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.05 Certain Rights of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.06 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.07 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.08 The Agent in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.09 Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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<TABLE>
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Section 8.10 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.11 Notice of Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.02 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.03 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.04 Payment of Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.05 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.06 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.07 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.09 Effectiveness; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.11 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.12 Change in Accounting Principles, Fiscal Year or Tax Laws . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.13 Headings Descriptive; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.14 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X
Jury Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.01 Jury Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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SCHEDULES
<TABLE>
<S> <C>
Schedule 3.01 Organization and Ownership of Subsidiaries
Schedule 3.08 Material Liabilities and Pending and
Threatened Litigation
Schedule 3.10(a) Ownership of Properties
Schedule 3.10(b) UCC Search Locations
Schedule 3.25 Intercompany Loans
Schedule 3.26(b) Refinanced Indebtedness
Schedule 3.27 Dividend Restrictions
Schedule 4.01(e) States For Authorization to do Business
Schedule 6.01(b) Existing Indebtedness
Schedule 6.02 Existing Liens
EXHIBITS
--------
EXHIBIT A FORM OF BORROWING REQUEST
EXHIBIT B FORM OF CONTINUATION/CONVERSION NOTICE
EXHIBIT C FORM OF REVOLVING CREDIT NOTE
EXHIBIT D FORM OF SWING LINE NOTE
EXHIBIT E FORM OF OPINION LETTER
</TABLE>
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (" AGREEMENT") is entered into this 12th day of
April, 1995, by and among SURGICAL CARE AFFILIATES, INC., a Delaware corporation
("SCA"), SCA-MANAGEMENT COMPANY, a Tennessee corporation ("MANAGEMENT") and SCA
INVESTMENT COMPANY, a Nevada corporation ("INVESTMENT"), (SCA, Management and
Investment may each be referred to herein as a "BORROWER" and collectively as
the "BORROWERS"), THIRD NATIONAL BANK IN NASHVILLE, a national banking
association ("TNB"), the other banks and lending institutions listed on the
signature pages hereof (TNB and such other banks and lending institutions are
referred to collectively herein as the "LENDERS"), and THIRD NATIONAL BANK IN
NASHVILLE, in its capacity as agent for the Lenders and each successive agent
for such Lenders as may be appointed from time to time pursuant to Article VIII
hereof (the "AGENT").
WITNESSETH:
WHEREAS, the Borrowers have requested and the Lenders have agreed to
provide a certain credit facility to the Borrowers on terms and conditions set
forth herein.
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:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings, unless the context expressly
otherwise requires:
"ADJUSTED LIBOR" means, for any Interest Period, the offered
rates for deposits in U.S. Dollars for a period comparable to the
Interest Period and an amount comparable to the LIBOR Loan as quoted by
the Telerate System and published on each Business Day by TNB's Funds
Management Desk, as may be adjusted by dividing such rate by the
remainder of one (1) minus any reserve requirements of the Board of
Governors of the Federal Reserve System (or any successor). If such
rate is unavailable on such service, then such rate shall be determined
by and based on any other interest rate reporting service of recognized
standing designated in writing by the Agent to the Borrowers and the
other Lenders.
<PAGE> 8
"AFFILIATE" of any Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person and
includes each executive officer or director or general partner of such
Person and each Person who is the beneficial owner of 5% or more of any
class of the Voting Stock of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, firm or
corporation whether through the ownership of voting securities, by
contract or otherwise.
"AGENT" means Third National Bank in Nashville, a national
banking association, and any successor agent appointed pursuant to
SECTION 8.10 hereto.
"AGREEMENT" means this Credit Agreement (including all
exhibits and schedules hereto) as the same may be restated, modified,
amended, or supplemented from time to time.
"APPLICABLE LIBOR MARGIN" means one-half of one percent
(0.50%) per annum.
"APPLICABLE SWING MARGIN" means one and three-fourths of one
percent (1.75%) per annum.
"ASSET SALE" means any Disposition except (i) the sale of
inventory in the ordinary course of business or equipment which has
become obsolete or is replaced in the ordinary course of business and
(ii) any such sale, conveyance, transfer or other disposition to any
Borrower.
"ASSET VALUE" means, with respect to any Disposition as of any
particular date, an amount equal to the greater of (a) the then book
value of the Property subject to such Disposition as established in
accordance with GAAP, or (b) the then fair market value of the
Property subject to such Disposition as determined in good faith by
the Board of Directors or similar managing body of such Consolidated
Company.
"AUTHORIZED OFFICER" means, relative to any Credit Party,
those of its officers whose signatures and incumbency shall have been
certified to the Agent and Lenders pursuant to SECTION 4.01(d).
"BANKRUPTCY CODE" means The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. Section 101,
et seq.).
"BASE RATE" means the variable interest rate that is equal to
the "base rate of interest" from time to time charged and announced by
TNB as its "base rate", which rate is used as an index for
establishing interest rates on loans. The Base Rate shall be adjusted
daily to reflect any changes in such "base rate of interest".
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<PAGE> 9
"BASE RATE LOAN" means any outstanding principal amount of the
Loans of any Lender that bears interest at a rate determined at or
referenced to the Base Rate.
"BORROWING" means the Loans of the same type and, in the case
of Revolving Credit Loans which are LIBOR Loans, having the same
Interest Period, made on the same Business Day by the Lenders.
"BORROWING REQUEST" means a loan request and certificate duly
executed by the respective Authorized Officers of the Borrowers,
substantially in the form of Exhibit A hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
day on which commercial banks are authorized to close under the laws
of the State of Tennessee.
"CAPITAL LEASE" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee, which
lease should, in accordance with GAAP, be required to be accounted for
as a capital lease on the balance sheet of such Person.
"CLOSING" means the time and place of the execution and/or
delivery of the Loan Documents.
"CLOSING DATE" means the 12 day of April, 1995, or at such
other date as the parties elect.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITMENT" or "COMMITMENTS" means, as the context may
require, a Lender's Revolving Credit Loan Commitment or Swing Line
Loan Commitment or, collectively, the Revolving Credit Loan
Commitments of the Lenders and the Swing Line Loan Commitment of TNB.
"COMMITMENT AMOUNT" means, on any date, as the context may
require, the Revolving Credit Loan Commitment Amount and/or the Swing
Line Loan Commitment Amount.
"CONDITIONS PRECEDENT" means those matters or events that must
be completed or must occur or exist prior to Lender's being obligated
to fund any Loan, including, but not limited to, those matters
described in ARTICLE IV hereof.
"CONSOLIDATED COMPANIES" means, collectively, each Borrower
and all of its Subsidiaries (except those Subsidiaries identified on
Schedule 3.01 as being inactive) and any other entity which in
accordance with GAAP the financial results are required to be
included in the Financial Statements of any Borrower.
-3-
<PAGE> 10
"CONSOLIDATED EBIT" means, for any fiscal period of SCA, an
amount equal to (a) the sum for such fiscal period of the Consolidated
Net Income (Loss) plus, to the extent subtracted in determining such
Consolidated Net Income (Loss), provisions for (i) taxes based on
income, and (ii) Consolidated Fixed Charges, minus (b) any items of
gain (or plus any items of loss) that were (A) not realized in the
ordinary course of business (whether or not classified as "ordinary"
by GAAP), and (B) the result of any sale of assets.
"CONSOLIDATED FIXED CHARGES" means Consolidated Interest
Expense and Consolidated Lease Expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any fiscal period
of SCA, total interest expense of the Consolidated Companies
(including, without limitation, interest expense attributable to
Capital Leases) determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED LEASE EXPENSE" means, for any fiscal period of
SCA, all payments made by the Consolidated Companies under Operating
Leases.
"CONSOLIDATED NET INCOME (LOSS)" means, for any fiscal period
of SCA, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting
period) determined in conformity with GAAP.
"CONSOLIDATED NET WORTH" means, as of the date of
determination, Shareholders' Equity of SCA.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, Consolidated Net Worth less (i) all goodwill,
organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles,
(ii) all unamortized debt discount and expense, (iii) all reserves
carried and not deducted from assets, (iv) cash held in a sinking or
other analogous fund established for the purpose of redemption,
retirement, defeasance or prepayment of any stock or Indebtedness, and
(v) any items not included in clauses (i) through (iv) above which are
treated as intangibles in conformity with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means, for any fiscal
period of SCA, the sum of Funded Debt and Consolidated Net Worth of
the Consolidated Companies.
"CONTEST" means an appropriate proceeding diligently conducted
and brought in good faith by the appropriate Consolidated Company
whereby such Consolidated Company disputes the applicability or amount
of any tax, levy, impost, fee, governmental charge or similar item and
as to which the Consolidated Company has established appropriate
reserves under GAAP.
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<PAGE> 11
"CONTINUATION/CONVERSION NOTICE" means a notice of
continuation or conversion and certification duly executed by the
Authorized Officers of the Borrowers, substantially in the form of
Exhibit B hereto.
"CREDIT PARTIES" means, collectively, the Borrowers and any
other Person who from time to time executes a guaranty agreement with
respect to all or any portion of the Obligations, which guaranty
agreement shall be form and substance satisfactory to Agent.
"DEFAULT" means the occurrence of any of the events specified
in SECTION 7.01 hereof, whether or not any requirement for notice or
lapse of time or other condition precedent has been satisfied.
"DISPOSITION" means any sale, conveyance, transfer,
assignment, lease or other disposition (including, without limitation,
by merger or consolidation, and by condemnation, eminent domain, loss,
damage or destruction, and whether by operation of law or otherwise)
by any Consolidated Company to any Person of any Property (including
capital stock but excluding limited partner interests in limited
partnerships).
"DOL" shall have the same meaning set forth in SECTION
5.10(d)(iv).
"DOLLAR" and "U.S. DOLLAR" and a sign "$" means lawful money
of the United States of America.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or
asbestos containing material or exposure to asbestos or asbestos
containing material), relating to, regulating or imposing liability or
standards of conduct concerning (a) pollution or protection of the
environment, (b) emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial toxic or
hazardous constituents, substances or wastes, including without
limitation, any Hazardous Substance, petroleum including crude oil or
any fraction thereof, any petroleum product or other waste, chemicals
or substances regulated by any Environmental Law into the environment
(including without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), (c) the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Substance, petroleum
including crude oil or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any Environmental
Law, or (d) underground storage tanks and related piping, and
emissions, discharges and releases or threatened releases therefrom,
such Environmental Laws to include, without limitation (i) the Clean
Air Act (42 U.S.C. Section 7401 et seq.), (ii) the Clean Water Act
(33 U.S.C. S 1251 et sea.), (iii) the Resource Conservation and
Recovery Act (42 U.S.C. S 6901 et seq.), (iv) the Toxic Substances
Control Act (15 U.S.C. S 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended
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<PAGE> 12
by the Superfund Amendments and Reauthorization Act (42 U.S.C. S 9601
et seq.), (vi) any "Superfund" or "Superlien" law, including, without
limitation, the Tennessee Hazardous Waste Management Acts of 1977 and
of 1983, as amended in Tennessee Code Annotated Section 68-212-101 et
seq. and Section 68-212-201 et seq., and (vii) all applicable
national and local laws or regulations with respect to environmental
control.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of
similar import, including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Person, (a) any
corporation (other than such Person) that is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) with
such Person, (b) any trade or business (other than such Person),
whether or not incorporated, that is under common control (as defined
in Section 414(c) of the Code) with such Person, and (c) any trade or
business (other than such Person) that is a member of an affiliated
service group (as defined in Section 414(m) of the Code) of which such
Person is also a member. The term ERISA Affiliate also includes any
other entity required to be aggregated with such Person under Section
414(o) of the Code and the treasury regulations thereunder.
"EVENT OF DEFAULT" shall have the same meaning set forth in
SECTION 7.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time including (unless the context otherwise
requires) any rules and regulations promulgated thereunder.
"EXISTING INTERCOMPANY LOAN DOCUMENTS" means, collectively,
the promissory notes and all related loan, subordination and other
agreements relating in any manner to the Existing Intercompany Loans.
"EXISTING INTERCOMPANY LOANS" means, collectively, the
Intercompany Loans more particularly described on Schedule 3.25.
"FEDERAL FUNDS RATE" means for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with member banks of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of Atlanta, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three (3) Federal
funds brokers of recognized standing selected by the Agent.
"FEE LETTER" means the confidential letter, dated March 31,
1995, between the Borrowers and Agent.
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"FINANCIAL STATEMENTS" means (a) the consolidated financial
statement or statements of SCA described or referenced in SECTION 3.06
hereof and delivered with this Agreement to Lender, and (b) subsequent
financial statements required to be provided pursuant to this
Agreement.
"FISCAL MONTH" means each of the twelve months in the Fiscal
Year.
"FISCAL QUARTER" means each of the quarters of the Fiscal Year
ending on March 31, June 30, September 30, and December 31.
"FISCAL YEAR" or "Annually" means any twelve-month accounting
period ending December 31.
"FIXED CHARGE COVERAGE RATIO" means, as of the last date of
any fiscal period of SCA, the ratio of (a) Consolidated EBIT to (b)
the sum of Consolidated Fixed Charges.
"FUNDED DEBT" means, with respect to the Consolidated
Companies, all Indebtedness for money borrowed, indebtedness evidenced
or secured by purchase money Liens, Capital Leases, conditional sales
contracts and similar title retention debt instruments, including any
current maturities of such Indebtedness plus any amounts distributable
to Minority Interests plus Minority Interest plus deferred taxes
payable. The calculation of Funded Debt shall include all Funded Debt
of the Consolidated Companies, plus all Funded Debt of other Persons
to the extent guaranteed by a Consolidated Company, to the extent
supported by a letter of credit issued for the account of a
Consolidated Company, or as to which and to the extent which a
Consolidated Company or its assets otherwise have become liable for
payment thereof. Funded Debt shall also include the redemption amount
with respect to any stock of a Consolidated Company required to be
redeemed within the next twelve (12) months.
"GAAP" means generally accepted accounting principles.
"GUARANTY" shall mean any contractual obligation, contingent
or otherwise, of a Person with respect to any Indebtedness or other
obligation or liability of another Person, including without
limitation, any such Indebtedness, obligation or liability directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including any obligations
(contingent or otherwise) arising through any agreement to purchase,
repurchase or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or any agreement to provide funds
for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income or other financial
condition or to make any payment other than for value received. The
amount of any Guaranty shall be deemed to be an amount equal to the
stated or determinable amount
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of the primary obligation in respect of which guaranty is made or, if
not so stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"HAZARDOUS SUBSTANCE" shall have the meaning ascribed to that
term in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Acts of 1986.
"INDEBTEDNESS" of any Person means, without duplication (a)
all obligations of such Person that in accordance with GAAP would be
shown on the balance sheet of such Person as a liability (including,
without limitation, obligations for borrowed money and for the
deferred purchase price of property or services, and obligations
evidenced by bonds, debentures, notes or other similar instruments);
(b) all rental obligations under leases required to be capitalized
under GAAP; (c) all Guaranties of such Person (including contingent
reimbursement obligations under undrawn letters of credit); (d)
Indebtedness of others secured by any Lien upon property owned by such
Person, whether or not assumed; and (e) obligations or other
liabilities under currency contracts, interest rate hedging contracts
or similar agreements or combinations thereof.
"INDUSTRY RELATED ENTITY" means any corporation, partnership,
limited liability company, joint venture or similar form of entity
that is primarily in the healthcare industry.
"INTERCOMPANY LOAN DOCUMENTS" means, collectively, the
promissory notes and all related loan, subordination and other
agreements relating in any manner to the Intercompany Loans,
including, without limitation, the Existing Intercompany Loan
Documents.
"INTERCOMPANY LOANS" means, collectively, any and all loans
existing from time to time between any of the Consolidated Companies,
including, without limitation, the Existing Intercompany Loans.
"INTEREST PERIOD" shall have the meaning set forth in SECTION
2.07 hereof.
"INVESTMENT" shall mean, when used with respect to any Person,
any direct or indirect advance loan or other extension of credit
(other than the creation of receivables in the ordinary course of
business) or capital contribution by such Person (by means of
transfers of property to others or payments for property or services
for the account or use of others, or otherwise) to any Person, or any
direct or indirect purchase or other acquisition by such Person of, or
of a beneficial interest in, capital stock, partnership interests,
bonds, notes, debentures or other securities issued by any other
Person.
"IRS" shall have the same meaning set forth in SECTION
5.10(D)(IV).
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"LENDER" or "LENDERS" means TNB, the other banks and lending
institutions listed on the signature pages hereof and each permitted
assignee thereof, if any, pursuant to SECTION 9.06 but shall not
include any participants.
"LEVERAGE RATIO" means the ratio, expressed as a percentage,
of Funded Debt to Consolidated Total Capitalization for the
Consolidated Companies.
"LIBOR LOAN" means any outstanding principal amount of the
Loans of any Lender that bears interest at a rate determined at or
referenced to Adjusted LIBOR.
"LIEN" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute, or
contract, and including, but not limited to, the lien or security
interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale, or trust receipt or a lease, consignment,
or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting the Property. For the purposes
of this Agreement, any Consolidated Company shall be deemed to be the
owner of any Property that it has acquired or holds subject to a
conditional sale agreement, financing lease, or other arrangement
pursuant to which title to the Property has been retained by or vested
in some other Person for security purposes.
"LOAN" or "LOANS" means, as the context may require, either a
Revolving Credit Loan of any type or a Swing Line Loan or,
collectively, all outstanding Revolving Credit Loans and Swing Line
Loans.
"LOAN DOCUMENTS" means, collectively, each document, paper or
certificate executed, furnished or delivered in connection with this
Agreement (whether before, at, or after the Closing Date), including,
without limitation, this Agreement, the Notes, the Fee Letter, and all
other documents, certificates, reports, and instruments that this
Agreement requires or that were executed or delivered (or both) at
Agent's request.
"MARGIN REGULATIONS" means Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time.
"MATERIAL ADVERSE CHANGE" means any materially adverse change
in any of (a) the business, results of operations, condition
(financial or otherwise), assets or performance of the Consolidated
Companies, taken as a whole, (b) the ability of any Credit Party to
perform its obligations under this Agreement, the Notes or any of the
other Loan Documents, including the payment of the Obligations, (c)
the legality, validity or enforceability of any Loan Document or (d)
the rights and remedies of the Lenders or the Agent under the Loan
Documents.
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"MATERIAL ADVERSE EFFECT" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, a
Material Adverse Change.
"MATURITY DATE" means the earlier of (i) April 12, 2000 or
(ii) the date Lender accelerates the Obligations following an Event of
Default or (iii) the occurrence of an event set forth in SECTION
7.01(E) or SECTION 7.01(F) herein. All amounts owed by the Borrowers
to Lender pursuant to this Agreement and the Loan Documents shall be
due and payable in full on the Maturity Date, unless the Maturity Date
is extended in a writing signed by the Lender.
"MINORITY INTEREST" means that amount depicted from time to
time on SCA's most current Financial Statements as "Minority Interest"
so long as such is calculated on a consistent basis and in accordance
with GAAP.
"NOTE" or "NOTES" means, as the context may require, either a
Revolving Credit Note or the Swing Line Note or, collectively, all
Revolving Credit Notes and the Swing Line Note.
"OBLIGATIONS" means all amounts owing to the Agent or any
Lender pursuant to the terms of this Agreement, including without
limitation, all Loans (including all principal and interest payments
due thereunder), fees, expenses, indemnification and reimbursement
payments, indebtedness, liabilities and obligations of the
Consolidated Companies, direct or indirect, absolute or contingent,
liquidated or unliquidated, now existing or hereafter arising,
together with all renewals, extensions, modifications or refinancings
thereof.
"OPERATING LEASE" means any lease of real, personal or mixed
property which is not a Capital Lease.
"PAYMENT OFFICE" means, at any time for any Lender, the
Payment Office set forth opposite such Lender's name on the signature
pages hereof, as the same may be amended pursuant to SECTION 9.06.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set
forth opposite its signature hereto, as such percentage may be
adjusted from time to time as a result of assignments or amendments
made pursuant to this Agreement.
"PERMITTED LIENS" means:
(i) Liens existing on the date hereof disclosed on
Schedule 6.02;
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(ii) Liens securing the Indebtedness permitted in SECTION
6.01(c); provided, however, that any such Lien shall be confined
solely to the personal property acquired and shall not exceed 100% of
such Borrower's cost thereof;
(iii) Liens for taxes not yet delinquent, and Liens for
Taxes that are subject to a Contest;
(iv) Liens arising by operation of law in favor of
materialmen, mechanics, carriers, lessors and other similar Persons
arising in the ordinary course of business which relate to obligations
which are not yet due or which are subject to a Contest;
(v) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds and other similar obligations;
(vi) zoning restrictions, easements, licenses or
restrictions on the use of real property owned by any Consolidated
Company, which do not materially impair the use of such property in
the operation of the business of such Consolidated Company or the
value of such property for the purpose of such business;
(vii) rights reserved or vested in governmental authority
which does not materially impair the use of such property;
(viii) Liens created by the Loan Documents; and
(ix) Liens securing Refinanced Indebtedness that are
assigned to Investment within 45 days after the Closing Date and
evidence satisfactory to Agent of such assignments is delivered to
Agent.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, government, or any agency
or political subdivision thereof, or any other form of entity.
"PLAN" means any employee benefit or other plan described in
Section 3(3) of ERISA established or maintained, or to which
contributions have been made, by any Consolidated Company.
"PRINCIPAL OFFICE" means the principal office of the Agent
located at 201 Fourth Avenue, North, Nashville, Tennessee 37219.
"PROPERTY" means any interest of any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
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"REFINANCED INDEBTEDNESS" means the Indebtedness of the
Consolidated Companies to be paid prior to or on the Closing Date with
the proceeds of the Loans as more particularly described on Schedule
3.26(b).
"REQUIRED LENDERS" means, at any time, Lenders (i) holding at
least an aggregate of sixty-six and two-thirds percent (66-2/3%) of
the then aggregate unpaid principal amount of the Loans or, if no
Loans are then outstanding, having at least an aggregate of sixty-six
and two-thirds percent (66-2/3%) of the Commitments and (ii)
constituting more than half of the Lenders then party to this
Agreement (provided there are more than two (2) Lenders at that time).
"REVOLVING CREDIT LOAN" shall have the same meaning set forth
in SECTION 2.01.
"REVOLVING CREDIT LOAN COMMITMENT" means, relative to any
Lender, such Lender's obligation to make Revolving Credit Loans
pursuant to SECTION 2.01.
"REVOLVING CREDIT LOAN COMMITMENT AMOUNT" means, on any date,
$80,000,000, as such amount may be reduced from time to time pursuant
to SECTION 2.12.
"REVOLVING CREDIT NOTE" means a promissory note of the
Borrowers payable to any Lender, in the form of Exhibit C hereto (as
such promissory note may be amended, endorsed or otherwise modified
from time to time) evidencing the aggregate Indebtedness of the
Borrowers to such Lender resulting from outstanding Revolving Credit
Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"SHAREHOLDERS' EQUITY" means, with respect to any Person as at
any date of determination, shareholders' equity of such Person
determined in accordance with GAAP.
"SOLVENT" means, with respect to any Person, that as of any
date of determination, (a) the then fair saleable value of the assets
of such Person is (i) greater than the then total amount of
liabilities (including contingent, subordinated, matured and
unliquidated liabilities) of such Person and (ii) greater than the
amount that will be required to pay such Person's probable liability
on such Person's then existing debts as they become absolute and
matured, (b) such Person's capital is not unreasonably small in
relation to its business or any contemplated or undertaken
transaction, and (c) such Person does not intend to incur, or believe
or reasonably should believe that it will incur, debts beyond its
ability to pay such debts as they become due.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation or other entity (including, without limitation,
partnerships, limited liability companies, joint ventures and
associations) regardless of its jurisdiction of organization or
formation, at
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least a majority of the total combined voting power of all classes of
voting stock or other ownership interests of which shall, at the time
as of which any determination is being made, be owned by such Person,
either directly or indirectly through one or more other Subsidiaries,
or (ii) any partnership, limited liability company, joint venture, or
other entity as to which such Person, such Person and one or more of
its Subsidiaries or one or more Subsidiaries of such Person has or
have the power to direct or cause the direction of management and/or
policies, or the power to elect the managing general partner or chief
manager (or the equivalent), of such partnership, limited liability
company, joint venture or other entity, as the case may be.
"SWING LINE LOAN" shall have the same meaning set forth in
SECTION 2.01(b).
"SWING LINE LOAN COMMITMENT" means, with respect to TNB, TNB's
obligation pursuant to SECTION 2.01(b) to make Swing Line Loans.
"SWING LINE LOAN COMMITMENT AMOUNT" means, on any date,
$5,000,000, as such amount may be reduced from time to time pursuant
to SECTION 2.12.
