UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 1997
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
----- -----
******************************
Commission File Number 0-26806
SHERIDAN HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3252967
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
4651 Sheridan Street, Suite 400, Hollywood, Florida 33021
(Address of principal executive offices, including zip code)
954/987-5822
(Registrant's telephone number, including area code)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of outstanding shares of the issuer's classes of common
stock as of the latest practicable date.
As of May 1, 1997, there were 6,417,998 shares of the Registrant's voting Common
Stock, $.01 par value, outstanding and 296,638 shares of the Registrant's
non-voting Class A Common Stock, $.01 par value, outstanding.
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
<TABLE>
SHERIDAN HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................................... $ --- $ ---
Accounts receivable, net of allowances........................................ 20,787 18,717
Income tax refunds receivable................................................. --- 570
Deferred income taxes......................................................... 1,361 1,154
Other current assets.......................................................... 1,810 1,845
------------- -------------
Total current assets........................................................ 23,958 22,286
Property and equipment, net of accumulated depreciation.......................... 3,778 3,730
Goodwill, net of accumulated amortization........................................ 48,642 46,111
Intangible assets, net of accumulated amortization............................... 1,738 1,281
------------- -------------
Total assets.............................................................. $ 78,116 $ 73,408
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................................. $ 306 $ 222
Amounts due for acquisitions.................................................. 559 558
Accrued salaries and benefits................................................. 1,824 2,798
Self-insurance accruals....................................................... 3,270 3,170
Refunds payable............................................................... 2,318 1,952
Accrued lease obligations..................................................... 778 971
Other accrued expenses........................................................ 2,613 3,090
Current portion of long-term debt............................................. 425 1,189
------------- -------------
Total current liabilities................................................... 12,093 13,950
Long-term debt................................................................... 26,880 21,367
Amounts due for acquisitions..................................................... 1,997 2,133
Stockholders' equity:
Preferred stock, par value $.01; 5,000 shares authorized, none issued......... --- ---
Common stock, par value $.01; 21,000 shares authorized:
Voting; 6,418 shares issued and outstanding................................. 64 64
Class A non-voting; 297 shares issued and outstanding...................... 3 3
Additional paid-in capital.................................................... 61,129 61,129
Excess purchase price distributed to management stockholders.................. (7,541) (7,541)
Retained earnings (deficit)................................................... (16,509) (17,697)
------------- -------------
Total stockholders' equity ................................................. 37,146 35,958
------------- -------------
Total liabilities and stockholders' equity................................ $ 78,116 $ 73,408
============= =============
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
SHERIDAN HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
------------- -------------
<S> <C> <C>
Net revenue...................................................................... $ 22,905 $ 19,854
Operating expenses:
Direct facility expenses...................................................... 15,999 14,446
Provision for bad debts....................................................... 925 675
Salaries and benefits......................................................... 1,830 1,550
General and administrative.................................................... 1,120 1,016
Amortization.................................................................. 437 551
Depreciation.................................................................. 143 210
------------- -------------
Total operating expenses.................................................... 20,454 18,448
------------- -------------
Operating income................................................................. 2,451 1,406
Interest expense................................................................. 601 553
------------- -------------
Income before income taxes....................................................... 1,850 853
Income tax expense............................................................... 662 ---
------------- -------------
Net income....................................................................... $ 1,188 853
============= =============
Net income per share............................................................. $ .17 $ .14
Weighted average shares of common stock and
common stock equivalents outstanding.......................................... 6,897 6,277
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
SHERIDAN HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................... $ 1,188 $ 853
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization................................................................ 437 551
Depreciation................................................................ 143 210
Provision for bad debts..................................................... 925 675
Deferred income taxes....................................................... (207) ---
Changes in operating assets and liabilities:
Accounts receivable......................................................... (2,727) (1,895)
Other current assets........................................................ 605 (371)
Other assets................................................................ (519) (42)
Accounts payable............................................................ 84 107
Other accrued expenses...................................................... (1,178) 97
------------- ------------
Net cash provided (used) by operating activities.......................... (1,249) 185
Cash flows from investing activities:
Acquisitions of physician practices........................................... (135) (10,119)
Investment in management agreement............................................ (3,203) ---
Capital expenditures.......................................................... (162) (563)
------------- ------------
Net cash provided (used) by investing activities.......................... (3,500) (10,682)
Cash flows from financing activities:
Borrowings on long-term debt.................................................. 5,618 12,032
Payments on long-term debt.................................................... (869) (871)
------------- ------------
Net cash provided by financing activities................................. 4,749 11,161
------------- ------------
Increase in cash and cash equivalents............................................ --- 664
Cash and cash equivalents:
Beginning of period........................................................... --- ---
------------- ------------
End of period................................................................. $ --- $ 664
============= ============
</TABLE>
See accompanying notes.
4
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
(1) BASIS OF PRESENTATION
---------------------
The interim consolidated financial statements have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
(SEC). 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 SEC rules and regulations;
nevertheless, management believes that the disclosures herein are adequate to
make the information presented not misleading. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the consolidated financial position of the Company at March 31,
1997, and the consolidated results of its operations and its consolidated cash
flows for the periods shown in the interim consolidated financial statements,
have been included herein. The results of operations for the interim periods are
not necessarily indicative of the results for the full years.
(2) GOODWILL
--------
Approximately $29.2 million of the total amount of goodwill, net of
accumulated amortization, at March 31, 1997 is related to the Company's
acquisition of Sheridan Healthcorp, Inc. (the "Predecessor") in November 1994.
Such goodwill represents the Company's market position and reputation, its
relationships with its customers and affiliated physicians, the relationships
between its affiliated physicians and their patients, and other similar
intangible assets.
The remaining $19.4 million of the total amount of goodwill at March 31, 1997 is
related to several acquisitions of physician practices which were completed from
September 1994 to March 1997, some of which are included in the acquisitions
discussed in Note 5 below. Such goodwill represents the general reputation of
the practices in the communities they serve, the collective experience of the
management and other employees of the practices in managing health care services
delivered under capitated arrangements, contracts with health maintenance
organizations, relationships between the physicians and their patients, patient
lists, and other similar intangible assets.
(3) INTANGIBLE ASSETS
-----------------
Intangible assets consist primarily of the physician employee workforce,
non-physician employee workforce, management team and computer software acquired
in the Company's acquisition of the Predecessor, non-compete covenants related
to certain acquisitions of physician practices, deferred loan costs, and
deferred acquisition costs. These intangible assets are being amortized over the
lives of the underlying assets or agreements, which range from three to seven
years.
(4) AMOUNTS DUE FOR ACQUISITIONS
----------------------------
Amounts due for acquisitions includes obligations to the former stockholders of
certain office-based physician practices acquired by the Company, which are
being paid over the terms of the employment agreements between the Company and
the former stockholders, which range from three to five years. It also includes
termination benefits payable to the former stockholders of an acquired practice,
which are payable beginning in 2001 or upon termination of their employment by
the Company, whichever is later.
5
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(5) ACQUISITIONS AND DIVESTITURES
-----------------------------
During the period from January to October 1996, the Company made six
acquisitions of physician practices for an aggregate of $12.4 million in cash
and deferred payments and approximately 658,000 shares of the Company's common
stock. The Company also entered into a long-term management agreement with a
physician practice in March 1997, in connection with which it acquired certain
assets from the practice for $3.2 million in cash. This transaction is referred
to as an acquisition in Note 2 and the remainder of this Note 5, and is included
in the pro forma consolidated results of operations below. These acquisitions
were accounted for as purchases, and accordingly, the operations of each of the
acquired practices are included in the Company's consolidated financial
statements beginning on each respective date of acquisition. The purchase price
of each acquisition was allocated to the net assets acquired based on their
estimated fair market values.
The following table summarizes the pro forma consolidated results of operations
of the Company as though all of the acquisitions of physician practices
discussed above had occurred at the beginning of the period presented. The pro
forma consolidated results of operations shown below do not necessarily
represent what the consolidated results of operations of the Company would have
been if these acquisitions had actually occurred at the beginning of the period
presented, nor do they represent a forecast of the consolidated results of
operations of the Company for any future period.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
(in thousands, except
per share data)
<S> <C> <C>
PRO FORMA RESULTS OF OPERATIONS:
Net revenue............................................................ $ 23,274 $ 23,864
Income before income taxes............................................. 1,881 1,075
Net income............................................................. 1,202 1,075
Net income per share................................................... $ .17 $ .16
</TABLE>
In December 1996 and February 1997, the Company sold two primary care practices
which generated an aggregate of $4.4 million of net revenue during the year
ended December 31, 1996.
(6) LONG-TERM DEBT
--------------
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Revolving credit facility, maturing in March 2000,
secured by substantially all assets of the Company.................... $ 25,600 $ ---
Revolving credit facility, maturing in February 1997,
secured by substantially all assets of the Company.................... --- 19,982
Capital lease obligations payable in various monthly
installments, maturing at various dates through 2001.................. 1,705 1,809
Note payable, maturing in January 1997.................................. --- 765
----------- -----------
Total................................................................ 27,305 22,556
Less current portion.................................................... (425) (1,189)
----------- -----------
Long-term debt...................................................... $ 26,880 $ 21,367
=========== ===========
</TABLE>
6
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
On March 12, 1997, the Company established a new $35 million revolving credit
facility, which was used to pay the outstanding balance under the previous
credit facility. There are no principal payments due under the new credit
facility until the maturity date of March 11, 2000. The new revolving credit
facility contains various restrictive covenants that include, among other
requirements, the maintenance of certain financial ratios, various restrictions
regarding acquisitions, sales of assets, liens and dividends, and limitations
regarding investments, additional indebtedness and guarantees. The Company was
in compliance with the loan covenants in the new credit facility as of March 31,
1997. The additional amount that could be borrowed under the credit facility is
potentially restricted by a leverage ratio defined in the credit agreement.
Based on the value of this leverage ratio at March 31, 1997, the Company had the
ability to borrow the entire unused portion of the credit facility, which was
$9.4 million at March 31, 1997.
(7) INCOME TAXES
------------
The Company's income tax expense was reduced by a loss carryforward from the
prior year for both the three months ended March 31, 1997 and the three months
ended March 31, 1996. Without the loss carryforward, income tax expense for the
three months ended March 31, 1997 and 1996 would have been approximately
$870,000 and $450,000. The Company had an unused loss carryforward of
approximately $1.6 million for book purposes as of March 31, 1997. The tax
effect of this loss carryforward is being allocated evenly among all four
quarters in the year ending December 31, 1997. The Company had net deferred tax
assets at March 31, 1997, which represent the tax effect of differences between
the tax basis and the financial reporting basis of assets and liabilities on the
Company's balance sheet.
(8) LITIGATION
----------
In October 1996, the Company and certain of its directors, officers and legal
advisors were named as defendants in a lawsuit filed in the Circuit Court of the
Seventeenth Judicial Circuit in and for Broward County, Florida by certain
former physician stockholders of the Predecessor, which was formerly named
Southeastern Anesthesia Management Associates, Inc. The claim alleges that the
defendants engaged in a conspiracy of fraud and deception for personal gain in
connection with inducing the plaintiffs to sell their stock in the Predecessor
to the Company, as well as legal malpractice and violations of Florida
securities laws. The claim seeks damages of at least $10 million and the
imposition of a constructive trust and disgorgement of stock and options held by
certain members of the Company's management. The Company believes the lawsuit is
without merit and intends to continue to vigorously defend against it.
(9) NET INCOME PER SHARE
--------------------
Net income per share reflected in the accompanying consolidated statement of
operations represents both primary earnings per share and fully diluted earnings
per share, which are substantially the same for the Company. In February 1997,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"), which is
effective for fiscal years ending after December 15, 1997. SFAS 128 simplifies
the calculation of earnings per share and provides for the reporting of basic
earnings per share and diluted earnings per share. Application of SFAS 128 to
the accompanying consolidated financial statements would not have a material
impact on the Company's earnings per share.
7
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(10) STOCK OPTIONS
-------------
The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," ("SFAS 123") in 1996. The Company has
elected to continue using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for employee stock
options. Each stock option has an exercise price equal to the market price on
the date of grant and, accordingly, no compensation expense has been recorded
for any stock option grants.
Stock option activity during the three months ended March 31, 1997 was as
follows:
<TABLE>
<CAPTION>
Weighted
Average
Number Exercise
of Shares Price
--------- --------
<S> <C> <C>
Balance, December 31, 1996................................................. 553,911 $ 5.73
Granted during period...................................................... 196,019 9.00
---------
Balance, March 31, 1997.................................................... 749,930 $ 6.58
=========
</TABLE>
The following table summarizes the pro forma consolidated results of operations
of the Company as though the fair value based accounting method in SFAS 123 had
been used in accounting for stock options.
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1997
--------------
(in thousands,
except per
share data)
<S> <C>
Pro forma results of operations:
Net income.............................................................................. $ 988
Net income per share.................................................................... .14
</TABLE>
(11) SUBSEQUENT EVENTS
-----------------
In April 1997, the Company sold two rheumatology physician practices for an
aggregate sale price of $3.3 million in cash. These two rheumatology practices
generated approximately $4.0 million of net revenue during the year ended
December 31, 1996. Also in April 1997, the Company entered into a long-term
management agreement with a three-physician obstetrical practice, in connection
with which it acquired certain assets from the practice for $2.5 million in cash
and deferred payments. This practice generated approximately $3.2 million of net
revenue in 1996.
In May 1997, the Company decreased the amount of its authorized common stock
from 31,000,000 shares to 21,000,000 shares, which is retroactively reflected in
the accompanying consolidated balance sheet.
8
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
This Form 10-Q contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements. Certain factors that might
cause such a difference include the following: fluctuations in the volume of
services delivered by the Company's affiliated physicians, changes in the
reimbursement rates for those services, uncertainty about the ability to collect
the appropriate fees for those services, fluctuations in the cost and
utilization rates of referral services used by patients that are subject to
shared-risk capitation arrangements, the loss of significant hospital or
third-party payor relationships, and changes in the number of patients using the
Company's physician services.
GENERAL
The Company is a physician practice management company which provides specialist
physician services at hospitals and ambulatory surgical facilities in the areas
of anesthesia, neonatology, pediatrics, emergency services and obstetrics, and
which owns and operates, or manages, office-based primary care and obstetrical
practices. The Company derives substantially all of its revenue from the medical
services provided by the physicians who are employed by the Company or whose
practices are managed by the Company. The Company increased the number of
physicians affiliated with it from approximately 145 at December 31, 1995 to
approximately 210 at March 31, 1997 through several acquisitions of physician
practices and the addition of several new contracts for specialist physician
services. The Company made several acquisitions of physician practices during
the period from January 1, 1996 to March 31, 1997, as described in Note 5 to the
accompanying consolidated financial statements. These acquisitions were
accounted for as purchases and accordingly, the operations of each of the
acquired practices are included in the Company's consolidated financial
statements beginning on each respective date of acquisition. The Company also
sold certain physician practices during the period from December 1996 to April
1997, as described in Notes 5 and 10 to the accompanying consolidated financial
statements.
RESULTS OF OPERATIONS
The following table shows certain statement of operations data expressed as
percentage of net revenue:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
-------- --------
<S> <C> <C>
Net revenue............................................................... 100.0% 100.0%
Operating expenses:
Direct facility expenses.............................................. 69.9 72.8
Provision for bad debts............................................... 4.0 3.4
Salaries and benefits................................................. 8.0 7.8
General and administrative............................................ 4.9 5.1
Amortization.......................................................... 1.9 2.8
Depreciation.......................................................... 0.6 1.0
--------- --------
Total operating expenses........................................... 89.3 92.9
--------- --------
Operating income.......................................................... 10.7% 7.1%
========= ========
</TABLE>
9
<PAGE>
Three Months Ended March 31, 1997 Compared To Three Months Ended March 31, 1996
Net revenue increased $3.0 million, or 15.4%, from $19.9 million in 1996 to
$22.9 million in 1997. Net revenue from hospital-based services increased by
$4.1 million, from $12.6 million in 1996 to $16.7 million in 1997. Of this
increase, $2.1 million was due to the acquisition of a hospital-based
neonatology and pediatric practice in March 1996, which is included in the
acquisitions discussed in Note 5 to the accompanying consolidated financial
statements. The remaining $2.0 million increase was primarily due to the
addition of several new contracts for hospital-based services, including new
neonatology contracts awarded to the Company since the neonatology acquisition
in March 1996. Net revenue from office-based practices decreased $1.0 million,
from $7.2 million in 1996 to $6.2 million in 1997, primarily due to the sale of
one of the Company's primary care practices in December 1996.
Direct facility expenses increased $1.6 million, or 10.8%, from $14.4 million in
1996 to $16.0 million in 1997. Direct facility expenses include all operating
expenses that are incurred at the location of the physician practice, including
salaries, employee benefits, referral claims (in the case of shared-risk
capitation business), office expenses, medical supplies, insurance and other
expenses. The increase in direct facility expenses was primarily due to the
acquisition of a hospital-based neonatology practice in March 1996 and the
addition of several new contracts for hospital-based services, which were
partially offset by the sale of a primary care practice in December 1996. Direct
facility expenses as a percentage of net revenue ("direct facility expense
percentage") decreased from 72.8% in 1996 to 69.9% in 1997. This decrease was
primarily due to an increase in the percentage of the Company's total net
revenue that is derived from hospital-based services, from 63.6% in 1996 to
73.0% in 1997. The Company's hospital-based operations have historically had a
lower direct facility expense percentage than its office-based operations.
The provision for bad debts increased $250,000, or 37.0%, from $675,000 in 1996
to $925,000 in 1997. This increase was primarily due to a 15.4% increase in net
revenue, as discussed above. As a percentage of net revenue, the provision for
bad debts increased from 3.4% in 1996 to 4.0% in 1997 primarily due to an
increase in the percentage of total net revenue that is comprised of
hospital-based revenue, which has higher bad debt expense as a percentage of net
revenue than office-based revenue.
Salaries and benefits increased $280,000, or 18.1%, from $1.5 million in 1996 to
$1.8 million in 1997. Salaries and benefits includes salaries, payroll taxes and
employee benefits related to employees located at the Company's central office,
including employees related to hospital-based operations, office-based
operations, and general corporate functions. The increase in salaries and
benefits was primarily due to the acquisition of a hospital-based neonatology
practice in March 1996, as discussed above. As a percentage of net revenue,
salaries and benefits increased slightly, from 7.8% in 1996 to 8.0% in 1997,
because the acquired neonatology practice has higher salaries and benefits as a
percentage of net revenue than the other operations of the Company.
General and administrative expense increased $104,000, or 10.2%, from $1.0
million in 1996 to $1.1 million in 1997. General and administrative expense
includes expenses incurred at the Company's central office, including office
expenses, accounting and legal fees, insurance, travel and other similar
expenses. The increase in general and administrative expense was primarily due
to the acquisition of a hospital-based neonatology practice in March 1996, as
discussed above. As a percentage of net revenue, general and administrative
expense decreased slightly from 5.1% in 1996 to 4.9% in 1997, primarily due to a
15.4% increase in net revenue, as discussed above.
Amortization expense decreased $114,000, or 20.7%, from $551,000 in 1996 to
$437,000 in 1997. This decrease was primarily due to a decrease in amortization
expense related to goodwill and intangible assets that were written down to
their estimated realizable values during the fourth quarter of 1996, which was
partially offset by amortization of the goodwill related to several acquisitions
of physician practices from March 1996 to March 1997, which are included in the
acquisitions discussed in Note 5 to the accompanying consolidated financial
statements.
10
<PAGE>
Operating income increased $1.1 million, or 74.3%, from $1.4 million in 1996 to
$2.5 million in 1997. This increase was primarily due to a 15.4% increase in net
revenue and a decrease in the direct facility expense percentage from 72.8% in
1996 to 69.9% in 1997, which was primarily due to a favorable shift in the
Company's mix of hospital-based and office-based operations, as discussed above.
Interest expense increased $48,000, from $553,000 in 1996 to $601,000 in 1997.
This increase was primarily due to additional debt incurred during the period
from January 1996 to March 1997 to finance acquisitions of physician practices,
which was partially offset by a decrease in the interest rate on the Company's
revolving credit facility, and payments on the Company's debt using cash flows
from operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of cash during the three months ended March 31,
1997 were to finance acquisitions of physician practices ($3.3 million), to
finance increases in accounts receivable ($1.8 million), and to reduce accrued
salaries and benefits ($1.0 million). The Company met its cash needs during this
period primarily through borrowings under its revolving credit facility ($5.6
million) and its net income plus non-cash expenses (amortization, depreciation
and deferred income taxes) ($1.6 million).
On March 12, 1997, the Company established a new $35 million revolving credit
facility with NationsBank, National Association (South) ("NationsBank"). The new
credit facility matures on March 11, 2000 and bears interest at the London
interbank offered rate plus an applicable margin which is subject to quarterly
adjustment based on a leverage ratio defined in the credit agreement. As of May
1, 1997, the applicable margin was 1.63%. The Company was in compliance with the
loan covenants in the new credit facility as of March 31, 1997. There are no
principal payments due under the credit facility until the maturity date of
March 11, 2000.
The outstanding balance under the credit facility increased from $20.0 million
at December 31, 1996 to $25.6 million at March 31, 1997 primarily due to the
acquisition of an office-based obstetrical practice in March 1997, an increase
in accounts receivable, as discussed above, and deferred financing costs related
to the new credit facility. The amount that can be borrowed under the new credit
facility is potentially restricted by a leverage ratio defined in the credit
agreement. Based on the value of this leverage ratio at March 31, 1997, the
Company had the ability to borrow the entire unused portion of the credit
facility, which was $9.4 million at March 31, 1997. Certain conditions must be
met, including the maintenance of certain financial ratios, and in certain
circumstances, the approval of NationsBank must be obtained, in order to use the
credit facility to finance acquisitions of physician practices. There can be no
assurance that the Company will be able to satisfy such conditions in order to
use its credit facility to finance any future acquisitions.
In March 1996, the Company issued approximately 658,000 shares of its common
stock as partial consideration for an acquisition of a hospital-based
neonatology practice completed in March 1996, which is included in the
acquisitions discussed in Note 5 to the accompanying consolidated financial
statements.
In order to provide funds necessary for the Company's future expansion
strategies, it will be necessary for the Company to incur, from time to time,
additional long-term bank indebtedness and/or issue equity or debt securities,
depending on market and other conditions. There can be no assurance that such
additional financing will be available on terms acceptable to the Company.
Net cash provided by operating activities was $185,000 in 1996 compared to $1.2
million of net cash used by operating activities in 1997. This decrease of $1.4
million was primarily due to a reduction in accrued salaries and benefits of
$1.0 million in 1997, compared to no significant change in accrued salaries and
benefits in 1996. The reduction in accrued salaries and benefits in 1997 was
primarily due to a change in the relationship between the end of the quarter and
the Company's two-week payroll cycle from December 31, 1996 to March 31, 1997.
Net cash used by investing activities decreased from $10.7 million in 1996 to
$3.5 million in 1997. This decrease was primarily due to a decrease in cash used
for physician practice acquisitions from $10.1 million in 1996 to $3.3 million
in 1997.
11
<PAGE>
Net cash provided by financing activities decreased from $11.2 million in 1996
to $4.7 million in 1997. This decrease was primarily due to a decrease in
borrowings under the Company's revolving credit facility from $12.0 million in
1996 to $5.6 million in 1997, which is related to the decrease in cash used for
physician practice acquisitions, as discussed above.
12
<PAGE>
Part II. OTHER INFORMATION
-----------------
Item 1: Legal Proceedings
From time to time, the Company is party to various other claims,
suits, and complaints. Currently, there are no such claims,
suits or complaints which, in the opinion of management, would
have a material adverse effect on the Company's financial
position, liquidity or results of operations.
Item 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit
Number Description
- ------ -----------
10.1 Anesthesiology Agreement, by and between South Broward Hospital District, a
Florida special taxing district doing business as Memorial Healthcare
System, and Sheridan Healthcorp, Inc., a Florida corporation, effective as
of January 1, 1997.
10.2 Real Property Lease Agreement, by and among ACP Venture I Limited
Partnership, a Delaware limited partnership, and Sheridan Healthcorp, Inc.,
a Florida corporation, dated as of January 11, 1997.
10.3 Amended and Restated Credit Agreement, by and among NationsBank, National
Association (South), a national banking association, as Agent and Lender,
and Sheridan Healthcare, Inc., as Borrower, dated as of March 12, 1997.
10.4 Sheridan Healthcare, Inc. Second Amended and Restated 1995 Stock Option
Plan, effective as of April 27, 1995, amended and restated as of July 27,
1995 and further amended as of February 26, 1997.
11.1 Statement regarding computation of per share earnings.
27 Financial Data Schedule (for SEC use only).
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
13
<PAGE>
SIGNATURES
----------
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.
SHERIDAN HEALTHCARE, INC.
(Registrant)
Date: May 15, 1997 By: /s/ Michael F. Schundler
---------------------------- ------------------------
Michael F. Schundler
Chief Financial Officer
(principal financial officer)
14
<PAGE>
ANESTHESIOLOGY AGREEMENT
(RE: MEDICAL ADMINISTRATIVE AND PROFESSIONAL SERVICES)
THIS AGREEMENT, effective as of the first day of January, 1997, at
12:01 a.m., by and between SOUTH BROWARD HOSPITAL DISTRICT, a Florida special
taxing district (hereinafter referred to as "Hospital District"), and Sheridan
Healthcorp, Inc., a Florida Corporation (hereinafter referred to as "Sheridan").
R E C I T A L S:
The following recitals serve as a preamble to show the facts and
circumstances which have induced the parties to enter into this Agreement are
stated and set forth as follows:
(1) The powers and duties of South Broward Hospital District are
derived from the general laws of the state of Florida and from Ch. 24415, Laws
of Fla.(1947), as amended. Ch.24415, Laws of Fla. (1947), as amended, represents
the "Charter" of the Hospital District.
(2) Under the provisions of Ch. 165.031, Fla. Stat., the Hospital
District is also deemed to be a unit of local government.
(3) Under its Charter, the Hospital District has the power, among
others, to establish, construct, acquire, operate and maintain hospitals or
facilities for limited or extended care and treatment and any facilities which
are necessary and incidental to the operation thereof.
(4) Since 1953, the main hospital facility owned and operated by the
Hospital District has been Memorial Regional Hospital, a licensed 680 bed public
hospital facility located at 3501 Johnson Street, Hollywood, Florida. However,
the Hospital District does own and operate other health care facilities of a
lesser size at various locations within the jurisdictional limits of the
Hospital District. Further, the Hospital District owns and operates a 100 bed
public hospital known as Memorial Hospital West, in Pembroke Pines, Florida.
Hospital District operates, pursuant to a lease agreement, a 301 bed public
Hospital, known as Memorial Hospital Pembroke, also located in Pembroke Pines,
Florida. The term "The Hospital" as used herein means Memorial Regional
Hospital, Memorial Hospital West, Memorial Hospital Pembroke, collectively and
individually.
<PAGE>
(5) Hospital District conducts its operations in accord with certain
rules, procedures, standard practices, and policies, which include, without
limitation, the charter, bylaws, standard practice rules and regulations of the
Hospital District, the bylaws and rules and regulations of the Hospital
District's medical staffs, the rules and regulations of the operational
departments of Hospital District, and other policies, practices and procedures
of the Hospital District, all as adopted and approved in the routine course of
the business of the Hospital District. Such rules, procedures, standard
practices and policies are hereinafter referred to as "Hospital District
Policies."
(6) Generally, Hospital District acts with respect to all matters
hereunder through its Chief Executive Officer, who is the executive exercising
overall authority with respect to the day-to-day operation and management of the
Hospital District. This authority may be delegated to the persons holding the
title of "Administrator" of each of the various hospitals of Hospital District,
or their designees.
(7) The name Memorial Regional Hospital is used as a fictitious name.
The names Memorial Regional Hospital, Memorial Hospital West, and Memorial
Hospital Pembroke have been registered by the Hospital District under the
provisions of the Fictitious Name Statute (Ch. 865.09, Fla. Stat.) with the
Division of Corporations of the Department of State, of the State of Florida.
South Broward Hospital District is the sole entity which has any interest in
operating the hospital enterprises known as Memorial Regional Hospital, Memorial
Hospital West, and Memorial Hospital Pembroke.
(8) Specifically, Hospital District requires the providing of
"Anesthesiologist Services," which term means physician services, as defined by
State law and Hospital District Policies (including, without limitation, Medical
Staff By-laws) relating to the administration of anesthesia, including, without
limitation:
(i) conducting a pre-anesthesiology evaluation, including,
without limitation, interviewing of patients, reviewing histories and making
appropriate physical examinations to determine the method of administering
anesthesia.
2
<PAGE>
(ii) providing anesthesia "standby" services to patients
and/or performing and/or directing administration of general, regional,
epidural, local, or nerve block anesthesia to patients, including, without
limitation, supervision and/or providing instructions to Non-Physician Personnel
or other assistants for the following types of surgery and/or procedures,
including, without limitation: Ear, Nose and Throat; Head and Neck, Vascular,
Open Heart, Thoracic, General Surgery, Orthopedic, Genito-Urinary,
Gynecological, Obstetrical, Neuroanesthesia, Eye Surgery, Oral Surgery, Plastic
Surgery, Pediatric, Electroconvulsive Therapy, Nerve blocks for Diagnosis or
Procedures for Control of Pain.
(iii) providing post anesthesia care, including, without
limitation, performing cardiopulmonary resuscitation of patients undergoing
surgery, or under anesthesia in emergency situations.
(iv) providing post operative pain relief.
(v) initiation, administration, supervision, and follow up
of patient controlled analgesia (P.C.A); and,
(vi) providing anesthesia management for delivery of out-
patient pain services.
It is understood and agreed that the specific Anesthesiologist Services
itemized in this section may be subject to change, during the term, based on the
changes in the standard of care governing the practice of Anesthesiology, and
based on changes within the scope of medical practice by Anesthesiologists. Any
such change shall be subject to the approval of Hospital District.
(9) The physicians providing the above referenced Anesthesiologist
Services pursuant to this Agreement are hereinafter referred to as
"Anesthesiologists." For purposes of this Agreement, the term "Anesthesiologist"
means a physician employed or otherwise retained by Sheridan to furnish
Anesthesiologist Services to patients; and to furnish other services to the
Hospital District pursuant to this Agreement, each of whom must, as a continuing
precedent of Hospital District's obligations hereunder:
3
<PAGE>
(i) hold a valid and unlimited license to practice medicine
in the State;
(ii) be either board eligible or board certified in a
recognized branch of Anesthesiology;
(iii) obtain and maintain appropriate membership in Hospital
District's Medical Staffs, with appropriate privileges necessary to provide
Anesthesiologist Services at the Hospital;
(iv) have formal training and experience in Anesthesiology;
(v) have skill in procedures and knowledge required in the
care of patients requiring Anesthesiologist Services; and
(vi) be approved by the Chief Executive Officer prior to
performing Anesthesiologist Services at the Hospital, in accordance with
existing Hospital and Medical Staff Bylaws, Rules and Regulations.
(vii) be fluent in the English language.
(10) Sheridan may retain the services of CRNAs, which term means
Certified Registered Nurse Anesthetists as defined by ss.464.012, Fla. Stat., to
assist Anesthesiologists in the performance of their duties under this
Agreement.
Each CRNA retained by Sheridan hereunder, shall perform services
hereunder within the framework of protocols established by an Anesthesiologist,
and shall, at all times be under the general direction and control of an
Anesthesiologist, who shall supervise and direct the specific course of medical
treatment.
All appointments of all CRNA's retained by Sheridan to perform services
under this Agreement must be approved by the Hospital District prior to such
appointment and all Sheridan's CRNA's must maintain the continuing approval of
the Hospital District.
Sheridan shall at all times be responsible for ensuring the
qualifications of its CRNA's and shall ensure that an Anesthesiologist shall
supervise, at all times, Sheridan's CRNA's while they are providing services to
patients.
4
<PAGE>
In each case involving the services of Sheridan's CRNA's, at least one
Anesthesiologist shall:
A. Monitor the course of anesthesia administration at frequent
intervals;
B. Remain physically present and available in the Surgical Suite,
for immediate diagnosis and treatment of emergencies (for purposes of this
Section, the term "Surgical Suite" shall mean the Hospital's Operating Rooms,
Recovery Rooms, and the Labor and Delivery Complex);
C. Direct no greater number of concurrent anesthesia procedures
than is permitted by Medicare regulations for reimbursement purposes;
D. Not perform any other services, including, without limitation
providing Anesthesiologist Services to other patients, while directing the
concurrent procedures under subsection (C) above.
(11) The proper operation of the Hospital, and the rendition of
Anesthesiologist Services at the Hospital, requires the performance of certain
duties which are medical administrative in nature by Anesthesiologists
designated as Medical Directors. The Medical Directors shall be Board Certified
in Anesthesiology, and be active in attending seminars and courses concerning
Anesthesiology and related medicine. The general responsibilities of the Medical
Director shall include, without limitation, the following:
(a) assumption and discharge of responsibility for medical direction
of the Anesthesiologist Services under Hospital District Policies;
(b) advising Hospital District, from a physician's perspective, and
within the scope of a physician's background and training, about the use,
availability, and selection of additional and replacement of anesthesia
equipment for Hospital. Sheridan shall assist Hospital District in evaluating,
from a physician's perspective, and within the scope of a physician's background
and training, medical equipment used in the rendition of anesthesia in the
Hospital.
5
<PAGE>
(c) serving as the official liaison for the Anesthesiologists with
the Administrator and Hospital District's Medical Staff;
(d) assisting in the inservice education of Hospital Personnel in
matters that affect the provision of anesthesia in the Hospital
(e) preparing and implementing a schedule of Anesthesiologist
coverage for the Hospital, in accord with the terms of this Agreement, and to
meet the staffing requirements required by the patient load;
(f) reviewing and responding appropriately to all questions
regarding the practice of medicine by Anesthesiologists posed by the
Administrator or Hospital District's Medical Staff;
(g evaluating on a regular basis the performance of each
Anesthesiologist;
(h) ensuring that all medical reports by Anesthesiologists are
complete and scrutinized for quality;
(i) developing and implementing a program of audit, peer review,
and continuing education for all Anesthesiologists with the concurrence of
Hospital District's Medical Staff and the Administrator;
(j) participating in establishment of procedures to improve the
quality of all services provided by Anesthesiologists and Hospital personnel
providing technical assistance to Anesthesiologists, and the cost effective
utilization of Hospital resources in connection with same; and additionally
participating in the Hospital's overall Quality Improvement Program in
accordance with Hospital District Policies and the policies of accrediting
organizations.
(k) ensuring the prompt preparation and filing, in accord with
Hospital District Policies, of reports of all examinations, procedures,
consultations, and other Anesthesiologist Services performed in the Hospital.
(l) participating in the educational programs conducted by Hospital
District or Medical Staff necessary to assure the Hospital District's overall
compliance with accrediting requirements and shall perform such other reasonable
teaching functions within the Hospital as Hospital District may request.
6
<PAGE>
The above services are hereinafter referred to as "Medical Administrative
Services."
(12) Sheridan is willing to retain and to provide to Hospital
District an Anesthesiologist to assume the position of Anesthesiology Medical
Director to perform Medical Administrative Services, and to retain and to
provide to Hospital District other Anesthesiologists to perform Anesthesiologist
Services and to retain and provide to Hospital District CRNA's under the
terms and conditions set forth below in this Agreement.
In consideration of the mutual promises contained below, the parties
herein agree as follows:
I. INCORPORATION OF RECITALS:
--------------------------
The above Recitals are hereby accepted by the parties as true and
incorporated herein.
II. APPOINTMENT:
------------
2.1 Exclusivity. Hospital District hereby retains Sheridan and Sheridan
accepts such retention, to provide all Anesthesiologist Services at the Hospital
on an exclusive basis, and to provide Medical Administrative Services in
accordance with the terms of this Agreement in order to assure the consistency,
quality and availability of Anesthesiologist Services to Hospital Patients. The
exclusivity granted to Sheridan under this Section means that during the term of
this Agreement, and any extension thereof, Hospital District will not obtain
Medical Administrative Services for the Hospital from any other party, and
Hospital District will not grant privileges to perform Anesthesiologist
Services, to:
(i) any physician specializing in anesthesiology;
(ii) any anesthesiologist specializing in pain management
services, including, without limitation, out-patient and in-patient pain
management, epidural and subarachnoid narcotic administration;
7
<PAGE>
(iii) any physician specializing in patient controlled
analgesia ("PCA") including, without limitation, medical initiation, supervision
and follow-up of PCA; or
(iv) any CRNA;
(v) unless that Physician or CRNA has been employed
or retained by Sheridan as provided in this Agreement.
Nothing in this Agreement limits the privileges that may be granted to
physicians who are not:
(i) physicians specializing in Anesthesiology
(ii) anesthesiologists specializing in pain management; or
(iii) physicians specializing in PCA.
2.2 Sheridan Outside Activities. Hospital District acknowledges that
Sheridan is and will continue to be involved in performing medical and
administrative duties in the nature of those provided pursuant to this Agreement
for entities other than Hospital District. Sheridan shall not be prohibited from
engaging in such activities outside of Hospital, so long as Sheridan continues
to provide Anesthesiologist and Medical Administrative Services consistent with
Hospital District's needs and standards specified in this Agreement.
Sheridan further acknowledges that it will not use its position of
trust and confidence to gain an advantage for any facility competing with
Hospital District, nor will it disclose to a competitor of Hospital District any
planning, marketing, operational, or other information which could be considered
proprietary.
Sheridan further agrees that without permission of the Hospital
District neither it, nor its retained Anesthesiologists shall own, directly or
indirectly, any interest in any entity or organization that performs physician
or other health care services (other than Anesthesiologist Services) within the
geographical boundaries of the South Broward Hospital District. This permission
will not be unreasonably withheld. Activities to which Hospital District
consents are listed on Attachment A.
8
<PAGE>
The ownership of shares or options by Sheridan or by its retained
Anesthesiologists in Sheridan Healthcare, Inc., (hereinafter referred to as
"Sheridan Healthcare") or Sheridan Healthcorp, Inc., publicly traded
corporations, will not be considered a breach of this Agreement.
2.3 Independent Contracts. Pursuant to this Agreement, Sheridan may
make independent contracts or agreements with Anesthesiologists and CRNAs to
assist Sheridan in meeting Sheridan's obligations under this Agreement, but
Hospital District shall not be a party to, or be bound by, such agreements.
III. COVENANTS OF SHERIDAN:
3.1 Scheduling of Anesthesiologist Services. Sheridan shall provide
Anesthesiologists to perform Anesthesiologist Services to the Hospital District
through twenty-four (24) hours each day, seven (7) days each week, including
holidays. Sheridan shall establish schedules to be approved by the Administrator
for Anesthesiologists to ensure that Hospital District's needs for
Anesthesiologist Services are fully met, as reasonably determined by the Chief
Executive Officer. Said coverage shall include, without limitation, at least one
(1) Anesthesiologist physically present at Memorial Regional Hospital at all
times.
3.2 Individual Anesthesiologists. In the event that the Hospital
District shall advise Sheridan that it questions whether it is in the best
interest of the Hospital District or Sheridan for Sheridan to continue to
provide to Hospital District the services of any specific Anesthesiologist,
Sheridan will promptly meet with Hospital District in a conscientious and good
faith effort to reach a concurrence with Hospital District on such questions. If
no concurrence can be reached, Hospital District's recommendation will be
binding on Sheridan.
3.3 Medical Director Coverage. Hospital District and Sheridan agree
that the Anesthesiology Medical Directors of the Hospital District, and its
individual Hospitals shall be determined by mutual agreement. Sheridan may, at
its discretion, terminate the services of any Anesthesiology Medical Director.
Sheridan shall provide an Anesthesiologist acceptable to Hospital District to
assume the duties of any Medical Director whose services are terminated, or who
is absent from the Hospital for vacation, sick leave, or for any other reason.
Sheridan shall notify the Hospital District of the individual or individuals so
designated and such designation shall be subject to the approval of Hospital
District.
9
<PAGE>
3.4 Automatic Termination of Privileges. In the event that any
Anesthesiologist's or CRNA's affiliation with Sheridan is terminated for any
reason, then the Medical Staff privileges of such Anesthesiologist or CRNA at
the Hospital shall be terminated automatically. Upon termination of this
Agreement, the Medical Staff privileges of all of Sheridan's retained
Anesthesiologists and CRNA's shall be terminated automatically.
All Anesthesiologists and CRNA's shall, by written agreement with
Sheridan, waive any and all rights to a hearing and appeal under the Medical
Staff By-laws with respect to termination of privileges under this Section, and
no other provision of this Agreement shall limit the operation of this Section.
Without limitation of the foregoing, this Agreement does not preclude
any Anesthesiologist or CRNA from reapplying for medical staff membership and
privileges following such automatic termination. Following such reapplication,
if such Anesthesiologist or CRNA qualifies for readmission to the medical staff
or the granting of clinical privileges in accord with the then current Hospital
District Policies, including, without limitation, bylaws, rules and regulations
of the Medical Staff, then such Anesthesiologist or CRNA will be granted such
membership or clinical privileges without regard to prior automatic termination
due to termination of this Agreement. By way of example, but without limitation
of the foregoing, after termination of this Agreement, any Anesthesiologist or
CRNA would not be eligible for granting of privileges at Memorial Regional
Hospital or Memorial Hospital West or Memorial Hospital Pembroke if such
privileges remain "closed" at Memorial Regional Hospital and Memorial Hospital
West and Memorial Hospital Pembroke, and limited to Anesthesiologists retained
by Sheridan, or any other party contracting with Hospital District following
termination of this Agreement.
10
<PAGE>
Further, without limitation of the foregoing, it is understood and
agreed that Sheridan shall not impose restrictions which would be applicable
after termination of this Agreement, by contract or otherwise, which
restrictions would prevent or limit Sheridan's retained Anesthesiologists and
CRNA's from contracting with Hospital District, directly or through contracts
similar to this contract, for the provision of Anesthesiologist Services to
Hospital District.
3.5 Ownership. The ownership and right of control of all reports,
records, and supporting documents prepared in connection with the operation of
the Hospital shall vest exclusively in Hospital District, provided, however,
that Sheridan shall have such right of access to such reports and records and
other supporting documentation as is necessary and as consistent with applicable
law and Hospital District Policies.
3.6 Sheridan Organizational Requirements. It is understood and agreed
that Sheridan, a corporation created pursuant to the laws of the State of
Florida, shall at all times: (1) be and remain legally organized and operated to
provide Anesthesiologist Services in a manner consistent with all State and
Federal laws, and (2) have and maintain a reasonably suitable replacement,
acceptable to Hospital District, as one of its members, directors or officers
who shall (a) be a Anesthesiologist, (b) discharge the duties of Anesthesiology
Medical Director, and (c) be engaged principally in the provisions of services
under this Agreement.
3.7 General Responsibilities. Each Anesthesiologist shall, as assigned
during the term of this contract, provide prompt Anesthesiology Services,
irrespective of sex, race, color, national origin, or ability to pay. Such
treatment shall be consistent with the facilities and equipment available and
with the prevailing professional standard of care.
3.8 Use of Premises. Sheridan agrees that its Anesthesiologists will
use the premises of the Hospital exclusively for the performance of services
hereunder, and will not do anything on the premises which is expressly
prohibited by the Administrator.
11
<PAGE>
3.9 Insurance.
----------
3.9-1 Amount. Sheridan shall obtain and maintain professional liability
insurance covering Sheridan and all of Sheridan's personnel including, without
limitation, each Anesthesiologist, and each CRNA, in the minimum amount of One
Million Dollars ($1,000,000) per claim and Three Million Dollars ($3,000,000) in
the annual aggregate, for the entire term of this Agreement, with company or
companies and under contracts deemed reasonably acceptable by Hospital District.
3.9-2 Continuous Claims Made Coverage. Sheridan shall maintain the
insurance required hereunder on a continuous claims made basis, or through the
purchase of tail coverage or prior acts coverage, if applicable, in the amount
described above for Sheridan and all of Sheridan's personnel, including, without
limitation, each Anesthesiologist, and each CRNA, to ensure coverage for claims
made after the termination of this Agreement, alleged to arise during the term
of this Agreement.
In the event Sheridan fails to provide Hospital District with proof of
continuous claims made coverage or tail coverage or prior acts coverage, as may
be applicable, as required under this Section within thirty (30) days prior to
the lapse of coverage under a claims made policy, then this Agreement shall be
Hospital District's authorization to purchase said tail coverage or prior acts
coverage as Sheridan's agent, for this limited purpose. This authorization shall
be irrevocable, upon Sheridan's failure to provide proof of tail coverage within
the time limit stated above after written notice from Hospital District.
Sheridan shall reimburse Hospital District for all costs associated with said
purchase, including, without limitation, broker's fees.
3.9-3 Proof of Insurance. Sheridan shall furnish Hospital District with
proof of insurance and shall furnish copies of all amendments and renewals to
each policy so long as this Agreement is in effect. Sheridan shall additionally
cause to be issued by such insurer or insurers a certificate thereof reflecting
such coverage which coverage shall be cancelable only upon at lease thirty (30)
days advance written notice from such insurer or insurers to Sheridan and
Hospital District. In all events, Sheridan shall provide Hospital District with
written notice of any change or cancellation in such coverage at least thirty
(30) days prior to the effective date of such change or cancellation. No
Anesthesiologist shall be permitted to perform Anesthesiologist Services at the
Hospital unless compliance with this Section is demonstrated to Hospital
District, to the satisfaction of the Administrator.
12
<PAGE>
3.10 Risk Management Obligation. Any "incident" known to Sheridan
occurring in the Hospital that could result in liability to Sheridan or Hospital
District shall be reported immediately to Hospital District. For purposes of
this Agreement, an "incident" is defined as any happening or occurrence which is
not consistent with the routine operation of the Hospital or of the routine care
of a particular patient. It may be an accident or a situation such as lost or
damaged property or a condition which could result in an accident.
3.11 Alteration of Premises. Sheridan shall not make, or suffer to be
made, any alterations to the premises of the Hospital or any part thereof, even
at Sheridan's own expense, without the written consent of the Hospital District.
3.12 Equal Employment Opportunity. Without limiting any provision
herein set forth, Sheridan expressly agrees to abide by any and all applicable
Federal and/or State Equal Employment Opportunity Statutes, Rules and
Regulations including, without limitation, Title VII of the Civil Rights Act of
1964, the Equal Employment Opportunity Act of 1972, the Age Discrimination and
Employment Act of 1967, the Equal Pay Act of 1963, the National Labor Relations
Act, the Fair Labor Standards Act, the Rehabilitation Act of 1973, and the
Occupational Safety and Health Act of 1970 -- all as may be, from time to time,
modified or amended. Sheridan agrees that its Anesthesiologists and CRNAs shall
not engage in any conduct which would be considered harassment or discrimination
in any manner under applicable law or Hospital District Policies, including,
without limitation, racial, sexual, gender, or handicap.
3.13 Collegiality. Sheridan recognizes and acknowledges that the role
of each Anesthesiologist and CRNA provided by Sheridan hereunder requires him or
her to work in a cooperative and harmonious manner with his or her colleagues on
the Medical Staff, as well as professional, technical, and other personnel of
the Hospital, including, without limitation, the Chief Executive Officer and
other administrative personnel of Hospital District. Each Anesthesiologist and
CRNA provided by Sheridan hereunder shall work in a cooperative manner to
promote the best interests of Hospital District and the patients he or she is
treating. It is understood and agreed that Anesthesiologists will be held to a
higher standard of cooperation under this section than those standards required
for other members of the Medical Staff who not Hospital based providers.
13
<PAGE>
3.14 Exclusive Ownership. Except as provided otherwise herein, all
patient revenues and all non-patient revenues identified with other departments,
the Hospital, or Hospital District in general, shall be the exclusive property
of Hospital District. Without limiting the generality of the foregoing, it is
specifically understood and agreed as follows:
3.15 Gifts and Grants. Hospital District shall receive and be vested in
full ownership of all gifts and grants of money or other property to or for use
with respect to the Hospital, from any source whatsoever.
3.16 Other Non-Patient Revenues. Hospital District shall receive and be
vested in full ownership of all other non-patient revenues of the Hospital.
3.17 Applicable Standards. Sheridan shall reasonably provide Medical
Administrative and Anesthesiologist Services in such a manner as will ensure
that all duties are performed and services provided hereunder, as may be
required by law or regulation, including, without limitation, any standard,
ruling or regulation of the Joint Commission on Accreditation of Health
Organizations, the Department of Health and Human Services or any other Federal,
State or local government agency, corporate entity or individual exercising
authority with respect to, or affecting the Hospital. Sheridan shall ensure that
all Medical Administrative and Anesthesiologist Services are rendered in a cost
effective, efficient manner, and in accord with the prevailing professional
standard of care as defined by Ch. 766, Fla. Stat., in conformity with the
prevailing professional standard of care, as defined by ss.766, Fla. Stat.
3.18 CRNA's. All CRNAs retained by Sheridan under this Agreement must
be licensed and, within two years, certified in accord with Ch. 464.012, Fla.
Stat., with special training in Anesthesia. All CRNAs performing services at the
Hospital under this Agreement, must be approved by the Medical Staff, and may
only perform such procedures as are approved by the Medical Staff, and each will
have a thirty (30) day period of observation during which all physical
examinations performed on patients will be reviewed by an Anesthesiologist.
14
<PAGE>
All notes and orders written by the CRNA will be countersigned by an
Anesthesiologist.
All CRNAs provided by Sheridan shall be employees of Sheridan and be
under the sole direction and control of Sheridan and Anesthesiologists, and
shall be covered as a named insured under the professional liability insurance
required under Section 3.9 of this Agreement.
Sheridan shall obtain and maintain workers' compensation coverage for
all CRNAs providing services under this Agreement, and shall provide Hospital
District with proof of such coverage.
IV. COVENANTS OF HOSPITAL DISTRICT:
-------------------------------
4.1 Operational Requirements. Hospital District shall, after
considering the recommendations of Sheridan provide such facilities, equipment,
supplies, utilities, janitorial, laundry, and other support services as Hospital
District shall deem necessary for the functioning of the Hospital.
4.2 Hospital District-Supplied Personnel. Hospital District shall
employ, terminate, and when it deems appropriate, reinstate such personnel as
Hospital District deems necessary for the proper operation of the Hospital.
V. FINANCIAL ARRANGEMENT:
----------------------
5.1 Sheridan Charges. Sheridan shall, from time to time, establish and
amend the Schedule of Charges for Anesthesiologist Services (the Fee Schedule)
to be rendered to patients by Sheridan. Whenever Sheridan desires to change the
Fee Schedule or to add a new procedure during the term, Sheridan shall promptly
provide the Chief Operating Officer with written notice of such change or new
procedure, specifying the existing fee, and the proposed amount of increase or
15
<PAGE>
decrease. Sheridan shall obtain the approval of the Administrator prior to
implementing such change or new procedure, which approval shall not be
unreasonably withheld. If the Administrator fails to respond within 90 days from
receipt of same, approval shall be deemed to have been given. Sheridan shall
provide the Chief Operating Officer with a copy or copies of such Schedule or
Schedules of Charges upon request, at any time during the term. All fees for
Anesthesiologist Services shall be reasonable and competitive with fees charged
for similar Anesthesiologist Services elsewhere in the community, and shall not
violate any law or regulation governing such fees, including, without
limitation, Federal Medicare Statutes and Regulations. Such charges are separate
and distinct from the charges made by Hospital District for Hospital Services
furnished to patients. It is understood and agreed that the Fee Schedule does
not incorporate by reference any negotiated discounts between Hospital District
and any third party payors. Relationships between third party payors shall be as
specified in Section 5.5 of this Agreement.
5.2 Schedule of Hospital District Charges. Hospital District shall,
from time to time, establish and amend a schedule of charges for services other
than Anesthesiologist Services to be rendered to patients, which charges shall
be separate and distinct from the charges made by Sheridan for Anesthesiologist
Services.
5.3 Sheridan Billing and Collection. Sheridan shall separately bill and
collect at its risk and expense for Anesthesiologist Services furnished by
Sheridan to patients at the Hospital. Hospital District shall take all steps
reasonably requested by Sheridan to provide information to assist in the billing
and collection of fees for those Anesthesiologist Services.