"SWING LINE NOTE" means a promissory note of the Borrowers
payable to TNB, in the form of Exhibit D hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrowers to TNB
resulting from outstanding Swing Line Loans, and also means all other
promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"TAXES" shall mean any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions,
withholdings or other charges of whatever nature, now or hereafter
imposed or levied by any governmental authority and all interest,
penalties, additions to tax and similar liabilities with respect
thereto, excluding, in the case of the Agent and each Lender, net
income and franchise taxes imposed on the Agent or such Lender by the
jurisdiction under the laws of which the Agent or such Lender is
organized or any political subdivision or taxing authority thereof or
therein, or by any jurisdiction in which such Lender's domestic
lending offices or eurodollar lending offices are located or any
political subdivision or taxing authority thereof or therein.
"TNB" means Third National Bank in Nashville, a national
banking association, its successors and assigns.
"VOTING STOCK" means securities of any class of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or persons
performing similar functions).
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SECTION 1.02 ACCOUNTING TERMS AND DETERMINATION. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with GAAP.
SECTION 1.03 OTHER DEFINITIONAL TERMS. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and the words Article, Section, Schedule, Exhibit and like references
are to this Agreement unless otherwise specified.
SECTION 1.04 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
ARTICLE II
THE LOANS
SECTION 2.01 REVOLVING CREDIT LOAN COMMITMENT AND SWING LINE LOAN
COMMITMENT. (a) Subject to and upon the terms and conditions herein set forth,
from time to time on any Business Day occurring prior to the Maturity Date, each
Lender will make Loans (relative to such Lender, and of any type, its "REVOLVING
CREDIT LOANS") to the Borrowers equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Revolving Credit Loans requested by the
Borrowers to be made on such day. The Commitment of each Lender described in
this SECTION 2.01(A) is herein referred to as its "REVOLVING CREDIT LOAN
COMMITMENT". On the terms and subject to the conditions hereof, the Borrowers
may from time to time borrow, prepay and reborrow Revolving Credit Loans.
(b) Subject to and upon the terms and conditions herein set forth,
from time to time on any Business Day occurring prior to the Maturity Date, TNB
will make Loans (relative to TNB, its "SWING LINE LOANS") to the Borrowers
equal to the principal amount of the Swing Line Loan required under the
Borrowers' cash management arrangement with TNB to maintain a non-negative
balance (limited to the Swing Line Loan Commitment Amount) in Management's
demand account with TNB on an interday or intraday basis. The Commitment of TNB
described in this SECTION 2.01(b) is herein referred to as its "SWING LINE LOAN
COMMITMENT". On the terms and subject to the conditions hereof, the Borrowers
may from time to time borrow, prepay and reborrow Swing Line Loans.
SECTION 2.02 LENDERS NOT PERMITTED OR REQUIRED TO MAKE LOANS. No Lender
shall be permitted or required to make any Loan if, after giving effect thereto,
the aggregate outstanding principal amount of all Loans
(a) that are Revolving Credit Loans made by such Lender
would exceed such Lender's Percentage of the Revolving Credit Loan
Commitment Amount, or
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(b) that are Swing Line Loans made by TNB would exceed
the then existing Swing Line Loan Commitment Amount.
SECTION 2.03 BORROWING PROCEDURE. (a) Whenever the Borrowers desire to
make a Borrowing with respect to the Revolving Credit Loan Commitments (other
than one resulting from a conversion or continuation pursuant to SECTION
2.03(c)), the Borrowers shall deliver to the Agent a Borrowing Request, such
Borrowing Request to be given prior to 11:00 A.M. (local time for the Agent) at
its Principal Office (i) one (1) Business Day prior to the requested date of
such Borrowing in the case of Base Rate Loans, and (ii) two (2) Business Days
prior to the requested date of such Borrowing in the case of LIBOR Loans.
Notices received after 11:00 A.M. shall be deemed received on the next Business
Day. The Borrowing Request shall include any certificates or documentation
required by Agent to be given in connection with the Borrowing. Each Borrowing
Request shall be irrevocable and shall specify the aggregate principal amount of
the Borrowing, the date of Borrowing (which shall be a Business Day), whether
the Borrowing is to consist of Base Rate Loans or LIBOR Loans (or both), whether
the Borrowing is to be deposited into Management's demand deposit account (or
any other Borrower's demand deposit account) maintained with Agent or wire
transferred into another account (with appropriate wiring information) and with
respect to a LIBOR Loan, the Interest Period chosen by the Borrowers.
(b) Each Loan shall, at the option of the Borrowers, be made,
continued as or converted into part of one or more Borrowings that shall
consist entirely of Base Rate Loans and LIBOR Loans only; provided, however,
that no Swing Line Loans may be made, continued or converted into a LIBOR Loan.
Each Borrowing comprised of LIBOR Loans shall not be less than $5,000,000 or a
greater integral multiple of $1,000,000, and each Borrowing comprised of Base
Rate Loans shall be not less than $500,000 or a greater integral multiple of
$100,000. At no time shall the aggregate number of LIBOR Loans exceed six (6).
(c) Whenever the Borrowers desire to convert all or a portion of
an outstanding Borrowing under the Revolving Credit Loan Commitments into one
or more Borrowings consisting of Loans of another type, or to continue
outstanding a Borrowing consisting of LIBOR Loans for a new Interest Period,
the Borrowers shall deliver to Agent a Continuation/Conversion Notice at least
one (1) Business Day prior to such Borrowing being converted into Base Rate
Loans, and at least two (2) Business Days prior written notice (or telephonic
notice promptly confirmed in writing) of each such Borrowing to be converted
into or continued as LIBOR Loans. The Continuation /Conversion Notice shall be
given prior to 11:00 A.M (local time for the Agent) on the date specified at
the Principal Office of the Agent. Each such Continuation/Conversion Notice
shall be irrevocable and shall specify the aggregate principal amount of the
Borrowings to be converted or continued, the date of such conversion or
continuation, whether the Borrowings are being converted into Base Rate Loans
or LIBOR Loans or continued as LIBOR Loans. In the case of LIBOR Loans, the
Continuation/Conversion Notice shall also specify the Interest Period
applicable thereto. If, upon the expiration of any Interest Period in respect
of any Borrowing, the Borrowers shall have failed to deliver the
Continuation/Conversion Notice, the Borrowers shall be deemed to have elected
to convert or
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continue such Borrowing to a Borrowing consisting of Base Rate Loans. So long
no Default or Event of Default shall have occurred and is continuing, no
Continuation/Conversion Notice may be given unless the Agent and the Required
Lenders shall have otherwise consented in writing. No conversion of any
Borrowing of LIBOR Loans shall be permitted except on the last day of the
Interest Period in respect thereof.
(d) Swing Line Loans shall be made automatically by TNB in
aggregate minimum principal amounts of $1,000 and an integral multiple of
$1,000 from time to time pursuant to Borrower's cash management arrangement
with TNB. All Swing Line Loans shall be made as Base Rate Loans and shall not
be entitled to be converted into LIBOR Loans.
(e) The following persons are authorized to submit a Borrowing
Request and a Continuation/Conversion Notice: Tarpley B. Jones and Jeffrey A.
Bogle and any other person designated thereby in writing by the Borrowers and
delivered to Agent as being authorized to submit such Requests and Notices, and
such authority shall continue until revoked in writing by the Borrowers.
(f) Without in any way limiting the Borrowers' obligation to
confirm in writing any telephonic notice, the Agent may act without liability
upon the basis of telephonic notice believed by the Agent in good faith to be
from the Borrowers prior to receipt of written confirmation. In each such case,
each Borrower hereby waives the right to dispute the Agent's record of the
terms of such telephonic notice.
(g) The Agent shall promptly give each Lender notice by telephone
(confirmed in writing) or by telex, telecopy or facsimile transmission of the
matters covered by the notices given to the Agent pursuant to this SECTION 2.03
with respect to the Commitments.
SECTION 2.04 DISBURSEMENT OF FUNDS. (a) No later than noon (local
time for the Agent) on the date of each Borrowing pursuant to the Revolving
Credit Loan Commitments (other than one resulting from a conversion or
continuation pursuant to SECTION 2.03(c)), each Lender will make available its
Percentage of the amount of such Borrowing in immediately available funds at the
Principal Office of the Agent. The Agent will make available to the Borrowers
the aggregate of the amounts (if any) so made available by the Lenders to the
Agent in a timely manner as directed by Borrower in the Borrowing Request by
either (i) crediting such amounts to the demand deposit account chosen by the
Borrowers in the Borrowing Request by the close of business on such Business Day
or (ii) wire transfer pursuant to the instructions set out in the Borrowing
Request. In the event that the Lenders do not make such amounts available to the
Agent by the time prescribed above, but such amount is received later that day,
such amount may be credited to the Borrowers in the manner described in the
preceding sentence on the next Business Day.
(b) The proceeds of each Swing Line Loan shall be made available
by TNB, by the close of business on each Business Day by crediting such amounts
to Management's demand
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deposit account (or any other Borrower's demand deposit account after receipt
by Agent of written notice from the Borrowers) maintained with the Agent.
(c) Unless the Agent shall have been notified by any Lender prior
to the date of a Borrowing pursuant to the Revolving Credit Commitments that
such Lender does not intend to make available to the Agent such Lender's
portion of the Borrowing to be made on such date, the Agent may assume that
such Lender has made such amount available to the Agent on such date and the
Agent may make available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
on the date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest at the
Federal Funds Rate. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrowers, and the Borrowers shall immediately pay such corresponding amount to
the Agent together with interest at the rate specified for the Borrowing which
includes such amount paid and any amounts due under SECTION 2.17 hereof.
Nothing in this SECTION 2.04(c) shall be deemed to relieve any Lender from its
obligation to fund its Commitments hereunder or to prejudice any rights that
the Borrowers may have against any Lender as a result of any default by such
Lender hereunder.
(d) All Borrowings under the Revolving Credit Commitments shall be
loaned by the Lenders on the basis of their Percentage of such Commitments. No
Lender shall be responsible for any default by any other Lender in its
obligations hereunder, and each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other
Lender to fund its Commitments hereunder.
SECTION 2.05 NOTES. Each Lender's Revolving Credit Loans under its
Revolving Credit Loan Commitment shall be evidenced by a Revolving Credit Note
payable to the order of such Lender in the maximum principal amount equal to
such Lender's Percentage of the original Revolving Credit Loan Commitment
Amount. All Swing Line Loans made by TNB shall be evidenced by a Swing Line Note
payable to the order of TNB in the maximum principal amount equal to the Swing
Line Loan Commitment Amount.
SECTION 2.06 INTEREST. (a) The Borrowers agree to pay interest in
respect of all unpaid principal amounts of the Loans from the respective dates
such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum equal to the applicable
rates indicated below:
(i) For Base Rate Loans -- The Base Rate.
(ii) For LIBOR Loans -- Adjusted LIBOR plus the Applicable
LIBOR margin
(iii) For Swing Line Loans -- The Base Rate minus the
Applicable Swing Margin.
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(b) To the extent not prohibited by applicable law, the Borrowers
shall pay a late charge equal to five percent (5%) of any payments of principal
and/or interest that are paid after the due date thereof, to cover the extra
expenses involved in handling delinquent payments.
(c) During the existence of any Event of Default, all outstanding
principal and unpaid interest, in respect of the Loans and all other amounts
owing hereunder shall bear interest (both before and after judgment) at a rate
equal to two percentage points (2%) per annum above the Base Rate.
(d) Interest on each Loan shall accrue from and including the
date of such Loan to but excluding the date of any repayment thereof. Interest
on all outstanding Base Rate Loans shall be payable on the last day of each
Fiscal Month in arrears. Interest on all LIBOR Loans shall be paid in arrears
on the last day of the applicable Interest Period; provided that with respect
to Interest Periods of six (6) months, accrued interest shall be paid in
arrears in two installments at the end of the third month thereof and at the
end thereof.
SECTION 2.07 INTEREST PERIODS. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Loans, the
Borrowers shall select an interest period (each an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall be either a one (1),
two (2), three (3) or six (6) month period; provided that:
(a) The Interest Period for any Borrowing of LIBOR Loans
shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing consisting of Loans of another type)
as selected by the Borrowers in the Borrowing Request or
Continuation/Conversion Notice given to Agent pursuant to SECTION
2.03(a) OR 2.03(c) and thereafter, if such Loan is continued in whole
or in part, as a LIBOR Loan pursuant to SECTION 2.03(c), shall
commence on the last day of the immediately preceding Interest Period
with respect thereto;
(b) If any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on
the Business Day immediately following such day;
(c) No Interest Period with respect to the Loans shall
extend beyond the Maturity Date.
SECTION 2.08 FEES. (a) On the Closing Date, the Borrowers shall pay
to the Agent for its sole benefit the non-refundable fees in the amounts and on
the dates set forth in the Fee Letter.
(b) The Borrowers shall pay to the Agent, for the account of each
Lender, a commitment fee for the period commencing on the Closing Date and
continuing as long as any of the Obligations remain outstanding, computed at a
rate equal to 15 basis points per annum on the average daily unused portion of
the Commitment Amount, computed quarterly, such fee
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payable quarterly in arrears on the last calendar day of each Fiscal Quarter of
SCA. The commitments fees generated with respect to the portion of the unused
portion of the Commitment Amount attributable to the unused portion of the
Swing Line Loan Commitment shall be payable to TNB only.
SECTION 2.09 USE OF PROCEEDS. The proceeds of the Loans shall be used
solely for the following purposes:
(a) approximately $58,000,000 shall be used initially to
repay Refinanced Indebtedness of the Consolidated Companies; and
(b) all other amounts shall be used as working capital
and for other general corporate purposes, including acquisitions and
capital expenditures of the Consolidated Companies and advances to any
Consolidated Companies.
SECTION 2.10 REPAYMENT OF PRINCIPAL. (a) The Borrowers' obligations to
pay the principal of and interest on the Loans to each Lender shall be evidenced
by the records of the Agent and such Lender and by the Note payable to such
Lender completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Loans shall be due
and payable in full on the Maturity Date.
SECTION 2.11 VOLUNTARY PREPAYMENTS OF BORROWINGS. (a) The Borrowers
may, at their option, prepay Borrowings consisting of Base Rate Loans at any
time in whole, or from time to time in part, in amounts aggregating $100,000 or
any greater integral multiple of $100,000, by paying the principal amount to be
prepaid together with interest accrued and unpaid thereon to the date of
prepayment. Those Borrowings consisting of LIBOR Loans may be prepaid, at
Borrowers' option, in whole, or from time to time in part, in amounts
aggregating $5,000,000 or any greater integral multiple of $1,000,000, by paying
the principal amount to be prepaid, together with interest accrued and unpaid
thereon to the date of prepayment, and all compensation payments pursuant to
SECTION 2.17 if such prepayment is made on a date other than the last day of an
Interest Period applicable thereto. Each such optional prepayment shall be
applied in accordance with SECTION 2.11(c).
(b) The Borrowers shall give written notice (or telephonic notice
confirmed in writing) to the Agent of any intended prepayment of the Loans (i)
not less than one (1) Business Day prior to any prepayment of Base Rate Loans,
and (ii) not less than two (2) Business Days prior to any prepayment of LIBOR
Loans. Such notice, once given, shall be irrevocable by the Borrowers. Upon
receipt of such notice of prepayment pursuant to the first sentence of this
SECTION 2.11(b), the Agent shall promptly notify each Lender of the contents of
such notice and of such Lender's Percentage of such prepayment, if any.
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(c) The Borrowers, when providing notice of prepayment pursuant to
SECTION 2.11(B), may designate the types of Loans and the specific Borrowing or
Borrowings that are to be prepaid, provided that if any prepayment of LIBOR
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than $5,000,000, such
Borrowing shall immediately be converted into Base Rate Loans. In the absence
of a designation by the Borrowers, the Agent shall, subject to the foregoing,
apply such prepayment first to Base Rate Loans and then to LIBOR Loans as
Interest Periods expire with respect thereto. All voluntary prepayments shall
be applied to the payment of interest before application to principal and shall
be applied against scheduled amortization payments in the inverse order of
maturity.
SECTION 2.12 VOLUNTARY REDUCTION OF COMMITMENTS. The Borrowers may,
from time to time on any Business Day, voluntarily reduce the amount of either
the Revolving Credit Loan Commitment Amount or the Swing Line Loan Commitment
Amount; provided, however, that (i) all such reductions shall require at least
three (3) Business Days' prior written irrevocable notice to the Agent and be
permanent, (ii) any partial reduction of (A) the Revolving Credit Loan
Commitment Amount shall be in a minimum amount of $5,000,000 and in an integral
multiple of $1,000,000, and (B) the Swing Line Loan Commitment Amount shall be
in a minimum amount of $1,000,000 and in an integral multiple of $500,000, and
(iii) except as provided below, (A) the Revolving Credit Loan Commitment Amount
may not be reduced to an amount less than the aggregate outstanding principal
amount of all Revolving Credit Loans, and (B) the Swing Line Loan Commitment
Amount may not be reduced to an amount less than the aggregate outstanding
principal amount of all the Swing Line Loans. The Borrowers may terminate the
Commitments in whole if, at the time of and as a condition of such termination,
the Borrowers shall have repaid in full the aggregate outstanding principal
amount of all Loans, together with all accrued interest and fees thereon to the
date of termination.
SECTION 2.13 PAYMENTS, ETC. (a) Except as otherwise specifically
provided herein, all payments under this Agreement and the other Loan Documents
shall be made without defense, set-off or counterclaim to the Agent not later
than 11:00 A.M. (local time for the Agent) on the date when due and shall be
made in Dollars in immediately available funds at its Principal Office.
(b)(i) All such payments shall be made free and clear of and
without deduction or withholding for any Taxes in respect of this
Agreement, the Notes or other Loan Documents, or any payments of
principal, interest, fees or other amounts payable hereunder or
thereunder. If any Taxes are so levied or imposed, the Borrowers agree
(A) to pay the full amount of such Taxes, and such additional amounts
as may be necessary so that every net payment of all amounts due
hereunder and under the Notes and other Loan Documents, after
withholding or deduction for or on account of any such Taxes
(including additional sums payable under this SECTION 2.13), will not
be less than the full amount provided for herein had no such deduction
or withholding been required, (B) to make such withholding or
deduction, and (C) to pay the full amount deducted to the relevant
authority in accordance with applicable law. The Borrowers will
furnish to
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the Agent and each Lender, within thirty (30) days after the date the
payment of any Taxes is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by such Borrower. The
Borrowers will indemnify and hold harmless the Agent and each Lender
and reimburse the Agent and each Lender upon written request for the
amount of any Taxes paid by the Agent or Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or illegally
asserted. A certificate as to the amount of such payment by such
Lender or the Agent, absent manifest error, shall be final, conclusive
and binding for all purposes. In the event that the Agent or any
Lender shall receive any refund or credit in respect of Taxes paid by
any Borrower, the Agent or such Lender (as the case may be) shall
promptly refund the resulting amount to such Borrower.
(ii) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof (including each
Lender that becomes a party to this Agreement after the date hereof,
if any) agrees that, prior to the first date on which any payment is
due to it hereunder, it will deliver to the Borrowers and the Agent
(i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case
may be, certifying in each case that such Lender is entitled to
receive payments under this Agreement and the Notes payable to it,
without deduction or withholding of any United States federal income
taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax. Each Lender which
delivers to the Borrowers and the Agent a Form 1001 or 4224 and Form
W-8 and W-9 pursuant to the preceding sentence further undertakes to
deliver to the Borrowers and the Agent two further copies of the said
letter and Form 1001 and 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner or certification, as the case may
be, on or before the date that any such letter or form expires or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent letter and form previously delivered by it
to the Borrowers, and such extensions or renewals thereof as may
reasonably be requested by the Borrowers.
(iii) The Borrowers shall also reimburse the Agent and each
Lender, upon written request, for any Taxes imposed (including,
without limitation, Taxes imposed on the overall gross or net income
of the Agent or such Lender pursuant to the laws of the jurisdictions
with taxing authority over Agent or such Lender) as the Agent or such
Lender shall determine are payable by the Agent or such Lender in
respect of amounts paid by or on behalf of any Borrower to or on
behalf of the Agent or such Lender pursuant to SECTION 2.13(b)(i).
(c) Subject to SECTION 2.07(b), whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day that is not a
Business Day, the due date thereof shall be extended to the Business Day
immediately following such day and, with respect to payments of principal,
interest thereon shall be payable at the applicable rate during such extension.
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(d) All computations of interest and fees shall be made on the
basis of a year of three hundred and sixty (360) days for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable (to the extent computed on
the basis of days elapsed). Interest on Base Rate Loans shall be calculated
based on the Base Rate from and including the date of such Loan to but
excluding the date of the repayment or conversion thereof. Interest on Swing
Line Loans shall be calculated based on the Base Rate from and including the
date of such Loan to but excluding the date of the repayment thereof. Interest
on LIBOR Loans shall be calculated as to each respective Interest Period from
and including the first day thereof to but excluding the last day thereof. Each
determination by the Agent of an interest rate or fee hereunder shall be made
in good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by the Borrowers to the Agent in accordance with the
terms of this Agreement shall, as to the Borrowers, constitute payment to the
Lenders under this Agreement.
SECTION 2.14 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event that
the Agent shall have determined (which determination shall be made in good faith
and, absent manifest error, shall be final, conclusive and binding upon all
parties) that on any date for determining the Adjusted LIBOR for any Interest
Period, by reason of any changes arising after the date of this Agreement
affecting the London interbank market or the Agent's position in such market,
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted LIBOR, then, and in
any such event, the Agent shall forthwith give notice (by telephone confirmed in
writing) to the Borrowers and to the Lenders of such determination and a summary
of the basis for such determination. Until the Agent notifies the Borrowers that
the circumstances giving rise to the suspension described herein no longer
exist, the obligations of the Lenders to make or permit portions of the Loans to
remain outstanding past the last day of then current Interest Periods as LIBOR
Loans shall be suspended, and such affected Loans shall bear the same interest
as Base Rate Loans and shall be maintained as Base Rate Loans at the expiration
of the Interest Period applicable thereto.
SECTION 2.15 ILLEGALITY. (a) In the event that any Lender
shall have determined (which determination shall be made in good faith and,
absent manifest error, shall be final, conclusive and binding upon all parties)
at any time that the making or continuance of any LIBOR Loan has become
unlawful by compliance by such Lender in good faith with any applicable law,
governmental rule, regulation, guideline or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, in any such event, the Lender shall give prompt notice (by telephone
confirmed in writing) to the Borrowers and to the Agent of such determination
and a summary of the basis for such determination (which notice the Agent
shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to the Borrowers referred to in
SECTION 2.15(a), (i) the Borrowers' right to request from such Lender and such
Lender's obligation to make, LIBOR Loans shall be immediately suspended, and
such Lender shall make a Loan as part of the requested Borrowing of LIBOR Loans
as a Base Rate Loan, which Base Rate Loan shall, for
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all other purposes, be considered part of such Borrowing, and (ii) if the LIBOR
Loan or Loans then outstanding are affected, the Borrowers shall immediately,
or if permitted by applicable law, no later than the date permitted thereby,
upon at least one Business Days written notice to the Agent and the affected
Lender, convert each such Loan into a Base Rate Loan or Loans, provided that if
more than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this SECTION 2.15(b).
SECTION 2.16 INCREASED COSTS. (a) If by reason of (i) after the
date hereof, the introduction of or any change (including, without limitation,
any change by way of imposition or increase of reserve requirements) in or in
the interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority or
quasi- governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(A) any Lender shall be subject to any tax, duty or other
charge with respect to its LIBOR Loans or its obligation to make LIBOR
Loans, or the basis of taxation of payments to any Lender of the
principal of or interest on its LIBOR Loans or its obligation to make
LIBOR Loans shall have changed (except for changes in the tax on the
overall net income of such Lender pursuant to the laws of
jurisdictions with taxing authority over such Lender); or
(B) any reserve (including, without limitation, any
reserve imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender
shall be imposed or deemed applicable or any other condition affecting
its LIBOR Loans or its obligation to make LIBOR Loans shall be imposed
on any Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Loans (except to
the extent already included in the determination of the interest rate for LIBOR
Loans), or there shall be a reduction in the amount received or receivable by
such Lender, then the Borrowers shall from time to time, upon written notice
from and demand by such Lender on the Borrowers (with a copy of such notice and
demand to the Agent), pay to the Agent for the account of such Lender within
five (5) Business Days after the date of such notice and demand, additional
amounts sufficient to indemnify such Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrowers
and the Agent by such Lender in good faith and accompanied by a statement
prepared by such Lender describing in reasonable detail the basis for and
calculation of such increased cost, shall, except for manifest error, be final,
conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any time, because
of the circumstances described in SECTION 2.16(a)(i) OR (ii) or any other
circumstances beyond such Lender's reasonable control arising after the date of
this Agreement affecting such Lender or the
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London interbank market or such Lender's position in such market, the
calculations for the interest rates for LIBOR Loans as determined by the Agent
will not adequately and fairly reflect the cost to such Lender of funding such
Loans, then, and in any such event and until such Lender notifies the Agent
that such circumstances no longer exist:
(i) the Agent shall forthwith give notice (by telephone
confirmed in writing) to the Borrowers and to the other Lenders of
such advice;
(ii) The Borrowers' right to request from such Lender, and
such Lender's obligation to make or permit portions of the Loans to
remain outstanding past the last day of the then current Interest
Periods as LIBOR Loans shall be immediately suspended; and
(iii) such Lender shall make a Loan as part of the
requested Borrowing of LIBOR Loans as a Base Rate Loan.