5.4 Hospital District Billing and Collection. Hospital District shall
perform appropriate billing and collection functions for all Hospital Services
at the Hospital by Hospital District. Sheridan shall take all steps reasonably
requested by Hospital District to provide information to assist in the billing
and collecting of fees for those services.
5.5 Third Party Payors.
-------------------
A. Sheridan agrees to accept Medicare assignment plus any supplemental
or additional insurance as payment in full for all Anesthesiologist Services
rendered at the Hospital for all Medicare patients.
16
<PAGE>
B. Sheridan recognizes that Hospital District is a participant in
various third party payment plans, which include, without limitation, insurance
companies, "managed care" companies, as such term is commonly used in the health
care industry and other third party payors. Generally, the term managed care is
understood to mean a program whereby health care costs are controlled or reduced
through the monitoring of the necessity and cost effectiveness of services
provided; either through prospective, concurrent, or retrospective review.
C. Sheridan agrees to negotiate in good faith with managed care
companies (including by way of example, and without limitation, Health
Maintenance Organizations, and Preferred Provider Organizations) and other third
party payors for the provision of Anesthesiologist Services at rates less than
Sheridan's full rates.
D. Sheridan agrees to provide Anesthesiologist Services at Memorial
Regional Hospital, Memorial Hospital West and other South Broward Hospital
District facilities to managed care companies and other third party payors at
the lowest rates of compensation offered by Sheridan to that managed care
company or third party payor for Anesthesiologist Services at any hospital or
health care facility within the geographic boundaries of Dade and Broward
Counties.
E. In the event that Hospital District enters into a contract to
provide services with a particular third party payor, Sheridan will either
maintain an existing contract, or, if Sheridan does not have an existing
contract, Sheridan shall attempt, in good faith, to enter into or participate in
a contract to provide services with that third party payor. In the event
Sheridan cannot reach agreement with that third party payor within 60 days, then
Hospital District shall use its best efforts and participate in negotiations
between Anesthesiology Associates and the third party payor for an additional 30
days.
F. Sheridan shall ensure that all of its retained Anesthesiologists
providing services at Hospital District's facilities are bound by the terms of
the Agreement with the third party payor, with respect to services provided on
behalf of Sheridan in accordance with the requirements of this section.
17
<PAGE>
5.6 Subsidy for Services Rendered to Patients of the Sunlife Program.
-----------------------------------------------------------------
A. Hospital District established a program at Memorial Regional
Hospital for the treatment of all patients requiring the services of an Ob/Gyn
specialist, who present to Memorial Regional Hospital and who do not have a
physician. This program involved retaining Ob/Gyn specialists through a
corporation known as Sunlife Ob/Gyn Services of Hollywood, Inc. The program is
hereinafter referred to as the "Sunlife Program."
B. Generally, patients of the Sunlife Program are indigent, but in
rare instances such a patient may not be indigent, or may have private health
insurance or Medicare or Medicaid.
C. Previously, Hospital District operated a program to provide
anesthesia care to obstetrical patients of the Sunlife Program, through the use
of certain Certified Registered Nurse Anesthetists (CRNA's) who were employed by
Hospital District, but generally under the physician supervision of Sheridan.
D. The parties believed that greater operational efficiencies and a
more economic use of resources can be achieved by consolidating delivery and
supervision of all anesthesia services under the auspices of Sheridan. In order
to achieve this goal, Hospital District terminated its use of employed Certified
Registered Nurse Anesthetists so that the services provided by Sheridan to
Hospital District, included, without limitation, the Anesthesiologist and
Certified Registered Nurse Anesthetist services for patients of the Sunlife
Program.
E. This change increased Sheridan's obligations to Hospital District to
provide indigent care.
F. During the term of this Agreement, in and for consideration of
Anesthesiologist and Certified Registered Nurse Anesthetist services for all
indigent patients of Hospital District, including, without limitation, patients
of the Sunlife Program, provided by Sheridan under this Agreement, Hospital
District shall pay Sheridan the amount of Four Hundred Fifty Thousand and No/100
Dollars ($450,000.00) per year, payable in equal installments of Thirty Seven
Thousand Five Hundred and 00/100 Dollars ($37,500.00) per month.
18
<PAGE>
Said monthly payments shall be payable on the first day of each month,
for that month, during the term of this Anesthesiology Agreement.
5.7 Compensation for Services of Sheridan. Sheridan shall be entitled
to all collections for Anesthesiologist Services furnished by Sheridan to
patients as billed and collected by Sheridan. Sheridan accepts such amounts
separately billed and collected by Sheridan plus payment of the subsidy for
Sunlife patients under Section 5.6, above, as Sheridan's sole compensation for
administrative services, Anesthesiologist Services, and all other items or
services provided pursuant to this Agreement. It is understood and agreed that
nothing in this Agreement shall be construed as a guarantee of income to
Sheridan (with the exception of payments under Section 5.6, above), and under no
circumstance shall Hospital District be liable to Sheridan for payment of any
additional sums, including, without limitation, payment for Anesthesiologist
Services rendered to indigent patients.
Without limiting the above, with the exception of payments under
Section 5.6, above, Sheridan and Anesthesiologists shall not seek, or be
entitled to, any reimbursement from Hospital District for care rendered to
indigent patients, including, without limitation, participation in any program
established by Hospital District to reimburse the Medical Staff, either
collectively or individually, for care rendered to indigent patients.
VI. TERM AND TERMINATION OF AGREEMENT:
----------------------------------
6.1 Contract Term. This Agreement shall be effective as of the First
day of January,1997,and shall run for a term of Thirty Six(36) months therefrom,
subject to Section 6.2 hereof.
6.2 Termination.This Agreement may be sooner terminated on the first
to occur of the following:
6.2-1 Termination of Agreement. In the event Hospital District and
Sheridan shall mutually agree in writing, this Agreement may be terminated on
the terms and date stipulated therein.
19
<PAGE>
6.2-2 Termination for Failure to Maintain Required Insurance. In all
circumstances in which Sheridan has given thirty (30) days advance written
notice of a change or cancellation of insurance under Section 3.9 herein,
Sheridan shall have fifteen (15) days from the date of such notice to obtain the
insurance coverage required herein.
In the event that such coverage cannot be obtained within fifteen (15)
days from the date of said notice, Hospital District may secure Anesthesiologist
Services from any other party, at its sole discretion, and this Agreement may be
terminated fifteen (15) days thereafter, at the sole option of Hospital
District.
6.2-3 Termination Due to Legislative or Administrative Changes. In the
event that there shall be a change in the Medicare or Medicaid Acts, regulations
or general instructions (or application thereof), the adoption of new
legislation, or a change in any other third party payor reimbursement system,
any of which materially adversely affects or impairs the reimbursement which
Hospital District or Sheridan may receive for their respective services
furnished to patients of the Hospital, either party may, by notice, propose a
new basis for compensation for the services furnished pursuant to this
Agreement. If such notice of new basis is given and if Sheridan and Hospital
District are unable within thirty (30) days thereafter to agree upon a new basis
for compensation, either party may terminate this Agreement by thirty (30) days
notice to the other on any future date specified in such notice.
6.2-4 Termination Due to Change of Control of Sheridan. In the event of
a change in control of Sheridan, pursuant to Section 7.4 below, Hospital
District may terminate this Agreement upon thirty (30) days advance written
notice.
6.2-5 Optional Termination. After the first six (6) months of this
Agreement, this Agreement may be terminated by either party, without cause, upon
written notice given six (6) months in advance of the intended date of
termination.
6.2-6 Effects of Termination. Upon termination of this Agreement, as
hereinabove provided, neither party shall have any further obligations hereunder
except for (i) obligations accruing prior to the date of termination and (ii)
obligations, promises or covenants contained herein which are expressly made to
extend beyond the term of this Agreement, including, without limitation,
indemnities and professional liability tail coverage, if applicable.
20
<PAGE>
VII. MISCELLANEOUS:
--------------
7.1 Status of Sheridan. It is expressly acknowledged by the parties
hereto that Sheridan is an "independent contractor" and nothing in this
Agreement is intended nor shall be construed to create an employer/employee
relationship, or to allow Hospital District to exercise control or direction
over the manner or method by which Sheridan or Anesthesiologists perform the
Anesthesiologist Services which are the subject matter of this Agreement;
provided always that the Services provided hereunder by Sheridan shall be
provided in a manner consistent with the standards governing such Services and
the provision of this Agreement. Sheridan understands and agrees that (1)
Hospital District will not withhold, on behalf of Sheridan or any
Anesthesiologist pursuant to this Agreement, any sums for income tax,
unemployment insurance, Social Security, or any other withholding pursuant to
any law or requirement of any governmental body relating to Sheridan or
Anesthesiologists, or make available to Sheridan or Anesthesiologists any of the
benefits afforded to employees of Hospital District; and (2) all of such
payments, withholdings, and benefits, if any, are the sole responsibility of
Sheridan. In the event the Internal Revenue Service should question or challenge
the "independent contractor" status of Sheridan or Anesthesiologists, the
parties hereto mutually agree that both Sheridan and Hospital District shall
have the right to participate in any discussion or negotiation occurring with
the Internal Revenue Service, irrespective of whom such discussions or
negotiations concern, or by whom such discussions or negotiations are initiated.
7.2 Notices. Any notice, demand, or communication required, permitted,
or desired to be given hereunder, shall be deemed effectively given when
personally delivered or mailed by prepaid Certified Mail, Return Receipt
Requested, addressed as follows:
21
<PAGE>
SHERIDAN: HOSPITAL DISTRICT:
- --------- ------------------
Attn: Vice President and Administrator
General Counsel Memorial Regional Hospital
Sheridan Healthcorp, Inc. 3501 Johnson Street
4651 Sheridan Street, Suite 200 Hollywood, Florida 33021
Hollywood, Florida 33021
. . . or to such other addresses and to the attention of such other persons or
officers as either party may designate by written notice.
7.3 Governing Law. This Agreement has been executed and delivered in,
and shall be interpreted, construed, and enforced pursuant to and in accordance
with, the laws of the State. All duties and obligations of the parties created
hereunder are performable in Broward County, Florida, and Broward County,
Florida shall be the sole and exclusive venue for any litigation, special
proceedings, or other proceedings as between the parties that may be brought or
arise out of or in connection with or by reason of this Agreement.
7.4 Assignment. No assignment of this Agreement or the rights and
obligations hereunder shall be valid without the specific written consent of
both parties. Without limitation of the foregoing, it is understood and agreed a
change in the control of Sheridan Healthcorp, Inc., or Sheridan Healthcare,
Inc., (whether directly or indirectly, including, without limitation, through
change in the type of corporation, merger, consolidation, or management
agreement, or sale or other transfer of more than 50% of the ownership of any of
the above specified corporations, or in the event that Mitchell Eisenberg and
Lewis Gold shall no longer be actively engaged or employed in the day to day
business of Sheridan) shall be considered an assignment of this Agreement, and
in such event, Hospital District may terminate this Agreement upon thirty (30)
days advance written notice.
7.5 Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or other
provision hereof.
22
<PAGE>
7.6 Enforcement. In the event Hospital District or Sheridan resorts to
legal action to enforce the terms and provisions of the Agreement, the
prevailing party shall be entitled to recover the cost of such actions so
incurred including, without limitation, reasonable attorney's fees, costs and
expenses, at both trial and appellate levels.
7.7 Gender and Number. Whenever the context hereof requires, the gender
of all words shall include the masculine, feminine, and neuter and the number of
all words shall include the singular and plural.
7.8 Force Majeure. Neither party shall be liable nor deemed to be in
default for any delay or failure in performance under this Agreement or for
other interruption of service deemed resulting, directly or indirectly, from
acts of God, civil or military authorities, acts of the public enemy, war,
accidents, fires, explosions, earthquakes, floods, failure of transportation,
strikes or other work interruptions by Hospital District's employees or any
similar or dissimilar cause beyond the reasonable control of either party.
7.9 Severability. In the event any provision of this Agreement is held
to be unenforceable for any reason, the unenforceability thereof shall not
affect the remainder of the Agreement, which shall remain in full force and
effect and enforceable in accordance with its terms.
7.10 Article and Other Headings. The article and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
7.11 Time of Essence. Time shall be of the essence with respect to this
Agreement.
7.12 Public Relations. Sheridan agrees that neither it nor its retained
Anesthesiologists shall make any statements to the press or to any media
representatives concerning matters relating to this Agreement or the performance
of duties hereunder without the consent of the Administrator.
23
<PAGE>
7.13 Entire Agreement. This Agreement supersedes all previous contracts
and constitutes the entire Agreement between the parties. Without limitation of
the foregoing, this Agreement, upon its effective date, terminates and replaces
entirely that certain Agreement between the parties dated October 1, 1990, and
all Amendments thereto. Neither party shall be entitled to benefits other than
those specified herein. No oral statements or prior written material not
specifically incorporated shall be of any force and effect and no changes in or
additions to this Agreement shall be recognized unless incorporated herein by
amendment signed by both parties, such amendments to become effective on the
date stipulated in such amendments. The parties specifically acknowledge that in
entering into and executing this Agreement, they rely solely upon the
representation and agreements contained in this Agreement, and no others.
IN WITNESS WHEREOF, South Broward Hospital District, a political
subdivision of the State of Florida, has caused this Agreement to be executed in
its corporate name by its duly authorized undersigned Chief Executive Officer on
the date and year written below.
IN WITNESS WHEREOF, Sheridan Healthcorp, Inc., a Florida Corporation,
has caused this Agreement to be executed in its corporate name by its duly
authorized undersigned Vice-President on the date and year written below.
SHERIDAN HEALTHCORP, INC.: SOUTH BROWARD HOSPITAL DISTRICT:
___________________________________ ___________________________________
Jay A. Martus Frank V. Sacco
Vice-President Chief Executive Officer
DATE: ________________________ DATE: ____________________________
APPROVED AS TO FORM AND CONTENT:
___________________________________
Clarke Walden, General Counsel
24
<PAGE>
OFFICE LEASE
LANDLORD: ACP VENTURE I, LIMITED PARTNERSHIP
TENANT: SHERIDAN HEALTHCORP, INC.
<PAGE>
OFFICE LEASE
TABLE OF CONTENTS
Page
1. PARTIES..................................................................1
2. DEMISED PREMISES.........................................................1
3. TERM.....................................................................2
4. TENANT'S PLANS AND SPECIFICATIONS........................................2
5. BASE RENT AND TIME OF PAYMENT............................................2
6. ADDITIONAL RENT..........................................................3
7. SALES TAX................................................................8
8. SECURITY DEPOSIT.........................................................8
9. USE......................................................................8
10. SURRENDER AND HOLDOVER...................................................8
11. ASSIGNMENT AND SUBLETTING................................................8
12. SUCCESSORS AND ASSIGNS...................................................9
13. SUBORDINATION AND ESTOPPEL...............................................9
14. DEFAULT BY TENANT.......................................................10
15. Intentionally Omitted...................................................11
16. SEVERABILITY AND WAIVER.................................................12
17. EMINENT DOMAIN..........................................................12
18. DAMAGE AND DESTRUCTION..................................................12
19. INDEMNITY...............................................................13
20. WAIVER OF CLAIMS........................................................13
21. ADDITIONAL CONSTRUCTION.................................................13
22. LANDLORD'S ENTRY FOR REPAIR AND TO RELET................................14
23. ALTERATIONS BY TENANT...................................................14
24. REPAIRS BY TENANT.......................................................15
25. MECHANIC'S LIENS........................................................15
26. REPAIRS BY LANDLORD.....................................................16
27. TENANT PARKING..........................................................16
28. COMPLIANCE WITH LAW BY TENANT...........................................17
29. TIME OF THE ESSENCE.....................................................17
30. NOTICES.................................................................17
31. SCOPE AND INTERPRETATION OF THE AGREEMENT...............................17
32. CAPTIONS................................................................17
33. RECORDING...............................................................17
34. INCREASED BASE RENT-CPI.................................................18
35. INSURANCE AND SUBROGATION...............................................18
36. SERVICES OF LANDLORD....................................................20
37. SIGNS AND WINDOW COVERING...............................................21
38. RULES AND REGULATIONS...................................................21
39. CONSTRUCTION............................................................21
40. ATTORNMENT..............................................................21
41. RELOCATION OF TENANT....................................................22
42. RADON GAS...............................................................22
43. HAZARDOUS AND TOXIC SUBSTANCES..........................................22
44. ADDITIONAL PROVISIONS...................................................26
<PAGE>
LEASE AGREEMENT
---------------
1. PARTIES
-------
THIS LEASE AGREEMENT is made this ________ day of January 1997 by and
between ACP VENTURE I, LIMITED PARTNERSHIP, a Delaware limited partnership,
whose address is 3440 Hollywood Boulevard, Suite 420, Hollywood, Florida 33021,
hereinafter referred to as LANDLORD, and SHERIDAN HEALTHCORP, INC. whose address
is Suite 400, 4651 Sheridan Street, Hollywood, Florida 33021, hereinafter
referred to as TENANT. This Lease modifies and incorporates and restates that
certain lease originally executed by STS Buildings Associates, L.P. as landlord
and Group Practice Management, Inc. as tenant, executed on September 15 1992, as
supplemented by Supplement One dated February 5, 1993, and as modified by First
Amendment of Lease Agreement dated May 2, 1994, and as further modified by
Cancellation of Subleases, Second Amendment of Lease Agreement, and Assignment
of Lease Agreement among Group Practice Management, Inc., Southeastern
Anesthesia Management Associates, Inc., and AMSA, Inc.; Tenant's name was
changed to Sheridan Healthcorp, Inc., a Florida corporation, on or about April
5, 1995; Landlord's interest was assigned to ACP Venture I, Limited Partnership,
a Delaware limited partnership, on or about September 15, 1995; as further
modified by that Third Amendment of Lease Agreement dated June 20, 1996.
W I T N E S S E T H
2. DEMISED PREMISES
----------------
LANDLORD hereby demises and leases unto TENANT, and TENANT hereby
leases from LANDLORD, those certain premises situated in the County of Broward,
State of Florida, identified as:
Suites 100, 120, 200, 240, 250, 260, 400, 410, 425, 460 and 480
(hereinafter referred to as either the "Demised Premises" or "Premises") of that
certain building known as Emerald Hills Executive Plaza II (hereinafter referred
to as the "Building") located at 4651 Sheridan Street, Hollywood, FL 33021,
which Demised Premises are outlined in red on the plan attached hereto and
marked Exhibit "A".
The "Rentable Area of the Premises" is hereby stipulated and mutually
agreed to by the parties to be Thirty-Nine Thousand Eight Hundred and Six
(39,806) square feet, whether the same should be more or less as a result of
completion of the Premises by LANDLORD for occupancy or for any other reason.
The "Rentable Area of the Building" in which the Premises are located is hereby
stipulated and mutually agreed to by the parties to be Seventy-Three Thousand
Five Hundred and Five (73,505) square feet.
3. TERM
----
The term of this Lease shall commence on December 15, 1996 (the
"Commencement Date") , at which time the original lease as modified from time to
shall merge into it (but any outstanding obligations of TENANT under the
original lease shall continue until fulfilled). TENANT has accepted the Demised
Premises "AS IS" except for the Landlord's work described in Exhibit B. The Term
shall end, unless sooner terminated, at midnight on September 12, 2005.
4. TENANT'S PLANS AND SPECIFICATIONS
---------------------------------
TENANT agrees to cooperate with LANDLORD in preparing plans and
specifications covering all work to be done by or for TENANT (as provided in
Exhibit "B" of this Lease captioned "Leasehold Improvements") in the Demised
Premises. Such plans and specifications shall be prepared at TENANT'S sole
expense by a duly licensed architect or engineer approved by LANDLORD, in such
detail as LANDLORD may reasonably require, and TENANT agrees that no work shall
commence on any of the aforesaid TENANT improvements until LANDLORD and TENANT
have approved such plans and specifications in writing, which plans and
specifications when so approved shall be designated Exhibit "C" and attached
hereto and made a part hereof by reference (hereinafter referred to as the
"Plans and Specifications"). LANDLORD and TENANT agree to cooperate with each
other in good faith to finalize the Plans
<PAGE>
and Specifications and finishing specifications for the Demised Premises, all
of which shall be subject to approval of both LANDLORD and TENANT, which
approval shall be granted in good faith and which shall not be unreasonably
withheld.
Any changes to the Plans and Specifications requested by TENANT, after
same have been approved in their final form by LANDLORD and TENANT, shall be
subject to LANDLORD'S approval and, if LANDLORD so approves same, TENANT shall
pay any and all extra costs that may be incurred by LANDLORD as a result of such
change immediately upon LANDLORD'S request therefor.
5. BASE RENT AND TIME OF PAYMENT
-----------------------------
The annual Base Rent for all of the Demised Premises effective as of
the Commencement Date, shall be Four Hundred Twenty-Six Thousand Five Hundred
Forty-Two and 69/100 DOLLARS ($426,542.69) (hereinafter referred to as "Primary
Base Rent") and shall be paid by TENANT to LANDLORD at its principal office or
that of its agent or at any other place hereafter designated in writing by
LANDLORD, in equal monthly installments of Thirty-Five Thousand Five Humdred
Forty-Five and 23/100 DOLLARS ($35,545.23) , on or before the first day of each
month during the Term hereof as same shall be adjusted in accordance with this
Lease. Should the Commencement Date occur on any day other than the first of the
month, then the rent for the space in question shall be prorated to the end of
the month in which the Commencement Date occurs. The Annual Base Rent shall be
increased by four percent (4%) over the Annual Base Rent for the previous year
of the Lease Term; the first such adjustment shall be made effective December
15, 1997, and adjustments shall be made on December 15 of each subsequent year.
The first month's Base Rent shall be paid simultaneously with execution
of this Lease, receipt of which is hereby acknowledged by LANDLORD. On the
Commencement Date, TENANT shall pay a pro rata amount of Rent, if any, for the
period from the Commencement Date to the first day of the next calendar month.
TENANT shall promptly pay any and all Rent due hereunder at the times and at the
address for LANDLORD stated above. TENANT shall promptly pay charges for work
performed on order of TENANT and any other charges that accrue under this Lease.
As used in the Lease "Rent" shall mean all sums due LANDLORD.
LANDLORD shall have the option to assess a charge against TENANT, if
any of TENANT'S payment checks shall be returned to LANDLORD marked "NSF" for
insufficient funds, in the amount of $25.00. Additionally, if at any time during
the Term of this Lease, including any extensions or option terms, LANDLORD shall
receive any two payment checks from TENANT returned to LANDLORD marked "NSF"
then LANDLORD may demand that TENANT make the balance of its rental payments by
cashier's check.
TENANT may be instructed by LANDLORD to make rental payments to a "lock
box," at a Florida Bank or such other institution as LANDLORD may designate. Due
to the nature of the handling of such payments, those which LANDLORD would
normally not accept under the below circumstances may be deposited in LANDLORD'S
account anyway.
Therefore, in the event that the payment made by TENANT is in an amount
which is less than what is due or, in the event that TENANT has received a
statutory notice and failed to comply with its demands and/or litigation is
pending concerning TENANT'S non-payment of rent or as a result of other defaults
by TENANT under the Lease, then, notwithstanding the fact that the rental
payment received may be deposited in LANDLORD'S "lockbox" at a Florida Bank or
such other institution utilized for this purpose by LANDLORD, same shall not be
deemed accepted unless and until the default which is the subject of the above
actions is cured to the satisfaction of the LANDLORD and as provided under the
Lease and Florida law. Such deposited but unaccepted rental payment(s) will be
refunded to TENANT on a LANDLORD issued check within a reasonable time after
such deposit is made. Such deposit of TENANT'S check, under the above
circumstances, shall in no way prejudice LANDLORD'S rights under Florida law
and/or the Lease.
6. ADDITIONAL RENT
---------------
(A) In addition to Base Rent, TENANT shall, for each calendar year or
portion thereof, pay to LANDLORD Additional Rent equal to "TENANT'S
2
<PAGE>
Proportionate Share" (as hereinafter defined) of the aggregate of "Operating
Expenses" (as hereinafter defined) and "Taxes" (as hereinafter defined) for the
applicable calendar year (hereinafter referred to as "Additional Rent").
Tenant's Proportionate share of Operating Expenses for the year 1996 shall
continue in force as it shall have been prior to execution of this Lease;
adjustments on all of the Additional Premises shall begin to accrue and shall
become effective on and after January 1, 1997.
(i) "TENANT'S Proportionate Share" shall mean the percentage which
the current Rentable Area of the Premises bears to the total
Rentable Area of the Building, which share is hereby stipulated
and agreed to be 54.16 %.Notwithstanding anything to the contrary
in this Lease, as to Operating Expenses only (which includes
insurance but not Real Estate Taxes), TENANT's Proportionate Share
is $4.72 per square foot for calendar year 1996 as to Suites 100,
120, 200, 240, 250, 400, 410, 425, and 480, which comprise 35,539
square feet, or 48.35% of the Building. As to this area, only, the
TENANT's Proportionate Share of Operating Expenses shall increase
4% each calendar year over that for the preceding calendar year,
beginning January 1, 1997. As to Suites 260 and 460, TENANT shall
pay its full prorata share of the Operating Expenses, calculated
at 4,267 square feet, or 5.81%.
(ii)For the purposes of explanation, "Operating Expenses" shall
mean all expenses, costs and disbursements of every kind and
nature, which LANDLORD shall pay or become obligated to pay
because of or in connection with the ownership, maintenance and/or
operation of the Building, computed on the accrual basis, but
shall not include "Taxes" (as hereinafter defined), the cost of
mortgage financing, individual tenant improvements, commissions or
fees paid in connection with LANDLORD'S leasing activities, or the
replacement of capital investment items and new capital
improvements, unless such items and/or improvements result in the
operating cost of the Building being decreased, in which latter
event the cost of said capital investment item or new capital
improvement shall be included by spreading it over the period
necessary to recover the cost of such item or improvement from the
savings accomplished by the decreased operating cost. By way of
explanation and clarification, but not by way of limitation,
Operating Expenses shall include the following:
(a) Wages and salaries of all employees engaged in the
operation and maintenance of the Building, employer's
social security taxes, unemployment taxes or insurance,
and any other taxes which may be levied on such wages and
salaries, the cost of disability and hospitalization
insurance, pension or retirement benefits, and any other
fringe benefits for such employees.
(b) All supplies and materials used in the operation and
maintenance of the Building.
(c) Cost of all utilities, including water, electricity,
sewer, gas and fuel oil used by or in the Building.
(d) Cost of customary building management, janitorial
services, accounting and legal services, trash and garbage
removal, operating, servicing and maintenance of all
systems and equipment including, but not limited to,
elevators, plumbing, heating, air conditioning,
ventilating, lighting, electrical, security and fire
alarms, fire pumps, fire extinguishers and hose cabinets,
mail chutes, guard service, painting, window cleaning,
landscaping and gardening.
(e) Cost of all casualty (including all extended
coverages), liability, flood, hazard, workman's
compensation, rent loss, and other insurance maintained by
LANDLORD, in LANDLORD'S sole discretion, on the Building
and/or LANDLORD'S personal property used in connection
therewith.
Notwithstanding any other provision herein to the
contrary, it is agreed that in the event the Building is
less than ninety-five percent (95%) occupied during any
partial year or any full calendar year for which Operating
Expenses are to be calculated hereunder, an adjustment
3
<PAGE>
shall be made in computing the Operating Expenses for such
year to compensate for any vacancies in the Building so
that the Operating Expenses for such year shall assume a
ninety-five percent (95%) occupancy for the Building for a
full year and shall include, (1) those Operating Expenses
actually incurred during such year and (2) sums needed to
compensate for vacancies in the Building for such year.
(iii) Except as otherwise specifically provided for in this
Section, "Taxes" shall mean all impositions, taxes, assessments
(special or otherwise), and other governmental liens or charges of
any and every kind, nature and sort whatsoever, ordinary and
extraordinary, foreseen and unforeseen, and substitutes therefor
(except only LANDLORD'S income taxes and except for any increase
in Taxes caused by construction in the Building commenced
subsequent to the date of this Lease; and except for taxes on
excess profits, estate, single business, inheritance, succession,
transfer, franchise, capital or other tax or assessment upon
LANDLORD or rentals payable under this Lease, or assessments
relating to the initial construction of the Building, other than
real property and ad valorem taxes, or capital improvements (but
not replacement) subsequently constructed therein or with respect
thereto solely for the benefit of other individual tenants in the
Building; however, shall not exclude capital improvements which
benefit all tenants in the Building) attributable in any manner to
the Building, or any part thereof, or any use thereof, or any
equipment, fixtures or other facility located therein or thereon
or used in conjunction therewith, including all costs incurred by
LANDLORD in contesting same and/or negotiating with public
authorities with respect to same. If the Building is for any
reason included along with other properties in a particular tax
bill, then LANDLORD shall apportion the tax so billed on an
equitable basis among all properties covered by the particular tax
bill. The tax bill shall include the Building and improvements
indicated by the area outlined in blue on Exhibit "E" to this
instrument. The tax bill to which Tenant contributes shall be
based on the discount, if any, allowable for December payment.
(iv)"Business Hours" shall mean Monday through Friday from 7:00
a.m. to 6:00 p.m., and 8a.m. to noon on Saturdays, except on New
Years Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving
Day, Christmas Day and any other national legal holidays which may
be established.
(B) On or before the first day of the Term and on or before the first
day of the calendar year following the calendar year in which the
Commencement Date occurs, LANDLORD shall submit to TENANT a statement of
the anticipated monthly amount of TENANT'S Proportionate Share of Taxes
and, where applicable, Operating Expenses, for said calendar year, and
TENANT shall pay same on a monthly basis in advance together with payments
of Base Rent.
(C) TENANT shall continue to make said monthly payments of Additional
Rent until notified by LANDLORD of a change thereof. The anticipated
monthly Additional Rent billed to TENANT may be changed from time to time
by LANDLORD based upon the prior year's actual statements or LANDLORD'S
anticipated costs. In the event the total of the monthly payments of
estimated Taxes which TENANT has made for the prior calendar year shall be
less than TENANT'S actual proportionate share of Taxes for said calendar
year, then TENANT shall pay the difference in a lump sum together with the
next installment of Base Rent, and TENANT shall concurrently pay the
difference between the aggregate of monthly payments made in the then
current calendar year and the amount of monthly payments which are then
calculated as monthly proportionate of Taxes and, where applicable, for the
current calendar year based on the prior calendar year's actual amounts.
Any overpayment by TENANT shall be credited towards Additional Rent and
Taxes and Operating Expenses next coming due under this Lease. Even though
the Term has expired and TENANT has vacated the Premises when the final
determination is made of TENANT'S Proportionate Share of said Operating
Expenses and Taxes for the year in which this Lease terminates, TENANT
shall, within ten (10) days following receipt of the annual statement, pay
any amount necessary based on actual amounts, for the last calendar year,
and conversely, any overpayment made shall, together with the rendering of
the annual statement, be rebated by LANDLORD to TENANT.
4
<PAGE>
(D) TENANT expressly agrees that LANDLORD, at LANDLORD'S sole
discretion, may apply the Security Deposit (as hereinafter defined) in full
or partial satisfaction of any Additional Rent due for any part of the
Term, including the final months, which application may follow the
termination of this Lease. If said Security Deposit is greater than the
amount of any such Additional Rent and there are no other sums or amounts
owed LANDLORD by TENANT by reason of any other terms, provisions, covenants
or conditions of this Lease, then LANDLORD shall refund the balance of said
Security Deposit to TENANT as provided in Section 8 below. LANDLORD shall
not be required to first apply said Security Deposit to such Additional
Rent if there are any other sums or amounts owed LANDLORD by TENANT by
reason of any other terms, provisions, covenants or conditions of this
Lease.
(E) Taxes and Operating Expenses for any portion of a year during the
first or final lease year, if applicable, shall be calculated as if the
TENANT were occupying the Premises for the entire calendar year, but shall
be due only in respect to those months included within the Term of this
Lease. Any Additional Rent for any partial month of occupancy at the end of
the Term of the Lease will be prorated, such proration to be based on the
actual number of days in said partial month. TENANT shall have the right,
within thirty (30) days after receipt by TENANT of any annual statement, to
inspect LANDLORD'S books and records, showing Taxes and Operating Expenses
for the calendar year covered by said statement at LANDLORD'S office,
during normal business hours, after five (5) days prior written notice.
Each annual statement shall become final and conclusive between the
parties, their successors and assigns, as to the matters set forth therein
unless LANDLORD receives written objections with respect thereto within
said thirty (30) day period. Anything herein to the contrary
notwithstanding, TENANT shall not delay or withhold payment of any balance
shown to be due pursuant to a statement rendered by LANDLORD to TENANT
because of any objection which TENANT may raise with respect thereto.
(F) TENANT shall have such rights to contest the validity or amount of
taxes assessed against the Building or the Premises as are permitted by
law, either in its name or in the name of LANDLORD, at TENANT's sole cost
and expense, in either case with LANDLORD's full cooperation. Any resulting
refund, rebate or reduction shall be used first to repay the expenses of
obtaining such relief. LANDLORD shall provide TENANT with governmental
notices of assessment or reassessment in time sufficient to reasonably
permit TENANT, at TENANT's election, to make such contest; and if LANDLORD
fails to do so, and LANDLORD fails to make a reasonable effort to contest
said increased assessment or reassessment, then there shall be excluded
from the tax bill to which TENANT contributes any taxes resulting from such
assessment or reassessment. The term "contest" as used in this paragraph
means contest, appeal, abatement or other proceeding prescribed by
applicable law to obtain tax reduction or tax refund.
(G) LANDLORD will pay any and all penalties or charges in connection
with a late payment of taxes and any impact fees or increases in impact
fees related to the Building, including, without limitation, any impact
fees related to TENANT's initial build-out or initial use of the Premises.
If TENANT's use of the Demised Premises is modified in the future in such a
manner to cause an increase in impact fees, TENANT will be responsible for
all such increases.
7. SALES TAX
---------
TENANT agrees to pay LANDLORD any sales or use tax or excise tax
imposed or levied against the Rent or any other charge or payment required
hereunder to be made by TENANT which has been imposed or levied by any
governmental body having jurisdiction thereover, payable with each installment
of Rent.
8. SECURITY DEPOSIT
----------------
TENANT acknowledges that it has received from LANDLORD its entire
original deposit of Two Hundred Ten Thousand and No/100 Dollars ($210,000.00),
and that no Security Deposit is now held by LANDLORD.
5
<PAGE>
9. USE
---
TENANT shall use and occupy the Demised Premises only for
administrative offices and for no other purpose, under the name or style of
Sheridan Healthcorp.
10. SURRENDER AND HOLDOVER
----------------------
TENANT agrees at the expiration or sooner termination of this Lease of
the Term to surrender the Demised Premises and everything belonging thereto or
in connection therewith in good condition, reasonable wear and tear excepted;
and to remove all signs, advertisements and rubbish from the said Demised
Premises; and if TENANT fails to do so, then TENANT hereby expressly authorizes
LANDLORD, as agent of TENANT, to remove such rubbish and make such repairs as
may be necessary to restore the Demised Premises to such condition, at the
expense of TENANT.
If TENANT retains possession of the Demised Premises or any part
thereof after the termination of this Lease, TENANT shall pay LANDLORD Rent at
1.25 times the rate payable for the year immediately preceding said holdover,
computed on a monthly basis, for the time TENANT thus remains in possession. The
provisions of this paragraph do not waive LANDLORD'S rights of re-entry or any
other right hereunder. Any retention of the Demised Premises after termination
of this Lease or any extension thereof shall be considered as a month to month
holdover unless otherwise agreed to in writing by the parties hereto.
11. ASSIGNMENT AND SUBLETTING
-------------------------
TENANT shall not assign, transfer, mortgage, pledge, or otherwise
encumber or dispose of this Lease or sublet the Premises or any part thereof, or
permit the Premises to be occupied by other persons unless prior written consent
is given by LANDLORD, which consent shall not be unreasonably withheld (but
LANDLORD may require, among other things, the posting of a Security Deposit by
the assignee or sublessee or the modification of this Lease to reflect the
then-standard lease form for the Building). LANDLORD's consent shall not be
required, however, in the event of an assignment or subletting by TENANT to a
majority-owned affiliate or subsidiary; TENANT shall, however, give LANDLORD
notice and evidence of such assignment or subletting. In the event of an
approved assignment or sublease the assignee or sublessee shall not be permitted
to further sublet or assign without first obtaining LANDLORD'S prior written
consent thereto as above provided. Any rental payments or other compensation
received by TENANT from an assignee or sublessee which are in excess of rental
payments or other charges due from TENANT to LANDLORD under the Lease (or any
portion thereof on a prorata basis in the event of a sublease) for the Demised
Premises so sublet or assigned shall be due and shall be paid to LANDLORD.
In the event of an assignment or sublease, the TENANT shall remain
liable for the performance of all the obligations on the part of TENANT to be
performed under this Lease Agreement.
12. SUCCESSORS AND ASSIGNS
----------------------
All rights, obligations and liabilities herein given to, or imposed
upon, the respective parties hereto shall extend to and bind the several and
respective heirs, executors, administrators, successors, permitted subtenants
and permitted assigns of said parties, subject to the provisions of Paragraph
11, and if there shall be more than one TENANT, they shall all be bound jointly
and severally by the terms, covenants, and agreements herein and the word
"TENANT" shall be deemed and taken to mean each and every person or party
mentioned as a TENANT herein, be the same one or more; and if there shall be
more than one TENANT, any notice required or permitted by the terms of this
Lease may be given by or to any one thereof, and shall have the same force and
effect as if given by or to all thereof. No rights, however, shall inure to the
benefit of any assignee of TENANT or sublessee of the Premises unless the
assignment to such assignee or sublet of the Premises has been consented to by
LANDLORD in writing as aforesaid.
13. SUBORDINATION AND ESTOPPEL
--------------------------
If the Premises are at any time subject to a ground lease, underlying
lease (but at time of execution of this instrument, the Premises are not subject
to a ground lease or underlying lease) or mortgage, and if TENANT has received
6
<PAGE>
written notice of same from the landlord thereunder or the holder thereof, as
the case may be (each of said landlords and mortgage holders being referred to
hereinafter as a "LANDLORD'S Mortgagee"), in any instance in which TENANT gives
notice to LANDLORD alleging default by LANDLORD hereunder, TENANT will also
simultaneously give a copy of such notice to each LANDLORD'S Mortgagee, and each
LANDLORD'S Mortgagee shall have the right (but not the obligation) to cure or
remedy such default during the period that is permitted to LANDLORD hereunder,
plus an additional period of forty-five (45) days, and TENANT shall accept such
curative or remedial action (if any) taken by LANDLORD'S Mortgagee with the same
effect as if such action had been taken by LANDLORD.
This Lease shall be subject and subordinate to all ground leases,
underlying leases. and mortgages (including any extensions, renewals,
replacements and modifications thereof) now or hereafter encumbering the
Building. Notwithstanding the foregoing, however, TENANT hereby agrees to
execute and deliver, within ten (10) days following demand therefor, any
instrument(s) which LANDLORD or LANDLORD'S Mortgagee may deem desirable to
evidence the subordination of this Lease to any and all such ground leases,
underlying leases and mortgages, provided same shall contain a reasonable
non-disturbance provision.
TENANT shall deliver to LANDLORD or to its mortgagee, auditors or
prospective purchaser, or the owner of the fee, when requested by LANDLORD, a
certificate stating the main provisions of this Lease and to the effect that
this Lease is in full force and effect and that LANDLORD is not in default
therein, and stating specifically any exceptions thereto. Failure to give such a
certificate within fifteen (15) days after written request shall be conclusive
evidence that the Lease is in full force and effect and LANDLORD is not in
default and TENANT shall be estopped from asserting any defaults known to TENANT
at that time.
14. DEFAULT BY TENANT
-----------------
A. Any one or more of the following events shall be deemed to be a
default by TENANT:
(1) Failure to pay any installment of Rent or pay any other
charge under this Lease when due,
(2) Failure to comply with any term, provision or covenant of
this Lease other than the covenants to pay Rent,
(3) If TENANT or Surety becomes insolvent, makes a transfer in
Fraud of Creditors, makes an Assignment for the benefit of
Creditors, or a Receiver be appointed to take possession of the
Demised Premises, the assets of the TENANT or the Surety,
(4) Subject to the provisions of Section 25, if TENANT does
any act which creates a lien on the Demised Premises or the
land on which the Demised Premises are located.
B. Prior to LANDLORD'S availing itself of any of the remedies
hereinafter set forth, LANDLORD shall give the following notices:
(1) In the case of a default under subparagraph A(1), ten (10)
days notice to cure said default, which period shall include the
three (3) day statutory period. The giving of Statutory Notice
shall not be deemed an election of remedies.
(2) In the case of a default under subparagraphs A(2), A(3), or
A(4), thirty (30) days notice to cure said default; however, the
above will not include defaults under Paragraphs 25 and 43, which
shall require ten (10) days notice to cure.
C. In addition to any other remedies provided by law, the following
remedies are available to LANDLORD at its option and may be applied
cumulatively or individually:
(1) Terminate this Lease by notice in writing in which event this
Lease shall end automatically by its own limitation and TENANT
shall immediately surrender the Demised Premises. In this case,
7
<PAGE>
TENANT shall pay LANDLORD all sums due as of the date of
termination. TENANT hereby waives any rights of redemption TENANT
may have in the Demised Premises.
(2) Re-enter and take possession of the Demised Premises holding
the same for the account of TENANT, in which case, the entire
amount of Base Rent for the Term of this Lease, plus other charges
enumerated in this Lease for the remainder of the Term, plus any
costs of reletting including rehabilitation and brokerage costs,
less an amount equal to the monthly Base Rent multiplied by the
number of months remaining on the Term of this Lease for which the
Demised Premises are relet, if any, shall be immediately due and
payable. TENANT hereby waives any claim TENANT may have to Rent
obtained in reletting in excess of that required to be paid by
TENANT.
Acceptance of surrender shall be by written notice only and the
acceptance of keys or changing of the locks shall not be deemed an
acceptance of surrender of the Demised Premises.
(3) Without prejudice to any present or future right of
possession, bring an action in law or in equity to collect Rent
and other charges due, for general or special damages, to restrain
any violation of any term, provision or covenant of this Lease
and/or to foreclose or protect any security interest or lien
arising out of this Lease, a separate agreement between the
parties covering property within the Demised Premises, operation
of law, or by statute.
(4) In any litigation arising under the terms of this Lease, the
prevailing party shall be entitled to its costs and payment of a
reasonable attorneys' fee (including those incurred in appellate
action). Delinquent Rent shall bear interest at eighteen percent
(18%) per annum, or at the highest rate permitted by the usury
laws of the State of Florida, whichever rate is less.
15. Intentionally Omitted
16. SEVERABILITY AND WAIVER
-----------------------
No waiver by LANDLORD of any provision hereof shall be deemed to have
been made unless such waiver be in writing signed by LANDLORD. The failure of
LANDLORD to insist upon the strict performance of any of the covenants or
conditions of this Lease, or to exercise any option herein conferred, shall not
be construed as waiving or relinquishing for the future any such covenants,
conditions or options, but the same shall continue and remain in full force and
effect. No payment by TENANT of a lesser amount than the monthly Rent herein
stipulated shall be deemed to be other than on account of the stipulated Rent.
If any clause or provision of this Lease is illegal or unenforceable under
present and future laws, then and in that event, the remainder of this Lease
shall not be affected thereby and such clause or provision of this Lease shall
be enforced to the extent permitted by law.
17. EMINENT DOMAIN
--------------
If the Demised Premises are totally taken, or partly taken so as to
render the Demised Premises untenantable in TENANT's reasonable judgment for the
purposes herein leased, by any legally constituted authority for any public use
or purpose, then, in either event, this Lease shall terminate as of the date of
said taking. If a part of the Demised Premises is taken, but the Demised
Premises are not rendered untenantable in TENANT's reasonable judgment, then
this Lease shall remain in full force and effect, except that the Rent hereunder
shall be reduced in proportion to the amount of the Demised Premises so taken.
In any such event, TENANT shall not have any right or claim to any part of any
reward made by said authority.
18. DAMAGE AND DESTRUCTION
----------------------
In the event the Premises shall be destroyed or so damaged or injured
by fire or other casualty during the Term whereby the same shall be rendered
untenantable, then LANDLORD shall have the right, but not the obligation, to
render such Premises tenantable by making repairs thereto within 120 days from
8
<PAGE>
casualty. If said Premises are not rendered tenantable by LANDLORD within said
120 day period, it shall be optional with either party hereto to cancel this
Lease, and in the event of such cancellation, the Rent shall be paid only to the
date of such fire or casualty. The cancellation herein mentioned shall be
evidenced in writing. During any time that the Premises are untenantable due to
causes set forth in this Section, a just and fair proportion of Base Rent shall
be abated. Notwithstanding the foregoing, should the cause of such damage,
destruction or injury to the Premises originate from the Premises and occur by
reason of the misfeasance or negligence of TENANT or any employee, agent,
licensee, patron or invitee of TENANT (hereinafter referred to as "TENANT
Damage"), TENANT shall not have the right to cancel this Lease, and no abatement
of Rent shall occur. In the event of said TENANT Damage, LANDLORD shall have the
right, but not the obligation, to render the Premises tenantable. If LANDLORD
elects to repair said TENANT Damage and render the Premises tenantable, which
election to repair will be made within thirty (30) days of the casualty, all
insurance proceeds available pursuant to this Lease shall be paid to LANDLORD,
and the balance of the cost of such repairs shall be paid by TENANT within five
(5) days following demand therefor as Additional Rent. In the event LANDLORD
elects to repair the Demised Premises, LANDLORD shall within 120 days make said
repairs to completion. If LANDLORD elects not to repair such TENANT damage,
TENANT shall be entitled to make such repairs, and in that event shall be
entitled to any insurance proceeds received in respect to the cost thereof. In
the event TENANT chooses not to make said repairs, TENANT shall assign LANDLORD
insurance proceeds for damages to LANDLORD's property.
19. INDEMNITY
---------
Except for Landlord's gross negligence, TENANT agrees to hold LANDLORD
harmless from and defend LANDLORD against any and all claims or liability for
any injury or damage to any person or property whatsoever, occurring in the
Demised Premises, the parking areas and grounds, or any public areas of the
Building of which the Demised Premises are a part, when such injury or damage
shall be caused in part or in whole by the negligence of TENANT, or TENANT'S
employees, agents, contractors or invitees.
Except for TENANT's gross negligence, LANDLORD agrees to hold TENANT
harmless from and defend TENANT against any and all claims or liability for any
injury or damage to any person or property whatsoever, occurring in the Demised
Premises, the parking areas and grounds, or any public areas of the Building of
which the Demised Premises are a part, when such injury or damage shall be
caused in part or in whole by the negligence of LANDL0RD, or LANDLORD's
employees, agents, contractors or invitees.
20. WAIVER OF CLAIMS
----------------
Except as to their gross negligence, LANDLORD and LANDLORD'S employees,
agents and invitees shall not be liable for, and TENANT hereby releases all
claims against LANDLORD, LANDLORD'S employees, agents and invitees, for damage
to person or property sustained by TENANT, or any person claiming through TENANT
or any person claiming directly, resulting from fire, accident or any cause
whatsoever in or upon the Demised Premises or the Building of which the Demised
Premises are a part. TENANT hereby agrees to give LANDLORD prompt written notice
of any accident, fire or damage occurring on or to the Demised Premises.
21. ADDITIONAL CONSTRUCTION
-----------------------
LANDLORD hereby reserves the right at any time and from time to time to
make alterations or additions to, and to build additional stories on, the
Building of which the Demised Premises are a part, and to build adjoining the
same. LANDLORD also reserves the right to construct other buildings or to add to
other buildings or to change the configuration and location of landscaping,
parking or other improvements and to permit others to do so. Except for periods
not to exceed five (5) business days, any changes to the Building of which the
Demised Premises are a part, or areas surrounding the Building, will not
materially and adversely affect TENANT's use of the Demised Premises.
9
<PAGE>
22. LANDLORD'S ENTRY FOR REPAIR AND TO RELET
----------------------------------------
TENANT will permit LANDLORD to erect, use and maintain pipes and
conduits in and through the Demised Premises. LANDLORD or its agents shall at
all times have the right to enter upon the Demised Premises (after reasonable
notice to TENANT or without notice to TENANT except that in the case of no
notice TENANT may require LANDLORD to reschedule up to one day) to examine the
same and to show them to prospective purchasers or tenants of the Building, and
to make such decorations, repairs, alterations, improvements or additions as
LANDLORD may deem necessary or desirable, and shall be allowed to take all
material into and upon said Demised Premises that may be required therefor,
without the same constituting an eviction of TENANT in whole or in part and the
Rent reserved shall in no way abate while said decorations, repairs,
alterations, improvements or additions are being made, by reason of loss or
interruption of the business of TENANT because of the prosecution of any such
work. During the six (6) months prior to the expiration of the Term of this
Lease, LANDLORD may exhibit the Demised Premises to prospective tenants.
LANDLORD shall have the right to change the arrangement and/or location of the
parking areas and ground and any public area of the Building of which the
Demised Premises are a part, and after reasonable notice, to change the name,
number of designation by which the Building is commonly known. Nothing herein
contained, however, shall be deemed or construed to impose upon LANDLORD any
obligation, responsibility or liability whatsoever, for the care, supervision or
repair of the Building or any part thereof, other than as herein provided. In
exercising its rights under this Lease, LANDLORD will use reasonable efforts not
to materially or adversely affect TENANT's business operations.
23. ALTERATIONS BY TENANT
---------------------
TENANT shall make no alterations, decorations, additions or
improvements in or to the Premises without LANDLORD'S prior written consent,
which consent will not be unreasonably withheld, and then only by contractors or
mechanics approved by LANDLORD. All alterations, additions or improvements upon
the Demised Premises made by either party shall, unless LANDLORD elects
otherwise, which election must be made by LANDLORD at the time LANDLORD consents
to the improvement, become LANDLORD'S property, and shall remain upon and be
surrendered with said Demised Premises as a part thereof, at the end of the Term
hereof, unless LANDLORD, at its option, which shall be subject to the above
prior notice, shall require its removal from the Demised Premises and the
restoration by TENANT of the said Demised Premises to its former condition.
24. REPAIRS BY TENANT
-----------------
TENANT shall take good care of the Demised Premises and shall, at
TENANT'S own cost and expense, make all repairs in the Demised Premises which
are not LANDLORD's responsibility, and, at the termination of this Lease, shall
surrender the Demised Premises in good condition, reasonable wear and tear
excepted. If TENANT fails to make such repairs, LANDLORD may, at LANDLORD'S
option and at TENANT'S expense, repair all damage or injury to the Demised
Premises caused by TENANT, or TENANT'S employees, agents, or invitees and TENANT
shall promptly reimburse LANDLORD for its expenses to make such repairs.
25. MECHANIC'S LIENS
----------------
TENANT is prohibited from subjecting the Demised Premises or the
Building of which they are a part or the land upon which they are located, or
any part thereof or any interest of LANDLORD therein to any Mechanic's Lien.
If any Mechanic's Lien shall at any time be filed against the Demised
Premises or the Building of which they are a part or the land upon which they
are located or any part thereof or any interest of LANDLORD therein, or if any
encumbrance, charge, mortgage, conditional bill of sale, title retention, or
security agreement shall be filed against the Demised Premises or the Building
of which they are a part or the land upon which they are located or any part
thereof or against any interest of LANDLORD therein, by reason of any work,
labor or services, or materials or equipment furnished to or for TENANT, TENANT
within ten (10) days after notice of the filing thereof, or such shorter period
10
<PAGE>
as may be required by the holder of any mortgage to which this Lease is subject
and subordinate (which shorter period will not be less than five (5) days), will
cause the same to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction, or otherwise. If TENANT shall fail to cause
such encumbrance, charge, etc., to be discharged within the period aforesaid
then, in addition to any other right or remedy, LANDLORD may, but shall not be
obligated to, discharge the same whether by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit or by bonding proceedings,
and in any such event, LANDLORD shall be entitled, if LANDLORD so elects, to
compel the prosecution of an action for the foreclosure of such lien by the
lienor and to pay the amount of the judgment in favor of the lienor with
interest, costs and allowances. Any amounts so paid by LANDLORD and all costs
and expenses incurred by LANDLORD in connection therewith, together with
interest thereon at the highest legal rate from the respective dates of
LANDLORD'S making of the payment or incurring the cost and expense, shall
constitute Additional Rent payable by TENANT under this Lease and shall be paid
to LANDLORD by TENANT on demand. Nothing herein contained shall obligate TENANT
to pay or discharge any lien created by LANDLORD.