SECTION 2.17 FUNDING LOSSES. The Borrowers shall compensate each
Lender, upon its written request to the Borrowers (which request shall set forth
the basis for requesting such amounts in reasonable detail and which request
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all of the parties hereto), for all losses, expenses
and liabilities (including, without limitation, any interest paid by such Lender
to lenders of funds borrowed by it to make or carry its LIBOR Loans, in either
case to the extent not recovered by such Lender in connection with the
reemployment of such funds and including loss of anticipated profits), which the
Lender may sustain: (a) if for any reason (other than a default by such Lender)
a borrowing of, or conversion to or continuation of, LIBOR Loans to Borrower
does not occur on the date specified therefor in a Borrowing Request, or
Continuation/ Conversion Notice (whether or not withdrawn), (b) if any repayment
(including mandatory prepayments and any conversions pursuant to SECTION 2.15)
of any LIBOR Loans to the Borrowers occurs on a date that is not the last day of
an Interest Period applicable thereto, or (c), if, for any reason, the Borrowers
default in their obligation to repay its LIBOR Loans when required by the terms
of this Agreement.
SECTION 2.18 APPORTIONMENT OF PAYMENTS. Aggregate principal and
interest payments in respect of Revolving Credit Loans shall be apportioned
among all outstanding Revolving Credit Commitments and Revolving Credit Loans to
which such payments relate proportionately to the Lenders' respective Percentage
of such Revolving Credit Commitments and outstanding Revolving Credit Loans.
The Agent shall distribute to each Lender at its Payment Office its share of all
such payments received by the Agent, with such distribution by Agent occurring
no later than the end of the Business Day following Agent's receipt of such
payments.
SECTION 2.19 SHARING OF PAYMENTS, ETC. If any Lender (other than TNB
with respect to the Swing Line Loans) shall obtain any payment or reduction
(including, without limitation, any amounts received as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code) of the Obligations
(whether voluntary, involuntary, through the exercise of any right of set- off
or otherwise) in excess of its Percentage of payments or reductions of such
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Obligations obtained by all the Lenders, such Lender shall forthwith (a) notify
each of the other Lenders and Agent of such receipt, and (b) purchase from the
other Lenders such participations in the affected Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, ratably with each of
them, provided that if all or any portion of such excess payment or reduction
is thereafter recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to
the extent of such recovery or such additional costs, but without interest
unless the Lender obligated to return such funds is required to pay interest on
such funds. Each Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this SECTION 2.19 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such participation.
SECTION 2.20 CAPITAL ADEQUACY. Without limiting any other provision of
this Agreement, but without duplication, in the event that any Lender shall have
determined that any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy not currently in
effect or fully applicable as of the Closing Date, or any change therein or in
the interpretation or application thereof after the Closing Date, or compliance
by such Lender with any request or directive regarding capital adequacy not
currently in effect or fully applicable as of the Closing Date (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction, does or shall have the effect of reducing the rate of return on
such Lender's capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such law, treaty, rule,
regulation, guideline or order, or such change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then within ten (10) Business Days
after written notice and demand by such Lender (with copies thereof to the
Agent), the Borrowers shall from time to time pay to such Lender additional
amounts sufficient to compensate such Lender for such reduction (but, in the
case of outstanding Base Rate Loans, without duplication of any amounts already
recovered by such Lender by reason of an adjustment in the applicable Base
Rate). Each certificate as to the amount payable under this SECTION 2.20 (which
certificate shall set forth the basis for requesting such amounts in reasonable
detail), submitted to the Borrowers by any Lender in good faith, shall, absent
manifest error, be final, conclusive and binding for all purposes.
SECTION 2.21 RELATIONSHIP OF BORROWERS.
(a) Joint and Several Liability. Borrowers acknowledge that they
are interdependent for their operational and financial needs, and they and each
Lender intend that each Borrower be jointly and severally liable for each
monetary obligation, warranty and covenant obligation arising under this
Agreement. The delivery of funds to any Borrower under this Agreement shall
constitute valuable consideration and reasonably equivalent value to all
Borrowers for the purpose of binding them and their assets on a joint and
several basis for the Obligations
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hereunder. The Agent may enforce this Agreement against any Borrower without
first making demand upon or instituting collection proceedings against other
Borrowers.
(b) Funding Requests and Administration. Any Borrower may request
or receive Loans or otherwise act on behalf of all Borrowers for the purpose of
giving and receiving notices and otherwise acting in the administration of this
Agreement. Any dealing of any Borrower with Agent and/or the Lenders under this
Agreement shall he deemed for the benefit of, and on behalf of, all Borrowers.
(c) Unconditional Obligation. The unconditional liability of each
Borrower for the entire Obligations shall not be impaired by any event
whatsoever, including, but not limited to, the merger, consolidation,
dissolution, cessation of business or liquidation of any Borrower; the
financial decline or bankruptcy of any Borrower; the failure of any other party
to guarantee the Obligations or to provide collateral therefor; Agent's and/or
Lenders' compromise or settlement with or without release of any Borrower;
Agent's and/or Lenders' release of any collateral for the Obligations, with or
without notice to Borrowers; Agent's and/or Lenders' failure to file suit
against any Borrower (regardless of whether Borrower is becoming insolvent, is
believed to be about to begin dissolution proceedings or any other
circumstance); Agent's and/or Lenders' failure to give any Borrower notice of a
Default or Event of Default; the unenforceability of the Obligations against
any Borrower due to bankruptcy discharge, counterclaim or for any other reason;
Agent's and/or Lenders' acceleration of the Obligations at any time; the
extension, modification or renewal of the Obligations; Agent's and/or Lenders'
failure to undertake or exercise diligence in collection efforts against any
party or property; the termination of any relationship of any Borrower with any
other Borrower, including, but not limited to, any relationship of commerce or
ownership; any Borrower's change of name or use of any name other than the name
used to identify such Borrower in this Agreement; or any Borrower's use of the
credit extended for any purpose whatsoever.
(d) Contribution and Subrogation. Borrowers' respective rights of
contribution and any other such rights among themselves are not impaired by
this Agreement, except that each Borrower agrees not to seek payment directly
or indirectly from another Borrower through a claim of indemnity, contribution,
or otherwise with respect to the Obligations, until the Obligations have been
repaid in full.
(e) Savings Provision. Should the liability of any Borrower
hereunder for the entire amount of the Obligations be subject to avoidance or
limitation, notwithstanding the contrary agreement and intention of the parties
hereto, under any state or federal fraudulent conveyance law or other similar
law that may be determined to be applicable, then the liability of such
Borrower shall be limited to the maximum amount for which the Borrower may be
liable without legal impairment.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower (as to itself and all other Consolidated Companies)
represents and warrants to Agent and Lenders that as of the date hereof and as
of the Closing Date:
SECTION 3.01 CORPORATE EXISTENCE. Each of the Consolidated Companies is
the form of legal entity described on Schedule 3.01 and is duly organized,
legally existing, and in good standing under the laws of the state in which it
was formed and it is duly qualified as the appropriate foreign legal entity in
all jurisdictions in which the Property owned or the business transacted by it
makes such qualification necessary. None of the Consolidated Companies will
commence doing business in any state unless and until it shall have qualified to
do business in such state. The jurisdiction of incorporation or organization,
and the beneficial ownership interest, for each Subsidiary of each Borrower as
of the date of this Agreement is accurately described on Schedule 3.01.
SECTION 3.02 CORPORATE POWER AND AUTHORIZATION. Each of the Credit
Parties is duly authorized and empowered to execute, deliver, and perform its
obligations under the Loan Documents to which it is a party; the board of
directors of each of the Credit Parties has authorized the respective Credit
Party to execute and perform its obligations under the Loan Documents to which
it is a party; and all other corporate and/or shareholder action on each Credit
Parties' part required for the due execution, delivery, and performance of its
obligations under the Loan Documents has been duly and effectively taken.
SECTION 3.03 BINDING OBLIGATIONS. This Agreement is, and the Notes and
other Loan Documents when executed and delivered in accordance with this
Agreement will be, legal, valid and binding upon and against the Credit Parties
that are parties thereto, respectively, enforceable against such Credit Parties
in accordance with their respective terms, subject to no defense, counterclaim,
set-off, or objection of any kind. None of the Lenders nor Agent has taken any
action nor have they failed to take any action that subjects such Lender or
Agent to any liability to the Credit Parties.
SECTION 3.04 NO LEGAL BAR OR RESULTANT LIEN. The execution, delivery
and performance by each Credit Party of the Loan Documents to which it is a
party do not constitute a default under, and will not violate any provisions of
the articles of incorporation (or charter) or bylaws of such Credit Party,
respectively, or any contract, agreement, law, regulation, order, injunction,
judgment, decree, or writ to which such Credit Party is subject, or result in
the creation or imposition of any Lien upon any Properties of such Credit Party.
SECTION 3.05 NO CONSENT. The execution, delivery, and performance by
each Credit Party of the Loan Documents to which it is a party do not require
the consent or approval of or filing with, any Person, other than such consents,
approvals or filings that have been made or obtained.
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SECTION 3.06 FINANCIAL CONDITION. The Financial Statements for SCA for
the period ended December 31, 1994, which have been delivered to Lender, have
been prepared in accordance with GAAP, consistently applied, and the Financial
Statements present fairly in all material respects the consolidated financial
condition of SCA as of the date or dates and for the period or periods stated
therein. Since the date of the most recent Financial Statements, there have been
no changes with respect to the Consolidated Companies that has had or would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.07 INVESTMENTS, ADVANCES, AND GUARANTIES. None of the
Consolidated Companies has made investments in, advances to, or guaranties of
the obligations of any Person, or committed or agreed to undertake any of these
actions or obligations in excess of $250,000 in any single case or in excess of
$1,000,000 in the aggregate during the twelve immediately preceding Fiscal
Months, except as referred to or reflected in the Financial Statements.
SECTION 3.08 LITIGATION. Except as set forth on Schedule 3.08 or in the
Financial Statements, there is no litigation, legal or administrative
proceeding, investigation, or other action of any nature pending or, to the
knowledge of any Borrower, threatened against or affecting any Consolidated
Company that involves the possibility of any judgment or liability that could
have a Material Adverse Effect. None of the Consolidated Companies has recently
experienced or is now experiencing any strike, labor dispute, slowdown, or work
stoppage due to labor disagreements which could have a Material Adverse Effect,
and no such strike, dispute, slowdown, or work stoppage is threatened against
any Consolidated Company.
SECTION 3.09 TAXES; GOVERNMENTAL CHARGES. Each of the Consolidated
Companies has filed or caused to be filed all tax returns and reports required
to be filed and has paid all taxes, assessments, fees, and other governmental
charges levied upon it or upon any of its Properties or income, which are due
and payable, including interest and penalties other than those that are not yet
delinquent, those which are subject to a Contest or those the non-payment of
which would have a Material Adverse Effect.
SECTION 3.10 TITLE, ETC. (a) Except as set forth on Schedule 3.10(a),
each of the Consolidated Companies has good title to its Properties, free and
clear of all Liens and title defects of any kind, except Permitted Liens and
title defects not constituting material impairments in the intended use for such
Properties. Except as set forth on Schedule 3.10(a), the Consolidated Companies
enjoy peaceful and undisturbed possession under all of their respective leases
and all leases are in full force and effect and no material default exists under
any such leases.
(b) Those locations set forth on Schedule 3.10(b) are all of the
locations (i) at which material property owned or leased by the Consolidated
Companies is located and (ii) representing each of the Consolidated Companies'
place of business if only one (1) exists or chief executive office if more than
one (1) place of business exists.
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SECTION 3.11 NO DEFAULT. None of the Credit Parties is in default in
any respect that would have a Material Adverse Effect under any indenture,
mortgage, deed of trust, credit agreement, note, agreement, or other instrument
to which any Credit Party is a party or by which it or its Properties are bound.
None of the Credit Parties is in violation of its respective Articles of
Incorporation or Bylaws. No Default or Event of Default hereunder have occurred
or are continuing as of the date hereof or at the Closing Date.
SECTION 3.12 MARGIN REGULATIONS. No part of the proceeds of any of the
Loans will be used for any purpose that violates, or that would be inconsistent
or not in compliance with, the provisions of the applicable Margin Regulations.
SECTION 3.13 COMPLIANCE WITH LAWS, ETC. None of the Consolidated
Parties is in violation of any law (including, without limitation, any
Environmental Law), judgment, decree, order, ordinance, or governmental rule or
regulation to which such Consolidated Party or any of its Properties is subject
and as to which a violation would have a Material Adverse Effect. None of the
Consolidated Parties has failed to obtain any license, permit, franchise, or
other governmental authorization necessary to the ownership of any of its
Properties or to the conduct of its business where such failure would have a
Material Adverse Effect. All improvements on the real estate owned by, leased to
or used by each Consolidated Party conform in all material respects to all
applicable state and local laws, zoning and building ordinances and health and
safety ordinances, and such real estate is zoned for the various purposes for
which such real estate and improvements thereon are presently being used.
SECTION 3.14 ERISA.
(a) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or
contributes to, or has during the past two years maintained or
contributed to, any Plan that is subject to Title IV of ERISA or to
which Section 412 of the Code or Section 302 of ERISA applies;
(b) Compliance. Each Plan maintained by the Consolidated
Companies has at all times been maintained by its terms and in
operation in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan of
such Consolidated Company or any ERISA Affiliate thereof, including
without limitation, any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Code, where the
failure to comply with such laws, and such taxes and penalties,
together with all other liabilities referred to in this SECTION 3.14
(taken as a whole), would in the aggregate have a Material Adverse
Effect; and
(c) Liabilities. The Consolidated Companies are subject
to no liabilities (including withdrawal liabilities) with respect to
any Plans of such Consolidated Companies or any of their ERISA
Affiliates, other than obligations to fund benefits under an ongoing
Plan and to pay current contributions, expenses and premiums with
respect
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to such Plans where such liabilities, together with all other
liabilities referred to in this SECTION 3.14 (taken as a whole), would
in the aggregate have a Material Adverse Effect.
(d) Funding. The Consolidated Companies and each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (i) required to be contributed under the terms of each Plan
and applicable law, and (ii) required to be paid as expenses of each
Plan, where the failure to pay such amounts (when taken as a whole,
including any penalties attributable to such amounts) would have a
Material Adverse Effect. The Consolidated Companies are subject to no
liabilities with respect to post-retirement medical benefits in any
amounts that, together with all other liabilities referred to in this
SECTION 3.14 (taken as a whole), would have a Material Adverse Effect
if such amounts were then due and payable.
SECTION 3.15 SUBSIDIARIES, ETC. Except as disclosed on Schedule 3.01,
none of the Borrowers have any Subsidiaries and neither any of the Borrowers nor
any Subsidiary of any Borrower is a joint venture partner, limited liability
company member or general partner in any joint venture, partnership or limited
liability company or uses any trade names.
SECTION 3.16 NO MATERIAL MISSTATEMENTS. No representation or warranty
contained in this Agreement (including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to the terms of this
Agreement, when viewed in conjunction with all other factual information,
representations or warranties in this Agreement or in any other document
furnished pursuant to the terms of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make the statements herein or therein not misleading in any
material respect as of the date made or deemed to be made. Except as may be set
forth herein (including the Schedules attached hereto), there is no fact known
to any Borrower that has had, or is reasonably expected to have, a Material
Adverse Effect.
SECTION 3.17 INVESTMENT COMPANY ACT. None of the Credit Parties is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 3.18 SECURITIES ACT, ETC. The Notes are not required to be
registered under the Securities Act of 1933, as amended, or under the securities
laws of any state. This Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended.
SECTION 3.19 USE OF PROCEEDS; PURPOSE OF THE CREDIT. The Borrowers have
used or will use proceeds from the Loan exclusively for the purposes stated in
this Agreement. No proceeds of the Loans will be used to acquire any security in
any transaction which is subject to Section 13 and 14 of the Exchange Act of
1934.
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SECTION 3.20 PERSONAL HOLDING COMPANY; SUBCHAPTER S. None of the
Borrowers is a "personal holding company" as defined in Section 542 of the Code,
and none of the Borrowers is a "Subchapter S" corporation within the meaning of
the Code.
SECTION 3.21 SOLVENCY. Each of the Credit Parties is now and, after
giving effect to the Loans to be made hereunder, at all times will be, Solvent
and is generally paying its debts as they mature.
SECTION 3.22 FILINGS. To the date hereof, each Borrower has filed all
reports and statements required to be filed with the Securities and Exchange
Commission. As of their respective dates, the reports and statements referred to
above complied in all material respects with all rules and regulations
promulgated by the Securities and Exchange Commission and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 3.23 CAPITAL. Each of the Credit Parties now has and shall at
all times hereafter have capital sufficient to carry on its business and
transactions and all businesses and transactions in which it is about to engage.
SECTION 3.24 GOVERNMENT CONTRACTS. None of the Credit Parties is
subject to the renegotiation of any government contracts which would have a
Material Adverse Effect.
SECTION 3.25 INTERCOMPANY LOANS. Except as disclosed on Schedule 3.25,
none of the Consolidated Companies are indebted to any other Consolidated
Company.
SECTION 3.26 INDEBTEDNESS. (a) Except as set forth on Schedules 3.25,
3.26(b) and 6.01(b), none of the Consolidated Companies is an obligor in respect
of any indebtedness for borrowed money, or any commitment to create or incur any
indebtedness for borrowed money, in an amount greater than $1,000,000 in any
single case, and such indebtedness and commitments for amounts less than
$1,000,000 do not exceed $1,000,000 in the aggregate for all such indebtedness
and commitments of the Consolidated Companies.
(b) The Indebtedness listed on Schedule 3.26(b) (the "REFINANCED
INDEBTEDNESS") and accrued and unpaid interest thereon and fees in respect
thereof have been paid in full or provision for assigning such indebtedness and
all collateral securing such indebtedness to SCA Investment Company has been
made such that, in accordance with the express provisions of the instruments
governing the same, upon funding of the Loans hereunder, the Consolidated
Companies will be released from all liability and contractual obligations with
respect thereto to the current holders of such indebtedness other than
indemnifications contained therein, and assignments in recordable form of any
and all Liens previously securing the Refinanced Indebtedness will be obtained,
including financing statements and other filings in respect thereof.
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SECTION 3.27 PAYMENT OR DIVIDEND RESTRICTIONS. Except as required by
this Agreement or as described on Schedule 3.27, none of the Consolidated
Companies is party to or subject to any agreement or understanding restricting
or limiting the payment of any dividends or other distributions or Intercompany
Loans by any such Consolidated Company.
ARTICLE IV
CONDITIONS PRECEDENT
The obligations of each Lender to make Loans to the Borrowers
hereunder are subject to the satisfaction of the following conditions:
SECTION 4.01 CONDITIONS PRECEDING TO INITIAL LOANS. At the time of
the funding of initial Loans hereunder, all obligations of the Borrowers
hereunder incurred prior to the initial Loans (including, without limitation,
the Borrowers' obligations to reimburse the reasonable fees and expenses of
counsel to Agent and to the Lenders (in an amount not to exceed $2,000 for each
Lender's counsel other than TNB's) and any fees and expenses payable to the
Agent and the Lenders as previously agreed with the Borrowers), shall have been
paid in full, the Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Notes evidencing the Commitments;
(c) certificates of the Secretary or Assistant Secretary
of the Credit Parties attaching and certifying copies of the
resolutions of the board of directors of the Credit Parties,
authorizing the execution, delivery and performance of the Loan
Documents to which such Credit Parties are a party;
(d) certificates of the Secretary or an Assistant
Secretary of the Credit Parties certifying (i) the name, title and
true signature of each officer of the Credit Parties executing the
Loan Documents to which such Credit Parties are a party, and (ii) the
bylaws or comparable governing documents of the Credit Parties;
(e) certified copies of the certificate or articles of
incorporation of each Credit Party certified by the Secretary of
State, together with certificates of good standing or existence, as
the case may be, from the Secretary of State of the jurisdiction of
incorporation or organization of such Credit Party and, if applicable,
authorizations to do business from any Secretary of State in the
States listed on Schedule 4.01(e);
(f) examination reports from the Uniform Commercial Code
records of those locations set forth on Schedule 3.10(b) attached
hereto, showing no outstanding liens or
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security interests granted by any Consolidated Company other than (i)
Permitted Liens, and (ii) Liens securing the Refinanced Indebtedness
which are being released or assigned to Management within the time
period required herein;
(g) agreement by the lenders of the Refinanced
Indebtedness to accept payment in full of all obligations outstanding
under the Refinanced Indebtedness and termination of all credit
facilities relating thereto and to release all Liens securing
Refinanced Indebtedness, and the establishment of escrow or other
arrangements for such repayment and release of Liens acceptable to the
Agent and the Lenders;
(h) certificates, reports, environmental audits and
investigations, and other information as the Agent may reasonably
request from any Consolidated Company in order to satisfy the Lenders
as to the absence of any material liabilities or obligations arising
from Environmental Laws, including without limitation, OSHA and other
public, safety and welfare laws and regulations to which the
Consolidated Companies may be subject, and the plans of the
Consolidated Companies with respect thereto;
(i) a summary set forth in format and detail reasonably
acceptable to the Agent of the types and amounts of insurance
(property and liability) maintained by the Consolidated Companies;
(j) certified copies of indentures, credit agreements,
instruments and other documents evidencing or securing Indebtedness of
any Consolidated Company described on Schedule 6.01(b);
(k) certificates, reports and other information as Agent
may reasonably request from any Consolidated Company in order to
satisfy the Lenders as to the absence of any material liabilities or
obligations arising from matters relating to employees of the
Consolidated Companies, including employee relations, collective
bargaining agreements, Plans and other compensation and employee
benefit plans;
(l) certificates, reports and other information as the
Agent may reasonably request from any Consolidated Company in order to
satisfy the Lenders as to the absence of any material liabilities or
obligations arising from litigation pending or threatened against the
Consolidated Companies;
(m) environmental affidavit and indemnity agreement with
respect to the Property executed by the Credit Parties in form and
substance satisfactory to Agent;
(n) the favorable opinion of Waller Lansden Dortch &
Davis, counsel to the Credit Parties, substantially in the form of
Exhibit E attached hereto and addressed to the Agent and each of the
Lenders; and
(o) such other documents as Agent may reasonably request.
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SECTION 4.02 CONDITIONS TO ALL LOANS. At the time of the making of all
Loans (before as well as after giving effect to such Loans and to the proposed
use of the proceeds thereof), the following conditions shall have been satisfied
or shall exist:
(a) there shall exist no Default or Event of Default; and
(b) all representations and warranties by the Borrowers contained
herein shall be true and correct in all material respects with
the same effect as though such representations and warranties
had been made on and as of the date of such Loans; provided,
however, that after the initial Loans hereunder, (i) all
representations and warranties by the Borrowers contained
herein with respect to any Consolidated Company other than a
Credit Party shall be limited to the actual knowledge of the
respective Authorized Officers of the Borrowers, (ii) the
representations and warranties set forth in Section 3.10 will
be qualified to the extent that no Liens are on the Properties
which would have a Material Adverse Effect and no defaults
exists under any lease which would have a Material Adverse
Effect and (iii) the representations and warranties set forth
in last sentence of Section 3.13 will be qualified to the
extent that any such non-conformity or non-compliance does not
have a Material Adverse Effect.