Nothing contained in this Lease shall be deemed or construed in any way
as constituting the consent or request of LANDLORD, express or implied by
inference or otherwise, to any contractor, subcontractor, laborer, or
materialmen for the performance of any labor or the furnishing of any materials
for any specific improvement, alteration to or repair of the Demised Premises or
any part thereof, nor as giving TENANT any right, power, or authority to
contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any lien against the Demised
Premises or the Building of which they are a part or the land upon which they
are located, or any part thereof or any interest of LANDLORD therein.
In accordance with Section 713.10, Florida Statutes, the interest of
the Landlord shall not be subject to liens for improvements made by the Tenant.
26. REPAIRS BY LANDLORD
-------------------
LANDLORD shall have no duty to TENANT to make any repairs or
improvements to the Demised Premises except structural repairs necessary for
safety and tenantability and repairs to the Building's major mechanical,
electrical and plumbing systems affecting the Demised Premises, and then only if
not brought about by any act or negligence of TENANT, or TENANT'S employees,
agents, or invitees. LANDLORD shall not be liable to TENANT for any damage
caused to TENANT or TENANT'S property due to the Building or any part or
appurtenances thereof being improperly constructed or being or becoming out of
repair. TENANT agrees to report immediately in writing to LANDLORD any defective
condition in or about the Demised Premises known to TENANT. Except if caused by
its gross negligence, LANDLORD shall not be liable for any damage to any
property in said Demised Premises which results from LANDLORD'S failure to make
said structural repairs. Structural repairs are herein defined as being limited
to foundation, supporting structure, roof and floor slab. LANDLORD shall operate
and maintain (including repair and replace as necessary), at a quality level
equal to similar buildings in the Hollywood area, all Building common areas and
the structural portions of the Building, including the roof, foundation, floor
slab, supporting structures, exterior window, including washing of windows at
least three (3) times yearly on the exterior and at least twice yearly on the
inside, and the mechanical systems, ceiling light bulb replacement, life safety
and HVAC systems (whether they serve the Building in general or the Demised
Premises individually).
27. TENANT PARKING
--------------
TENANT and TENANT'S employees, agents or invitees shall have the right,
on a non-exclusive basis, to use the parking area, which is designated for the
Building of which the Demised Premises are a part, at no additional charge
except as provided in Section 6 of this Lease. LANDLORD reserves unto itself the
right to designate specific areas for employee parking only or to designate
individual parking spaces in the parking area for use by TENANT. LANDLORD,
however, shall have no obligation to make such designation referred to herein.
28. COMPLIANCE WITH LAW BY TENANT
-----------------------------
TENANT agrees not to do or permit anything to be done in or about the
Demised Premises, which might in any way conflict with any law, ordinance, rule
or regulation affecting the use and occupancy of the Demised Premises, which are
now in effect or may hereafter be enacted by any public authority, or in any way
11
<PAGE>
obstruct or interfere with the rights of other tenants of the Building, or
injure or annoy them, nor use or allow the use of the Demised Premises for any
improper, immoral or objectionable purpose. The TENANT agrees that during the
Term of this Lease that it shall comply with all governmental laws, ordinances,
rules or regulations, with regard to the Demised Premises.
29. TIME OF THE ESSENCE
-------------------
It is understood and agreed between the parties hereto that time is of
the essence of this Lease.
30. NOTICES
-------
All notices required under this Lease shall be in writing. Any notice
by LANDLORD to TENANT shall be deemed to be duly given when mailed by certified
mail or nationally recognized overnight delivery service, addressed to TENANT at
the Demised Premises. Any notice by TENANT to LANDLORD shall be deemed duly
given if sent by certified mail or nationally recognized overnight delivery
service, to LANDLORD at 3440 Hollywood Boulevard, Suite 420, Hollywood, Florida
33021, Attn: Property Management, or at such other address as may hereafter be
designated by LANDLORD.
31. SCOPE AND INTERPRETATION OF THE AGREEMENT
-----------------------------------------
This Lease shall be considered to be the only agreement between the
parties hereto pertaining to the Demised Premises. All negotiations and oral
agreements acceptable to both parties are included herein. The laws of the State
of Florida shall govern the validity, interpretation, performance and
enforcement of this Lease.
32. CAPTIONS
--------
Any headings preceding the text of the several paragraphs and
subparagraphs hereof are inserted solely for convenience of reference and shall
not constitute a part of this Lease, nor shall they affect its meaning or
construction.
33. RECORDING
---------
TENANT shall not record this Lease or a short form or memorandum
thereof without LANDLORD'S prior written consent and joinder in such instrument,
provided, however, that TENANT or LANDLORD shall, at the other party's request,
enter into the Short Form Lease Agreement attached hereto as SUPPLEMENT II to
this Lease, which Short Form Lease Agreement either party shall have the right
to record in the Public Records of the County in which the Demised Premises are
located.
34. intentionally omitted
---------------------
35. INSURANCE AND SUBROGATION
-------------------------
A) Coverage: TENANT shall maintain, at its expense, throughout the
Term, for the benefit of LANDLORD and LANDLORD'S Mortgagees, the
following insurance coverages:
(i) general liability insurance for bodily injury and property
damage to protect LANDLORD and TENANT and LANDLORD'S Mortgagee
against damage, costs and attorneys' fees arising out of accidents
of any kind occurring on or about the Premise which coverage shall
not be less than Three Million and No/100 Dollars ($3,000,000.00);
(ii) fire and extended casualty insurance with sufficient coverage
to reimburse the loss of all TENANT'S improvements to the
Premises, and all of TENANT'S fixtures, equipment, personal
property and inventory;
(iii)appropriate worker's compensation and any and all other
insurance required by law.
12
<PAGE>
B) Additional Insureds: All insurance, except the worker's
compensation coverage which shall include a waiver of subrogation
against the LANDLORD and LANDLORD'S Mortgagees, required by Subsection
35(A)above shall name LANDLORD and LANDLORD'S Mortgagees as additional
insureds and be written by a company or companies qualified to do
business in Florida and reasonably acceptable to LANDLORD. A
certificate showing such insurance in force and naming LANDLORD and
LANDLORD'S Mortgagees as additional insureds and waiver of subrogation
for worker's compensation shall be delivered to LANDLORD prior to
the Commencement Date, and such insurance and updated certificates
or renewal policies shall be delivered to LANDLORD no fewer than
thirty (30) days prior to the expiration of the then existing
policies. No policy shall be canceled or subject to reduction in
coverage or other change without at least 30 days advance written
notice to LANDLORD. All policies shall be written as primary
policies not contributing with and not in excess of coverage LANDLORD
may carry. If TENANT shall fail to comply with the requirements of
Subsection 35(A) above or of this Subsection 35(B), LANDLORD shall
have the right, but not the obligation, in addition to all other
rights and remedies available to LANDLORD at law, in equity, and
under this Lease, to procure, at TENANT'S sole cost and expense, the
insurance required by Subsection 35(A) and this Subsection 35(B).
TENANT shall reimburse LANDLORD for all costs and expenses incurred
by LANDLORD in connection with the procurement of said insurance
within five (5) days following LANDLORD'S submission of a statement
therefor to TENANT, plus interest on the amounts expended by
LANDLORD until repayment by TENANT at the maximum rate permitted by
law. No acceptance or approval of any insurance by LANDLORD shall
relieve or release TENANT from any liability, duty or obligation
under this Lease. Whenever any part of the Premises shall have been
damaged or destroyed by fire or other casualty or any other incident
or accident has accrued which gives rise to a potential claim under
an insurance policy to be maintained by TENANT under this Section 35,
TENANT shall promptly make proof of loss in accordance with the terms
of the applicable insurance policies and shall promptly prosecute all
valid claims which may have arisen against the insurers based upon
any such casualty, incident or accident. TENANT shall give LANDLORD
written notice of any potential claims within five (5) days following
the date TENANT acquires actual notice thereof.
(C) Waiver of Subrogation: LANDLORD and TENANT each waive any right
of recovery against the other for any loss to the extent that such
claim is covered by valid and collectible insurance carried for the
benefit of the party entitled to make such claim and provided the
insurer pays such claim. TENANT agrees to obtain waiver of subrogation
clauses for the benefit of the LANDLORD and LANDLORD'S Mortgagees
from all insurers providing the insurance coverages required by
this Section. The foregoing waiver shall not apply if the policy of
insurance covering such loss would be invalidated by the operation
of said waiver.
(A) TENANT shall not do or permit anything to be done or bring into or
keep on or permit anything to be brought into or kept on the Demised
Premises which shall increase the rate of insurance on the building of
which the Demised Premises are a part. If, by reason of the failure of
TENANT to comply with the terms of this Lease,or by reason of TENANT'S
occupancy (even though permitted or contemplated by this Lease), the
insurance rate shall at any time be higher than it would be otherwise,
TENANT shall reimburse LANDLORD for all increases in insurance
premiums charged because of such violation or occupancy by TENANT.
(B) LANDLORD, throughout the Term and at its expense, will procure and
continue to deep in full force and effect, in the name of LANDLORD,
general liability insurance against claims for injuries to persons
and property occurring in the Building and the Common Areas, such
insurance to be in a single limit of ONE MILLION AND NO/100 Dollars
($1,000,000.00) With respect to improvements in the Building,including
the Premises (but excluding TENANT's personal property, furniture
and trade fixtures, and leasehold improvements furnished and installed
by and at the expense of TENANT and not forming a part of the realty),
LANDLORD will procure and maintain, or cause to be procured and
maintained, insurance covering fire and extended coverage, insuring
in an amount of not less than eighty percent (80%) of the replacement
cost thereof (excluding foundation and excavation costs). LANDLORD's
insurer(s) will be licensed to transact business in the State of
Florida. LANDLORD will deliver to TENANT, on request, the customary
certificates(s) evidencing such paid-up insurance. Upon TENANT's
request, but no earlier than thirty (30) days prior to the expiration
of any policy, LANDLORD will deliver to TENANT such certificate(d)
as will evidence a renewal or new policy to take the place of the one
expiring.
13
<PAGE>
36. SERVICES OF LANDLORD
--------------------
So long as TENANT is not in default hereunder, and subject to the
provisions of Article 6 herein, LANDLORD agrees to furnish the Demised Premises,
24 hours per day, all year, with elevator service and with a reasonable amount
of water and electricity suitable for the intended use of the Demised Premises,
and during the business hours and Saturdays from 8 am to Noon, such air
conditioning and heat as may be required for the comfortable occupation of the
Demised Premises. Air conditioning shall be provided by LANDLORD upon reasonable
prior notification from TENANT, at the then-standard rate for the Building.
Notwithstanding the foregoing, air conditioning shall be charged to TENANT at
the "Negotiated Special Rate" for each air conditioning zone in the Demised
Premises as the Demised Premises are constituted prior to execution of this
instrument. The "Negotiated Special Rate" is $7.57 per hour for 1996, increased
by 6% on January 1 of each calendar year. LANDLORD agrees to furnish cleaning
and janitorial services as outlined on Exhibit "G" to this instrument; in
addition, LANDLORD will shampoo TENANT's carpet at LANDLORD's cost once during
the Lease Term upon Tenant's request for same. Subject to the rental abatement
provisions below, LANDLORD, however, shall not be liable for failure to furnish
any of the foregoing when such failure is caused by accidents, or conditions
beyond the control of LANDLORD, or by needed repairs, labor disturbances or
labor disputes of any character, whether resulting from or caused by acts of
LANDLORD or otherwise; nor shall LANDLORD be liable under any circumstances for
loss of or injury to property, however occurring, through or in conjunction with
or incidental to the furnishing of any of the foregoing, nor shall any such
failure relieve TENANT from the duty to pay the full amount of Rent herein
reserved, or constitute or be construed as a constructive or other eviction of
TENANT. In the event that any of the foregoing services to the Premises are
interrupted for more than three (3) consecutive business days and correction of
said interruption is within the control of LANDLORD, TENANT shall be entitled to
an abatement of Base Rent proportionate to TENANT's inability to conduct its
business in the Premises. In any event of an interruption of the above services,
LADLORD will initiate and continue to make diligent efforts to restore said
interrupted service.
If TENANT shall install or maintain any equipment or other machinery,
except standard office machines, which substantially increases LANDLORD'S water
and/or electricity costs, LANDLORD may charge TENANT additional rent as
compensation for excess consumption of water and/or electricity caused by the
operation of said equipment or machinery. This shall not include computers and
auxiliary peripherals or kitchen appliances, televisions or vending machines.
LANDLORD further acknowledges that TENANT will have a separate air conditioner
for its computer room and will reimburse LANDLORD for utilities consumed by said
air conditioner.
37. SIGNS AND WINDOW COVERING
-------------------------
TENANT shall not exhibit, inscribe, paint, or affix any sign,
advertisement, notice or other lettering on any part of the outside of the
Demised Premises or of the building of which the Demised Premises are a part, or
inside the Demised Premises of visible from the outside, or if visible from a
common corridor. TENANT may, with LANDLORD'S prior written approval, install and
thereafter maintain an identification sign on the entrance door to the Demised
Premises.
TENANT shall not install any drapes, curtains, blinds or any other
window covering or overlay of any type, texture, fiber, material or the like on
any window, door or other aperture located at or within the Demised Premises,
without the express written consent of LANDLORD.
38. RULES AND REGULATIONS
---------------------
The Rules and Regulations attached hereto as Exhibit D as well as such
Rules and Regulations as may be hereafter adopted by LANDLORD for the safety,
care and cleanliness of the Premises and the preservation of good order thereon,
are hereby expressly made a part thereof, and TENANT agrees to comply with said
Rules and Regulations, so long as they are not more strictly enforced against
TENANT than against any other tenant. TENANT, and TENANT'S employees, agents,
and invitees shall observe faithfully and comply strictly with the Rules and
Regulations attached to this Lease, and such other and further reasonable Rules
and Regulations as LANDLORD may from time to time adopt. LANDLORD shall not be
liable to TENANT for the violation of any of said Rules and Regulations or the
default in any covenant or condition in any lease by any other tenant in the
Building or by any employees, agents or invitees of any other tenant in the
Building.
14
<PAGE>
39. CONSTRUCTION
------------
Intentionally deleted.
40. ATTORNMENT
----------
If the interests of LANDLORD under this Lease shall be transferred
voluntarily or by reason of foreclosure or other proceedings enforcement of any
mortgage on the Premises, TENANT shall, at the election of such transferee, be
bound to such transferee (herein sometimes called the "Purchaser") for the then
remaining balance of the Term, and any extensions or renewals thereof which may
be effected in accordance with the terms and provisions hereof, with the same
force and effect as if the Purchaser were the LANDLORD under this Lease, and
TENANT does hereby agree to attorn to the Purchaser, including the mortgagee
under any such mortgage if it be the Purchaser, as its landlord, said attornment
to be effective and self-operative without the execution of any further
instruments, upon for the Purchaser succeeding to the interest of LANDLORD under
this Lease. Notwithstanding the foregoing, however, TENANT hereby agrees to
execute any instrument(s) which the Purchaser may deem desirable to evidence
said attornment by TENANT. The respective rights and obligations of TENANT and
the Purchaser upon such attornment, to the extent of the then remaining balance
of the Term of this Lease and any such extensions and renewals, shall be and are
the same as those set forth herein. In the event of such transfer of LANDLORD'S
interests, LANDLORD shall be released and relieved from all liability and
responsibility thereafter accruing to TENANT under this Lease or otherwise, and
LANDLORD'S successor, by acceptance of Rent from TENANT hereunder, shall become
liable and responsible to TENANT in respect to all obligations of LANDLORD under
this Lease accruing from and after the date of such transfer.
41. RELOCATION OF TENANT Intentionally Deleted
---------------------
42. RADON GAS
---------
Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit.
43. HAZARDOUS AND TOXIC SUBSTANCES
------------------------------
In addition to and not by way of limitation of the provisions of
Section 28 above, TENANT hereby covenants with LANDLORD and represents and
warrants to LANDLORD as follows:
(A) TENANT, at its sole cost and expense, will strictly comply with any and
all applicable federal, state and local environmental laws, rules,
regulations, permits and orders affecting the Demised Premises and/or the
business operation of TENANT conducted on the Demised Premises, relating to
the generation, manufacture, recycling, reuse, sale, storage, handling,
transport, or presence of any "Hazardous Materials" (as hereinafter
defined) on the Demised Premises whether now in effect or as may be
promulgated or amended from time to time (collectively, the "Environmental
Laws"). TENANT will not permit or allow the generation, manufacture,
recycling, reuse, sale, storage, handling, transport, or presence of any
Hazardous Materials on the Premises without LANDLORD'S express prior
written consent, which consent LANDLORD may exercise in its sole
discretion. As used in this Section, the term "Hazardous Material(s)" shall
mean any substances defined as or included in the definition of "hazardous
15
<PAGE>
substances", "hazardous wastes", "hazardous materials", "toxic substances",
"contaminants" or other pollution under any applicable Environmental Laws.
Notwithstanding anything to the contrary contained herein, LANDLORD'S
consent to any action by TENANT shall not operate to relieve TENANT of the
obligation to comply with all of the provisions of this Section. TENANT
will not permit or allow, and will take all actions necessary to avoid, the
occurrence of any spills of Hazardous Materials on or off the Demised
Premises as a result of any construction on, or use of, the Demised
Premises. TENANT shall promptly advise LANDLORD in writing immediately upon
becoming aware of (i) the existence of any spills, releases or discharges
of Hazardous Materials that occur on or onto the Demised Premises, or off
the Demised Premises, and of any existing or threatened violation of this
Section; (ii) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened by
any governmental authority with respect to the Demised Premises from time
to time under any applicable Environmental Laws; (iii) any and all claims
made or threatened by any non-governmental party against TENANT or the
Demised Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials or any
violation of applicable Environmental Laws; and (iv) TENANT'S discovery of
any occurrence or condition on any real property adjoining or in the
immediate vicinity of the Demised Premises that could cause the Demised
Premises or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of the Demised Premises under
any Environmental Laws.
(B) Without LANDLORD'S prior written consent, TENANT shall not enter into
any settlement, consent or compromise with respect to any "Environmental
Claim(s)" (as hereinafter defined); provided, however, that LANDLORD'S
prior consent shall not be necessary for TENANT to take any remedial action
if ordered by a court of competent jurisdiction or if the presence of
Hazardous Materials at the Demised Premises poses an immediate, significant
threat to the health, safety or welfare of any individual or otherwise
requires an immediate remedial response. As used in this Section,
"Environmental Claim(s)" shall mean any claim(s) or cause(s) of action
resulting from the failure of TENANT or the Demised Premises to comply with
any Environmental Law relating to Hazardous Materials, industrial hygiene
or environmental conditions. In any event, TENANT shall promptly notify
LANDLORD of any action so taken.
(C) Without limiting the generality of paragraph (A) of this Section, at
all times during the Term of this Lease and any renewals or extensions
hereof, TENANT, at its sole cost and expense, shall comply with any and all
applicable laws, regulations, ordinances, permits and orders regulating the
type and quantity of waste that may be discharged into the sanitary sewer
system serving the Demised Premises, including, but not limited to, all
rules, regulations, permits and orders of any governmental entity having
jurisdiction, or its successor. TENANT agrees to limit its discharges of
waste into the sanitary sewer system to "Domestic Waste Water", as such
term is defined by Florida Law, as amended from time to time, or as the
term may be defined by other laws, regulations, ordinances, permits or
orders presently in effect or hereafter enacted, as such laws, regulations,
ordinances, permits or orders may be amended from time to time. In no
event, however, shall Domestic Waste Water be construed to mean or include
any "Non-Domestic Waste Water" that has undergone "Pre-Treatment" as the
latter term is defined by Florida Law or as defined by other laws,
regulations, ordinances, orders or permits presently in effect or hereafter
enacted, as such laws, regulations, ordinances, orders or permits may be
amended from time to time.
(D) TENANT agrees that (upon reasonable notice or without notice in which
event TENANT may ask LANDLORD to reschedule for up to four hours) LANDLORD
and LANDLORD'S agents and independent contractors may enter and inspect the
Demised Premises at any time, and from time to time, to verify that
TENANT'S operations on the Demised Premises do not violate any of the
provisions of this Section and that they comply with any and all applicable
Environmental Laws. At LANDLORD'S option, LANDLORD may obtain, from time to
time, reports from licensed professional engineers or other environmental
scientists with experience in environmental investigations (which reports
will be done at LANDLORD's sole cost unless same indicate TENANT has
committed an offense under Environmental Laws) and may require TENANT to
permit such licensed professional engineers or other environmental
scientists to conduct complete and thorough on-site inspections of the
Demised Premises, including, without limitation, sampling and analysis of
the soil surface water, groundwater and air, to determine whether TENANT is
in compliance with the provisions of this Section and all Environmental
Laws. TENANT and its agents shall cooperate with LANDLORD and its agents in
connection with the conduct of such investigations. In the event such
investigations disclose that TENANT is in default under this Section 43,
TENANT shall, immediately upon demand, reimburse LANDLORD for all costs and
expenses of such investigations; moreover, LANDLORD may, at its option,
undertake such steps as it deems necessary to cure such default and to
16
<PAGE>
bring the Demised Premises into compliance with the terms of this Section,
and TENANT shall, immediately upon demand, reimburse LANDLORD for all costs
and expenses incurred in curing such default and bringing the Demised
Premises into compliance with the terms of this Section in exercising its
rights under this Paragraph 43 D, LANDLORD will use reasonable efforts not
to interfere with TENANT's business.
(E) TENANT hereby indemnifies and holds LANDLORD harmless from and against
any and all claims, demands, damages, losses, liens, liabilities,
penalties, fines, lawsuits and other proceedings, costs, and expenses
(including, without limitation, reasonable attorneys' fees and costs at
trial and all appellate levels), arising directly or indirectly from, or in
any way connected with: (i) the presence or use, generation, treatment or
storage on, under or about the Demised Premises of any Hazardous Materials
on the Demised Premises caused by TENANT, or the disposal or release of
Hazardous Materials on the Demised Premises caused by TENANT, whether or
not expressly approved by LANDLORD in writing, (ii) the presence of any
Hazardous Materials on or about the Demised Premises, whether or not
expressly approved by LANDLORD in writing, (iii) the presence of any
Hazardous Materials off the Demised Premises as the result of any use of
the Demised Premises, (iv) TENANT's violation or alleged violation of any
Environmental Laws, and regulations promulgated thereunder, as the same may
be amended from time to time, (v) the costs of any necessary inspection,
audit, cleanup or detoxification of the Demised Premises under any
Environmental Laws, and the preparation and implementation of any closure,
remedial or other required plans, consent orders, license applications or
the like, caused by TENANT, or (vi) any default by TENANT under this
Section. All sums paid and costs incurred by LANDLORD with respect to any
Environmental Claim or any other matter indemnified against hereunder shall
be due and payable by TENANT immediately upon demand. If, after demand,
TENANT fails to pay any sums due pursuant to this indemnification, such
sums shall bear interest at the highest rate then permitted by applicable
law, from the date so paid or incurred by LANDLORD until LANDLORD is
reimbursed by TENANT. The indemnification contained herein shall survive
the termination of the leasehold estate created hereby and any assignment
by LANDLORD of its rights under this Lease.
(F) The provisions of this Section 43 shall apply with equal force and
effect to TENANT'S use and occupancy of the Building. Any provision of this
Lease to the contrary notwithstanding, any breach of the covenants,
representations or warranties contained in this Section 43 shall constitute
a default under this Lease and shall entitle LANDLORD, in addition to
LANDLORD'S other rights and remedies available at law, in equity or under
this Lease, to immediately terminate this Lease. LANDLORD represents and
warrants to TENANT to the best of LANDLORD's knowledge that there has not
been and there is not presently any use, handling, storage, transportation,
generation or disposal of hazardous or toxic materials or substances, as
such terms are defined or used in any law, rule or regulation of any
governmental authority having jurisdiction over the Building and Common
Area. To the best of its knowledge, at the time of its execution of this
instrument, LANDLORD further represents and warrants that there is no radon
gas in or about the Premises and that no part of the Premises, including
the walls, ceilings, structural steel, flooring, pipes or boilers, is
wrapped, insulated, fireproofed or surfaced with any asbestos-containing
materials. LANDLORD shall indemnify, defend and hold TENANT harmless from
and against any claims, losses, damages, liabilities, and expenses
(including reasonable attorneys' fees at all pre-trial and appellate
levels, foreseeable and unforeseeable consequential damages, and clean-up
costs) as a result of breach, falsity or inaccuracy of the foregoing. The
foregoing indemnity shall survive the expirations or earlier termination of
this Lease.
44. ADDITIONAL PROVISIONS
---------------------
Insofar as the following additional provisions, if any, conflict with
any of the foregoing provisions, the following additional provisions, if any,
shall prevail:
(A) DELETIONS To the extent that any provision in this Lease has been
deleted by strike out or otherwise crossing out such preprinted provision,
such deleted provision shall be construed to have never been included in
the Lease or to have been a part thereof ab initio.
(B) SIGNAGE LANDLORD has installed and TENANT shall maintain a
building-standard identification sign on the entrance door to the Demised
Premises. TENANT will have at least four building directory strips provided
for its use, on the Building lobby directory. LANDLORD will install
Tenant's name, on the Building pylon sign located furthest west on Sheridan
Street with letters not to exceed five inches. TENANT shall have the right
to install, at its own cost and expense, a sign on the south elevation of
17
<PAGE>
the exterior of the Building. The color scheme of such sign, and the size
of such sign and type of lettering on each sign, shall be similar to the
NationsBank sign located on the building owned by LANDLORD which is
adjacent to the Building. In addition, LANDLORD shall, at LANDLORD'S sole
cost and expense, update any information concerning the tenant which is
contained on the Building's directory. TENANT shall indemnify LANDLORD from
and against any costs or damages incurred by LANDLORD as a result of the
Building sign and shall maintain such sign at TENANT'S sole cost and
expense. Upon the expiration or earlier termination of the Lease, TENANT
shall remove its exterior Building sign and shall make such repairs to the
Building as may be necessary to correct any damage to the Building caused
by such removal.
(C) TENANT'S RIGHT TO TERMINATE LEASE. TENANT shall have the right, in its
sole discretion, to terminate the Lease effective as of September 14, 2000
(the "Termination Date"). TENANT shall exercise its right to terminate by
providing written notice of its election at least 180 days prior to the
Termination Date. Should TENANT elect to so terminate the Lease, it shall
pay to LANDLORD on or before the Termination Date the amount of the
"Termination Fee". The "Termination Fee" shall mean the sum of (A) the
amount which is equal to four times the monthly Base Rent and the monthly
Operating Expenses for the Demised Premises which would have been
applicable during the year 2001 and (B) the amount which is one half of the
amount actually spent by LANDLORD in performing "Landlord's Work" (after
deducting therefrom the Tenant Contribution as defined in the Second
Modification) and "Landlord's Suite 120 Work" as such terms are defined in
the Second Modification.
(D) RESERVED PARKING. TENANT shall have the right to the exclusive use of
the 12 parking spaces (the "Reserved Parking Area") cross-hatched on the
site plan of the Building attached hereto as Exhibit "C" and made a part
hereof. TENANT shall have the right, at its sole cost, to post such signs
and/or make such markings in the Reserved Parking Area as TENANT may deem
reasonably necessary in order to enable TENANT to enforce its rights
therein. TENANT shall have the right, at its sole cost, to employ whatever
lawful means it deems necessary to prevent unauthorized use of the Reserved
Parking Area, including, without limitation, the towing of vehicles. TENANT
shall hold LANDLORD harmless from and against any liability and costs which
LANDLORD may incur as a result of TENANT's enforcement measures.
(E) RIGHT OF FIRST OFFER: RIGHT OF FIRST REFUSAL. Whenever any space on the
second, third and/or fourth floor(s) of the Building (the "Option Space")
becomes vacant and available for lease, LANDLORD shall so notify TENANT and
shall offer TENANT the right to lease the same for the then remaining term
of the Lease upon such economic terms and conditions as LANDLORD reasonably
deems to be representative of the average economic terms (taking into
consideration the length of the remaining term) then prevailing with
respect to comparable space within the Building. LANDLORD's notice of
availability ("Landlord's Notice") shall specify the location and rentable
area of the Option Space in question (the "Offered Space") and shall
further specify the base rent, tenant improvement allowances and other
economic terms upon which TENANT may lease the available space (which terms
shall be determined as set forth above). TENANT shall have 10 days from its
receipt of Landlord's Notice within which to notify LANDLORD that it elects
to lease the Offered Space upon the terms and conditions set forth in
Landlord's Notice. Should TENANT fail or decline to timely notify LANDLORD,
then LANDLORD shall be free to lease the Offered Space to a third party
upon the same, or less tenant-favorable, economic terms and conditions as
were contained in Landlord's Notice. LANDLORD shall not be entitled to
thereafter lease the Offered Space to any other party upon economic terms
and conditions more tenant-favorable than those contained in Landlord's
Notice to TENANT without first offering TENANT, in writing, the opportunity
to lease the Offered Space upon the same, more tenant-favorable, economic
terms and conditions. Upon receipt of any such notice, TENANT shall have
five (5) business days during which to elect to lease the Offered Space
upon the specified economic terms and conditions.
(F) OPTION TO RENEW. Provided TENANT is not in default, LANDLORD grants to
TENANT an option to extend the Term of this Lease Agreement for a period of
five (5) years (the "Extension Period") under the following terms and
conditions:
18
<PAGE>
C. TENANT shall give LANDLORD written notice of its
election to extend the Term at least one hundred
eighty (180) days prior to expiration of the original
Term.
D. The annual Base Rent(as defined in Section 5 above)
for the Extension Period shall be determined by and
adjusted in accordance with Section 5, as if the
Extension Period was part of the original Term.
E. Upon commencement of the Extension Period, LANDLORD
shall provide TENANT a redecorating allowance up to
Five and No/100 Dollars ($5.00) per square foot of
the Demised Premises to be occupied by TENANT during
the Extension Period. LANDLORD shall pay said amount
to TENANT within thirty (30) days of receipt from
TENANT of paid invoices and releases of lien for
refurbishment work to the Demised Premises. If
LANDLORD does not pay the redecorating allowances to
TENANT within the thirty (30) day period, TENANT may
offset said amount against the next due payment of
rent.
F. For the first year of the Extension Period, Operating
Expenses, as defined in Paragraph 6 of the Lease, to
be reimbursed by TENANT to LANDLORD shall be an
amount equal to Tenant's Proportionate Share" of
LANDLORD'S actual Operating Expenses for the Building
for the last full calendar year of the Lease Term
plus four percent (4%), Thereafter, TENANT's
reimbursement to LANDLORD for Operating Expenses
shall increase yearly by four percent (4%).
Thereafter, TENANT"S reimbursement to LANDLORD for
Operating Expenses shall increase yearly by four
percent (4%) over the amount paid by TENANT for
Operating Expenses for the prior year of the Renewal
Term.
G. All the terms, covenants,and conditions of this Lease
shall remain in full force and effect and be
unchanged during the Extension Period.
(G) RIGHT OF FIRST OFFER. At any time during the terms of this Lease or any
extension hereof, TENANT shall have the "First Right of Offer" to lease
from LANDLORD space adjacent to TENANT in the Building, as said space
becomes available. LANDLORD shall notify TENANT of the availability or
impending availability of such space and TENANT shall have fifteen (15)
days from LANDLORD"S mailing, via registered mail, return receipt requested
of said notice, to refuse to lease such space or commit to lease such
space, which refusal or commitment to lease shall be in writing to
LANDLORD. If no answer is received within said period then same shall be
considered a refusal to lease said space. If TENANT commits to lease such
space then the Lease shall be made and delivered within thirty (30) days
from TENANT"S commitment. In the event TENANT refuses to lease said space
or fails to answer as stated above and LANDLORD fails to lease said space
for four (4) months, then LANDLORD will again notify TENANT as stated above
and TENANT shall again have fifteen (15) days to answer as above, terms and
conditions for the new space leased by TENANT under this Paragraph shall be
the same terms and conditions as contained in this Lease except that work
to be done by LANDLORD in said space shall equal the amount per square foot
paid for TENANT"S initial Tenant improvements times the percentage of time
remaining on the Term of the Lease.
(H) OPTION TO REDUCE THE DEMISED PREMISES. TENANT may reduce the size of
the Demised Premises by up to fifty percent (50%) of the square footage of
the Demised Premises (excluding the square footage of Suite 460), and Base
Rent and other charges under this Lease shall be adjusted upon the
effective date of said space reduction, provided that:
H. The space being excluded from the Demised Premises is
a "reasonably releasable configuration with access to
the common area hallway and outside window exposure;
19
<PAGE>
I. TENANT shall reimburse to LANDLORD the unamortized
prorata amount of improvement costs paid by LANDLORD
within the Premises, real estate commissions and
moving allowance;
J. TENANT shall give LANDLORD at least one hundred
twenty (120)days' notice of its intention to exercise
this option to reduce the Premises and provide
therewith a floor plan for LANDLORD'S approval
indicating the space to be excluded from the Demised
Premises.
(I) OPERATIONS. LANDLORD agrees to operate and maintain the Building in
which the Demised Premises is located at least at as high a quality level
as similar suburban office buildings in Broward County, including types of
tenants, general appearance and maintenance and signage.
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease the day and
year hereinafter set forth.
WITNESSES: LANDLORD:
Executed this _____ day of January, 1997.
ACP VENTURE I, LIMITED PARTNERSHIP
a Delaware Limited Partnership
By: ACP Venture Corp., a Florida corporation,
as sole general partner
___________________________ By: _____________________________________
Allen C. de Olazarra, President
___________________________ Attest:___________________________________
As to LANDLORD Name:_____________________________________
Title:____________________________________
(CORPORATE SEAL)
WITNESSES: TENANT:
Executed this _____ day of January, 1997.
SHERIDAN HEALTHCORP, INC.,
a Florida corporation
___________________________ By: _____________________________________
Jay Martus, Vice President & General Counsel
___________________________ Attest:___________________________________
As to TENANT Name:_____________________________________
Title:____________________________________
(CORPORATE SEAL)
20
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
SHERIDAN HEALTHCARE, INC.,
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH),
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
March 12, 1997
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 12, 1997
(the "Agreement"), is made by and among SHERIDAN HEALTHCARE, INC., a Delaware
corporation having its principal place of business in Hollywood, Florida (the
"Borrower"), NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking
association organized and existing under the laws of the United States, in its
capacity as a Lender ("NationsBank"), and each other financial institution
executing and delivering a signature page hereto and each other financial
institution which may hereafter execute and deliver an instrument of assignment
with respect to this Agreement pursuant to Section 12.1 (hereinafter such
financial institutions may be referred to individually as a "Lender" or
collectively as the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a
national banking association organized and existing under the laws of the United
States, in its capacity as agent for the Lenders (in such capacity, and together
with any successor agent appointed in accordance with the terms of Section 11.9,
the "Agent");
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower and NationsBank have heretofore entered into a
Revolving Credit Agreement dated November 1, 1995 (the "Prior Agreement")
pursuant to which NationsBank has agreed to make a revolving credit facility of
up to $45,000,000 to the Borrower, which facility has been guaranteed by certain
subsidiaries and affiliates (the "Guarantors") of the Borrower by Guaranty
Agreements (the "Guarantys"), and the Borrower and the Guarantors have secured
their obligations pursuant to (i) a Security Agreement dated November 1, 1995
(the "Security Agreement") by which the Borrower and the Guarantors have granted
to NationsBank a security interest in property described therein; and
WHEREAS, the Borrower has requested that the Lenders amend and restate
the Prior Agreement in its entirety in order to provide for a revolving credit
facility of up to $35,000,000, the proceeds of which are to be used for general
corporate purposes including working capital, capital expenditures, permitted
acquisitions, and refinancing certain indebtedness and which shall include a
letter of credit facility of up to $2,000,000 for the issuance of standby
letters of credit; and
WHEREAS, the Lenders are willing to make such revolving credit and
letter of credit facilities available to the Borrower upon the terms and
conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
Definitions and Terms
1.1. Amendment and Restatement. The Borrower, the Agent, and the Lender
hereby agree that upon the effectiveness of this Agreement, the terms and
provisions of the Prior Agreement shall be and hereby are amended and restated
in their entirety by the terms and conditions of this Agreement and the terms
and provisions of the Prior Agreement, except as otherwise provided herein,
shall be superseded by this Agreement.
<PAGE>
This Agreement is given as a substitution of, and not as a payment of,
the obligations of Borrower under the Prior Agreement and is not intended to
constitute a novation of the Prior Agreement. Except as otherwise selected by
the Borrower by delivery of a Borrowing Notice prior to the Closing Date in
accordance with the terms hereof, upon the effectiveness of this Agreement all
amounts outstanding and owing by Borrower under the Prior Agreement as of the
Closing Date, as determined by the Lender, shall constitute Advances hereunder
accruing interest with respect to Base Loans under the Prior Agreement, at the
Base Rate hereunder. All of the indebtedness, liabilities and obligations owing
by the Borrower under the Prior Agreement shall continue to be secured by the
"Collateral" as defined in the Prior Agreement and Borrower acknowledges and
agrees that the "Collateral" as defined in the Prior Agreement remains subject
to a security interest in favor of NationsBank in its capacity as Agent
hereunder for the ratable benefit of the Lenders and to secure the liabilities
of Borrower re-evidenced by this Agreement and the other Loan Documents.
1.2. Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest
at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant
for, or conversion of securities into, such equity interest, or (ii) assets
of another Person which constitute all or substantially all of the assets
of such Person or of a line or lines of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with the Borrower; or (ii) which beneficially owns or holds
5% or more of any class of the outstanding voting stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of
the Borrower; or 5% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by the Borrower.
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, whether through ownership of voting stock, by contract or
otherwise.
"Applicable Commitment Percentage" means, with respect to each Lender
at any time, a fraction, the numerator of which shall be such Lender's
Revolving Credit Commitment and the denominator of which shall be the Total
Revolving
2
<PAGE>
Credit Commitment, which Applicable Commitment Percentage for each
Lender as of the Closing Date is as set forth in Exhibit A; provided that
the Applicable Commitment Percentage of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with Section 12.1.
"Applicable Margin" means for each Eurodollar Rate Loan that percent
per annum set forth below, which shall be based upon the Consolidated
Leverage Ratio for the Four-Quarter Period most recently ended as specified
below:
------ --------------------------------------- ----------------------------
Tier Consolidated Leverage Ratio Eurodollar Applicable Margin
------ --------------------------------------- ----------------------------
I Less than 1.50 to 1.00 1.125%
------ --------------------------------------- ----------------------------
II Equal to or greater than 1.50 to 1.00 1.375%
and less than 2.00 to 1.00
------ --------------------------------------- ----------------------------
III Equal to or greater than 2.00 1.625%
to 1.00 and less than 2.50 to 1.00
------ --------------------------------------- ----------------------------
IV Equal to or greater than 2.50 to 1.00 1.875%
and equal to or less than 3.00 to 1.00
------ --------------------------------------- ----------------------------
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to Section 8.1(a)(ii) and Section 8.1(b)(ii), subject to
review and confirmation of such computations by the Agent, and shall be
effective commencing on the first Business Day next following the date such
certificate is received (or, if earlier, the date such certificate was
required to be delivered) until the first Business Day following the date
on which a new certificate is delivered or is required to be delivered,
whichever shall first occur; provided however, if the Borrower shall fail
to deliver any such certificate within the time period required by Section
8.1, then the Applicable Margin shall be Tier IV until the appropriate
certificate is so delivered. From the Closing Date to the first Business
Day next following the date the first certificate is received, the
Applicable Margin shall be 1.625%.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of Credit.
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest under
this Agreement pursuant to Section 12.1.
3
<PAGE>
"Authorized Representative" means any of the Chairman of the Board,
the President, the Chief Financial Officer, the Vice President-Finance, or
the General Counsel of the Borrower or, any other Person expressly
designated by the Board of Directors of the Borrower (or the appropriate
committee thereof) as an Authorized Representative of the Borrower, as set
forth from time to time in a certificate in the form of Exhibit C.
"Base Rate" means the per annum rate of interest equal to the greater
of (i) the Prime Rate or (ii) the Federal Funds Effective Rate plus
one-half of one percent (1/2%). Any change in the Base Rate resulting from
a change in the Prime Rate or the Federal Funds Effective Rate shall become
effective as of 12:01 A.M. of the Business Day on which each such change
occurs. The Base Rate is a reference rate used by the Agent in determining
interest rates on certain loans and is not intended to be the lowest rate
of interest charged on any extension of credit to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made to satisfy
Reimbursement Obligations arising from a drawing under a Letter of Credit.
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body).
"Borrower's Account" means a demand deposit account number 3603892011
or any successor account with the Agent, which may be maintained at one or
more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility, in the form of Exhibit D.
"Business Day" means, (i) with respect to any Base Rate Loan, any day
which is not a Saturday, Sunday or a day on which banks in the States of
New York and North Carolina are authorized or obligated by law, executive
order or governmental decree to be closed and, (ii) with respect to any
Eurodollar Rate Loan, any day which is a Business Day, as described above,
and on which the relevant international financial markets are open for the
transaction of business contemplated by this Agreement in London, England,
New York, New York and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and the
Guarantors, for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) bythe
Borrower or any Guarantor during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and the Guarantors, including
4
<PAGE>
without limitation all transactional costs incurred in connection with such
expenditures provided the same have been capitalized, excluding, however,
the amount of any Capital Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the Agent together with
any compliance certificate delivered pursuant to Section 8.1(a) or (b), and
excluding all expenditures which are included in the Cost of Acquisition
with respect to an Acquisition, and (ii) with respect to any Capital Lease
entered into by the Borrower or a Guarantor during such period, the present
value of the lease payments due under such Capital Lease over the term of
such Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate, that
rate used in the preparation of the financial statements described in
Section 8.1(a)), all the foregoing in accordance with GAAP applied on a
Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board and
any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) other than existing shareholders at
the Closing Date either (A) becomes the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act ), directly or indirectly, of Voting
Stock of the Borrower (or securities convertible into or exchangeable
for such Voting Stock) representing thirty-five percent (35%) or more
of the combined voting power of all Voting Stock of the Borrower (on a
fully diluted basis) or (B) otherwise acquires the ability, directly
or indirectly, to elect a majority of the board of directors of the
Borrower; or
(ii) if TA Associates shall at anytime cease to own, directly or
indirectly, at least fifteen percent (15%) of the combined voting
power of all Voting Stock of the Borrower;or
(iii) during any period of up to 12 consecutive months,
commencing on the Closing Date, individuals who at the beginning of
such 12-month period were directors of the Borrower shall cease for
any reason (other than the death, disability or retirement of an
officer of the Borrower that is serving as a director at such time so
long as another officer of the Borrower replaces such Person as a
director) to constitute a majority of the board of directors of the
Borrower; or
(iv) any Person or two or more Persons who are stockholders other
than existing stockholders as of the Closing Date, either directly or
indirectly, acting in concert shall have acquired, after the Closing
Date, by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the Borrower.
5
<PAGE>
"Closing Date" means the date as of which this Agreement is executed by
the Borrower, the Lenders and the Agent and on which the conditions set forth
in Section 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower, any
Guarantor or any other Person in which the Agent or any Lender is granted a
Lien as security for all or any portion of the Obligations under any Security
Instrument.
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 7.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and the
Guarantors for any Four-Quarter Period ending on the date for which the
computation thereof is being made, the sum of, without duplication, (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) taxes on
income, (iv) amortization, (v) depreciation, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis, and (vi) certain
one-time charges of $17,360,000 incurred in the fourth quarter of 1996;
provided, however, that with respect to an Acquisition that is accounted for
as a"purchase", for the first four Four-Quarter Periods ending after the date
of such Acquisition, the computation of Consolidated EBITDA shall include the
actual historical results of operations of the Person or assets so acquired,
which amounts shall be determined on a historical pro forma basis as if such
Acquisition had been consummated as a "pooling of interests" plus certain
demonstrable cash flow adjustments approved by the Agent.
"Consolidated Fixed Charge Ratio" means, with respect to the Borrower
and the Guarantors for any Four-Quarter Period ending on the date for which
the computation thereof is being made, the ratio of (i) Consolidated EBITDA
for such period plus Consolidated Lease Payments for such period less
(without duplication) Capital Expenditures for such period, to (ii)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to the Borrower and the
Guarantors for any Four-Quarter Period ending on the date for which the
computation thereof is being made, the sum of, without duplication, (i)
Consolidated Interest Expense, (ii) current maturities of Consolidated
Indebtedness as of the end of such Four-Quarter Period (but excluding any
amounts outstanding under the Revolving Credit Facility and any insurance
premium financing plan that fully amortizes within one year) (iii)
Consolidated Lease Payments for such period and (iv) all dividends paid to
shareholders of the Borrower, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
6
<PAGE>
"Consolidated Indebtedness" means all Indebtedness for Money Borrowed
and all Deferred Excess Compensation of the Borrower and the Guarantors, all
determined on a consolidated basis.
"Consolidated Interest Expense" means, with respect to any period ending
on the date for which the computation thereof is being made, the gross
interest expense of the Borrower and the Guarantors, including without
limitation (i) the current amortized portion of debt discounts to the extent
included in gross interest expense, (ii) the current amortized portion of all
fees (including fees payable in respect of any Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included in
gross interest expense and (iii) the portion of any payments made in
connection with Capital Leases allocable to interest expense, all determined
on a consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Lease Payments" means, with respect to any period ending
on the date for which computation thereof is being made, the gross amount of
all lease or rental payments, whether or not characterized as rent, of the
Borrower and the Guarantors, excluding payments in respect of Capital Leases
constituting Indebtedness, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, for any date for which the
computation thereof is being made, the ratio of (i) Consolidated Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such date).
"Consolidated Net Income" means, for any period ending on the date for
which computation thereof is being made, the gross revenues from operations
of the Borrower and the Guarantors (including payments received by the
Borrower and the Guarantors of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by Persons in
which investment is permitted pursuant to this Agreement and not related to
an extraordinary event), less all operating and non-operating expenses of the
Borrower and the Guarantors including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent Basis; but
excluding (for all purposes other than compliance with Section 9.1(a)) hereof
as income: (i) net gains on the sale, conversion or other disposition of
capital assets, (ii) net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Borrower or the
Guarantors, (iii) net gains on the collection of proceeds of life insurance
policies, (iv) any write-up of any asset, and (v) any other net gain or
credit of an extraordinary nature as determined in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date for which the amount
thereof is to be determined, the consolidated stockholder's equity of the
Borrower and the Guarantors as determined in accordance with GAAP minus
(without duplication of deductions in respect of items already deducted in
arriving at consolidated stockholder's equity) (i) all reserves (other than
contingency reserves not allocated to any particular purpose), including
without limitation reserves for depreciation, depletion, amortization,
obsolescence, deferred income taxes, insurance and inventory valuation and
(ii) any treasury stock all as determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
7
<PAGE>
"Consolidated Total Assets" means, as of any date for which the amount
thereof is to be determined, the net book value of all assets of the Borrower
and the Guarantors as determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Contingent Obligation" of any Person means all contingent liabilities
required (or which, upon the creation or incurring thereof, would be
required) to be included in the financial statements (including footnotes) of
such Person in accordance with GAAP applied on a Consistent Basis, including
Statement No. 5 of the Financial Accounting Standards Board, all Rate Hedging
Obligations and Letters of Credit and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or other
obligation of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including obligations of such Person however
incurred:
(1) to purchase such Indebtedness or other obligation or any property
or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the purchase or
payment of such Indebtedness or other obligation, or (ii) to
maintain a minimum working capital, net worth or other balance
sheet condition or any income statement condition of the primary
obligor;
(3) to grant or convey any lien, security interest, pledge, charge or
other encumbrance on any property or assets of such Person to
secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other property or
services primarily for the purpose of assuring the owner or
holder of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or other
obligation; or
(5) otherwise to assure the owner of the Indebtedness or such
obligation of the primary obligor against loss in respect
thereof.
Such liabilities shall be computed at the amount which, in light of all
the facts and circumstances existing at the time, represent in the reasonable
judgment of the Agent the present value of the amount which can reasonably be
expected to become an actual or matured liability. The Borrower shall furnish
to the Agent the calculation of such Contingent Obligations and such
information as it shall reasonably deem necessary in order to calculate such
present value.
8
<PAGE>
"Contract Provider" means any Person or any employee, agent or
subcontractor of such Person who provides professional health care services
under or pursuant to any contract with the Borrower or any Guarantor.
"Cost of Acquisition" means, with respect to any Acquisition, as at the
date of entering into any agreement therefor, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or
options to acquire capital stock of the Borrower or any Guarantor to be
transferred in connection therewith, (ii) the amount of any cash and fair
market value of other property (excluding property described in clause (i)
and the unpaid principal amount of any debt instrument) given as
consideration, (iii) the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of any Indebtedness
incurred, assumed or acquired by the Borrower or any Guarantor in connection
with such Acquisition, (iv) all additional purchase price amounts in the form
of earnouts and other contingent obligations that should be recorded on the
financial statements of the Borrower and the Guarantors in accordance with
GAAP, (v) all amounts paid in respect of covenants not to compete, consulting
agreements that should be recorded as a liability on the financial statements
of the Borrower and the Guarantors in accordance with GAAP, and other
affiliated contracts in connection with such Acquisition, (vi) the aggregate
fair market value of all other consideration given by the Borrower or any
Guarantor in connection with such Acquisition, and (vii) out of pocket
transaction costs for the services and expenses of attorneys, accountants and
other consultants incurred in effecting such transaction, and other similar
transaction costs so incurred.
"Credit Party" means, collectively, the Borrower, each Guarantor and
each other Person providing Collateral pursuant to any Security Instrument.
"Default" means any event or condition which, with the giving or receipt
of notice or lapse of time or both, would constitute an Event of Default
hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two
percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent (2%)
above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Base Rate and
(iii) in any case, the maximum rate permitted by applicable law, if lower.
"Deferred Excess Compensation" means the present value of those amounts
payable to a Person pursuant to an employement contract with the Borrower or
a Guarantor in excess of reasonable compensation for services which present
value is reflected on the balance sheet of the Borrower or such Guarantor as
a liability.
9
<PAGE>
"Dollars" and the symbol "$" means dollars constituting legal tender for
the payment of public and private debts in the United States of America.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than 180 days following the date of issuance thereof
and rated in an investment grade rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by any Lender
or certificates of deposit maturing within one year from the date of
issuance thereof and issued by a bank or trust company organized under
the laws of the United States or of any state thereof having capital
surplus and undivided profits aggregating at least $400,000,000 and
being rated "A-3" or better by S&P or "A" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations described
in paragraphs (a) through (f) above, the shares of which mutual funds
are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock issued
by a Person having a rating of its long term unsecured debt of "A" or
better by S&P or "A-3" or better by Moody's; and
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a trust,
which certificates are rated at least "A-1" by S&P and "P-1" by
Moody's.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees of the
Borrower or any of its ERISA Affiliates or is assumed bythe Borrower or any
of its ERISA Affiliates in connection with any Acquisition or (ii) has at any
time been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
10
<PAGE>
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, as amended,
the Clean Air Act, as amended, the Clean Water Act, as amended, any other
"Superfund" or "Superlien" law or any other federal, or applicable state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or trade
or business which is a member of a group which is under common control with
the Borrower, who together with the Borrower, is treated as a single employer
within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated according
to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
---------------------------
Rate 1-Eurodollar Reserve Percentage Margin
"Eurodollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D or any successor regulation, as the maximum reserve requirement
(including any basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term is defined
in Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate of Eurodollar Rate Loans is
determined), whether or not the Agent or any Lender has any Eurocurrency
liabilities subject to such requirements, without benefits of credits or
proration, exceptions or offsets that may be available from time to time to
the Agent or any Lender. The Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" means any of the occurrences set forth as such in
Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
"Facility Guaranty" means the Amended and Restated Guaranty and
Suretyship Agreement among the Guarantors and the Agent for the benefit of
11
<PAGE>
the Lenders, delivered as of the Closing Date and such other Guaranty and
Suretyship Agreements otherwise pursuant to Section 8.20, as the same may be
amended, modified or supplemented.