Each request for a Borrowing and the acceptance by any Borrower of the
proceeds thereof, shall constitute a representation and warranty by the
Borrowers, as of the date of the Loans comprising such Borrowing, that the
applicable conditions specified in SECTIONS 4.01 AND 4.02 have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants that, during the term of this Agreement
(including any extensions hereof) and until all Obligations shall have been
finally paid in full and all Obligations shall have been fully discharged,
unless Agent shall otherwise first consent in writing, the Borrowers shall:
SECTION 5.01 FINANCIAL STATEMENTS AND REPORTS. Promptly furnish to each
Lender:
(a) Annual Reports. As soon as available, and in any
event within ninety (90) days after the close of each Fiscal Year, the
audited consolidated statements of the Consolidated Companies in the
form as required by the rules and regulations promulgated by the
Securities and Exchange Commission setting forth the audited
consolidated balance sheet of the Consolidated Companies as at the end
of such year, and the audited consolidated statement of income,
statement of cash flows, and statement of retained earnings of the
Consolidated Companies for such year, setting forth in each case in
comparative form (beginning when comparative data are available) the
corresponding figures for the preceding Fiscal Year accompanied by the
report of SCA's chief financial
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officer, and by an unaudited consolidating balance sheet and unaudited
consolidating statements of income, statements of cash flows, and
statements of retained earnings of the Consolidated Companies duly
certified by SCA's chief financial officer as being correct
reflections of the information used for the audited consolidated
financial statements. The audit opinion in respect of the Financial
Statements of SCA shall be the opinion of a firm of independent
certified public accountants among the "Big Six" or such other firm as
may be acceptable to Agent;
(b) Quarterly and Year-to-Date Reports. As soon as
available and in any event within forty-five (45) days after the end
of each of the first three (3) Fiscal Quarters of each Fiscal Year,
the consolidated balance sheets of the Consolidated Companies as of
the end of such Fiscal Quarter, and the consolidated and consolidating
statements of income of the Consolidated Companies for such Quarter
and for a period from the beginning of the Fiscal Year to the close of
such Fiscal Quarter, all certified by the chief financial officer or
chief accounting officer of SCA as being true and correct to the best
of his or her knowledge;
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to SECTION 5.01(a) and (b), a
certificate of the treasurer or chief financial officer of Borrower
(i) to the effect that, based on the review of the activities of the
Consolidated Companies and such financial statements during the period
covered thereby, there exists no Default or Event of Default under
this Agreement, or if there exists a Default or Event of Default
hereunder, specifying the nature thereof and the proposed response
thereto and (ii) demonstrating in reasonable detail compliance as of
the end of such Fiscal Year or such Fiscal Quarter with SECTION 5.12,
SECTIONS 6.01 THROUGH 6.04 AND SECTION 6.13.
(d) Other Information. Promptly upon its becoming
available, such other material information about the Borrowers or the
Indebtedness as Agent or any Lender may reasonably request from time
to time.
All such balance sheets and other Financial Statements referred to in SECTIONS
5.01(a) and (b) hereof shall conform to GAAP on a basis consistent with those
of previous Financial Statements.
SECTION 5.02 AUDITOR'S NO DEFAULT CERTIFICATE. Concurrently with the
furnishing of the annual Financial Statements pursuant to SECTION 5.01(a)
hereof, furnish or cause to be furnished to Agent a certificate of compliance of
such independent public accountants stating that in making the examination
necessary for their audit they have obtained no knowledge of any Default or
Event of Default, if they have obtained such knowledge, disclosing the nature,
details, and period of existence of such event.
SECTION 5.03 TAXES AND OTHER LIENS. Pay and discharge, or cause to be
paid or discharged, promptly all taxes, assessments, and governmental charges or
levies imposed upon any Credit Party or upon any of Credit Party's income or
Property as well as all claims of any
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kind (including claims for labor, materials, supplies, and rent) which, if
unpaid, might become a Lien (other than a Permitted Lien) upon any or all of
Credit Party's Property; provided, however, that the Borrowers shall not be
required to pay any such tax, assessment, charge, levy, or claim if the amount,
applicability, or validity thereof shall currently be subject to a Contest.
SECTION 5.04 MAINTENANCE.
(a) Maintain or cause to be maintained the corporate
existence, name, rights, and franchises of each Credit Party;
(b) Observe and comply, or cause the observance and
compliance, (except to the extent that any failure would have a
Material Adverse Effect) with all applicable laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, certificates, franchises, permits, licenses,
authorizations, and requirements of all federal, state, county,
municipal, and other governments; and
(c) To the extent necessary to avoid a Material Adverse
Effect, maintain, or cause to be maintained, the Property of each
Credit Party (and any Property leased by or consigned to it or held
under title retention or conditional sales contracts) in good and
workable condition at all times and make, or cause to be made, all
repairs, replacements, additions, and improvements to its Property.
SECTION 5.05 FURTHER ASSURANCES. Promptly cure any defects in the
creation, issuance, and delivery of the Loan Documents. The Borrowers at their
expense promptly will execute and deliver to Agent upon request all such other
and further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrowers in the Loan
Documents, or to correct any omissions in the Loan Documents, or to state more
fully the Obligations and agreements set out in any of the Loan Documents, all
as may be reasonably necessary or appropriate in connection therewith.
SECTION 5.06 PERFORMANCE OF OBLIGATIONS.
(a) Pay the Obligations according to the terms of the
Loan Documents; and
(b) do and perform, and cause to be done and to be
performed, every act and discharge all of the Obligations provided to
be performed and discharged by each Borrower under the Loan Documents,
at the time or times and in the manner specified.
SECTION 5.07 INSURANCE. Maintain or cause to be maintained with
financially sound and reputable insurance, insurance with respect to their
respective Properties and business and the Properties and business of the other
Credit Parties, against loss or damage of the kinds customarily insured against
by reputable companies in the same or similar businesses, such insurance to be
of such types and in such amounts as is customary for such companies under
similar circumstances.
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SECTION 5.08 ACCOUNTS AND RECORDS. Keep, and cause the other Credit
Parties to keep, books of record and account, in which full, true, and correct
entries will be made of all dealings or transactions in accordance with GAAP,
except only for changes in accounting principles or practices with which such
Borrower's certified public accountants concur and which changes have been
reported to Agent in writing and with an explanation thereof.
SECTION 5.09 RIGHT OF INSPECTION. Permit any officer, employee, or
agent of Agent or any Lender to visit and inspect any of the Property of any and
all Credit Parties during normal business hours upon reasonable advance notice
(except that no advance notice will be required during the existence of a
Default or Event of Default), to examine the books of record and accounts of the
Credit Parties, to take copies and extracts from such books of record and
accounts, and to discuss the affairs, finances, and accounts of the Credit
Parties with the respective officers, accountants, and auditors of the Credit
Parties, all at such reasonable times and as often as the Agent or such Lender
may reasonably desire.
SECTION 5.10 NOTICE OF CERTAIN EVENTS. Furnish to the Agent:
(a) Default. Promptly after any Borrower has notice or
knowledge of the occurrence of a Default or an Event of Default, a
certificate of the chief financial officer or principal accounting
officer of such Borrower specifying the nature thereof and the
proposed response thereto;
(b) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of any action, suit or proceeding
or any governmental investigation or any arbitration, before any court
or arbitrator or any governmental or administrative body, agency or
official, against any Consolidated Company, or any property of any
thereof an adverse determination of which could have a Material
Adverse Effect, or (ii) actual knowledge of the threat of any such
action, suit, proceeding, investigation or arbitration;
(c) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or notice of any
action, claim or request for information, either judicial or
administrative, from any governmental authority relating to any actual
or alleged claim, notice of potential liability under or violation of
any Environmental Law, or any actual or alleged spill, leak, disposal
or other release of any waste, petroleum product, or hazardous waste
or Hazardous Substance by any Consolidated Company that could result
in penalties, fines, claims or other liabilities to any Consolidated
Company in amounts in excess of $250,000;
(d) ERISA. (i) Promptly after any Borrower has knowledge
or should have had knowledge of the occurrence thereof with respect to
any Plan of any Consolidated Company or any ERISA Affiliate thereof,
or any trust established thereunder, notice of (A) a "reportable
event" described in Section 4043 of ERISA and the regulations issued
from time to time thereunder (other than a "reportable event" not
subject to the provisions for 30-day notice to the PBGC under such
regulations), or (B) any other event
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which could reasonably be expected to subject any Consolidated Company
to any tax, penalty or liability under Title I or Title IV of ERISA or
Chapter 43 of the Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Code, or any tax,
penalty or liability under any Requirement of Law applicable, where
any such taxes, penalties or liabilities exceed or could reasonably be
expected to exceed $250,000 in the aggregate;
(ii) Promptly after such notice must be provided to
the PBGC, or to a Plan participant, beneficiary or alternative
payee, a copy of any notice referred to or required under
Section 101(d), 302(f)(4), 303, 307 or 4041(c)(1)(A) of ERISA
or under Section 412 of the Code with respect to any Plan of
any Consolidated Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, (A) a copy of any
notice received by any Consolidated Company or any ERISA
Affiliate thereof concerning the intent of the PBGC or any
other governmental authority to terminate a Plan of such
Consolidated Company or ERISA Affiliate thereof that is
subject to Title IV of ERISA, (B) a copy of any notice
received by any Consolidated Company or any ERISA Affiliate
thereof concerning the intent of the PBGC or any other
governmental authority to impose any liability on such
Consolidated Company or ERISA Affiliate thereof under Title IV
of ERISA, or (C) a copy of any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning
the intent of the IRS or any other governmental authority to
impose any liability on such Consolidated Company or ERISA
Affiliate thereof under Chapter 43 of the Code, which action
under SECTION 5.10(d)(iii)(C) could have a Material Adverse
Effect;
(iv) Upon the request of the Agent, promptly upon
the filing thereof with the Internal Revenue Service ("IRS")
or the Department of Labor ("DOL"), a copy of IRS Form 5500 or
annual report for each Plan of any Consolidated Company or
ERISA Affiliate thereof that is subject to Title IV of ERISA;
(v) Upon the request of the Agent, (A) true and
complete copies of any and all documents, government reports
and IRS determination or opinion letters or rulings for any
Plan of any Consolidated Company from the IRS, PBGC or DOL,
(B) any reports filed with the IRS, PBGC or DOL with respect
to a Plan of the Consolidated Companies or any ERISA Affiliate
thereof, or (C) a current statement of withdrawal liability
for each Multiemployer Plan of any Consolidated Company or any
ERISA Affiliate thereof;
(e) Liens. Promptly upon any Credit Party becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting the
respective properties of any of the Consolidated Companies,
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the claim to which such Lien relates is in excess of $250,000, other
than a Permitted Lien;
(f) Public Filings, Etc. Promptly upon the filing thereof
or otherwise becoming available, copies of all financial statements,
annual, quarterly and special reports, proxy statements and notices
sent or made available generally by SCA to its public security
holders, of all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any of them with any
securities exchange, and of all financial press releases and other
statements made available generally to the public relating to material
developments in the business or financial condition of any Borrower
and the other Consolidated Companies;
(g) Accountants' Reports. Promptly upon receipt thereof,
copies of all financial statements of, and all reports submitted by,
independent public accountants to any Borrower in connection with each
annual, interim or special audit of any Borrower and the other
Consolidated Companies' financial statements, including without
limitation, the comment letter submitted by such accountants to such
Borrower's management in connection with their annual audit;
(h) New Consolidated Companies. Within thirty (30) days
after the formation or acquisition of any Consolidated Company, or the
designation of a Person as a Consolidated Company or any other event
resulting in the creation of a new Consolidated Company, notice of the
formation or acquisition of such Consolidated Company or such
occurrence, including a description of the assets of such entity, the
activities in which it will be engaged, and such other information as
the Agent may reasonably request;
(i) Additional Debt. The occurrence of the receipt of any
notice from, or the taking of any other action by, the holder of any
promissory note, debenture, or other evidence of Indebtedness of any
Credit Party or of any security (as defined under the Securities Act
of 1933, as amended) of any Credit Party with respect to a claimed
default, together with a detailed statement by a responsible officer
of such Credit Party specifying the notice given or other action taken
by such holder and the nature of the claimed default and what action
such Credit Party is taking or proposes to take with respect thereto;
(j) Change in Management. Any material change in the
management of any Borrower; and
(k) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as the Agent or any
Lender may reasonably request from time to time.
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SECTION 5.11 ERISA COMPLIANCE. Comply or cause compliance with ERISA
and all other applicable laws governing any Plan to which any Consolidated
Company of any such Borrower is a party.
SECTION 5.12 FINANCIAL COVENANTS. (a) Tangible Net Worth. Maintain at
all times Consolidated Tangible Net Worth of not less than the sum of
$80,000,000 plus (i) fifty percent (50%) of positive Consolidated Net Income
(Loss) for each Fiscal Quarter from and after December 31, 1994 through the date
of such determination, and (ii) one hundred percent (100%) of the net proceeds
of any future equity offering.
(b) Fixed Charge Coverage. Maintain as of the last day of each
Fiscal Quarter, a minimum Fixed Charge Coverage Ratio, calculated for the
immediately preceding four (4) Fiscal Quarters of 4.0 to 1.0.
(c) Leverage Ratio. Maintain as the last day of each Fiscal
Quarter, maximum Leverage Ratio of less than .49 to 1.0.
SECTION 5.13 ADDITIONAL CREDIT PARTIES. Promptly after the formation,
creation or acquisition (provided that nothing in this SECTION 5.13 shall be
deemed to authorize the acquisition of any entity) of any Consolidated Company
not listed on Schedule 3.01, or the merger between any Consolidated Companies,
which new or newly merged Consolidated Company will have a net worth in excess
of $10,000,000, the Borrowers shall execute and deliver, and cause to be
executed and delivered a guaranty agreement in form and substance satisfactory
to Agent from each such Consolidated Company, together with related documents of
the kind described in Article IV, as Agent shall require, all in form and
substance satisfactory to the Agent.
SECTION 5.14 INTERCOMPANY LOANS. Within one hundred and twenty (120)
days after the Closing Date, deliver to Agent certified copies of the
Intercompany Loan Documents and evidence satisfactory to Agent that all
Intercompany Loans and Intercompany Loan Documents have been duly authorized and
approved by all necessary corporate and shareholder action on the part of the
parties thereto, and constitute the legal and binding obligations of the parties
thereto, enforceable against each of them in accordance with their respective
terms.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees that, during the term of this
Agreement and any extensions hereof and until the Obligations has been paid and
satisfied in full, unless Agent shall otherwise first consent in writing, the
Borrowers will not, and will not permit any other Credit Party to, either
directly or indirectly:
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SECTION 6.01 DEBTS, GUARANTIES, AND OTHER OBLIGATIONS. Incur, create,
assume, or in any manner become or be liable, or permit any Consolidated Company
to incur, create, assume, or in any manner become or be liable, with respect to
any Indebtedness; provided that subject to all other provisions of this Article
VI, the foregoing prohibitions shall not apply to:
(a) Indebtedness evidenced by the Notes;
(b) Indebtedness outstanding on the date hereof, all as
described on Schedule 6.01(b) (excluding Refinanced Indebtedness
except to the extent permitted in SECTION 6.01(f));
(c) Purchase money Indebtedness and obligations under
Capital Leases, all acceptable to Agent and the Required Lenders, not
to exceed an aggregate amount of $20,000,000 in any twelve month
period;
(d) Unsecured current liabilities other than liabilities
for borrowed money or liabilities evidenced by promissory notes, bonds
or similar instruments (incurred in the ordinary course of business)
and either (i) not more than thirty (30) days past due or (ii) being
disputed by a Contest with GAAP;
(e) Unsecured Indebtedness (in addition to the
Indebtedness permitted in Section 6.01(a), (d) and (h)) in an
aggregate principal amount not to exceed $50,000,000 at any one time
outstanding;
(f) Refinanced Indebtedness to the extent it becomes an
Intercompany Loan within 45 days after the Closing Date;
(g) the Intercompany Loans described in Schedule 3.25; and
(h) Indebtedness resulting from any letters of credit
issued from time to time by TNB in its sole discretion for the benefit
of any of the Credit Parties.
SECTION 6.02 LIENS. Create, incur, assume, or permit to exist any Lien
on any of its Property (now owned or hereafter acquired) except, subject to all
other provisions of this Article, the foregoing restrictions shall not apply to
the Permitted Liens.
SECTION 6.03 INVESTMENTS, LOANS, AND ADVANCES. Make or permit to remain
outstanding any loans or advances to or Investments in any Person, except that,
subject to all other provisions of this Article, the foregoing restriction shall
not apply to:
(a) Investments in Consolidated Companies;
(b) Investments in Industry Related Entities in an
aggregate amount not to exceed $10,000,000 at any one time;
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(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case supported by the full faith credit of the United
States and maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the
date of creation thereof rated in the highest grade by a nationally
recognized credit rating agency;
(e) Investments in certificates of deposit having
maturities of less than one year, or repurchase agreements issued by
commercial banks in the United States of America having capital and
surplus in excess of $50,000,000, or commercial paper of the highest
quality;
(f) endorsement of negotiable instruments in the ordinary
course of such Borrower's business;
(g) Investments offered from time to time through
SunTrust Capital Markets, Inc. or any other Affiliate of TNB;
(h) money market mutual funds which invest in high
quality short term debt instruments, including U.S. Treasury and other
governmental agency securities, certificates of deposit, bankers
acceptances, commercial paper and repurchase agreements;
(i) variable rate demand bonds which are backed by
letters of credit issued by major domestic or international commercial
banks; or
(j) Investments in any Person that is not a Consolidated
Company that operates outpatient ambulatory surgery centers in an
aggregate amount up to $10,000,000 during any Fiscal Year (the
"PERMITTED AMOUNT"); provided, however, any unused portion of the
Permitted Amount for a Fiscal Year may be carried forward to the
immediately following Fiscal Year provided that in no event shall the
aggregate amount of such Investments exceed $20,000,000 during any
Fiscal Year.
SECTION 6.04 SALES AND LEASEBACKS. Enter into any arrangement, directly
or indirectly, with any Person by which any Consolidated Company shall sell or
transfer any Property, whether now owned or hereafter acquired, and by which any
Borrower shall then or thereafter rent or lease as lessee such Property or any
part thereof or other Property that such Consolidated Company intends to use for
substantially the same purpose or purposes as the Property sold or transferred.
SECTION 6.05 NATURE OF BUSINESS. Suffer or permit any material change
to be made in: (a) the character of any Credit Party's business as carried on at
the Closing Date; or (b) the accounting periods of the Consolidated Companies.
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SECTION 6.06 ACQUISITIONS, MERGERS, ETC. (a) Merge with any Person that
is not a Borrower if as a result of such merger the surviving entity would not
be a Borrower or if a Default or Event of Default would result therefrom or (b)
purchase, lease or otherwise acquire (including by merger unless the provision
in clause (a) above applies) all or any substantial portion of the property or
assets (including capital stock) of any Person during the existence of a Default
or Event of Default or if such purchase, lease or acquisition would cause the
occurrence of a Default or an Event of Default.
SECTION 6.07 ASSET DISPOSITIONS, ETC. Permit any single Asset Sale
having an Asset Value in excess of $1,000,000 or any Asset Sales having an
aggregate Asset Value in excess of $10,000,000 during any twelve month period;
provided, however, with respect to the restriction of any single Asset Sale
having an Asset Value in excess of $1,000,000, such restriction shall not apply
to a Disposition involving Coral Springs Surgery Center Limited Partnership or
Plano Surgery Center, L.P.
SECTION 6.08 PROCEEDS OF LOAN. Permit the proceeds of the Loans to be
used for any purpose other than those permitted under this Agreement.
SECTION 6.09 TRANSACTIONS WITH AFFILIATES. Enter into any transactions
or series of related transactions with any Affiliate of any Consolidated Company
(but excluding any Affiliate that is also a Consolidated Company), other than on
terms and conditions substantially as favorable to such Consolidated Company as
would be obtained by such Consolidated Company at the time in a comparable
arm's-length transaction with a Person other than an Affiliate; provided,
however, the foregoing restriction shall not apply to transactions involving any
officer or director of any Borrower with respect to such individual's employment
agreement, if any, with the Borrowers or any of them.
SECTION 6.10 PREPAYMENTS OF OTHER DEBTS. Prepay any Indebtedness
(excluding trade payables) to any Person, except that the foregoing restriction
shall not apply to the Obligations (unless otherwise expressly prohibited by
another provision herein or in any Loan Document), the Refinanced Indebtedness
or to prepayments by any Consolidated Company to any Borrower.
SECTION 6.11 ERISA. (a) Take or fail to take any action with respect to
any Plan of any Consolidated Company or ERISA Affiliate that would violate any
provision of the Code or ERISA, or to continuation healthcare requirements for
group health plans under the Code, including without limitation (a) establishing
any such Plan, (b) amending any such Plan (except where required to comply with
applicable law), (c) terminating or withdrawing from any such Plan, or (d)
incurring an amount of unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA, or any withdrawal liability under Title IV of ERISA with
respect to any such Plan, without first obtaining the written approval of the
Required Lenders, where such actions or failures could reasonably be expected to
have a Material Adverse Effect.
(b) Establish and/or maintain any Plan subject to Section 412 of
the Code, Section 302 of ERISA, or Title IV of ERISA.
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SECTION 6.12 ADDITIONAL NEGATIVE PLEDGES. Create or otherwise cause or
suffer to exist or become effective, directly or indirectly, any prohibition or
restriction on the creation or existence of any Lien upon any asset of any
Consolidated Company, other than pursuant to (a) SECTION 6.02 and (b) any
requirement of applicable law or any regulatory authority having jurisdiction
over any of the Consolidated Companies.
SECTION 6.13 LIMITATION ON PAYMENT RESTRICTIONS AFFECTING CONSOLIDATED
COMPANIES. Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Consolidated Company
to (a) pay dividends or make any other distributions on such Consolidated
Company's stock, (b) pay any indebtedness owed to any Borrower or any other
Consolidated Company, or (c) transfer any of its property or assets to any
Borrower or any other Consolidated Company, except any consensual encumbrance or
restriction existing under the Loan Documents.
SECTION 6.14 ACTIONS UNDER CERTAIN DOCUMENTS. Without the prior written
consent of the Agent, modify, amend, cancel or rescind the Intercompany Loans or
Intercompany Loan Documents.
SECTION 6.15 INCONSISTENT AGREEMENTS. Enter into any agreement
containing any provision which would be violated or breached by the performance
by any Borrower of its Obligations.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. Any of the following events shall be
considered an Event of Default as those terms are used in this Agreement:
(a) Principal and Interest Payments. The Borrowers shall
fail to make payment when due (including, without limitation, by
mandatory prepayment) any principal payment with respect to the Loans,
or the Borrowers shall fail to make within five (5) days after the due
date thereof any payment of interest, fee or other amount payable
hereunder; or
(b) Representations and Warranties. Any representation or
warranty made by any Borrower or any other Credit Party in any Loan
Document, is incorrect in any material respect as of the date thereof;
or any representation, statement (including Financial Statements),
certificate, or data furnished or made by any Borrower or any other
Credit Party in any Loan Document with respect to any Indebtedness,
reasonably appears to have been untrue in any material respect, as of
the date as of which the facts therein set forth were stated or
certified; or
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(c) Covenants Without Notice. Any Borrower shall fail to
observe or perform any covenant or agreement contained in Sections
5.04, 5.06, 5.10, 5.11, 5.12 and 6.01 through 6.15, inclusive;
(d) Other Covenants. Any Borrower shall fail to observe
or perform any covenant or agreement contained in this Agreement,
other than those referred to in SECTIONS 7.01(a) or (c) and, if
capable of being remedied, such failure shall remain unremedied for
thirty (30) days after the earlier of (a) any Borrower's obtaining
knowledge thereof or (b) written notice thereof shall have been given
to the Borrowers by Agent or any Lender;
(e) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, custodian, liquidator, or trustee of any Credit Party, or of
any of its respective Property, is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction; or
any Credit Party is adjudicated bankrupt or insolvent; or any of the
Property of any Credit Party is sequestered by court order or a
petition is filed against any Credit Party under any state or federal
bankruptcy, reorganization, debt arrangement, insolvency, readjustment
of debt, dissolution, liquidation, or receivership law of any
jurisdiction, whether now or hereafter in effect and such petition is
not dismissed within thirty (30) days after filing thereof; or
(f) Voluntary Petitions. Any Credit Party takes
affirmative steps to prepare to file, or any Credit Party files a
petition in voluntary bankruptcy or to seek relief under any provision
of any bankruptcy, reorganization, debt arrangement, insolvency,
readjustment of debt, dissolution, or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the
filing of any petition against it under any such law; or
(g) Assignments for Benefit of Creditors, Etc. Any Credit
Party makes an assignment for the benefit of its creditors, or admits
in writing its inability to pay its debts generally as they become
due, or consents to the appointment of a receiver, trustee, or
liquidator of any Credit Party or of all or any part of its
Properties; or
(h) Defaults Under Other Agreements. Any Consolidated
Company shall fail to observe or perform within any applicable grace
period any covenants or agreements contained in any agreements or
instruments relating to any of its Indebtedness (other than the
Obligations) exceeding $5,000,000 in the aggregate, or any other event
shall occur if the effect of such failure or other event is to
accelerate, or to permit the holder of such Indebtedness or any other
Person to accelerate, the maturity of such Indebtedness, or any such
Indebtedness shall be required to be prepaid (other than by a
regularly scheduled required prepayment) in whole or in part prior to
its stated maturity;
(i) Money Judgment. A judgment or order for the payment
of money in excess of $5,000,000 or otherwise having a Material
Adverse Effect shall be rendered
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against any Consolidated Company and such judgment or order shall
continue unsatisfied (in the case of a money judgment) and in effect
for a period of thirty (30) days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
(j) Change in Control of SCA. Any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act), shall become the "beneficial owner(s)" (as defined in said Rule
13d-3) of more than forty percent (40%) of the shares of the
outstanding common stock of SCA entitled to vote for members of SCA's
board of directors;
(k) Change in Control of other Borrowers. SCA shall cease
to own one hundred percent (100%) of the outstanding capital stock of
either Management or Investment; or
(l) Default Under Other Loan Documents. There shall exist
or occur any "Event of Default" as provided under the terms of any
other Loan Document, or any Loan Document ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by
or on behalf of any Borrower or any other Credit Party, or at any time
it is or becomes unlawful for any Borrower or any other Credit Party
to perform or comply with its obligations under any Loan Document, or
the obligations of any Borrower or any other Credit Party under any
Loan Document are not or cease to be legal, valid and binding on such
Borrower or any such Credit Party.
SECTION 7.02 REMEDIES. Upon the happening of any Event of Default set
forth above, with the exception of those events set forth in Section 7.01(e) and
7.01(f): the Agent may, and upon written or telex request of the Required
Lenders, shall (i) declare the entire principal amount of the Obligations then
outstanding, including interest accrued thereon, to be immediately due and
payable without presentment, demand, protest, notice of protest, or dishonor or
other notice of default of any kind, all of which Borrower hereby expressly
waives, (ii) declare the Commitments terminated whereupon the Commitments of
each Lender shall terminate immediately, or (iii) exercise all rights set forth
in the Loan Documents or afforded a creditor under applicable law.
Upon the happening of any event specified in Section 7.01(e) and
Section 7.01(f) above: (i) all Obligations, including all principal, accrued
interest, and other charges or monies due in connection therewith shall be
immediately and automatically due and payable in full, without presentment,
demand, protest, or dishonor or other notice of any kind, all of which each
Borrower hereby expressly waives, (ii) all obligations of Lenders under this
Agreement shall immediately cease and terminate unless and until Required
Lenders shall reinstate such obligations in writing, (iii) all rights set forth
in the Loan Documents may be exercised; or (iv) Agent may bring an action to
protect or enforce Lenders' rights under the Loan Documents or seek to collect
and/or enforce the Obligations by any lawful means.
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SECTION 7.03 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender is authorized, at any time and
from time to time, pursuant to Article IX, without notice to any Borrower (any
such notice being expressly waived by each Borrower), to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by Lender to or for the
credit or the account of any Borrower against any and all of the Obligations,
irrespective of whether or not Lender shall have accelerated the Obligations or
made any demand under this Agreement or any Note and although such obligations
may be unmatured, all pursuant to Article IX hereof.
ARTICLE VIII
THE AGENT
SECTION 8.01 APPOINTMENT OF AGENT. Each Lender hereby designates TNB as
Agent to administer all matters concerning the Loans and to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Note by the acceptance of a Note shall be deemed irrevocably to authorize, the
Agent to take such actions on its behalf under the provisions of this Agreement,
the other Loan Documents and all other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent may perform any of its duties hereunder by or
through its agents or employees. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable for any action taken or omitted to
be taken by it or them hereunder or in connection herewith, except for its or
their own gross negligence or willful misconduct. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any of the Lenders, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise be imposed upon or exist against the Agent.
SECTION 8.02 AUTHORIZATION OF AGENT WITH RESPECT TO THE LOAN DOCUMENTS.
(a) Each Lender hereby authorizes the Agent to enter into each of the Loan
Documents and to take all action contemplated thereby, all in its capacity as
Agent for the ratable benefit of the Lenders. All rights and remedies under the
Loan Documents may be exercised by the Agent for the benefit of the Agent and
the Lenders upon the terms thereof. The Lenders further agree that the Agent may
assign its rights and obligations under any of the Loan Documents to any
affiliate of the Agent, if necessary or appropriate under applicable law, which
assignee in each such case shall (subject to compliance with any requirements of
applicable law governing the assignment of such Loan Documents) be entitled to
all the rights of the Agent under and with respect to the applicable Loan
Document.
(b) The Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested in
it by, and with respect to taking
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or refraining from taking any action or actions which it may be able to take
under or respect of, this Agreement, unless the Agent shall have been
instructed by the Required Lenders to exercise or refrain from exercising such
rights or to take or refrain from taking such action except for such actions or
rights that expressly require the consent of the Required Lenders or all of the
Lenders. The Agent shall incur no liability under or respect of this Agreement
with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment or which may seem to it to be necessary or
desirable in the circumstances, except for its gross negligence or willful
misconduct.
(c) The Agent shall not be liable to the Lenders or to any Lender
in acting or refraining from acting under this Agreement or any other Loan
Document in accordance with the instructions of the Required Lenders or all of
the Lenders, where expressly required by this Agreement, and any action taken
or failure to act pursuant to such instructions shall be binding on all
Lenders; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
any Loan Document or applicable law. In each circumstance where any consent of
or direction from the Required Lenders or all of the Lenders is required or
requested by Agent, the Agent shall send to the Lenders a notice setting forth
a description in reasonable detail of the matter as to which consent or
direction is requested and the Agent's proposed course of action with respect
thereto. In the event the Agent shall not have received a response from any
Lender within five (5) Business Days after such Lender's receipt of such
notice, such Lender shall be deemed to have agreed to the course of action
proposed by the Agent.
SECTION 8.03 AGENT'S DUTIES LIMITED; NO FIDUCIARY DUTY. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents. None of the Agent nor any of its
respective officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender, and nothing in this Agreement, express or implied, is intended to
or shall be so construed as to impose upon the Agent any obligations in respect
of this Agreement or the other Loan Documents except as expressly set forth
herein.
SECTION 8.04 NO RELIANCE ON THE AGENT. (a) Each Lender represents and
warrants to the Agent and the other Lenders that independently and without
reliance upon the Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Consolidated Companies in connection with
the taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of the Consolidated Companies, and, each
Lender further agrees that, except as expressly provided in this Agreement, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. As long as any of the Loans are outstanding, each
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Lender shall continue to make its own independent evaluation of the financial
condition and affairs of the Consolidated Companies.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the other
Loan Documents, or any other documents contemplated hereby or thereby, or the
financial condition of the Consolidated Companies, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, the other Loan Documents
or the other documents contemplated hereby or thereby, or the financial
condition of the Consolidated Companies or the existence or possible existence
of any Default or Event of Default; provided, however, to the extent that the
Agent has been advised in writing that a Lender has not received any
information formally delivered to the Agent pursuant to Section 7.01, the Agent
shall deliver or cause to be delivered such information to such Lender.
SECTION 8.05 CERTAIN RIGHTS OF AGENT. If the Agent shall request
instructions from the Required Lenders with respect to any action or actions
(including the failure to act) in connection with this Agreement, the Agent
shall be entitled to refrain from such act or taking such act, unless and until
the Agent shall have received instructions from the Required Lenders; and the
Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.
SECTION 8.06 RELIANCE BY AGENT. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other documentary, teletransmission or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person. The Agent may consult with legal counsel
(including counsel for any Credit Party), 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 8.07 INDEMNIFICATION OF AGENT. To the extent the Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify the Agent, ratably according to the respective amounts of the Loans
outstanding hereunder (or if no amounts are outstanding, ratably in accordance
with the Commitments), in either case, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including fees of experts, consultants and counsel and disbursements)
or disbursements of any kind or nature whatsoever that may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder, in
any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable to the Agent for any
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portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
SECTION 8.08 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to lend under this Agreement, the Loans made by it and the Notes
issued to it, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Note and may exercise the same as though it were not
performing the duties of Agent specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Notes," or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to
(unless expressly prohibited by the terms of this Agreement), and generally
engage in any kind of banking, trust, financial advisory or other business with
the Consolidated Companies or any Affiliate of the Consolidated Companies as if
it were not performing the duties specified herein as Agent, and may accept fees
and other consideration from the Consolidated Companies for services in
connection with this Agreement and otherwise without having to account for the
same to the Lenders.
SECTION 8.09 HOLDERS OF NOTES. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
SECTION 8.10 SUCCESSOR AGENT. (a) The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with cause by the Required Lenders; provided, however, the
Agent may not resign or be removed until a successor Agent has been appointed
and shall have accepted such appointment. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint a successor Agent, subject
to the Borrowers' prior written approval. If no successor Agent shall have been
so appointed by the Required Lenders, or the Borrowers shall not have accepted
such appointment, within thirty (30) days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank that maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or any
State thereof, or any Affiliate of such bank, having a combined capital and
surplus of at least $100,000,000.
(b) Upon the acceptance of any appointment as the Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under this Agreement.
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SECTION 8.11 NOTICE OF DEFAULT OR EVENT OF DEFAULT. In the event that
the Agent or any Lender shall acquire actual knowledge, or shall have been
notified, of any Default or Event of Default (other than through a notice by
one party hereto to all other parties), the Agent or such Lender shall promptly
notify the Agent, and the Agent shall take such action and assert such rights
under this Agreement as the Required Lenders or of all the Lenders, where
expressly required by this Agreement, shall request in writing, and the Agent
shall not be subject to any liability by reason of its acting pursuant to any
such request. If the Required Lenders shall fail to request the Agent to take
action or to assert rights under this Agreement in respect of any Default or
Event of Default within ten (10) Business Days after their receipt of the
notice of any Default or Event of Default from the Agent or any Lender, or
shall request inconsistent action with respect to such Default or Event of
Default, the Agent may, but shall not be required to, take such action and
assert such rights (other than rights under Article VIII hereof) as it deems in
its discretion to be advisable for the protection of the Lenders with respect
to such Default or Event of Default; provided, however, that in the event such
Default or Event of Default is cured, the provisions of this Section shall
apply to any future Event of Default or Default.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 NOTICES. All communications under or in connection with
this Agreement or any of the other Loan Documents shall be in writing and shall
be mailed by first class certified mail, postage prepaid, or otherwise sent by
telex, telegram, telecopy, or other similar form of rapid transmission
confirmed by mailing (in the manner stated above) a written confirmation at
substantially the same time as such rapid transmission, or personally delivered
to an officer of the receiving party. All such communications shall be mailed,
sent, or delivered to such party at its address or applicable teletransmission
number set forth opposite such party's name on the signature pages hereof, or
such other address or applicable teletransmission number as such party may
hereafter specify to Agent and the Borrowers. Each such notice, request or
other communication shall be effective (a) if given by mail seventy-two (72)
hours after such communication is deposited in the mails with first-class
postage prepaid, addressed as aforesaid, (b) if given by telecopy, when such
telecopy is transmitted to the telecopy number as described above and the
appropriate confirmation is received, or (c) if given by any other means
(including, without limitation, by air courier), when delivered or received at
the address specified in this SECTION 9.01; provided that notices to the Agent
shall not be effective until received.
SECTION 9.02 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or the other Loan Documents, nor consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders do any of the following: (a)
increase the Revolving Credit Loan Commitments or other contractual obligations
to the Borrowers under this Agreement, (b) reduce the principal of, or interest
on, the Notes or any
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<PAGE> 58
fees hereunder, (c) postpone any date fixed for the payment in respect of
principal of, or interest on, the Notes or any fees hereunder, (d) change the
percentage of the Revolving Credit Loan Commitments or of the aggregate unpaid
principal amount of the Notes, or the number or identity of Lenders that shall
be required for the Lenders or any of them to take any action hereunder, (e)
modify the definition of "Required Lenders," or (f) modify Article VIII or (g)
modify this SECTION 9.02. Notwithstanding the foregoing, (I) no amendment,
waiver or consent shall, unless in writing and signed by the Agent in addition
to the Lenders required hereinabove to take such action, affect the rights or
duties of the Agent under this Agreement or under any other Loan Document and
(II) no amendment, waiver or consent shall, unless in writing and signed by TNB
in addition to the Lenders required hereinabove to take such action, affect the
interests, rights or duties of TNB in its capacity as the provider of the Swing
Line Loan Commitment.
SECTION 9.03 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent, any Lender or any holder of a Note in exercising any right
or remedy hereunder or under any other Loan Document, and no course of dealing
between any Credit Party and the Agent, any Lender or the holder of any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right or remedy hereunder or under any other Loan Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies that the Agent, any
Lender or the holder of any Note would otherwise have. No notice to or demand
on any Credit Party not required hereunder or under any other Loan Document in
any case shall entitle any Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights
of the Agent, the Lenders or the holder of any Note to any other or further
action in any circumstances without notice or demand.
SECTION 9.04 PAYMENT OF EXPENSES, ETC. Each Borrower shall:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the Agent
in the administration (both before and after the execution hereof and including
reasonable expenses actually incurred relating to advice of counsel as to the
rights and duties of the Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of, preservation of
rights under, enforcement of, and, after a Default or Event of Default,
refinancing, renegotiation or restructuring of, this Agreement and the other
Loan Documents and the documents and instruments referred to therein, and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees actually incurred and disbursements of counsel for the
Agent), and in the case of enforcement of this Agreement or any Loan Document
after an Event of Default, all such reasonable, out-of-pocket costs and
expenses (including, without limitation, the reasonable fees actually incurred
and disbursements of counsel), for any of the Lenders;
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<PAGE> 59
(b) pay and hold each of the Lenders harmless from and against any
and all present and future stamp, documentary, indebtedness and other similar
taxes with respect to this Agreement, the Notes and any other Loan Documents,
any collateral described therein, or any payments due thereunder, and save each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such taxes; and
(c) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold each
of them harmless against, any and all costs, losses, liabilities, claims,
damages or expenses incurred by any of them (whether or not any of them is
designated a party thereto) (an "Indemnitee") arising out of or by reason of
any investigation, litigation or other proceeding related to any actual or
proposed use of the proceeds of any of the Loans or any Credit Party's entering
into and performing of the Agreement, the Notes or the other Loan Documents,
including, without limitation, the reasonable fees actually incurred and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding; provided, however, the Borrowers shall not be
obligated to indemnify any Indemnitee for any of the foregoing arising out of
such Indemnitee's gross negligence or willful misconduct;
(d) without limiting the indemnities set forth in SECTION 9.04(c),
indemnify each Indemnitee for any and all expenses and costs (including without
limitation, remedial, removal, response, abatement, cleanup, investigative,
closure and monitoring costs), losses, claims (including claims for
contribution or indemnity and including the cost of investigating or defending
any claim and whether or not such claim is ultimately defeated, and whether
such claim arose before, during or after any Consolidated Company's ownership,
operation, possession or control of its business, property or facilities or
before, on or after the date hereof, and including also any amounts paid
incidental to any compromise or settlement by the Indemnitee or Indemnitees to
the holders of any such claim), lawsuits, liabilities, obligations, actions,
judgments, suits, disbursements, encumbrances, liens, damages (including
without limitation damages for contamination or destruction of natural
resources), penalties and fines of any kind or nature whatsoever (including
without limitation in all cases the reasonable fees actually incurred, other
charges and disbursements of counsel in connection therewith) incurred,
suffered or sustained by that Indemnitee based upon, arising under or relating
to Environmental Laws based on, arising out of or relating to in whole or in
part, the existence or exercise of any rights or remedies by any Indemnitee
under this Agreement, any other Loan Document or any related documents.
If and to the extent that the obligations of the Borrowers under this SECTION
9.04 are unenforceable for any reason, the Borrowers hereby agree to make the
maximum contribution to the payment and satisfaction of such obligations that
is permissible under applicable law.
SECTION 9.05 RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender or other holder of a Note may have under
applicable law and subject to SECTION 2.19 hereof, each Lender or other holder
of a Note shall, upon the occurrence of any Event of Default and whether or not
such Lender or such holder has made any demand or any Credit Party's
obligations are matured, have the right to appropriate and apply to the
Obligations, all
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deposits of any Credit Party (general or special, time or demand, provisional
or final) then or thereafter held by and other Indebtedness or property then or
thereafter owing by such Lender or other holder to any Credit Party, whether or
not related to this Agreement or any transaction hereunder. Upon direction by
the Agent with the consent of the Required Lenders, each Lender holding
deposits of any Credit Party shall exercise its set-off rights as so directed
and any such amounts recovered shall be applied to the Obligations.
SECTION 9.06 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that none of the
Borrowers may assign or transfer any of its interest hereunder without the
prior written consent of the Lenders.
(b) Any Lender may make, carry, transfer or participate Loans at,
to or for the account of, any of its branch offices or the office of an
Affiliate of such Lender provided that the Borrowers will not be responsible
for any increased Taxes as a result of any such transfer or participation.
(c) Any Lender may at any time assign all or any portion of its
rights in this Agreement and the Notes issued to it to a Federal Reserve Bank;
provided that no such assignment shall release the Lender from any of its
obligations hereunder.
(d) If (i) any Taxes referred to in SECTION 2.13(b) have been
levied or imposed so as to require withholdings or deductions by the Borrowers
and payment by the Borrowers of additional amounts to any Lender as a result
thereof, (ii) any Lender shall make demand for payment of any material
additional amounts as compensation for increased costs pursuant to SECTION 2.16
or for its reduced rate of return pursuant to SECTION 2.20, or (iii) any Lender
shall decline to consent to a modification or waiver of the terms of this
Agreement or the other Loan Documents requested by the Borrowers, then and in
such event, upon request from the Borrowers delivered to such Lender and the
Agent, such Lender shall assign, pursuant to such documentation acceptable to
Agent, all of its rights and obligations under this Agreement and the other
Loan Documents to another Lender selected by the Borrowers, in consideration
for the payment by such assignee to the Lender of the principal of, and
interest on, the outstanding Loans accrued to the date of such assignment, and
the assumption of such Lender's Commitment hereunder, together with any and all
other amounts owing to such Lender under any provisions of this Agreement or
the other Loan Documents accrued to the date of such assignment.
SECTION 9.07 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE
NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF
TENNESSEE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,
THE NOTES OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE CHANCERY COURTS FOR
DAVIDSON COUNTY, TENNESSEE
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OR IN THE FEDERAL COURTS FOR THE MIDDLE DISTRICT OF TENNESSEE, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE TRIAL BY JURY, AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) Nothing herein shall affect the right of the Agent, any
Lender, any holder of a Note or any Credit Party to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Borrower in any other jurisdiction.
SECTION 9.08 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
SECTION 9.09 EFFECTIVENESS; SURVIVAL. (a) This Agreement shall become
effective on the date on which all of the parties hereto shall have executed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent pursuant to SECTION 9.01 or, in the case of the Lenders,
shall have given to the Agent written or telex notice (actually received) that
the same has been executed and mailed to them.
(b) The obligations of the Borrowers under SECTIONS 2.13, 2.16,
2.17, 2.20 and 9.04 shall survive the payment in full of the Notes after the
Maturity Date. All representations and warranties made herein, in the
certificates, reports, notices and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the other
Loan Documents, and such other agreements and documents, the making of the
Loans hereunder, and the execution and delivery of the Notes.
SECTION 9.10 SEVERABILITY. In case any provision in or obligation under
this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any jurisdiction, shall not in any way be affected
or impaired thereby.
SECTION 9.11 INDEPENDENCE OF COVENANTS. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
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SECTION 9.12 CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR TAX LAWS.
I (a) any preparation of the Financial Statements hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with similar
functions) (other than changes mandated by FASB-106) result in a material
change in the method of calculation of financial covenants, standards or terms
found in this Agreement, or (b) there is a material change in federal tax laws
that materially affects the Borrowers' ability to comply with the financial
covenants, standards or terms found in this Agreement, the Borrowers and the
Required Lenders agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating the Borrowers' financial condition shall be the
same after such changes as if such changes had not been made. Unless and until
such provisions have been so amended, the provisions of this Agreement shall
govern.
SECTION 9.13 HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT. The headings of
the several Sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement. This Agreement, the other Loan Documents, and
the agreements and documents required to be delivered pursuant to the terms of
this Agreement constitute the entire agreement among the parties hereto and
thereto regarding the subject matters hereof and thereof and supersede all
prior agreements, representations and understandingsmxelated to such subject
matters.
SECTION 9.14 INTEREST. The parties to this Agreement intend to conform
strictly to applicable usury laws and other laws that may limit monetary
charges, however such charges may be characterized, as presently in effect.
Accordingly, if the transactions contemplated hereby would be usurious or
otherwise excessive under applicable law (including the laws of the United
States of America and the State of Tennessee), then, in that event,
notwithstanding anything to the contrary in any Loan Document or agreement
executed in connection with or as security for any of the Notes, the Borrowers
and Lenders agree as follows: (a) the aggregate of all consideration that
constitutes interest under applicable law which is contracted for, charged or
received under any of the Notes, this Agreement or any of the other Loan
Documents or agreements, or otherwise in connection with the Notes, and all
other monetary charges, shall under no circumstances exceed the maximum lawful
rate of interest or lawful amount of other charges permitted by applicable law,
and any excess shall be credited on the applicable Notes by the holder thereof
(or, if the Notes shall have been paid in full, refunded to the Borrowers); and
(b) in the event that the maturity of any of the Notes is accelerated by reason
of an election of the holder resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount of interest permitted by applicable law, and
excess interest, if any, for which this Agreement provides, or otherwise, shall
be cancelled automatically as of the date of such acceleration or prepayment
and, if previously paid, shall be credited on the applicable Notes (or, if the
Notes shall have been paid in full, refunded to the Borrowers).
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ARTICLE X
JURY WAIVER
SECTION 10.01 JURY WAIVER. IF ANY ACTION OR PROCEEDING INVOLVING THIS
LOAN AGREEMENT OR ANY LOAN DOCUMENT IS COMMENCED IN ANY COURT OF COMPETENT
JURISDICTION, EACH BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVE THEIR
RIGHTS TO DEMAND A JURY TRIAL.
ENTERED INTO the date first above written.
<TABLE>
<S> <C>
BORROWER:
--------
Address for Notices: SURGICAL CARE AFFILIATES, INC.
- -------------------
102 Woodmont Blvd., Suite 610
Nashville, Tennessee 37205 By: /s/ Tarpley B. Jones
Attn: Tarpley A. Jones, Chief -----------------------------------------
Financial Officer Title: Sr. Vice President
Telephone No.: (615) 385-3541 -----------------------------------------
Telecopy No.: (615) 298-5641
SCA-MANAGEMENT COMPANY
By: /s/ Tarpley B. Jones
-----------------------------------------
Title: Sr. Vice President
-----------------------------------------
SCA INVESTMENT COMPANY
By: /s/ Tarpley B. Jones
-----------------------------------------
Title: Sr. Vice President
-----------------------------------------
</TABLE>
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<PAGE> 64
<TABLE>
<S> <C>
AGENT:
-----
Address for Notices: THIRD NATIONAL BANK IN NASHVILLE,
- ------------------- as Agent
201 Fourth Avenue North
P.O. Box 305110
Nashville, Tennessee 37230-5110 By: /s/ Karen Cole Ahern
Attn: Karen Cole Ahern, Vice-President ------------------------------------------
Telephone No.: (615) 748-5817 Title: Vice President
Telecopy No.: (615) 748-5161 ------------------------------------------
LENDERS:
-------
Address for Notices: THIRD NATIONAL BANK IN NASHVILLE
- -------------------
201 Fourth Avenue North
P.O. Box 305110
Nashville, Tennessee 37230-5110 By: /s/ Karen Cole Ahern
Attn: Karen Cole Ahern, Vice-President ------------------------------------------
Telephone No.: (615) 748-5817 Title: Vice President
Telecopy No.: (615) 748-5161 ------------------------------------------
Payment Office:
- --------------
201 Fourth Avenue North
P.O. Box 305110
Nashville, TN 37230-5110
Attn: Karen Cole Ahern, Vice-President
Telephone No.: (615) 748-5817
Telecopy No.: (615) 748-5161
REVOLVING CREDIT LOAN COMMITMENT $55,000,000
PERCENTAGE: 68.75%
</TABLE>
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<PAGE> 65
<TABLE>
<S> <C>
Address for Notices: FIRST AMERICAN NATIONAL BANK
- -------------------
First American Center
Second Floor By: /s/ Sandra G. Hammrick
Nashville, Tennessee 37237-2812 ----------------------------------------
Attn: Sandra G. Hamrick Title: Bank Officer
Bank Officer ----------------------------------------
Telephone No.: (615) 748-2191
Telecopy No.: (615) 748-2812
Payment Office:
- --------------
First American Center
Second Floor
Nashville, TN 37237-2812
Attn: Sandra G. Hamrick
Telephone No.: (615) 748-2191
Telecopy No.: (615) 748-2812
REVOLVING CREDIT LOAN COMMITMENT $15,000,000
PERCENTAGE: 18.75%
Address for Notices: NATIONSBANK OF TENNESSEE, N.A.
- -------------------
One NationsBank Plaza
Second Floor By: /s/ Cathy Wind
Nashville, Tennessee 37239 ----------------------------------------
Attn: Cathy Wind, Vice President Title: Vice President
Telephone No.: (615) 749-4023 ----------------------------------------
Telecopy No.: (615) 749-4743
Payment Office:
- --------------
One NationsBank Plaza
Second Floor
Nashville, TN 37239
Attn: Linda Kelly, Medical Industries
Telephone No.: (615) 749-3607
Telecopy No.: (615) 749-4743
REVOLVING CREDIT LOAN COMMITMENT $10,000,000
PERCENTAGE: 12.50 %
</TABLE>
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<PAGE> 66
Schedule 3.01
Active Consolidated Companies
(arranged by location)
ALABAMA
Dothan Surgery Center, Dothan (90%)
DOTHAN SURGERY CENTER, L.P. (TN)1
GP: SCA-Dothan, Inc. (TN)
Florence Surgery Center, Florence (81%)
FLORENCE SURGERY CENTER, L.P. (TN)
GP: SCA-Florence, Inc. (TN)
Gadsden Surgery Center, Gadsden (74%)
GADSDEN SURGERY CENTER, LTD. (AL)
GP: Gadsden Surgery Center, Inc. (AL)(wholly-owned
subsidiary of SCA-Gadsden, Inc.)