"Facility Termination Date" means the date on which the Revolving Credit
Termination Date shall have occurred, no Letters of Credit shall remain
outstanding and the Borrower shall have fully, finally and irrevocably paid
and satisfied all Obligations.
"Federal Funds Effective Rate" means, for any day, the rate per annum
(rounded upward to the nearest 1/100th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Effective Rate for such day shall be such rate on such
transactions on the next preceding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds
Effective Rate for such day shall be the average rate quoted to the Agent on
such day on such transaction as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the Borrower and
the Guarantors commencing on January 1 of each calendar year and ending on
December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law, ordinance,
code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability or standards of
conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and the Guarantors, taken together as one accounting
period.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances as
of the date of a report.
"Government Securities" means direct obligations of, or obligations the
timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
12
<PAGE>
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
"Guarantors" means, at any date, the Subsidiaries, Partnerships and
professional corporations or associations whose financial results are
included in the consolidated financial statements of the Borrower.
"Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law.
"HCFA" means the United States Health Care Financing Administration and
any successor thereto.
"Indebtedness" means with respect to any Person, without duplication,
all Indebtedness for Money Borrowed, all indebtedness of such Person for the
acquisition of property, all indebtedness secured by any Lien on the property
of such Person whether or not such indebtedness is assumed, all Letter of
Credit Outstandings, all liability of such Person by way of endorsements
(other than for collection or deposit in the ordinary course of business),
and all Contingent Obligations; but excluding all accounts payable and
accrued expenses in the ordinary course of business so long as payment
therefor is due within one year; provided that in no event shall the term
Indebtedness include surplus and retained earnings, lease obligations (other
than pursuant to Capital Leases), reserves for deferred income taxes and
investment credits, other deferred credits or reserves, or deferred
compensation obligations.
"Indebtedness for Money Borrowed" means with respect to any Person,
without duplication, all indebtedness in respect of money borrowed, including
without limitation all Capital Leases, all insurance premium financing and
the deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title retention
agreements), other than trade payables incurred in the ordinary course of
business.
"Interbank Offered Rate" means, with respect to any Eurodollar Rate Loan
for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If or any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, with respect to any Eurodollar Rate Loan
for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars
at approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period;
13
<PAGE>
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or converted and
ending, at the Borrower's option, on the date one, two, three, or six months
thereafter as notified to the Agent by the Authorized Representative three
(3) Business Days prior to the beginning of such Interest Period; provided,
that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) Business Days
prior to the first day of such Interest Period, the Loan for
which such Interest Period was to be determined shall be deemed
to be a Base Rate Loan as of the first day thereof;
(ii)if an Interest Period for a Eurodollar Rate Loan would
end on a day which is not a Business Day, such Interest Period
shall be extended to the next Business Day (unless such extension
would cause the applicable Interest Period to end in the
succeeding calendar month, in which case such Interest Period
shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date; and
(v) there shall not be more than five (5) Interest Periods
in effect on any day.
"Interest Rate Selection Notice" means the written notice delivered by
an Authorized Representative in connection with the election of a subsequent
Interest Period for any Eurodollar Rate Loan or the conversion of any
Eurodollar Rate Loan into a Base Rate Loan or the conversion of any Base Rate
Loan into a Eurodollar Rate Loan, in the form of Exhibit E.
"Issuing Bank" means initially NationsBank and thereafter any Lender
which is successor to NationsBank as issuer of Letters of Credit under
Article III.
"LCAccount Agreement" means the LC Account Agreement dated as of the
date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
14
<PAGE>
Lender) as such Lender may from time to time specify to the Authorized
Representative and the Agent as the office by which its Loans are to be made
and maintained.
"Letter of Credit" means a standby letter of credit issued by the
Issuing Bank for the account of the Borrower in favor of a Person advancing
credit or securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters of
Credit and Reimbursement Obligations up to an aggregate amount at any one
time outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Letter of Credit Commitment as the same may be increased or
decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in Article III
hereof providing for the issuance by the Issuing Bank for the account of the
Borrower of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding the Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of determination,
the aggregate amount remaining undrawn under all Letters of Credit plus
Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any 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. For the purposes of
this Agreement, the Borrower and any Guarantor shall be deemed to be the
owner of any property which 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 any borrowing pursuant to an Advance under the
Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, the Swap Agreements, and
all other instruments and documents heretofore or hereafter executed or
delivered to or in favor of any Lender or the Agent in connection with the
Loans made and transactions contemplated under this Agreement, as the same
may be amended, supplemented or replaced from the time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of the
Borrower or any of the Guarantors, taken as a whole, (ii) the ability of any
Credit Party to pay or perform its respective obligations, liabilities and
indebtedness under the Loan Documents as such payment or performance becomes
due in accordance with the terms thereof, or (iii) the rights, powers and
remedies of the Agent or any Lender under any Loan Document or the validity,
legality or enforceability thereof (including for purposes of clauses (ii)
and (iii) the imposition of burdensome conditions thereon).
15
<PAGE>
"Material Subsidiary" means any direct or indirect Subsidiary of the
Borrower which (i) has total assets equal to or greater than 5% of
Consolidated Total Assets (calculated as of the end of the most recent fiscal
period with respect to which the Agent shall have received financial
statements required to be delivered pursuant to Sections 8.1(a) or (b) (or if
prior to delivery of any financial statements pursuant to such Sections, then
calculated with respect to the Fiscal Year end financial statements
referenced in Section 7.6) (the "Required Financial Information")) or (ii)
has net income equal to or greater than 5% of Consolidated Net Income
(calculated for the most recent period for which the Agent has received the
Required Financial Information).
"Material Partnership" means (i) any general or limited partnership in
which the Borrower or a Guarantor is a General Partner, or (ii) any general
or limited partnership in which the Borrower or a Guarantor is a Limited
Partner and (A) has total assets equal to or greater than 5% of Consolidated
Total Assets (calculated as of the most recent fiscal period with respect to
which the Agent shall have received the Required Information or (B) has net
income equal to or greater than 5% of Consolidated Net Income (calculated for
the most recent period for which the Agent has received the Required
Financial Information).
"Medicaid Certification" means certification by HCFA or a state agency
or entity under contract with HCFA that health care operations are in
compliance with all the conditions of participation set forth in the Medicaid
Regulations.
"Medicaid Provider Agreement" means an agreement entered into between a
state agency or other such entity administering the Medicaid program and a
health care operation under which the health care operation agrees to provide
services for Medicaid patients in accordance with the terms of the agreement
and Medicaid Regulations.
"Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the
Social Security Act and any statutes succeeding thereto; (ii) all applicable
provisions of all federal rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (i) above and all federal administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
16
<PAGE>
described in clause (i) above; (iii) all state statutes and plans for medical
assistance enacted in connection with the statutes and provisions described
in clauses (i) and (ii) above; and (iv) all applicable provisions of all
rules, regulations, manuals and orders of all Governmental Authorities
promulgated pursuant to or in connection with the statutes described in
clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law
promulgated pursuant to or in connection with the statutes described in
clause (ii) above, in each case as may be amended, supplemented or otherwise
modified from time to time.
"Medicare Certification" means certification by HCFA or a state agency
or entity under contract with HCFA that the health care operation is in
compliance with all the conditions of participation set forth in the Medicare
Regulations.
"Medicare Provider Agreement" means an agreement entered into between a
state agency or other such entity administering the Medicare program and a
health care operation under which the health care operation agrees to provide
services for Medicare patients in accordance with the terms of the agreement
and Medicare Regulations.
"Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established
by Title XVIII of the Social Security Act and any statutes succeeding
thereto; together with all applicable provisions of all rules, regulations,
manuals and orders and administrative, reimbursement and other guidelines
having the force of law of all Governmental Authorities (including without
limitation, Health and Human Services ("HHS"), HCFA, the Office of the
Inspector General for HHS, or any person succeeding to the functions of any
of the foregoing) promulgated pursuant to or in connection with any of the
foregoing having the force of law, as each may be amended, supplemented or
otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making,
or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States of
America or of any municipal corporation or other public body organized under
the laws of any such state which are rated in the highest investment rating
category by both S&P and Moody's.
"Net Proceeds" from the issuance of equity or Indebtedness means cash
payments received therefrom as and when received, net of all legal,
accounting, banking, underwriting, title and recording fees and expenses,
commissions, discounts and other issuance expenses incurred in connection
therewith and all taxes required to be paid or accrued as a consequence of
such transaction.
17
<PAGE>
"Notes" means, collectively, the promissory notes of the Borrower
evidencing Revolving Loans executed and delivered to the Lenders as provided
in Section 2.5 substantially in the form of Exhibit F.
"Obligations" means the obligations, liabilities and Indebtedness of the
Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, (iii) all liabilities of Borrower to any
Lender which arise under a Swap Agreement, and (iv) the payment and
performance of all other obligations, liabilities and Indebtedness of the
Borrower to the Lenders or the Agent hereunder, under any one or more of the
other Loan Documents or with respect to the Loans.
"Participation" means, with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented by
the participation of such Lender hereunder in the liability of the Issuing
Bank in respect of a Letter of Credit issued by the Issuing Bank in
accordance with the terms hereof.
"Partnership" means any general or limited partnership (as defined by
the Florida Uniform Partnership Act) in which the Borrower or a Guarantor is
a partner.
"Partnership Interests" shall have the meaning therefor provided in the
Pledge Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which (i) is maintained for employees of the Borrower or any of its ERISA
Affiliates or is assumed by the Borrower or any of its ERISA Affiliates in
connection with any Acquisition or (ii) has at any time been maintained for
the employees of the Borrower or any current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the context
may indicate), (i) that certain Amended and Restated Securities Pledge
Agreement dated as of the date hereof by and among the Borrower, certain
Guarantors and the Agent for the benefit of the Agent and the Lenders, and
(ii) any additional Pledge Agreement delivered to the Agent pursuant to
Section 8.20 as hereafter amended, supplemented or replaced from time to
time.
"Pledged Partnership Interests" has the meaning given to such term in
the Pledge Agreement.
18
<PAGE>
"Pledged Securities" has the meaning given to such term in the Pledge
Agreement.
"Pledged Stock" has the meaning given to such term in the Pledge
Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any state of
the United States of America or of any municipal corporation or other public
body organized under the laws of any such state which are rated, based on the
escrow, in the highest investment rating category by both S&P and Moody's and
which have been irrevocably called for redemption and advance refunded
through the deposit in escrow of Government Securities or other debt
securities which are (i) not callable at the option of the issuer thereof
prior to maturity, (ii) irrevocably pledged solely to the payment of all
principal and interest on such obligations as the same becomes due and (iii)
in a principal amount and bear such rate or rates of interest as shall be
sufficient to pay in full all principal of, interest, and premium, if any, on
such obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
"Prime Rate" means the rate of interest per annum announced publicly by
the Agent as its prime rate from time to time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the Agent.
"Principal Office" means the office of the Agent at NationsBank,
National Association (South), Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of the Borrower
or any Guarantor, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations,
buybacks, reversals, terminations or assignments of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing Date in
United States federal or state laws or regulations (including Regulation D
and capital adequacy regulations) or foreign laws or regulations or the
adoption or making after such date of any interpretations, directives or
19
<PAGE>
requests applying to a class of banks, which includes any of the Lenders,
under any United States federal or state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof
or compliance by any Lender with any request or directive regarding capital
adequacy, including those relating to "highly leveraged transactions,"
whether or not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed prior to
the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation of the
Borrower with respect to any Letter of Credit to reimburse the Issuing Bank
and the Lenders to the extent of their respective Participations (including
by the receipt by the Issuing Bank of proceeds of Loans pursuant to Section
3.2) for amounts theretofore paid by the Issuing Bank pursuant to a drawing
under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into with
any financial institution whose debt obligations or commercial paper are
rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least (i) if there shall
be two (2) or less Lenders, 100% of the aggregate Credit Exposures of all
Lenders on such date, (ii) if there shall be three (3) Lenders, 66-2/3%, and
(iii) if there shall be more than three (3) Lenders, 51%, of the aggregate
Credit Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "Credit Exposure" of each Lender shall
be equal to the aggregate principal amount of the Loans owing to such Lender
plus the aggregate unutilized amounts of such Lender's Revolving Credit
Commitment plus the amount of such Lender's Applicable Commitment Percentage
of Letter of Credit Outstandings; provided that, if any Lender shall have
failed to pay to the Issuing Bank its Applicable Commitment Percentage of any
drawing under any Letter of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable to Letters of Credit
and Reimbursement Obligations shall be deemed to be held by the Issuing Bank
for purposes of this definition.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of the Guarantors (other than those payable or distributable
solely to the Borrower or another Guarantor) now or hereafter outstanding,
except a dividend payable solely in shares of a class of stock to the holders
of that class; (b) any redemption, conversion, exchange, retirement or
similar payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of Borrower or any of the Guarantors
(other than those payable or distributable solely to the Borrower or another
Guarantor) now or hereafter outstanding; (c) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of stock of Borrower or any Guarantor now or
hereafter outstanding; and (d) any issuance and sale of capital stock of any
Guarantor (or any option, warrant or right to acquire such stock) other than
to the Borrower or another Guarantor.
20
<PAGE>
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make Loans to the Borrower up to an aggregate
principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in Article II
hereof providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of determination,
the aggregate principal amount of all Loans then outstanding and all interest
accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date or (ii) such earlier date of termination of Lenders' obligations
pursuant to Section 10.1 upon the occurrence of an Event of Default, or (iii)
such date as the Borrower may voluntarily and permanently terminate the
Revolving Credit Facility by payment in full of all Revolving Credit
Outstandings and Letter of Credit Outstandings and cancellation of all
Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance under the
Revolving Credit Facility in accordance with Article II.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill.
"Security Agreement" means, collectively (or individually as the context
may indicate), (i) the Amended and Restated Security Agreement dated as of
the date hereof by the Borrower and the Guarantors to the Agent, and (ii) any
additional Security Agreement delivered to the Agent pursuant to Section 8.20
as hereafter modified, amended or supplemented from time to time.
"Security Instruments" means, collectively, the Pledge Agreement, the
Security Agreement, and all other agreements, instruments and other
documents, whether now existing or hereafter in effect, pursuant to which the
Borrower or any Guarantor shall grant or convey to the Agent or the Lenders a
Lien in property as security for all or any portion of the Obligations, as
any of them may be amended, modified or supplemented from time to time.
"Single Employer Plan" means any employee pension benefit plan covered
by Title IV of ERISA in respect of which the Borrower or any Guarantor is an
"employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
21
<PAGE>
"Solvent" means, when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means March 11, 2000.
"Subsidiary" means any corporation or other entity in which more than
50% of its outstanding voting stock or more than 50% of all equity interests
is owned directly or indirectly by the Borrower and/or by one or more of the
Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the Borrower and
any Lender with respect to Indebtedness evidenced by any or all of the Notes,
on terms mutually acceptable to Borrower and such Person and approved by each
of the Lenders, which agreements create Rate Hedging Obligations.
"Termination Event" means: (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation); or (ii) the withdrawal
of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or was deemed such under Section 4068(f) of ERISA; or (iii) the
termination of a Pension Plan, the filing of a notice of intent to terminate
a Pension Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan; or (vii) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii) any
event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively;
or (ix) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the
PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$2,000,000.
22
<PAGE>
"Total Revolving Credit Commitment" means a principal amount equal to
$35,000,000, as reduced from time to time in accordance with Section 2.7.
-----------
"Voting Stock" means shares of capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
1.3. Rules of Interpretation.
------------------------
(a) All accounting terms not specifically defined herein shall have the
meanings assigned to such terms and shall be interpreted in accordance with
GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise defined
herein, except to the extent that the Uniform Commercial Code of another
jurisdiction is controlling, in which case such terms shall have the meaning
given in the Uniform Commercial Code of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used herein or in
any other Loan Document are solely for convenience of reference and shall not
constitute a part of any such document or affect the meaning, construction or
effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan Document shall
apply to the singular as well as the plural form of such defined term, and
all references to the masculine gender shall include reference to the
feminine or neuter gender, and vice versa, as the context may require.
(f) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the
whole of the applicable document and not to any particular article, section,
subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned.
23
<PAGE>
(h) All dates and times of day specified herein shall refer to such
dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel have
reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule ofconstruction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other Person by
reference to the title of such officer shall be deemed to refer to each other
officer of such Person, however titled, exercising the same or substantially
similar functions.
(k) All references to any agreement or document as amended, modified or
supplemented, or words of similar effect, shall mean such document or
agreement, as the case may be, as amended, modified or supplemented from time
to time only as and to the extent permitted therein and in the Loan
Documents.
ARTICLE II
The Revolving Credit Facility
-----------------------------
2.1. Revolving Loans.
---------------
(a) Commitment. Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Advances to the Borrower under the
Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total
borrowing requested by the Borrower on any day determined by such Lender's
Applicable Commitment Percentage up to but not exceeding the Revolving Credit
Commitment of such Lender, provided, however, that the Lenders will not be
required and shall have no obligation to make any such Advance (i) so long as
a Default or an Event of Default has occurred and is continuing or (ii) if
the Agent has accelerated the maturity of any of the Notes as a result of an
Event of Default; provided further, however, that immediately after giving
effect to each such Advance, the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings shall not exceed the Total
Revolving Credit Commitment. Within such limits, the Borrower may borrow,
repay and reborrow under the Revolving Credit Facility on a Business Day from
the Closing Date until, but (as to borrowings and reborrowings) not
including, the Revolving Credit Termination Date; provided, however, that (y)
no Revolving Loan that is a Eurodollar Rate Loan shall be made which has an
Interest Period that extends beyond the Stated Termination Date and (z) each
Revolving Loan that is a Eurodollar Rate Loan may, subject to the provisions
of Section 2.8, be repaid only on the last day of the Interest Period with
respect thereto unless such payment is accompanied by the additional payment,
if any, required by Section 5.4.
24
<PAGE>
(b) Amounts. Except as otherwise permitted by the Lenders from time to
time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus Letter of Credit Outstandings shall not exceed at any time
the Total Revolving Credit Commitment, and, in the event there shall be
outstanding any such excess, the Borrower shall immediately make such
payments and prepayments as shall be necessary to comply with this
restriction. Each Revolving Loan hereunder, other than Base Rate Refunding
Loans, and each conversion under Section 2.8, shall be in an amount of at
least (i) $500,000, and, if greater than $500,000, an integral multiple of
$500,000 in the case of Eurodollar Rate Loans, and (ii) $100,000, and if
greater than $100,000, an integral multiple of $100,000 in the case of Base
Rate Loans.
(c) Advances. (i) An Authorized Representative shall give the Agent (1)
at least three (3) Business Days' irrevocable written notice by telefacsimile
transmission of a Borrowing Notice or Interest Rate Selection Notice (as
applicable) with appropriate insertions, effective upon receipt, of each
Revolving Loan that is a Eurodollar Rate Loan (whether representing an
additional borrowing hereunder or the conversion of a borrowing hereunder
from Base Rate Loans to Eurodollar Rate Loans) prior to 11:00 A.M. and (2)
irrevocable written notice by telefacsimile transmission of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions, effective upon receipt, of each Revolving Loan (other than Base
Rate Refunding Loans to the extent the same are effected without notice
pursuant to Section 2.1(c)(iv)) that is a Base Rate Loan (whether
representing an additional borrowing hereunder or the conversion of borrowing
hereunder from Eurodollar Rate Loans to Base Rate Loans) prior to 11:00 A.M.
on the day of such proposed Revolving Loan. Each such notice shall specify
the amount of the borrowing, the type of Revolving Loan (Base Rate or
Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan, the
Interest Period to be used in the computation of interest. Notice of receipt
of such Borrowing Notice or Interest Rate Selection Notice, as the case may
be, together with the amount of each Lender's portion of an Advance requested
thereunder, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 11:00 A.M.) not later than 1:00 P.M. on the same day
as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 2.1, each Lender shall, pursuant to the terms and subject
to the conditions of this Agreement, make the amount of the Advance or
Advances to be made by it on such day available by wire transfer to the Agent
in the amount of its pro rata share, determined according to such Lender's
Applicable Commitment Percentage of the Revolving Loan or Revolving Loans to
be made on such day. Such wire transfer shall be directed to the Agent at the
Principal Office and shall be in the form of Dollars constituting immediately
available funds. The amount so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower by
delivery of the proceeds thereof to the Borrower's Account or otherwise as
shall be directed in the applicable Borrowing Notice by the Authorized
Representative and reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to convert the Revolving
Loans in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time, provided, however, there shall not
be outstanding at any one time Eurodollar Rate Loans having more than five
(5) different Interest Periods. If the Agent does not receive a Borrowing
25
<PAGE>
Notice or an Interest Rate Selection Notice giving notice of election of the
duration of an Interest Period or of conversion of any Loan to or
continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
Section 2.1(c) or 2.8, the Borrower shall be deemed to have elected to
convert such Loans to (or continue such Loan as) a Base Rate Loan until the
Borrower notifies the Agent in accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, and the Borrower shall not immediately fully
reimburse the Issuing Bank in respect of such drawing, (A) provided that the
conditions to making a Revolving Loan as herein provided shall then be
satisfied, the Reimbursement Obligation arising from such drawing shall be
paid to the Issuing Bank by the Agent without the requirement of notice to or
from the Borrower from immediately available funds which shall be advanced as
a Base Rate Refunding Loan by each Lender under the Revolving Credit Facility
in an amount equal to such Lender's Applicable Commitment Percentage of such
Reimbursement Obligation, and (B) if the conditions to making a Revolving
Loan as herein provided shall not then be satisfied, each of the Lenders
shall fund by payment to the Agent (for the benefit of the Issuing Bank) in
immediately available funds the purchase from the Issuing Bank of their
respective Participations in the related Reimbursement Obligation based on
their respective Applicable Commitment Percentages of the Total Letter of
Credit Commitment. If a drawing is presented under any Letter of Credit in
accordance with the terms thereof and the Borrower shall not immediately
reimburse the Issuing Bank in respect thereof, then notice of such drawing or
payment shall be provided promptly by the Issuing Bank to the Agent and the
Agent shall provide notice to each Lender by telephone or telefacsimile
transmission. If notice to the Lenders of a drawing under any Letter of
Credit is given by the Agent at or before 12:00 noon on any Business Day,
each Lender shall, pursuant to the conditions specified in this Section
2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of
its Participation in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such amount to the Agent
for the account of the Issuing Bank at the Principal Office in Dollars and in
immediately available funds before 2:30 P.M. on the same Business Day. If
notice to the Lenders of a drawing under a Letter of Credit is given by the
Agent after 12:00 noon on any Business Day, each Lender shall, pursuant to
the conditions specified in this Section 2.1(c)(iv), either make a Base Rate
Refunding Loan or fund the purchase of its Participation in the amount of
such Lender's Applicable Commitment Percentage of such drawing or payment and
shall pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 12:00
noon on the next following Business Day. Any such Base Rate Refunding Loan
shall be advanced as, and shall continue as, a Base Rate Loan unless and
until the Borrower converts such Base Rate Loan in accordance with the terms
of Section 2.8.
2.2. Payment of Interest. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Revolving Loan made by such Lender for the period commencing
on the date of such Revolving Loan until such Revolving Loan shall be due at
the then applicable Base Rate for Base Rate Loans or applicable Eurodollar
Rate for Eurodollar Rate Loans, as designated by the Authorized
Representative pursuant to Section 2.1; provided, however, that if any amount
shall not be paid when due (at maturity, by acceleration or otherwise), all
amounts outstanding hereunder shall bear interest thereafter at the Default
Rate. 26
<PAGE>
(b) Interest on each Revolving Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Revolving Loan shall be paid (i) quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing March 31, 1997 for each Base Rate Loan, (ii) on the last day of
the applicable Interest Period for each Eurodollar Rate Loan, and (iii) upon
payment in full of the principal amount of such Revolving Loan.
2.3. Payment of Principal . The principal amount of each Revolving Loan
shall be due and payable to the Agent for the benefit of each Lender in full
on the Revolving Credit Termination Date, or earlier as specifically provided
herein. The principal amount of any Base Rate Loan may be prepaid in whole or
in part at any time. The principal amount of any Eurodollar Rate Loan may be
prepaid only at the end of the applicable Interest Period unless the Borrower
shall pay to the Agent for the account of the Lenders the additional amount,
if any, required under Section 5.4. All prepayments of Revolving Loans made
by the Borrower shall be in the amount of (i) $500,000 or such greater amount
which is an integral multiple of $100,000 in the case of Eurodollar Rate
Loans, (ii) $100,000 or such greater amount which is an integral multiple of
$100,000 in the case of Base Rate Loans, or (iii) the amount equal to all
Revolving Credit Outstandings or such other amount as necessary to comply
with Section 2.1(b) or Section 2.8.
2.4. Non-Conforming Payments. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount
required to be paid to the Lenders with respect to the Revolving Loans, shall
be made to the Agent at the Principal Office, for the account of each Lender,
in Dollars and in immediately available funds before 12:30 P.M. on the date
such payment is due. The Agent may, but shall not be obligated to, debit the
amount of any such payment which is not made by such time to any ordinary
deposit account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later
of (i) the time such funds become available funds and (ii) the next Business
Day. Any non-conforming payment may constitute or become a Default or Event
of Default. Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until the later of (x) the date such funds
become available funds or (y) the next Business Day at the Default Rate from
the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes becomes
due and payable on a day other than a Business Day, then such due date shall
be extended to the next succeeding Business Day unless provided otherwise
under clause (ii) of the definition of "Interest Period"; provided that
interest shall continue to accrue during the period of any such extension and
provided further, that in no event shall any such due date be extended beyond
the Revolving Credit Termination Date.