Mobile Surgery Center, Mobile *2 (89%)
MOBILE-SC, LTD. (AL)
GP: SCA-Mobile, Inc. (AL)
MOBILE-SC PROPERTIES, LTD. (AL)
GP: SCA-Mobile Properties, Inc. (AL)
ARIZONA
Yuma Outpatient Surgery Center, Yuma (77%)
YUMA OUTPATIENT SURGERY CENTER, L.P. (TN)
GP: SCA-Yuma, Inc. (TN)
____________________________
1 Parentheses indicate state of formation.
2 Asterisk indicates that real property and most equipment comprising
the surgery center is owned by a property partnership and leased to an
operating partnership.
<PAGE> 67
ARKANSAS
Center for Day Surgery, Fort Smith (86%)
FORT SMITH OUTPATIENT SURGERY CENTER, L.P. (TN)
GP: The Center for Day Surgery, Inc. (AR)
Little Rock Surgery Center, Little Rock (58%)
LITTLE ROCK SURGERY CENTER, LIMITED PARTNERSHIP (AR)
GP: Little Rock-SC, Inc. (AR)
LITTLE ROCK SURGERY PROPERTIES, LIMITED PARTNERSHIP (AR) (owner of
former surgery center cite pending sale of the property)
GP: SCA-Little Rock Development Corp. (AR)
CALIFORNIA
Forest Surgery Center, San Jose (73%)
FOREST AMBULATORY SURGICAL ASSOCIATES, L.P. (CA)
GP: SCA-San Jose, Inc. (CA)
Inland Surgery Center, Redlands (59%)
INLAND SURGERY CENTER, L.P. (CA)
GP: Redlands Ambulatory Surgery Center
Partner: Redlands-SCA Surgery Centers, Inc. (CA)
San Luis Obispo Surgery Center, San Luis Obispo (66%)
SAN LUIS OBISPO SURGERY CENTER, A CALIFORNIA LIMITED
PARTNERSHIP (CA)
GP: SCA-San Luis Obispo, Inc. (CA)
The Surgery Center, Santa Rosa (95%)
SANTA ROSA SURGERY CENTER, L.P. (TN)
GP: SCA-Santa Rosa, Inc. (TN)
Sutter Street Surgery Center, San Francisco (100%)
Health Horizons of San Francisco, Inc. (TN)
(wholly-owned subsidiary of SCA-HHI, Inc.)
<PAGE> 68
COLORADO
Aurora Surgery Center, Aurora (72%)
AURORA SURGERY CENTER LIMITED PARTNERSHIP (CO)
GP: Aurora-SC, Inc. (CO)
Colorado Springs Surgery Center, Colorado Springs (83%)
COLORADO SPRINGS SURGERY CENTER, LTD. (CO)
GP: SCA-Colorado Springs, Inc. (CO)
Denver West Surgery Center, Golden (60%)
GOLDEN SURGERY CENTER, L.P. (CO)
GP: Golden-SCA, Inc. (CO)
Pueblo Surgery Center, Pueblo (74%)
PUEBLO AMBULATORY SURGERY CENTER LIMITED PARTNERSHIP (CO)
GP: Pueblo-SCA Surgery Center, Inc. (CO)
Surgery Center of Ft. Collins, Fort Collins (78%)
SCA-FCSC, L.P. (CO)
GP: SCA-Fort Collins, Inc. (CO)
DELAWARE
Central Delaware Surgery Center, Dover (50%)
CENTRAL DELAWARE AMBULATORY SURGERY CENTER (General Partnership)
Partner: SCA-Dover, Inc. (DE)
FLORIDA
Citrus Regional Surgery Center, Lecanto (78%)
CITRUS REGIONAL SURGERY CENTER, L.P. (TN)
GP: SCA-Citrus, Inc. (TN)
Coral Springs Surgical Center, Coral Springs (100%)
CORAL SPRINGS SURGERY CENTER LIMITED PARTNERSHIP (TN)
GP: Coral Springs-SC, Inc. (TN)
<PAGE> 69
Emerald Coast Surgery Center, Fort Walton Beach (51%)
EMERALD COAST SURGERY CENTER, L.P. (TN)
GP: SCA-Fort Walton, Inc. (TN)
Physician's Surgery Center, Fort Myers (33%)
PHYSICIANS SURGERY CENTER, LTD. (FL)
GP: SCA/Ft. Myers, LLC (FL)
Member: SCA-Ft. Myers, Inc. (FL)
Physicians' Surgical Care Center, Winter Park (45%)
WINTER PARK SURGERY CENTER, L.P. (TN)
GP: Winter Park, LLC (TN)
Member: SCA-Winter Park, Inc. (TN)
Sarasota Surgery Center, Sarasota(*) (73%)
SARASOTA SURGERY CENTER, LTD. (FL)
GP: SCA-Sarasota, Inc. (FL)
SARASOTA SURGERY PROPERTIES, LTD. (FL)
GP: Surgical Services of Sarasota, Inc. (FL)
St. Petersburg Surgery Center, St. Petersburg (59%)
ST. PETERSBURG SURGERY CENTER, LTD. (FL)
GP: SCA-St. Petersburg, Inc. (FL)
Tampa Outpatient Surgical Facility, Tampa (52%)
TAMPA OUTPATIENT SURGERY JOINT VENTURE, LTD. (FL)
GP: SCA-Tampa, Inc. (FL)
TAMPA IVF/GIFT CENTER, L.P. (TN) (operates in vitro specialty
area within the surgery center)
GP: Tampa Outpatient Surgery Joint Venture, Ltd. (FL)
GP: SCA-Tampa, Inc. (FL)
TAMPA PAIN MANAGEMENT CENTER, L.P. (TN) (operates pain management
specialty area within the surgery center)
GP: Tampa Outpatient Surgery Joint Venture, Ltd. (FL)
GP: SCA-Tampa, Inc. (FL)
<PAGE> 70
GEORGIA
[Development Stage]
GAINESVILLE SURGERY CENTER, L.P. (TN)
GP: SCA-Northeast Georgia Health, LLC (TN)
Member: SCA-Gainesville, Inc. (TN)
HAWAII
Surgicare of Hawaii, Honolulu (81%)
HONOLULU SURGERY CENTER, L.P. (TN)
GP: SCA-Honolulu, Inc. (TN)
INDIANA
Evansville Surgery Center, Evansville (61%)
EVANSVILLE SURGERY CENTER ASSOCIATES, L.P. (IN)
GP: SCA-Deaconess Joint Venture, LLC (IN)
Member: SCA-Evansville, Inc. (IN)
North Indianapolis Surgery Center, Indianapolis (100%)
SCA-North Indianapolis, Inc. (IN)
KENTUCKY
Lexington Surgery Center, Lexington(*) (87%)
LEXINGTON SURGERY CENTER, LTD. (KY)
GP: Lexington-SC, Inc. (KY)
SURGERY PROPERTY ASSOCIATES, LTD.
GP: Lexington-SC Properties, Inc. (KY)
LEX-SURG ASSOCIATES (owns a portion of the equipment)
GP: Lexington-SC Properties, Inc. (KY)
Surgecenter of Louisville, Louisville(*) (85%)
LOUISVILLE S.C., LTD. (KY)
GP: Surgery Center of Louisville, Inc. (KY)
LPSC, LTD. (KY)
<PAGE> 71
GP: Louisville-SC Properties, Inc. (KY)
MARYLAND
Central Maryland Surgery Center, Baltimore (50%)
All-Care Surgicenter, Inc. (MD)
Montgomery Surgery Center, Rockville (34%)
MONTGOMERY SURGERY CENTER LIMITED PARTNERSHIP (MD)
GP: Maryland Ambulatory Centers
Partner: Maryland-SCA Centers, Inc. (MD)
MASSACHUSETTS
Maple Surgery Center, Springfield (100%)
MAPLE SURGERY CENTER, LIMITED PARTNERSHIP (MA)
GP: Springfield-SC, Inc. (MA)
MICHIGAN
[Development Stage]
MARQUETTE SURGERY CENTER, L.P. (TN)
GP: SCA-Marquette, Inc. (TN)
MISSOURI
The Surgery Center, St. Joseph (42%)
ST. JOSEPH SURGERY CENTER, L.P. (TN)
GP: SCA-St. Joseph Missouri, Inc. (TN)
NEVADA
SCA INVESTMENT COMPANY (NV)
NEW JERSEY
Roseland Surgical Center, Roseland (100%)
SCA-Roseland, Inc. (NJ)
<PAGE> 72
Surgical Center of South Jersey, Mt. Laurel (71%)
SURGICAL CENTER OF SOUTH JERSEY, LIMITED PARTNERSHIP (NJ)
GP: SCA-South Jersey, Inc. (NJ)
NEW MEXICO
Surgery Center of Albuquerque, Albuquerque(*) (78%)
NEW MEXICO SURGICENTER LIMITED PARTNERSHIP (NM)
GP: SCA-Albuquerque, Inc. (NM)
NEW MEXICO SURGERY PROPERTIES LIMITED PARTNERSHIP (NM)
GP: SCA-Albuquerque Surgery Properties, Inc. (NM)
NORTH CAROLINA
Blue Ridge Day Surgery Center, Raleigh (65%)
BLUE RIDGE DAY SURGERY CENTER, L.P. (TN)
GP: SCA-Blue Ridge, Inc. (TN)
Charlotte Surgery Center, Charlotte(*) (61%)
CHARLOTTE SURGERY PROPERTIES, LTD. (NC)
GP: SCA-Mecklenberg Development Corp. (NC)
CHARLOTTE SURGERY CENTER, LTD. (NC)
GP: Charlotte-SC, Inc. (NC)
Surgecenter of Wilson, Wilson (87%)
SURGECENTER OF WILSON, LIMITED PARTNERSHIP (NC)
GP: SC-Wilson, Inc. (NC)
OREGON
[Development Stage]
McKENZIE SURGERY CENTER, L.P. (TN) (f/k/a Eugene Surgery Center, L.P.)
GP: SCA/McKenzie Joint Venture, LLC
Member: SCA-Eugene, Inc. (TN)
<PAGE> 73
PENNSYLVANIA
Grandview Surgery Center, Camp Hill (51%)
GRANDVIEW SURGERY CENTER, LTD. (PA)
GP: Camp Hill Ambulatory Centers
Partner: Camp Hill-SCA Centers, Inc. (PA)
Lancaster Surgery Center, Lancaster(*) (60%)
LANCASTER SURGERY CENTER, LIMITED PARTNERSHIP (PA)
GP: Lancaster Surgical Center, Inc. (PA)
LANCASTER SURGERY PROPERTIES, LTD. (PA)
GP: Lancaster Medical Centre, Inc. (PA)
Westmoreland Surgery Center, Mt. Pleasant (96%)
MT. PLEASANT SURGERY CENTER, L.P. (TN)
GP: SCA-Mt. Pleasant, Inc. (TN)
Paoli Surgery Center, Paoli (36%)
PAOLI SURGERY CENTER, L.P. (TN)
GP: Paoli Ambulatory Surgery Center
Partner: SCA-Paoli, Inc. (TN)
Scranton Surgery Center, Scranton (60%)
SCRANTON SURGERY CENTER, LIMITED PARTNERSHIP (PA)
GP: Scranton-SC, Inc. (PA)
SOUTH CAROLINA
Charleston Surgery Center, Charleston (57%)
CHARLESTON SURGERY CENTER LIMITED PARTNERSHIP (SC)
GP: SCA-Charleston, Inc. (SC)
Greenville Surgery Center, Greenville (81%)
GREENVILLE SURGERY CENTER LIMITED PARTNERSHIP (SC)
GP: SCA-Greenville East, Inc. (TN) (Partnership owns assets. Real
property owned by general partner and leased to the
partnership. General partner is wholly-owned subsidiary of
SCA-HHI, Inc.)
<PAGE> 74
TENNESSEE
SURGICAL CARE AFFILIATES, INC. (DE)
SCA-DEVELOPMENT, INC. (TN)
SCA-MANAGEMENT COMPANY (TN)
Chattanooga Surgery Center, Chattanooga(*) (82%)
CHATTANOOGA SURGERY CENTER, LTD., L.P. (TN)
GP: Chattanooga-SC, Inc. (TN)
CHATTANOOGA SURGERY PROPERTIES, LTD., L.P. (TN)
GP: SCA-Hamilton Development Corp. (TN)
Knoxville Surgery Center, Knoxville (72%)
KNOXVILLE AMBULATORY SURGERY CENTER, L.P. (TN)
GP: Knoxville-SCA Surgery Center, Inc. (TN)
Memphis Surgery Center, Memphis(*) (40%)
MEMPHIS SURGERY CENTER, LTD., L.P. (TN)
GP: Memphis-SC, LLC (TN)
Member: SCA-Shelby Development Corp. (TN)
MEMPHIS SURGERY PROPERTIES, LTD., L.P. (TN)
GP: Memphis-SP, LLC (TN)
Member: Shelby Surgery Properties, Inc. (TN)
Nashville Surgery Center, Nashville (83%)
NASHVILLE SURGERY CENTER, L.P. (TN)
GP: Nashville Ambulatory Surgery Center
Partner: Nashville-SCA Surgery Centers, Inc. (TN)
TEXAS
Arlington Day Surgery Center, Arlington (67%)
ARLINGTON SURGERY CENTER ASSOCIATES, LTD. (TX)
GP: SCA-Arlington Surgery, Inc. (TX)
Conroe Surgery Center, Conroe (73%)
CONROE SURGERY CENTER, L.P. (TN)
GP: SCA-Conroe, Inc. (TN)
<PAGE> 75
East El Paso Surgery Center, El Paso (51%)
EL PASO SURGERY CENTER LIMITED PARTNERSHIP (TX)
GP: El Paso-SC, Inc. (TX)
Fort Worth Surgery Center, Fort Worth (59%)
FORT WORTH SURGERY CENTER ASSOCIATES (TX)
Partner: Fort Worth-SC, Inc. (TX)
Greenpark Surgery Center, Houston (60%)
GREENPARK SURGERY CENTER ASSOCIATES, LTD. (TX)
GP: Greenpark Surgery Center, Inc. (TX)
Greenville Surgery Center, Dallas (63%)
GREENVILLE SURGERY CENTER, LTD. (TX)
GP: Greenville Surgery Center, Inc. (TX)
Plano Surgery Center, Plano (100%)
PLANO SURGERY CENTER, L.P. (TN)
GP: SCA-Plano, Inc. (TN)
San Antonio Surgery Center, San Antonio (96%)
SAN ANTONIO SURGERY CENTER, LTD. (TX)
GP: San Antonio Surgery Center, Inc. (TX)
WEST VIRGINIA
Cabell-Huntington Surgery Center, Huntington(*) (26%)
HUNTINGTON SURGERY CENTER, LIMITED PARTNERSHIP (WV)
GP: SCA Cabell, Inc. (WV)
HUNTINGTON SURGERY PROPERTIES, LIMITED PARTNERSHIP (WV)
GP: SCA Cabell Development Corporation (WV)
WISCONSIN
Eau Claire Surgery Center, Eau Claire (51%)
EAU CLAIRE SURGERY CENTER, LIMITED PARTNERSHIP (WI)
GP: Ambulatory Health Services Association
Partner: SCA-JV, Inc. (IL)
<PAGE> 76
Oshkosh Surgery Center, Oshkosh (97%)
OSHKOSH SURGERY CENTER, L.P. (TN)
GP: Oshkosh-SCA Surgery Center, Inc. (WI)
Wausau Surgery Center, Wausau (79%)
WAUSAU SURGERY CENTER, L.P. (TN)
GP: SCA-Wausau, Inc. (TN)
Wauwatosa Surgery Center, Wauwatosa (67%)
WAUWATOSA SURGERY CENTER, LIMITED PARTNERSHIP (WI)
GP: Wauwatosa Outpatient Surgery Center, Inc. (WI)
<PAGE> 77
Inactive Consolidated Companies
SCA - Huntington Development Corporation
Greenville - SC Properties, Inc.
Dover - SC Properties, Inc.
SCA - Madison Development Corporation
SCA - Jefferson, Inc.
SC - Mobile Diagnostic, Inc.
SCA - Stamford, Inc.
SCA - Waterbury, Inc.
Ambulatory Care, Inc. (formerly Ambulatory Health Resources, Inc.)
Ambulatory Care - Duval Development Corp.
Kendall Medical Development Corporation
(d/b/a Dade County Ambulatory Surgical Center)
Sheila Stinnett and Associates, Inc.
SCA - Dade Development Corp.
SCA - Broward, Inc.
SCA - Hillsborough, Inc.
SCA - Orange, Inc.
SCA - Daugherty, Inc.
SCA - Chatham, Inc.
SCA - DeKalb, Inc.
SCA - Hall, Inc.
SCA - Boone Development Corp. (formerly SCA - Campbell Development
Corp.)
Healthcare Management, Inc.
SCA - Dental Institute, Inc.
SCA - Jackson, Inc.
SCA - Charlotte Diagnostic, Inc.
Franklin - Surgical Care, Inc.
Hamilton - Surgical Care, Inc.
Lucas - Surgical Care, Inc.
Montgomery - Surgical Care, Inc.
Trumbell - Surgical Care, Inc.
Stark - Surgical Care, Inc.
SCA - Greenville, Inc.
SCA - Horry, Inc.
SCA - Richland, Inc.
SCA - Spartanburg, Inc.
SCA - Davidson Development Corp.
SCA - Health Plan Management Corp.
SCA - Therapy, Inc.
SCA - CV, Inc.
Affiliated Eye Care Associates, Inc.
Grand Prairie - SC, Inc.
Bryan - SC, Inc.
SCA - Bryan Development Corp.
SCA - Cambell, Inc.
SCA - Charlottesville, Inc.
SCA - Lynchburg, Inc.
<PAGE> 78
SCA - Norfolk, Inc.
SCA - Spotsylvania, Inc.
SCA - Virginia Beach, Inc.
SCA - Alexandria, Inc. (VA corp)
SCA - Monongalia, Inc.
SCA - Raleigh, Inc.
SCA - Wood, Inc.
SCA - Janesville, Inc.
SCA - Madison, Inc.
SCA - Neenah, Inc.
SCA - Decatur, Inc.
SCA - West Ashley, Inc.
Surgery Center of Memphis, Inc.
SCA - Knoxville, Inc.
SCA - Aiken, Inc.
SCA - Cabarrus Surgery Center, Inc.
SCA - Alexandria, Inc. (TN corp)
SCA - Harlingen, Inc.
SCA - Boise, Inc.
SCA - Englewood, Inc.
SCA - Fort Wayne, Inc.
SCA - Rock Hill, Inc.
Fayette Diagnostic Center, Inc.
Fayette Diagnostic Properties, Inc.
Hanover - SC, Inc.
SCA - Tallahassee, Inc.
SCA - Evansville Development Corp.
SCA - Indianapolis, Inc.
SCA - Boynton, Inc.
Lancaster-SC, Inc.
Grand Junction Surgery Center, Inc.
Englewood Surgery Center, L.P.
Fort Wayne Surgery Center, L.P.
Hanover Surgery Center, L.P.
Harlingen Surgery Center, L.P.
Rock Hill Surgery Center, L.P.
Physicians Diagnostic Properties, Ltd.
Physicians Diagnostic Center, Ltd.
Tallahassee Surgery Center, L.P., Limited Partnership
Evansville Properties, Limited Partnership
Indianapolis Surgery Center Limited Partnership
North Indianapolis Surgery Center Limited Partnership
Lexington-SC Partners, Ltd.
Bethesda West Surgery Center, L.P.
Bethesda West Surgery General Partnership
<PAGE> 79
Schedule 3.08
Litigation
None
<PAGE> 80
Schedule 3.10(a)
Liens, Title Defects, and Status of Leases
None
<PAGE> 81
Schedule 3.10(b)
Property Locations
Alabama
Dothan Surgery Center, 1450 Ross Clark Circle, SE,
Suite 4, Dothan, AL 36301
Florence Surgery Center, 103 Helton Court, Florence,
AL 35630
Gadsden Surgery Center, 418 S. Fifth Street, Gadsden,
AL 35901
Mobile Surgery Center, 1721 Springhill Avenue, Mobile
AL 36604
Arizona
Yuma Outpatient Surgery Center, 2475 Avenue A, Suite B
Yuma, AZ 85364
Arkansas
Center for Day Surgery, 4200 Jenny Lind, Fort Smith,
AR 72901
Little Rock Surgery Center, 8820 Knoedl Court, Little
Rock, AR 72205
California
Forest Surgery Center, 2110 Forest Avenue, 2nd Floor
San Jose, CA 95128
Inland Surgery Center, 1620 Laurel Avenue, Redlands,
CA 92373
San Luis Obispo Surgery Center, 1304 Ella Street, Suite
C, San Luis Obispo, CA 93401
Sutter Street Surgery Center, 450 Sutter Street, Suite
600, San Francisco, CA 94108
The Surgery Center, 1111 Sonoma Avenue, Santa Rosa,
CA 95405
Colorado
Aurora Surgery Center, 13701 E. Mississippi Avenue,
Suite 200, Aurora, CO 80012
Colorado Springs Surgery Center, 1615 Medical Center
Point, Colorado Springs, CO 80907
Denver West Surgery Center, 13952 Denver West Parkway,
Suite 100, Bldg. 53, Golden CO 80401
Surgery Center of Fort Collins, 1100 E. Prospect Road,
Fort Collins, CO 80525
Pueblo Surgery Center, 25 Montebello Road, Pueblo,
CO 81001
<PAGE> 82
Delaware
Central Delaware Surgery Center, 100 Scull Terrace,
Dover, DE 19901
Florida
Citrus Regional Surgery Center, 110 N. Lecanto, Hwy.,
Lecanto, FL 34461
Coral Springs Surgical Center, 1725 University Drive,
Coral Springs, FL 33065
Emerald Coast Surgery Center, 995 NW Mar Walt Drive,
Fort Walton Beach, FL 32547
Physician's Surgery Center, 4035 Evans Avenue, Fort
Myers, FL 33901
Physicians' Surgical Care Center, 2056 Aloma Avenue,
Suite 200, Winter Park, FL 32792
St. Petersburg Surgery Center, 539 Pasadena Avenue South,
St. Petersburg, FL 33707
Sarasota Surgery Center, 983 Beneva Road, Sarasota,
FL 34232
Tampa Outpatient Surgical Facility, 5013 N. Armenia
Avenue, Tampa, FL 33603
Georgia
Development Stage - Gainesville, GA
Hawaii
Surgicare of Hawaii, 226 N. Kuakini Street, Suite 200
Honolulu, HI 96817
Indiana
Evansville Surgery Center, 1212 Lincoln, Evansville,
IN 47714
North Indianapolis Surgery Center, 8651 Township
Line Road, Indianapolis, IN 46260
Kentucky
Lexington Surgery Center, 1725 Harrodsburg Road,
Lexington, KY 40504
Surgecenter of Louisville, 4005 DuPont Circle,
Louisville, KY 40207
<PAGE> 83
Maryland
Montgomery Surgery Center, 46 W. Gude Drive,
Rockville, MD 20850
Central Maryland Surgery Center, 1500 Joh Avenue,
Baltimore, MD 21227
Massachusetts
Maple Surgery Center, 298 Carew Street, Springfield,
MA 01104
Michigan
Development Stage - Marquette, MI
Missouri
The Surgery Center, 802 North Riverside Road, St.
Joseph, MO 64507
New Jersey
Roseland Surgical Center, 556 Eagle Rock Avenue,
Roseland, NJ 07068
Surgical Center of South Jersey, 130 Gaither Drive,
Suite 160, Mt. Laurel, NJ 08054
New Mexico
Surgery Center of Albuquerque, 1720 Wyoming NE @
Indian School, Albuquerque, NM 87112
North Carolina
Charlotte Surgery Center, 2825 Randolph Road,
Charlotte, NC 28211
Blue Ridge Day Surgery Center, 2308 Wesvill Court,
Raleigh, NC 27607
Surgecenter of Wilson, 209 Richards Street, Wilson,
NC 27893
Oregon
Development Stage - McKenzie, OR
<PAGE> 84
Pennsylvania
Grandview Surgery Center, 205 Grandview Avenue,
Camp Hill, PA 17011
Lancaster Surgery Center, 217 Harrisburg Avenue,
Lancaster, PA 17603
Paoli Surgery Center, 1 Industrial Blvd.,
Paoli, PA 19301
Westmoreland Surgery Center, 200 Bessemer Road,
Mt. Pleasant, PA 15666
Scranton Surgery Center, 425 Adams Avenue,
Scranton, PA 18510
South Carolina
Charleston Surgery Center, 2690 Lake Park Drive,
N. Charleston, SC 29418
Greenville Surgery Center, 5 Memorial Medical Court,
Greenville, SC 29605
Tennessee
Chattanooga Surgery Center, 400 N. Holtzclaw Avenue,
Chattanooga, TN 37404
Knoxville Surgery Center, 9300 Park West Blvd.,
Knoxville, TN 37923
Memphis Surgery Center, 1044 Cresthaven Road,
Memphis, TN 38119
Nashville Surgery Center, 1717 Patterson Street,
Nashville, TN 37203
Surgical Care Affiliates, Inc., 102 Woodmont Blvd.,
Suite 610, Nashville, TN 37205
Texas
Arlington Day Surgery Center, 918 N. Davis Drive,
Arlington, TX 76012
Conroe Surgery Center, 233 I-45 N, Conroe, TX 77304
East El Paso Surgery Center, 7835 Corral Drive,
El Paso, TX 79915
Fort Worth Surgery Center, 2001 W. Rosedale,
Fort Worth, TX 76104
Greenpark Surgery Center, 7515 S. Main, Suite 800
Houston, TX 77030
Greenville Surgery Center, 7150 Greenville, Avenue,
Suite 200, Box 340, Dallas, TX 75231
Plano Surgery Center, 5920 West Park Blvd.,
Plano, TX 75093
San Antonio Surgery Center, 5290 Medical Drive,
San Antonio, TX 78229
<PAGE> 85
West Virginia
Cabell-Huntington Surgery Center, 1201 Hal Greer
Blvd., Huntington, WV 25701
Wisconsin
Eau Claire Surgery Center, 950 W. Clairemont Avenue,
Eau Claire, WI 54701
Oshkosh Surgery Center, 1925 Surgery Center Drive,
Oshkosh, WI 54901
Wausau Surgery Center, 2809 Westhill Drive,
Wausau, WI 54401
Wauwatosa Surgery Center, 10900 W. Potter Road,
Wauwatosa, WI 53226
<PAGE> 86
Schedule 3.25
The Refinanced Indebtedness set forth in Schedule 3.26(b) and intercompany
loans by SCA Investment Company in connection with each of the surgery centers
listed below, which loans have outstanding the approximate principal amounts
shown on the attached worksheet:
ALABAMA
Dothan Surgery Center, Dothan, AL
Florence Surgery Center, Florence, AL
Gadsden Surgery Center, Gadsden, AL
ARIZONA
Yuma Outpatient Surgery Center, Yuma, AZ
ARKANSAS
Center for Day Surgery, Fort Smith, AR
Little Rock Surgery Center, Little Rock, AR
CALIFORNIA
Sutter Street Surgery Center, San Francisco, CA
COLORADO
Aurora Surgery Center, Aurora, CO
Denver West Surgery Center, Golden, CO
Pueblo Surgery Center, Pueblo, CO
Surgery Center of Ft. Collins, Fort Collins, CO
FLORIDA
Citrus Regional Surgery Center, Lecanto, FL
Coral Springs Surgical Center, Coral Springs, FL
Physician's Surgery Center, Fort Myers, FL
Physicians' Surgical Care Center, Winter Park, FL
Sarasota Surgery Center, Sarasota, FL
St. Petersburg Surgery Center, St. Petersburg, FL
INDIANA
Evansville Surgery Center, Evansville, IN
North Indianapolis Surgery Center, Indianapolis, IN
<PAGE> 87
KENTUCKY
Lexington Surgery Center, Lexington, KY
Surgecenter of Louisville, Louisville, KY
MARYLAND
Central Maryland Surgery Center, Baltimore, MD
MASSACHUSETTS
Maple Surgery Center, Springfield, MA
MISSOURI
The Surgery Center, St. Joseph, MO
NEW JERSEY
Roseland Surgical Center, Roseland, NJ
Surgical Center of South Jersey, Mt. Laurel, NJ
NORTH CAROLINA
Blue Ridge Day Surgery Center, Raleigh, NC
Surgecenter of Wilson, Wilson, NC
PENNSYLVANIA
Westmoreland Surgery Center, Mt. Pleasant, PA
Paoli Surgery Center, Paoli, PA
Scranton Surgery Center, Scranton, PA
TENNESSEE
Knoxville Surgery Center, Knoxville, TN
Nashville Surgery Center, Nashville, TN
TEXAS
East El Paso Surgery Center, El Paso, TX
Fort Worth Surgery Center, Fort Worth, TX
Plano Surgery Center, Plano, TX
<PAGE> 88
WEST VIRGINIA
Cabell-Huntington Surgery Center, Huntington, WV
WISCONSIN
Oshkosh Surgery Center, Oshkosh, WI
Wausau Surgery Center, Wausau, WI
Wauwatosa Surgery Center, Wauwatosa, WI
<PAGE> 89
04-May-95 SURGICAL CARE AFFILIATES, INC.
02:59 PM WORKING CAPITAL LOANS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
INTEREST BALANCE PRINCIPAL BALANCE
FACILITY RATE 1-31-95 ADDITIONS PAYMENTS 2-28-95 **** COMMENTS ****
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAPLE 12% 1,040,000 0 (10,000) 1,030,000
WAUWATOSA 12% 110,781 0 0 110,781 INTEREST PAID CURRENTLY
EL PASO 12% 389,559 25,000 (6,000) 408,559
BALTIMORE 12% 1,082,446 0 (11,239) 1,071,207
FT. COLLINS 10% 590,157 0 (15,000) 575,157
NASHVILLE 10% 304,602 0 0 304,602 INTEREST PAID CURRENTLY
GADSDEN PRIME +1 412,645 0 (9,952) 402,693
OSHKOSH 10% 74,728 0 (10,000) 64,728
KNOXVILLE 10% 919,829 0 0 919,829 INTEREST PAID CURRENTLY
MT PLEASANT 10% 683,650 0 0 683,650 INTEREST PAID CURRENTLY
CORAL SPRINGS PRIME +1 1,078,376 0 0 1,078,376 INTEREST PAID CURRENTLY
WINTER PARK 10% 125,000 0 0 125,000 INTEREST PAID CURRENTLY
RALEIGH 10% 200,000 0 0 200,000 INTEREST PAID CURRENTLY
DENVER WEST 10% 440,000 0 0 440,000 INTEREST PAID CURRENTLY
WAUSAU 10% 460,000 50,000 0 510,000 INTEREST PAID CURRENTLY
DOTHAN 10% 141,030 0 (22,862) 118,168
PLANO 10% 847,734 80,000 0 927,734 INTEREST PAID CURRENTLY
NORTH INDY 10% 140,000 0 0 140,000 INTEREST PAID CURRENTLY
INDY - MIDTOWN 185,600 0 0 185,600 TO BE WRITTEN OFF AGAINST RESERVE
PAOLI PRIME +2 1,000,000 0 0 1,000,000 INTEREST PAID CURRENTLY
CITRUS REGIONAL 10% 250,000 0 0 250,000 INTEREST PAID CURRENTLY
SAN FRANCISCO 10% 737,604 0 0 737,604 INTEREST PAID CURRENTLY
FLORENCE 10% 292,000 0 0 292,000 INTEREST PAID CURRENTLY
FT SMITH 10% 1,001,774 0 0 1,001,774 INTEREST PAID CURRENTLY
ST JOSEPH 10% 195,000 0 (45,000) 150,000
------------------------------------------------------
TOTAL OUTSTANDING 12,702,515 155,000 (130,053) 12,727,462
======================================================
</TABLE>
<PAGE> 90
SURGICAL CARE AFFILIATES, INC.
EQUIPMENT & PROPERTIES LOANS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
BALANCE PRINCIPAL BALANCE
CENTER 1-31-95 ADDITIONS PAYMENTS 2-28-95 **** COMMENTS ****
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALTIMORE EQUIPMENT 10% 355,510 0 (5,122) 350,388
SCRANTON EQUIPMENT PRIME +1 1,228,291 0 (20,000) 1,208,291
SOUTH JERSEY EQUIPMENT PRIME +1 240,541 0 (11,647) 228,894
YUMA EQUIPMENT 10% 464,981 0 0 464,981
MT PLEASANT EQUIPMENT 10% 78,000 0 (5,000) 73,000
NASHVILLE EQUIPMENT 10% 641,355 0 0 641,355
PUEBLO EXPANSION 10% 601,340 0 (953) 600,387
AURORA EXPANSION PRIME 352,010 0 (1,344) 350,666
SARASOTA EXPANSION 10% 651,688 0 (25,000) 626,688
EL PASO CONSTRUCTION 12% 20,754 0 (5,000) 15,754
YUMA EXPANSION 10% 1,509,875 0 (20,000) 1,489,875
EVANSVILLE EXPANSION 10% 147,523 0 (24,000) 123,523
FT WORTH EXPANSION 8% 324,201 0 (5,008) 319,193
ST. PETE EXPANSION 10% (79) 178 0 99
DENVER WEST CONSTRUCTION 10% 307,140 0 0 307,140 AMORT TO BE SET UP AND PMTS
FT SMITH EXPANSION 10% 274,529 0 0 274,529 BEGIN WHEN EXPANSION
GADSDEN EXPANSION 10% 333,110 0 0 333,110 COMPLETED
HUNTINGTON EXPANSION PRIME +1 748,219 0 0 748,219 "
CORAL SPRINGS CONSTRUCTION PRIME 388,209 0 0 388,209 "
WINTER PARK CONSTRUCTION 10% 777,546 0 0 777,546 "
ROSELAND EXPANSION 10% 30,864 5,622 0 36,486 "
FLORENCE EXPANSION 10% 300,614 142,120 0 442,734 "
WAUSAU CONSTRUCTION 10% 435,675 0 0 435,675 "
DOTHAN CONSTRUCTION 10% 20,069 0 0 20,069 "
----------------------------------------------------
TOTAL OUTSTANDING 10,231,965 147,920 (123,074) 10,256,811
====================================================
</TABLE>
<PAGE> 91
SURGICAL CARE AFFILIATES, INC.
MORTGAGE LOANS
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
TOTAL
MONTHLY # YRS/ BALANCE PRINCIPAL BALANCE
CENTER PMT RATE 1-31-95 ADDITIONS PAYMENTS 2-28-95
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOUISVILLE 12,990 10/10% 944,338 0 (7,807) 936,531
LEXINGTON SURG PROP 11,391 15/10% 1,090,772 0 0 1,090,772
LEXINGTON EQUIPMENT 2,580 10/10% 151,527 0 0 151,527
FT. MYERS 10,179 15/9.5% 798,469 0 0 798,469
INDY (NORTH) 20,181 6.67/10% 822,457 40,000 (13,327) 849,130
INDY (MIDTOWN) 19,099 10/10% 1,292,409 0 0 1,292,409 TO BE WRITTEN OFF AGAINST RESERVE
SOUTH JERSEY 17,079 10/10% 1,003,078 0 (8,721) 994,357
SCRANTON MORTG 40/P+1% 1,945,379 0 (15,000) 1,930,379
WILSON 10% 681,023 0 (12,000) 669,023
OSHKOSH 10% 1,432,345 0 0 1,432,345
FT SMITH 10% 1,704,970 0 0 1,704,970
MT PLEASANT 10% 731,704 0 0 731,704
LITTLE ROCK PROP 21,606 15/10% 1,551,940 0 (18,363) 1,533,577
ROSELAND MORTGAGE 10% 7,891,788 0 (77,372) 7,814,416
EVANSVILLE MORTGAGE 10% 1,252,151 0 (5,208) 1,246,943
--------------------------------------------------------
TOTAL OUTSTANDING 23,294,350 40,000 (157,798) 23,176,552
========================================================
</TABLE>
<PAGE> 92
Schedule 3.26(b)
Refinanced Indebtedness
Prior Lender: First Union (approximate principal amounts)
-Charlotte, NC ($483,906)
-Wilson, NC ($1,383,333)
-Wilson, NC ($766,667)
-Colorado Springs, CO ($1,971,249)
-Oshkosh, WI ($920,000)
-Oshkosh, WI ($1,512,446)
-El Paso, TX ($862,350)
Prior Lender: First Tennessee (approximate principal amounts)
-Pueblo, CO ($900,000)
-Pueblo, CO ($1,662,625)
-Memphis, TN ($956,312)
-Chattanooga, TN ($737,135)
-Huntington, WV ($339,705)
Prior Lender: NationsBank (approximate principal amounts)
-Aurora, CO ($1,092,500)
-Aurora, CO ($1,075,000)
-Fort Collins, CO ($1,122,375)
-Fort Collins, CO ($1,054.687.50)
-Golden, CO ($1,150,000)
-Golden, CO ($1,411,900)
-Sarasota, FL ($519,999)
-Lancaster, PA ($5,097,941)
-Wauwatosa, WI ($1,048,484)
Prior Lender: First American (approximate principal amounts)
-Greenville, SC ($3,034,468)
-Wausau, WI ($1,189,800)
-Wausau, WI ($2,215,332)
-Surgical Care Affiliates, Inc. ($2,000,000)
<PAGE> 93
Prior Lender: Third National Bank in Nashville
-Surgical Care Affiliates, Inc. ($30,000,000)
-Surgical Care Affiliates, Inc. ($7,076,792)
-Nashville Surgery Center ($1,069,444)
-Nashville Surgery Center ($1,883,267)
-Surgery Center of Albuquerque ($1,549,759)
-Central Delaware Surgery Center ($150,000)
-Central Delware Surgery Center ($1,168,125)
-Inland Surgery Center ($697,126)
-Mobile Surgery Center ($591,657)
-Charleston Surgery Center ($500,694)
-Grandview Surgery Center ($270,788)
-Emerald Coast Surgery Center ($1,425,616)
-Emerald Coast Surgery Center ($1,542,562)
-Coral Springs Surgical Center ($1,317,845)
-Coral Springs Surgical Center ($1,600,000)
-Knoxville Surgery Center ($1,683,814)
-Knoxville Surgery Center ($958,718)
-Physicians' Surgical Care Center (Winter Park)
($1,295,863)
-St. Petersburg Surgery Center ($1,486,199)
-St. Petersburg Surgery Center ($875,000)
<PAGE> 94
Schedule 3.27
Dividend Restrictions
None
<PAGE> 95
Schedule 4.01(e)
Authority to Transact Business
Surgical Care Affiliates, Inc.
Tennessee
SCA Investment Company
[Not qualified in any state]
SCA-Management Company
Alabama
Arizona
Arkansas
California
Colorado
Delaware
Florida
Georgia
Hawaii
Indiana
Kentucky
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
North Carolina
Oregon
Pennsylvania
South Carolina
Texas
West Virginia
Wisconsin
<PAGE> 96
Schedule 6.01(b)
Indebtedness of Consolidated Companies
Loans:
1. Indebtedness owed to Arlington Bank of Commerce with respect to the
Arlington (Texas) surgery center, in the approximate principal amount of
$342,438 as of February 28, 1995.
2. Indebtedness owed to NationsBank of Florida, N.A. with respect to the Tampa
(Florida) surgery center, in the approximate principal amount of $173,820 as of
February 28, 1995.
3. Indebtedness owed to First Interstate Bank with respect to the Eau Claire
(Wisconsin) surgery center, in the approximate principal amount of $347,549 as
of February 28, 1995.
4. Indebtedness owed to Third National Bank in Nashville with respect to the
Rockville (Maryland) surgery center, in the approximate principal amount of
$17,533 as of February 28, 1995.
5. Indebtedness owed to Republic Bank Ridglea with respect to the Fort Worth
(Texas) surgery center, in the approximate principal amount of $390,771 as of
February 28, 1995.
6. Indebtedness to Metlife with respect to the Gadsden (Alabama) surgery
center, in the approximate principal amount of $378,115, as of February 28,
1995.
7. Indebtedness to AmSouth with respect to the Gadsden (Alabama) surgery
center, in the approximate principal amount of $39,625; as of February 28,
1995.
Capital Leases with respect to the following surgery centers:
Center for Day Surgery, Fort Smith, AR
Little Rock Surgery Center, Little Rock, AR
Sarasota Surgery Center, Sarasota, FL
Lexington Surgery Center, Lexington, KY
Surgecenter of Louisville, Louisville, KY
The Surgery Center, St. Joseph, MO
Fort Worth Surgery Center, Fort Worth, TX
Cabell-Huntington Surgery Center, Huntington, WV
Mobile Surgery Center, Mobile, AL
Chattanooga Surgery Center, Chattanooga, TN
Memphis Surgery Center, Memphis, TN
Charlotte Surgery Center, Charlotte, NC
Lancaster Surgery Center, Lancaster, PA
Arlington Day Surgery Center, Arlington, TX
Surgery Center of Albuquerque, Albuquerque, NM
<PAGE> 97
Schedule 6.02
Permitted Liens
1. Liens relating to indebtedness listed on Schedule 6.01(b)
<PAGE> 98
EXHIBIT A TO CREDIT AGREEMENT
BORROWING REQUEST
<TABLE>
<S> <C> <C>
VIA FAX (615) 748-4089 and VIA FAX (615) 748-5161
- ---------------------- --- ----------------------
ATTN: LEIGH ANN GREGORY ATTN: KAREN COLE AHERN
Third National Bank in Nashville, as Agent
401 Fourth Avenue North
P.O. Box 305110
Nashville, Tennessee 37230-5110
</TABLE>
Date: __________________, ______
Re: Credit Agreement dated April 12, 1995 by and among Surgical
Care Affiliates, Inc., SCA-Management Company, SCA Investment
Company, the lenders listed therein and Third National Bank in
Nashville, as agent (as may be amended from time to time, the
"Credit Agreement")
Agent:
Capitalized terms not otherwise defined in this request have the same
meaning as in the Credit Agreement. The individual signing this request
certifies that (i) he or she is an individual authorized by the Borrowers to
submit Borrowing Requests to the Agent pursuant to the Credit Agreement, (ii)
the undersigned hereby irrevocably gives notice of and requests, pursuant to
Section 2.03 of the Credit Agreement, a Borrowing under the Credit Agreement
(the "Proposed Borrowing"), and (iii) the amount of the Proposed Borrowing is
available to the Borrowers pursuant to the Credit Agreement. The information
below relates to the Proposed Borrowing:
1. AMOUNT OF PROPOSED BORROWING: ____________________________________________
2. DATE OF PROPOSED BORROWING: ______________________________________________
3. DESIGNATION OF LOANS:
<TABLE>
<S> <C> <C>
Base Rate Loan - $_______________________ (multiples of $100,000 and not less than $500,000)
LIBOR Loan - $_______________________ (multiples of $1,000,000 and not less than $5,000,000)
</TABLE>
Borrowing Requests must be given one (1) day prior to the Proposed
Borrowing for Base Rate Loans and two (2) days prior to the Proposed Borrowing
for LIBOR Loans. All Borrowing Requests received after 11:00 A.M. shall be
deemed received on the next Business Day.
4. (a) For LIBOR Loans, INTEREST PERIOD (indicate one):
<TABLE>
<S> <C>
[ ] one (1) month period [ ] three (3) month period
[ ] two (2) month period [ ] six (6) month period
</TABLE>
<PAGE> 99
<TABLE>
<S> <C> <C>
(b) CALCULATION OF RATE:
Adjusted LIBOR
-------------------------
plus Applicable LIBOR Margin + 0.50%
-------------------------
TOTAL =
-------------------------
</TABLE>
[S] [C]
(c) EXPIRATION DATE:
---------------------
5. (a) DEPOSIT PROCEEDS OF BORROWING INTO (indicate one):
<TABLE>
<S> <C>
[ ] SCA-Management Company Account No.
-------------------------------------
or
[ ] SCA Investment Company Account No.
-------------------------------------
or
[ ] Surgical Care Affiliates, Inc. Account No.
-----------------------------
OR
</TABLE>
(b) WIRE TRANSFER PROCEEDS OF BORROWING ACCORDING TO THE
FOLLOWING INSTRUCTIONS:
ABA No.
---------------------------------------------------
Account No.
-----------------------------------------------
Name of Bank:
----------------------------------------------
Customer Reference:
----------------------------------------
Other Information:
-----------------------------------------
-----------------------------------------------------------
In connection with the Proposed Borrowing the undersigned represents
on the date hereof and on the date of the Proposed Borrowing (a) there exist no
Default or Event of Default and (b) all representations and warranties by the
Borrowers contained in the Credit Agreement are true and correct in all
material respects except as qualified in Section 4.02(b) of the Credit
Agreement.
Very truly yours,
<TABLE>
<S> <C>
BORROWERS:
SURGICAL CARE AFFILIATES, INC. SCA-MANAGEMENT COMPANY
By: By:
-------------------------------------------- ----------------------------------------
Title: Title:
----------------------------------------- -------------------------------------
</TABLE>
SCA INVESTMENT COMPANY
By:
--------------------------------------------
Title:
-----------------------------------------
<PAGE> 100
EXHIBIT B TO CREDIT AGREEMENT
CONTINUATION/CONVERSION NOTICE
<TABLE>
<S> <C> <C>
VIA FAX (615) 748-4089 and VIA FAX (615) 748-5161
- ---------------------- --- ----------------------
ATTN: LEIGH ANN GREGORY ATTN: KAREN COLE AHERN
Third National Bank in Nashville, as Agent
401 Fourth Avenue North
P.O. Box 305110
Nashville, Tennessee 37230-5110
</TABLE>
Date: ___________________, _________
Re: Credit Agreement dated April 12, 1995 by and among Surgical
Care Affiliates, Inc., SCA-Management Company, SCA Investment
Company, the lenders listed therein and Third National Bank
in Nashville, as agent (as may be amended from time to time,
the "Credit Agreement")
Agent:
Capitalized terms not otherwise defined in this request have the same
meaning as in the Credit Agreement. The individual signing this request
certifies that (i) he or she is an individual authorized by the Borrowers to
submit Continuation/Conversion Notices to the Agent pursuant to the Credit
Agreement and (ii) the undersigned hereby irrevocably gives notice of and
requests, pursuant to Section 2.03 of the Credit Agreement, the continuation or
conversion of a Borrowing under the Credit Agreement (the "Continued/Converted
Borrowing"). The information below relates to the Proposed Borrowing:
6. IDENTIFICATION OF EXISTING LOAN TO BE CONTINUED/CONVERTED:
Amount
<TABLE>
<S> <C> <C>
Base Rate Loan
----------------------------------
LIBOR Loan - expiring
----------------- ----------------------------------
7. DATE OF CONTINUED/CONVERTED BORROWING:
-------------------------------------------------------
8. DESIGNATION OF INTEREST OPTION FOR CONTINUED/CONVERTED
BORROWING:
</TABLE>
<TABLE>
<S> <C> <C>
Base Rate Loan - $ (multiples of $100,000 and not less than $500,000)
----------------------------
LIBOR Loan - $ (multiples of $1,000,000 and not less than $5,000,000)
----------------------------
</TABLE>
Borrowing Requests must be given one (1) day prior to the Proposed
Borrowing for Base Rate Loans and two (2) days prior to the Proposed Borrowing
for LIBOR Loans. All Borrowing Requests received after 11:00 A.M. shall be
deemed received on the next Business Day.
<PAGE> 101
9. (a) INTEREST PERIOD for LIBOR CONTINUED/CONVERTED BORROWING
(indicate one):
[ ] one (1) month period
[ ] two (2) month period
[ ] three (3) month period
[ ] six (6) month period
(b) CALCULATION OF RATE:
<TABLE>
<S> <C>
Adjusted LIBOR
-------------------------
plus Applicable LIBOR Margin + 0.50%
-------------------------
TOTAL =
-------------------------
</TABLE>
(c) EXPIRATION DATE:
-----------------------
In connection with the Continued/Converted Borrowing the undersigned
represents on the date hereof and on the date of the Continued/Converted
Borrowing (a) there exist no Default or Event of Default and (b) all
representations and warranties by the Borrowers contained in the Credit
Agreement are true and correct in all material respects except as qualified in
Section 4.02(b) of the Credit Agreement.
Very truly yours,
<TABLE>
<S> <C>
BORROWERS:
SURGICAL CARE AFFILIATES, INC. SCA-MANAGEMENT COMPANY
By: By:
-------------------------------------------- ----------------------------------------
Title: Title:
----------------------------------------- -------------------------------------
SCA INVESTMENT COMPANY
By:
---------------------------------------------
Title:
------------------------------------------
</TABLE>
<PAGE> 102
EXHIBIT C TO CREDIT AGREEMENT
REVOLVING CREDIT NOTE
Nashville, Tennessee $55,000,000.00
April 12, 1995
FOR VALUE RECEIVED, SURGICAL CARE AFFILIATES, INC., a Delaware
corporation, SCA-MANAGEMENT COMPANY, a Tennessee corporation, and SCA INVESTMENT
COMPANY, a Nevada corporation (the "BORROWERS"), jointly and severally promise
and agree to pay to the order of THIRD NATIONAL BANK IN NASHVILLE, a national
banking association, its successors, assigns or any subsequent holder of this
Note (the "LENDER"), for the account of its applicable Payment Office, in lawful
money of the United States of America in immediately available funds, the
principal amount of up to Fifty-Five Million Dollars ($55,000,000.00), or so
much thereof as may be advanced from time to time, together with interest
thereon and other amounts due as provided below. This Note shall mature on April
12, 2000 (the "MATURITY DATE") at which time Borrowers shall pay an amount equal
to all outstanding principal plus any and all accrued and unpaid interest and
all other amounts due hereunder.
This Note is issued pursuant to, and is one of the Revolving Credit
Notes referred to in, that certain Credit Agreement of even date herewith by and
between Borrowers, Lender, the other lenders set forth on the signature pages
thereof and Third National Bank in Nashville, as Agent (as it may be amended,
restated or modified from time to time, the "CREDIT AGREEMENT"). Any term not
otherwise defined in this Note shall have the same meaning as in the Credit
Agreement. Reference is made to the Credit Agreement, which, among other
things, provides for the acceleration of the maturity hereof upon the occurrence
of certain events in certain circumstances and upon certain terms and
conditions.
Borrowers promise to pay interest on the outstanding principal amount of
each Loan hereunder, at such interest rates, payable at such times, and computed
in such manner, as are specified for such Loan in the Credit Agreement in strict
accordance with the terms thereof. Interest for each year shall be computed
based upon a 360-day year.
As long as no Event of Default has occurred, Borrowers may borrow,
repay, reborrow and repay hereunder until the Maturity Date; provided, however
that at no time shall the principal amount outstanding hereunder exceed
Fifty-Five Million Dollars ($55,000,000.00) (the "MAXIMUM PRINCIPAL AMOUNT"). If
such excess occurs, Borrowers shall immediately pay to Agent for the benefit of
Lender all principal outstanding hereunder in excess of the Maximum Principal
Amount, plus all interest, fees and charges accrued as required by the Credit
Agreement.
All or part of the indebtedness evidenced by this Note may only be
prepaid before the Maturity Date in accordance with the terms set forth in the
Credit Agreement.
Lender and Borrowers intend to conform strictly to applicable usury laws
and other laws that may limit monetary charges, however such charges may be
characterized, as presently in
<PAGE> 103
effect. Accordingly, Borrowers and Lender agree that, notwithstanding anything
to the contrary herein or in any agreement executed in connection with or as
security for this Note, the sum of all consideration that constitutes interest
under applicable law which is contracted for, charged, or received hereunder
shall under no circumstance, including without limitation any circumstance in
which the Note has been accelerated or prepaid, exceed the maximum lawful rate
of interest permitted by applicable law. Any excess interest shall be credited
on this Note or, if this Note shall have been paid in full, refunded to
Borrowers, by the holder hereof.
Borrowers shall pay a late charge equal to five percent (5%) of any
payments of principal and/or interest that are paid after the due date thereof,
to cover the extra expenses involved in handling delinquent payments (the "LATE
CHARGE"); provided that in no event shall the Late Charge result in the payment
of interest in excess of the maximum rate of interest permitted by applicable
law.
All amounts received for payment under this Note shall be applied first
to any unpaid expenses due under this Note or under any other Loan Documents,
then to the unpaid Late Charge, then to the unpaid Default Interest, then to all
other accrued but unpaid interest due under this Note and finally to the
reduction of outstanding principal due under this Note.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent.
Following the occurrence of any Event of Default, whether or not any
notice of such default has been delivered, principal and unpaid interest shall
bear interest (both before and after judgement) at a rate equal to two
percentage points (2%) per annum above the Base Rate (the "DEFAULT INTEREST").
Time is of the essence of this Note. Upon the occurrence of any one or
more of the Events of Default specified in the Credit Agreement (each, an "EVENT
OF DEFAULT"), all amounts then remaining unpaid on this Note shall be, or may be
declared to be, immediately due and payable as provided in the Credit Agreement,
without further notice. Agent may waive any Event of Default before or after the
same has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply an additional or subsequent waiver.
Borrowers and any and all endorsers, guarantors and other parties liable
on this Note, (collectively, the "OBLIGORS") jointly and severally waive
presentment for payment, protest, notice of protest, notice of nonpayment of
this Note, demand and all legal diligence in enforcing collection, and hereby
expressly consent to (i) any and all delays, extensions, renewals or other
modifications of this Note or any waivers of any term hereof, (ii) any release
or discharge of the Obligors, (iii) any release, substitution or exchange of any
security for the payment hereof, (iv) any failure to act on the part of Agent or
Lender, and (vi) any indulgence shown by Agent or Lender from time to time
(without notice or further assent from any of the Obligors) and hereby agree
that no such action, failure to act or failure to exercise any right or remedy
by Agent or Lender shall in any way affect or impair the obligations of any of
the Obligors.
<PAGE> 104
BORROWERS HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVE THEIR
RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE,
ANY DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR ANY RELATIONSHIP
BETWEEN BORROWERS AND LENDER.
In any action to enforce this Note, Borrowers hereby irrevocably and
unconditionally waive any and all rights under the laws of any state to claim or
recover any special, exemplary, punitive, consequential or other damages other
than actual direct damages.
Borrowers shall pay, on demand, all costs and expenses (including court
costs, attorneys' fees and expenses) incurred by Agent and/or Lender in
attempting to enforce or collect this Note, protect or enforce its rights under
this Note or the Credit Agreement or protect or collect on any security for the
payment of this Note.
This Note has been executed and delivered in, and shall be governed by
and construed according to the laws of the State of Tennessee except to the
extent pre-empted by applicable laws of the United States of America. If any
provision of this Note should for any reason be invalid or unenforceable, the
remaining provisions hereof shall remain in full force and effect.
This Note may not be changed, extended or terminated except in writing
signed by Borrowers and Lender. No waiver of any term or provision hereof shall
be valid unless in writing signed by Lender.
EXECUTED this the 12th day of April, 1995.
BORROWERS:
SURGICAL CARE AFFILIATES, INC.,
a Delaware corporation
By: /s/ Tarpley B. Jones
------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
SCA-MANAGEMENT COMPANY, a Tennessee
corporation
By: /s/ Tarpley B. Jones
------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
SCA INVESTMENT COMPANY, a Nevada
corporation
By: /s/ Tarpley B. Jones
------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
<PAGE> 105
EXHIBIT D TO CREDIT AGREEMENT
PROMISSORY NOTE
Nashville, Tennessee $5,000,000.00
April 12, 1995
FOR VALUE RECEIVED, SURGICAL CARE AFFILIATES, INC., a Delaware
corporation, SCA-MANAGEMENT COMPANY, a Tennessee corporation, and SCA INVESTMENT
COMPANY, a Nevada corporation (the "BORROWERS"), jointly and severally promise
and agree to pay to the order of THIRD NATIONAL BANK IN NASHVILLE, a national
banking association, its successors, assigns or any subsequent holder of this
Note (the "LENDER"), for the account of its applicable Payment Office, in lawful
money of the United States of America in immediately available funds, the
principal amount of up to Five Million Dollars ($5,000,000.00), or so much
thereof as may be advanced from time to time, together with interest thereon and
other amounts due as provided below. This Note shall mature on April 12, 2000
(the "MATURITY DATE") at which time Borrowers shall pay an amount equal to all
outstanding principal plus any and all accrued and unpaid interest and all other
amounts due hereunder.
This Note is issued pursuant to, and is the Swing Line Note referred to
in, that certain Credit Agreement of even date herewith by and between
Borrowers, Lender, the other lenders set forth on the signature pages thereof
and Third National Bank in Nashville, as Agent (as it may be amended, restated
or modified from time to time, the "CREDIT AGREEMENT"). Any term not otherwise
defined in this Note shall have the same meaning as in the Credit Agreement.
Reference is made to the Credit Agreement, which, among other things, provides
for the acceleration of the maturity hereof upon the occurrence of certain
events in certain circumstances and upon certain terms and conditions.
Borrowers promise to pay interest on the outstanding principal amount
hereunder, at such interest rates, payable at such times, and computed in such
manner, as are specified for such Loan in the Credit Agreement in strict
accordance with the terms thereof. Interest for each year shall be computed
based upon a 360-day year.
As long as no Event of Default has occurred, Borrowers may borrow,
repay, reborrow and repay hereunder until the Maturity Date; provided, however
that at no time shall the principal amount outstanding hereunder exceed Five
Million Dollars ($5,000,000.00) (the "MAXIMUM PRINCIPAL AMOUNT"). If such
excess occurs, Borrowers shall immediately pay to Agent for the benefit of
Lender all principal outstanding hereunder in excess of the Maximum Principal
Amount, plus all interest, fees and charges accrued as required by the Credit
Agreement.
All or part of the indebtedness evidenced by this Note may only be
prepaid before the Maturity Date in accordance with the terms set forth in the
Credit Agreement.
<PAGE> 106
Lender and Borrowers intend to conform strictly to applicable usury laws
and other laws that may limit monetary charges, however such charges may be
characterized, as presently in effect. Accordingly, Borrowers and Lender agree
that, notwithstanding anything to the contrary herein or in any agreement
executed in connection with or as security for this Note, the sum of all
consideration that constitutes interest under applicable law which is contracted
for, charged, or received hereunder shall under no circumstance, including
without limitation any circumstance in which the Note has been accelerated or
prepaid, exceed the maximum lawful rate of interest permitted by applicable
law. Any excess interest shall be credited on this Note or, if this Note shall
have been paid in full, refunded to Borrowers, by the holder hereof.
Borrowers shall pay a late charge equal to five percent (5%) of any
payments of principal and/or interest that are paid after the due date thereof,
to cover the extra expenses involved in handling delinquent payments (the "LATE
CHARGE"); provided that in no event shall the Late Charge result in the payment
of interest in excess of the maximum rate of interest permitted by applicable
law.
All amounts received for payment under this Note shall be applied first
to any unpaid expenses due under this Note or under any other Loan Documents,
then to the unpaid Late Charge, then to the unpaid Default Interest, then to all
other accrued but unpaid interest due under this Note and finally to the
reduction of outstanding principal due under this Note.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent.
Following the occurrence of any Event of Default, whether or not any
notice of such default has been delivered, principal and unpaid interest shall
bear interest (both before and after judgement) at a rate equal to two
percentage points (2%) per annum above the Base Rate (the "DEFAULT INTEREST").
Time is of the essence of this Note. Upon the occurrence of any one or
more of the Events of Default specified in the Credit Agreement (each, an "EVENT
OF DEFAULT"), all amounts then remaining unpaid on this Note shall be, or may be
declared to be, immediately due and payable as provided in the Credit Agreement,
without further notice. Agent may waive any Event of Default before or after the
same has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply an additional or subsequent waiver.
Borrowers and any and all endorsers, guarantors and other parties liable
on this Note, (collectively, the "OBLIGORS") jointly and severally waive
presentment for payment, protest, notice of protest, notice of nonpayment of
this Note, demand and all legal diligence in enforcing collection, and hereby
expressly consent to (i) any and all delays, extensions, renewals or other
modifications of this Note or any waivers of any term hereof, (ii) any release
or discharge of the Obligors, (iii) any release, substitution or exchange of any
security for the payment hereof, (iv) any failure to act on the part of Agent or
Lender, and (vi) any indulgence shown by Agent or Lender from time to time
(without notice or further assent from any of the Obligors) and
hereby agree that no such action, failure to act or failure to exercise any
right or remedy by Agent or Lender shall in any way affect or impair the
obligations of any of the Obligors.
<PAGE> 107
BORROWERS HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVE THEIR
RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE,
ANY DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR ANY RELATIONSHIP
BETWEEN BORROWERS AND LENDER.
In any action to enforce this Note, Borrowers hereby irrevocably and
unconditionally waive any and all rights under the laws of any state to claim
or recover any special, exemplary, punitive, consequential or other damages
other than actual direct damages.
Borrowers shall pay, on demand, all costs and expenses (including
court costs, attorneys' fees and expenses) incurred by Agent and/or Lender in
attempting to enforce or collect this Note, protect or enforce its rights under
this Note or the Credit Agreement or protect or collect on any security for the
payment of this Note.
This Note has been executed and delivered in, and shall be governed by
and construed according to the laws of the State of Tennessee except to the
extent pre-empted by applicable laws of the United States of America. If any
provision of this Note should for any reason be invalid or unenforceable, the
remaining provisions hereof shall remain in full force and effect.
This Note may not be changed, extended or terminated except in writing
signed by Borrowers and Lender. No waiver of any term or provision hereof shall
be valid unless in writing signed by Lender.
EXECUTED this the 12th day of April, 1995.
BORROWERS:
SURGICAL CARE AFFILIATES, INC.,
a Delaware corporation
By: /s/ Tarpley B. Jones
-------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
SCA-MANAGEMENT COMPANY, a Tennessee
corporation
By: /s/ Tarpley B. Jones
-------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
SCA INVESTMENT COMPANY, a Nevada
corporation
By: /s/ Tarpley B. Jones
-------------------------------------------
Tarpley B. Jones, Secretary and Treasurer
<PAGE> 108
EXHIBIT E TO CREDIT AGREEMENT
April 12, 1995
First American National Bank NationsBank of Tennessee, N.A.
First American Plaza One NationsBank Plaza
Nashville, Tennessee 37237 Nashville, Tennessee 37239
Third National Bank in Nashville Third National Bank in Nashville
as a Lender (as defined below) as Agent (as defined below)
201 Fourth Avenue North 201 Fourth Avenue North
Nashville, Tennessee 37230 Nashville, Tennessee 37230
Re: Surgical Care Affiliates, Inc.
SCA Investment Company
SCA-Management Company
Ladies and Gentlemen:
We have acted as counsel to Surgical Care Affiliates, Inc., a Delaware
corporation ("SCA"), SCA Investment Company, a Nevada corporation
("Investment"), and SCA-Management Company, a Tennessee corporation
("Management"), in connection with the Credit Agreement, dated April 12, 1995
(the "Credit Agreement"), among SCA, Investment, and Management as borrowers
(each a "Borrower" and collectively, the "Borrowers"); First American National
Bank, a national banking association ("First American"), NationsBank of
Tennessee, N.A., a national banking association ("NationsBank"), and Third
National Bank in Nashville, a national banking association as lenders (each a
"Lender" and collectively, the "Lenders"); and Third National Bank in
Nashville, a national banking association as agent for the Lenders (in such
capacity, the "Agent"). Capitalized terms used herein and not otherwise
defined are used as defined in the Credit Agreement.
In our capacity as such counsel we have examined originals, or copies
identified to our satisfaction as being true copies, of the following
documents:
1. the Credit Agreement;
2. the Notes;
3. the Fee Letter;
<PAGE> 109
First American National Bank
NationsBank of Tennessee, N.A.
Third National Bank in Nashville
April 12, 1995
Page 2
4. the Certificate of Incorporation and Bylaws of SCA (the "SCA
Governing Documents");
5. the Articles of Incorporation and Bylaws of Investment (the
"Investment Governing Documents"); and
6. the Charter and Bylaws of Management (the "Management
Governing Documents").
The Credit Agreement, the Notes, and the Fee Letter are collectively
referred to as the "Loan Documents." The SCA Governing Documents, the
Investment Governing Documents, and the Management Governing Documents are
collectively referred to as the "Borrower Governing Documents."
As used in this opinion, the term "Governmental Authorities" shall
mean any executive, legislative, judicial, administrative, or regulatory body
of the State of Tennessee or the United States of America having jurisdiction
over the Borrowers. The term "Applicable Law" means statutes, rules and
regulations of the State of Tennessee and the United States of America that,
in our experience, are normally applicable to transactions of the type
contemplated by the Loan Documents. The term "Applicable Order" means any
order, ruling, decree, judgment, or similar action of a Governmental Authority
known to us or identified to us by the Borrowers as being applicable to the
Borrowers. The abbreviation "TCA" means the Tennessee Code Annotated as in
effect in the State of Tennessee on the date hereof.
In addition to the foregoing, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records, documents
or other instruments as in our judgment are necessary or appropriate to enable
us to render the opinions expressed below. We have obtained and relied upon
such certificates and assurances from public officials as we have deemed
necessary. In all such examinations, we have assumed the genuineness of all
signatures on original and certified documents, and the conformity to original
or certified documents of all documents submitted to us as conformed or
photostatic copies.
We are admitted to the bar in the State of Tennessee. We express no
opinion herein as to any laws other than (i) the laws of State of Tennessee,
(ii) the Delaware General Corporation Law (the "DGCL"), (iii) the Nevada
General Corporation Law (the "NGCL"), and (iv) the federal laws of the United
States of America.
<PAGE> 110
First American National Bank
NationsBank of Tennessee, N.A.
Third National Bank in Nashville
April 12, 1995
Page 3
(iv) the federal laws of the United States of America.
Assumptions
In rendering this opinion we have assumed, without having made any
independent investigation of the facts and without expressing any opinion with
respect to (except, in each case, with respect to matters on which we have
specifically opined below), the following:
(i) that all factual matters, including, without limitation,
representations and warranties contained in the Loan Documents or in
certificates provided to us by or on behalf of the Borrowers
(including the certificate attached as Exhibit 1 hereto), are true and
correct as set forth therein, provided, however, that we have not
assumed any matter to be true or correct that we know to be untrue or
incorrect;
(ii) that with respect to each party to the Loan Documents
other than the Borrowers, each Loan Document constitutes the legally
valid and binding obligation of such other parties, enforceable
against such other parties in accordance with their respective terms;
(iii) that the "loan charges" (as defined in TCA Section
47-14-113) collected pursuant to the Loan Documents will be fair and
reasonable compensation for expenses incurred or services rendered,
and will be directly related to the Loan Documents;
(iv) that the effective rate of interest applicable to
obligations under the Loan Documents is not usurious; and
(v) that any "commitment fees," as defined in TCA Section
47-14-102(4)), will comply with the provisions of TCA Section
47-14-113(b).
Opinions
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth herein, we are of the
opinion that:
<PAGE> 111
First American National Bank
NationsBank of Tennessee, N.A.
Third National Bank in Nashville
April 12, 1995
Page 4
1. SCA is a corporation existing and in good standing under the
DGCL. Investment is a corporation existing and in good standing under the
NGCL. Management is a corporation existing and in good standing under the laws
of the State of Tennessee. SCA, Investment, and Management are qualified as
foreign corporations in each of the jurisdictions set forth on Schedule 4.01(f)
of the Credit Agreement.
2. Each Borrower has the corporate power and authority to execute
and deliver the Loan Documents, and to perform its obligations thereunder.
3. Each Borrower has taken all necessary corporate action to
authorize the execution and delivery of the Loan Documents, and the performance
of its obligations thereunder.
4. The execution, delivery, and performance of the Loan Documents
by each Borrower do not (i) violate any provision of the Borrower Governing
Documents, (ii) violate any provision of Applicable Law, (iii) violate or
contravene any Applicable Order, (iv) to our knowledge, conflict with or
constitute a breach under any agreement, indenture, or other instrument to
which the Borrowers are a party or by which any of them are bound, or (v)
require any consent or approval of any Governmental Authority.
5. Each Borrower has executed and delivered each Loan Document to
which it is a party, and each Loan Document constitutes the valid and binding
obligation of each Borrower, enforceable against such Borrower in accordance
with its terms.
6. To our knowledge, none of the Consolidated Companies is a party to
any litigation, action, or other proceeding required to be described on
Schedule 3.08 of the Credit Agreement that is not so described.
Qualifications
The opinions set forth above are qualified as follows:
a. The opinions expressed in Paragraph 5 are subject to (i) the
effect of all applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and (ii) the effect of general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing and the
<PAGE> 112
First American National Bank
NationsBank of Tennessee, N.A.
Third National Bank in Nashville
April 12, 1995
Page 5
possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
b. We express no opinion regarding the enforceability of (i) Section
2.03(f) of the Credit Agreement, (ii) Section 2.19 of the Credit Agreement to
the extent that such provision purports to grant to any Lender a right of
setoff with respect to obligations of the Borrowers acquired by such Lender
through a participation purchased from other Lenders, or (iii) Section 9.04(d)
of the Credit Agreement to the extent that such provision purports to indemnify
any Indemnitee under circumstances where such indemnity would violate law or
contravene public policy.
c. We express no opinion with respect to the enforceability of any
provision that (i) requires waivers, amendments, or other modifications to be
in writing, (ii) purports to confer subject matter jurisdiction on any court,
and (iii) purports to select courts located in the State of Tennessee as a
venue for litigation, to the extent that venue in Tennessee would be
inconvenient, not in the interest of justice, or otherwise unjust or
inequitable.
d. We express no opinion as to the effect of compliance by the Agent
or any Lender with any laws, rules or regulations applicable to the Loan
Documents or the transactions contemplated thereby because of the status of the
Agent or any Bank as a regulated entity or the nature of any of the Agent's or
any Bank's businesses.
e. Where we render an opinion to our knowledge, we have based such
opinion not upon our own independent verification but solely upon (i) receipt
of certificates executed by the officers of the Borrowers covering such
matters, and (ii) the conscious awareness of any attorney actively involved in
the negotiation and preparation of the Loan Documents or the representation of
the Borrowers with respect to the matters that are the subject of such opinion.
Where we render an opinion "to our knowledge," we have therefore conducted no
independent investigation of such matters.
This opinion is given as of the date hereof, and we disclaim any
obligation to update this opinion letter after the date hereof. This opinion
is rendered only to the addressees above and is solely for their benefit in
connection with the above transactions. This opinion may not be relied upon by
the
<PAGE> 113
First American National Bank
NationsBank of Tennessee, N.A.
Third National Bank in Nashville
April 12, 1995
Page 6
addressees for any other purpose, or quoted to or relied upon by any other
person, firm, corporation, or other entity for any purpose without our prior
written consent.
Very truly yours,
/s/ Waller, Lansden, Dortch and Davis
-------------------------------------
<PAGE> 114
Exhibit 1 to Opinion
SURGICAL CARE AFFILIATES, INC.
SCA INVESTMENT COMPANY
SCA-MANAGEMENT COMPANY
OFFICER'S CERTIFICATE
I, Tarpley B. Jones, being the Senior Vice President and Chief
Financial Officer of Surgical Care Affiliates, Inc., a Delaware corporation
("SCA"), and the Secretary-Treasurer of SCA Investment Company, a Nevada
corporation ("Investment"), and SCA- Management Company, a Tennessee
corporation ("Management"), do hereby certify the following to Waller Lansden
Dortch & Davis ("WLDD") in connection with an opinion of WLDD to be rendered in
connection with the Credit Agreement, dated April 12, 1995 (the "Credit
Agreement"), among SCA, Investment, and Management as borrowers (each a
"Borrower" and collectively, the "Borrowers"); First American National Bank, a
national banking association ("First American"), NationsBank of Tennessee,
N.A., a national banking association ("NationsBank"), and Third National Bank
in Nashville, a national banking association as lenders (each a "Lender" and
collectively, the "Lenders"); and Third National Bank in Nashville, a national
banking association as agent for the Lenders (in such capacity, the "Agent"):
1. The representations and other statements made in the Loan
Documents are true and correct in all respects.
2. No order, ruling, decree, judgment, or similar action of any
executive, legislative, judicial, administrative, or regulatory body of the
State of Tennessee or the United States of America is presently in effect with
respect to any Borrower.
3. The execution, delivery, and performance of the Loan Documents by
the Borrowers do not conflict with, or constitute a breach under, any
agreement, indenture, or other instrument to which any Borrower is a party or
by which any Borrower is bound.
4. None of the Consolidated Companies is a party to any litigation,
action, or other proceeding required to be described on Schedule 3.08 of the
Credit Agreement that is not so described.
IN WITNESS WHEREOF, the undersigned has set his hand this the 12th day
of April, 1995.
/s/ Tarpley B. Jones
--------------------
Tarpley B. Jones
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF SURGICAL CARE FOR THE QUARTER ENDED MARCH 31, 1995, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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<SECURITIES> 294,639
<RECEIVABLES> 36,381,740
<ALLOWANCES> 4,452,372
<INVENTORY> 4,681,043
<CURRENT-ASSETS> 87,699,660
<PP&E> 210,526,159
<DEPRECIATION> 61,550,158
<TOTAL-ASSETS> 351,569,386
<CURRENT-LIABILITIES> 52,858,509
<BONDS> 51,510,548
<COMMON> 9,856,872
0
0
<OTHER-SE> 206,626,001
<TOTAL-LIABILITY-AND-EQUITY> 351,569,386
<SALES> 65,106,351
<TOTAL-REVENUES> 65,106,351
<CGS> 38,507,315
<TOTAL-COSTS> 38,507,315
<OTHER-EXPENSES> 1,561,131
<LOSS-PROVISION> 921,983
<INTEREST-EXPENSE> 1,162,284
<INCOME-PRETAX> 17,330,779
<INCOME-TAX> 6,932,312
<INCOME-CONTINUING> 10,398,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,398,467
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
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