27
<PAGE>
2.5. Notes. Revolving Loans made by each Lender shall be evidenced by
the Note payable to the order of such Lender in the respective amount of its
Applicable Commitment Percentage of the Revolving Credit Commitment, which
Note shall be dated the Closing Date or a later date pursuant to an
Assignment and Acceptance and shall be duly completed, executed and delivered
by the Borrower.
2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans
and the fees described in Section 2.10 shall be made to the Agent for the
account of the Lenders pro rata based on their Applicable Commitment
Percentages, (b) all payments to be made by the Borrower for the account of
each of the Lenders on account of principal, interest and fees, shall be made
without diminution, setoff, recoupment or counterclaim, and (c) the Agent
will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
2.7. Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than five (5) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business
Day of receipt of such notice, telefacsimile notice, or telephonic notice
(confirmed in writing), of such reduction. Each such reduction shall be in
the aggregate amount of $1,000,000 or such greater amount which is in an
integral multiple of $500,000, or the entire remaining Total Revolving Credit
Commitment, and shall permanently reduce the Total Revolving Credit
Commitment. Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Revolving Loans to the extent that the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment after giving
effect to such reduction, together with accrued and unpaid interest on the
amounts prepaid. No such reduction shall result in the payment of any
Eurodollar Rate Loan other than on the last day of the Interest Period of
such Eurodollar Rate Loan unless such prepayment is accompanied by amounts
due, if any, under Section 5.4.
2.8. Conversions and Elections of Subsequent Interest Periods . Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Article V, the Borrower
may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 11:00 A.M. on any
Business Day, convert all or a part of Eurodollar Rate Loans to Base Rate
Loans on the last day of the Interest Period for such Eurodollar Rate Loans;
and
28
<PAGE>
(b) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 11:00 A.M. three (3)
Business Days' prior to the date of such election or conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day.
Each election and conversion pursuant to this Section 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the
definition of "Interest Period" herein and in Sections 2.1, 2.3 and Article
V. The Agent shall give written notice to each Lender of such notice of
election or conversion prior to 3:00 P.M. on the day such notice of election
or conversion is received. All such continuations or conversions of Loans
shall be effected pro rata based on the Applicable Commitment Percentages of
the Lenders.
2.9. Increase and Decrease in Amounts. The amount of the Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall
be reduced by the aggregate amount of Outstanding Letters of Credit.
2.10. Fee . For the period beginning on the Closing Date and ending on
the Revolving Credit Termination Date, the Borrower agrees to pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to 0.375% per annum multiplied by
the average daily amount by which the Total Revolving Credit Commitment
exceeds the sum of (i) Revolving Credit Outstandings plus (ii) Letter of
Credit Outstandings. Such fees shall be due in arrears on the last Business
Day of each March, June, September and December commencing March 31, 1997 to
and on the Revolving Credit Termination Date. Notwithstanding the foregoing,
so long as any Lender fails to make available any portion of its Revolving
Credit Commitment when requested, such Lender shall not be entitled to
receive payment of its pro rata share of such fee until such Lender shall
make available such portion. Such fee shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.
2.11. Deficiency Advances . No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan or fund its purchase of any Participation hereunder nor shall
the Revolving Credit Commitment of any Lender hereunder be increased as a
result of such default of any other Lender. Without limiting the generality
of the foregoing, in the event any Lender shall fail to advance funds to the
Borrower as herein provided, the Agent may in its discretion, but shall not
be obligated to, advance under the Revolving Note in its favor as a Lender
29
<PAGE>
all or any portion of such amount or amounts (each, a "deficiency advance")
and shall thereafter be entitled to payments of principal of and interest on
such deficiency advance in the same manner and at the same interest rate or
rates to which such other Lender would have been entitled had it made such
advance under its Revolving Note; provided that, upon payment to the Agent
from such other Lender of the entire outstanding amount of each such
deficiency advance, together with accrued and unpaid interest thereon, from
the most recent date or dates interest was paid to the Agent by the Borrower
on each Revolving Loan comprising the deficiency advance at the interest rate
per annum for overnight borrowing by the Agent from the Federal Reserve Bank,
then such payment shall be credited against the applicable Revolving Note of
the Agent in full payment of such deficiency advance and the Borrower shall
be deemed to have borrowed the amount of such deficiency advance from such
other Lender as of the most recent date or dates, as the case may be, upon
which any payments of interest were made by the Borrower thereon.
2.12. Use of Proceeds . The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other corporate purposes, including the making of
Acquisitions and Capital Expenditures permitted hereunder.
ARTICLE III
Letters of Credit
3.1. Letters of Credit . The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery
to the Issuing Bank of an Application and Agreement for Letter of Credit
relating thereto in form and content acceptable to the Issuing Bank;
provided, that (i) the Letter of Credit Outstandings shall not exceed the
Total Letter of Credit Commitment and (ii) no Letter of Credit shall be
issued if, after giving effect thereto, Letter of Credit Outstandings plus
Revolving Credit Outstandings shall exceed the Total Revolving Credit
Commitment. No Letter of Credit shall have an expiry date (including all
rights of the Borrower or any beneficiary named in such Letter of Credit to
require renewal) or payment date occurring later than the earlier to occur of
one year after the date of its issuance or the fifth Business Day prior to
the Stated Termination Date.
3.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the Letters
of Credit and all reasonable expenses incurred by the Issuing Bank in
connection with the Letters of Credit, and in any event and without demand to
place in possession of the Issuing Bank (which shall include Advances under
the Revolving Credit Facility if permitted by Section 2.1) sufficient funds
to pay all debts and liabilities arising under any Letter of Credit. The
Issuing Bank agrees to give the Borrower prompt notice of any request for a
draw under a Letter of Credit. The Issuing Bank may charge any account the
Borrower may have with it for any and all amounts the Issuing Bank pays under
30
<PAGE>
a Letter of Credit, plus charges and reasonable expenses as from time to time
agreed to by the Issuing Bank and the Borrower; provided that to the extent
permitted by Section 2.1(c)(iv), amounts shall be paid pursuant to Advances
under the Revolving Credit Facility. The Borrower agrees to pay the Issuing
Bank interest on any Reimbursement Obligations not paid when due hereunder at
the Base Rate plus two percent (2.0%), or the maximum rate permitted by
applicable law, if lower, such rate to be calculated on the basis of a year
of 360 days for actual days elapsed.
(b) In accordance with the provisions of Section 2.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically
acquire on the date of issuance thereof, a Participation in the liability of
the Issuing Bank in respect of each Letter of Credit in an amount equal to
such Lender's Applicable Commitment Percentage of such liability, and to the
extent that the Borrower is obligated to pay the Issuing Bank under Section
3.2(a), each Lender (other than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to the Issuing Bank as hereinafter described, its Applicable
Commitment Percentage of the liability of the Issuing Bank under such Letter
of Credit.
(i) Each Lender (including the Issuing Bank in its capacity as
a Lender) shall, subject to the terms and conditions of Article II, pay to
the Agent for the account of theIssuing Bank at the Principal Office in
Dollars and in immediately available funds, an amount equal to its Applicable
Commitment Percentage of any drawing under a Letter of Credit, such funds to
be provided in the manner described in Section 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a
Lender to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender
shall, automatically and without any further action on the part of the
Issuing Bank or such Lender, acquire a Participation in an amount equal to
such payment (excluding the portion thereof constituting interest accrued
prior to the date the Lender made its payment) in the related Reimbursement
Obligation of the Borrower. The Reimbursement Obligations of the Borrower
shall be immediately due and payable whether by Advances made in accordance
with Section 2.1(c)(iv) or otherwise.
(iii) Each Lender's obligation to make payment to the Agent
for the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and this
Section 3.2(c), and the right of the Issuing Bank to receive the same, shall
be absolute and unconditional, shall not be affected by any circumstance
whatsoever and shall be made without any offset, abatement, withholding or
reduction whatsoever. If any Lender is obligated to pay but does not pay
amounts to the Agent for the account of the Issuing Bank in full upon such
request as required by Section 2.1(c)(iv) or this Section 3.2(c), such Lender
shall, on demand, pay to the Agent for the account of the Issuing Bank
interest on the unpaid amount for each day during the period commencing on
the date of notice given to such Lender pursuant to Section 2.1(c) until such
Lender pays such amount to the Agent for the account of the Issuing Bank in
full at the interest rate per annum for overnight borrowing by the Agent from
the Federal Reserve Bank.
31
<PAGE>
(iv) In the event the Lenders have purchased Participations in
any Reimbursement Obligation as set forth in clause (ii) above, then at any
time payment (in fully collected, immediately available funds) of such
Reimbursement Obligation, in whole or in part, is received by Issuing Bank
from the Borrower, Issuing Bank shall promptly pay to each Lender an amount
equal to its Applicable Commitment Percentage of such payment from the
Borrower.
(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver to
the Agent, and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to each Letter of Credit
outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article VI, be
subject to the conditions that such Letter of Credit be in such form and
contain such terms as shall be reasonably satisfactory to the Issuing Bank
consistent with the then current practices and procedures of the Issuing Bank
with respect to similar letters of credit, and the Borrower shall have
executed and delivered such other instruments and agreements relating to such
Letters of Credit as the Issuing Bank shall have reasonably requested
consistent with such practices and procedures and shall not be in conflict
with any of the express terms herein contained. All Letters of Credit shall
be issued pursuant to and subject to the Uniform Customs and Practice for
Documentary Credits, 1993 revision, International Chamber of Commerce
Publication No. 500 (the "UCP") and all subsequent amendments and revisions
thereto.
(f) The Borrower agrees that Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be signed
or issued by an administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of Section
12.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing
Bank, each other Lender and the Agent from and against any and all claims and
damages, losses, liabilities, reasonable costs and expenses which the Issuing
Bank, such other Lender or the Agent may incur (or which may be claimed
against the Issuing Bank, such other Lender or the Agent) by any Person by
reason of or in connection with the issuance or transfer of or payment or
failure to pay under any Letter of Credit; provided that the Borrower shall
not be required to indemnify the Issuing Bank, any other Lender or the Agent
for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified or (ii) caused by the failure of
the Issuing Bank to pay under any Letter of Credit after the presentation to
it of a request for payment strictly complying with the terms and conditions
of such Letter of Credit, unless such payment is prohibited by any law,
regulation, court order or decree. The indemnification and hold harmless
provisions of this Section 3.2(g) shall survive repayment of the Obligations,
32
<PAGE>
occurrence of the Revolving Credit Termination Date, and expiration or
termination of this Agreement.
(h) Without limiting Borrower's rights as set forth in Section
3.2(g), the obligation of the Borrower to immediately reimburse the Issuing
Bank for drawings made under Letters of Credit and the Issuing Bank's right
to receive such payment shall be absolute, unconditional and irrevocable, and
that such obligations of the Borrower shall be performed strictly in
accordance with the terms of this Agreement and such Letters of Credit and
the related Applications and Agreement for any Letter of Credit, under all
circumstances whatsoever, including the following circumstances:
(i) 48.any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related LC
Documents");
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other than
the defense of payment in accordance with the terms of this Agreement) or
other rights which the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be
acting), the Agent, the Lenders or any other Person, whether in connection
with the Loan Documents, the Related LC Documents or any unrelated
transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit (or
any persons or entities for whom such beneficiary or any such transferee
may be acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the Agent, with
or without notice to or approval by the Borrower in respect of any of
Borrower's Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
3.3. Letter of Credit Facility Fees . The Borrower shall pay to the
Agent, (i) for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn
on each outstanding Letter of Credit at a rate equal to the Applicable
Margin, and (ii) for the Issuing Bank, 0.125% based on the aggregate amount
33
<PAGE>
available to be drawn on each outstanding Letter of Credit. Such fees shall
be due with respect to each Letter of Credit quarterly in arrears on the last
day of each March, June, September and December, the first such payment to be
made on the first such date occurring after the date of issuance of a Letter
of Credit. The fees described in this Section 3.3 shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
3.4. Administrative Fees . The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and
the Borrower shall agree from time to time.
ARTICLE IV
Security
--------
4.1. Security . As security for the full and timely payment and
performance of all Obligations, the Credit Parties shall on or before the
Closing Date do or cause to be done all things necessary in the reasonable
opinion of the Agent and its counsel to grant to the Agent for the benefit of
the Lenders a duly perfected first priority security interest in all
Collateral subject to no prior Lien or other encumbrance or restriction on
transfer (other than restrictions on transfer imposed by applicable
securities laws).
4.2. Further Assurances . At the request of the Agent, the Borrower will
or will cause the Guarantors or other Credit Party, as the case may be to
execute, by its duly authorized officers, alone or with the Agent, any
certificate, instrument, statement or document, or to procure any such
certificate, instrument, statement or document, or to take such other action
(and pay all actual out of pocket costs) which the Agent reasonably deems
necessary from time to time to create, continue or preserve the liens and
security interests in Collateral (and the perfection and priority thereof) of
the Agent contemplated hereby and by the other Loan Documents.
4.3. Information Regarding Collateral . The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower
and each other Person providing Collateral pursuant to a Security Instrument
(each, a "Grantor") at the Closing Date is located at the address or
addresses specified on Schedule 4.3, and (ii) Schedule 4.3 contains a true
and complete list of (a) the name and address of each Grantor and of each
other Person that has effected any merger or consolidation with a Grantor or
contributed or transferred to a Grantor any property constituting Collateral
at any time since January 1, 1992 (excluding Persons making sales in the
ordinary course of their businesses to a Grantor of property constituting
inventory in the hands of such seller), (b) each location of the chief
executive office of each Grantor at any time since January 1, 1992, (c) each
location in which goods constituting Collateral are or have been located
since January 1, 1992 (together with the name of each owner of the property
located at such address if not the applicable Grantor, and a summary
description of the relationship between the applicable Grantor and such
Person), and (d) each trade style used by any Grantor since January 1, 1992
and the purposes for which it was used. Borrower shall not change, and shall
not permit any other Grantor to change, the location of its chief executive
office or any location specified in clause (c) of the immediately preceding
sentence, or use or permit any other Grantor to use, any additional trade
34
<PAGE>
style, except upon giving not less than thirty (30) days' prior written
notice to the Agent and taking or causing to be taken all such action at
Borrower's or such other Grantor's expense as may be reasonably requested by
the Agent to perfect or maintain the perfection of the Lien of the Agent in
Collateral.
4.4. Security Instruments . On or before the Closing Date the Borrower
shall execute and deliver to the Agent, and shall cause each of the
Guarantors to execute and deliver to the Agent, each of the Security
Instruments to which it is a party, together with such other instruments and
documents, including financing statements and amendments to financing
statements, as the Agent may reasonably request.
ARTICLE V
Yield Protection and Illegality
-------------------------------
5.1. Additional Costs . (a) In the event of any Regulatory Change the
Borrower shall promptly pay to the Agent for the account of a Lender from
time to time, without duplication, such amounts as such Lender may reasonably
determine to be necessary to compensate it for any costs (other than normal
overhead expenses) incurred by such Lender which it determines are
attributable to its making or maintaining any Loan or its obligation to make
any Loans, or the issuance or maintenance by the Issuing Bank of or any other
Lender's Participation in any Letter of Credit issued hereunder, or any
reduction in any amount receivable by such Lender under this Agreement or the
Notes in respect of any of such Loans or the Letters of Credit, including
reductions in the rate of return on a Lender's capital (such increases in
costs and reductions in amounts receivable and returns being herein called
"Additional Costs"), resulting from such Regulatory Change which: (i) changes
the basis of taxation of any amounts payable to such Lender under this
Agreement or the Notes in respect of any of such Loans or the Letters of
Credit (other than taxes imposed on or measured by the income, revenues or
assets); or (ii) imposes or modifies any reserve, special deposit, or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Lender (other than any such
reserve, deposit or requirement reflected in the Prime Rate, Federal Funds
Effective Rate or the Interbank Offered Rate, in each case computed in
accordance with the respective definitions of such terms set forth in Section
1.1); or (iii) has or would have the effect of reducing the rate of return on
capital of any such Lender to a level below that which the Lender could have
achieved but for such Regulatory Change (taking into consideration such
Lender's policies with respect to capital adequacy); or (iv) imposes any
other condition adversely affecting the Agent or the Lenders under this
Agreement, the Notes or the issuance or maintenance of, or any Lender's
Participation in, the Letters of Credit (or any of such extensions of credit
or liabilities). Each Lender will notify the Authorized Representative and
the Agent of any event occurring after the Closing Date which would entitle
it to compensation pursuant to this Section 6.1(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such
compensation.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.1, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of the Lender which includes deposits by reference to which the
35
<PAGE>
interest rate on Eurodollar Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of any Lender
which includes Eurodollar Rate Loans or (ii) becomes subject to restrictions
on the amount of such a category of liabilities or assets which it may hold,
then, if the Lender so elects by notice to the other Lenders, the obligation
hereunder of such Lender to make, and to convert Base Rate Loans into,
Eurodollar Rate Loans that are the subject of such restrictions shall be
suspended until the date such Regulatory Change ceases to be in effect and
the Borrower shall, on the last day(s) of the then current Interest Period(s)
for outstanding Eurodollar Rate Loans convert such Eurodollar Rate Loans into
Base Rate Loans; provided, however, that the suspension of such obligation
and the conversion of any Eurodollar Rate Loans into Base Rate Loans shall
apply only to any Lender who is affected by such restrictions and who has
provided such notice to the other Lenders, and the obligation of the other
Lenders to make, and to convert Base Rate Loans into, Eurodollar Rate Loans
shall not be affected by such restrictions. In the event that the obligation
of some, but not all, of the Lenders to make, or to convert Base Rate Loans
into, Eurodollar Rate Loans is suspended, then any request by the Borrower
during the pendency of such suspension for a Eurodollar Rate Loan shall be
deemed a request for such Eurodollar Rate Loan from the Lender(s) not subject
to such suspension and for a Base Rate Loan from the Lender(s) who are
subject to such suspension, in each case in the respective amounts based on
the Lenders' respective Applicable Commitment Percentages. Notwithstanding
anything contained in this Agreement to the contrary, the Borrower shall have
no obligations under this Section 5.1 unless any Lender seeking payment of
Additional Costs shall have required similar payments from its other
similarly situated customers.
(c) Determinations by any Lender for purposes of this Section 5.1
of the effect of any Regulatory Change on its costs of making or maintaining,
or being committed to make Loans, or by NationsBank as issuer of any Letter
of Credit of the effect of any Regulatory Change on its costs in connection
with the issuance or maintenance of, or any other Lender's Participation in,
any Letter of Credit issued hereunder, or the effect of any Regulatory Change
on amounts receivable by any Lender in respect of Loans or Letters of Credit,
and of the additional amounts required to compensate the Lender in respect of
any Additional Costs, shall be made taking into account such Lender's
policies, or the policies of the parent corporation of such Lender, as to the
allocation of capital, costs and other items and shall be conclusive absent
manifest error. The Lender requesting such compensation shall furnish to the
Authorized Representative and the Agent within one hundred eighty (180) days
of the incurrence of any Additional Costs for which compensation is sought an
explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of any such Additional Costs.
5.2. Suspension of Loans . Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate
for any Eurodollar Rate Loan for any Interest Period, the Agent determines
(which determination made on a reasonable basis shall be conclusive absent
manifest error) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Eurodollar Rate Loan
as provided in this Agreement; or
36
<PAGE>
(b) the relevant rates of interest referred to in the definition
of "Interbank Offered Rate" in Section 1.1 upon the basis of which the
Eurodollar Rate for such Interest Period is to be determined do not
adequately reflect the cost to the Lenders of making or maintaining such
Eurodollar Rate Loan for such Interest Period;
then the Agent shall give the Authorized Representative prompt notice
thereof, and so long as such condition remains in effect, the Lenders shall
be under no obligation to make Eurodollar Rate Loans that are subject to
such condition, or to convert Base Rate Loans into Eurodollar Rate Loans,
and the Borrower shall on the last day(s) of the then current Interest
Period(s) for outstanding Eurodollar Rate Loans, as applicable, convert
such Eurodollar Rate Loans into another Eurodollar Rate Loan if such
Eurodollar Rate Loan is not subject to the same or similar condition, or
Base Rate Loans, if available hereunder. The Agent shall give the
Authorized Representative notice describing in reasonable detail any event
or condition described in this Section 5.2 promptly following the
determination by the Agent that the availability of Eurodollar Rate Loans
is, or is to be, suspended as a result thereof. The Agent shall give the
Authorized Representative notice when such event or condition described in
this Section 5.2 no longer remains in effect.
5.3. Illegality . Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender to honor its obligation
to make or maintain Eurodollar Rate Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender's obligation to make or continue Eurodollar Rate Loans, or to convert
Base Rate Loans into Eurodollar Rate Loans, shall be suspended until such
time as such Lender may again make and maintain Eurodollar Rate Loans, and
such Lender's outstanding Eurodollar Rate Loans shall be converted into Base
Rate Loans in accordance with Section 2.8 or earlier if required by
applicable law. The conversion of any Eurodollar Rate Loans into Base Rate
Loans shall apply only to any Lender who is affected by such restrictions and
who has provided the notice described above, and the obligation of the other
Lenders to make, and to convert Base Rate Loans into, Eurodollar Rate Loans
shall not be affected by such restrictions. In the event that the obligation
of some, but not all, of the Lenders to make, or to convert Base Rate Loans
into, Eurodollar Rate Loans is so suspended, then any request by the Borrower
during the pendency of such suspension for a Eurodollar Rate Loan shall be
deemed a request for such Eurodollar Rate Loan from the Lender(s) not subject
to such suspension and for a Base Rate Loan from the Lender(s) who are
subject to such suspension, in each case in the respective amounts based on
the Lenders' respective Applicable Commitment Percentages.
5.4. Compensation . The Borrower shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Rate
Loan on a date other than the last day of the Interest Period for such
Eurodollar Rate Loan, including without limitation any conversion required
pursuant to Sections 5.1, 5.2 or 5.3; or
37
<PAGE>
(b) any failure by the Borrower to borrow or convert a Eurodollar
Rate Loan on the date for such borrowing or conversion specified in the
relevant Borrowing Notice or Interest Rate Selection Notice under Article
II hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on
the principal amount so paid, prepaid or converted or not borrowed for the
period from the date of such payment, prepayment or conversion or failure
to borrow or convert to the last day of the then current Interest Period
for such Loan (or, in the case of a failure to borrow or convert, the
Interest Period for such Loan which would have commenced on the date
scheduled for such borrowing or conversion) at the applicable rate of
interest for such Eurodollar Rate Loan provided for herein over (ii) the
Interbank Offered Rate (as reasonably determined by the Agent) for Dollar
deposits of amounts comparable to such principal amount and maturities
comparable to such period. A determination of a Lender as to the amounts
payable pursuant to this Section 5.4 shall be conclusive, provided that
such determinations are made on a reasonable basis. The Lender requesting
compensation under this Section 5.4 shall promptly furnish to the
Authorized Representative and the Agent calculations in reasonable detail
setting forth such Lender's determination of the amount of such
compensation.
5.5. Alternate Loan and Lender . In the event any Lender suspends the
making of any Eurodollar Rate Loan pursuant to this Article V (herein a
"Restricted Lender"), the Restricted Lender's Commitment Percentage of any
Eurodollar Rate Loan shall bear interest at the Base Rate or the Eurodollar
Rate for which the suspension does not apply, as selected by Borrower, until
the Restricted Lender once again makes available the applicable Eurodollar
Rate Loan. Notwithstanding the provisions of Section 3.2(b), interest shall
be payable to the Restricted Lender at the time and manner as paid to those
Lenders making available Eurodollar Rate Loans.
5.6. Taxes . (a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise,
stamp or other taxes, fees, duties, levies, imposts, charges, deductions,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding (i) franchise taxes, (ii) any taxes (other than
withholding taxes) that would not be imposed but for a connection between a
Lender or the Agent and the jurisdiction imposing such taxes (other than a
connection arising solely by virtue of the activities of such Lender or the
Agent pursuant to or in respect of this Agreement or any other Loan
Document), (iii) any taxes imposed on or measured by any Lender's assets, net
income, receipts or branch profits, and (iv) any taxes arising after the
Closing Date solely as a result of or attributable to a Lender changing its
designated lending office after the date such Lender becomes a party hereto
(such non-excluded items being collectively called "Taxes"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will
(x) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
38
<PAGE>
(y) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(z) pay to the Agent for the account of each Lender such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Lender will equal the full amount such Lender
would have received had no such withholding or deduction been required.
(b) Prior to the date that any Lender or participant organized under the
laws of a jurisdiction outside the United States becomes a party hereto, such
Person shall deliver to the Borrower and the Agent such certificates,
documents or other evidence, as required by the Code or Treasury Regulations
issued pursuant thereto, properly completed, currently effective and duly
executed by such Lender or participant establishing that payments to it
hereunder and under the Notes are (i) not subject to United States Federal
backup withholding tax and (ii) not subject to United States Federal
withholding tax under the Code because such payment is either effectively
connected with the conduct by such Lender or participant of a trade or
business in the United States or totally exempt from United States Federal
withholding tax by reason of the application of the provisions of a treaty to
which the United States is a party or such Lender is otherwise exempt.
(c) If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lender, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of
any such failure. For purposes of this Section 5.6, a distribution hereunder
by the Agent or any Lender to or for the account of any Lender shall be
deemed a payment by or on behalf of the Borrower.
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
--------------------------------------------------------
6.1. Conditions of Initial Advance . The obligation of the Lenders to
make the initial Advance under the Revolving Credit Facility, and of the
Issuing Bank to issue any Letter of Credit, is subject to the conditions
precedent that:
(a) the Agent shall have completed all due diligence with respect
to the Borrower and the Guarantors and shall have received on the Closing
Date, in form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this Agreement, the Notes,
the initial Facility Guaranties, the Security Instruments, the LC
Account Agreement and the other Loan Documents, together with all
schedules and exhibits thereto; and
(ii) the favorable written opinion or opinions with respect to
the Loan Documents and the transactions contemplated thereby of special
counsel to the Credit Parties dated the Closing Date, addressed to the
39
<PAGE>
Agent and the Lenders and satisfactory to Smith Helms Mulliss & Moore,
L.L.P., special counsel to the Agent, substantially in the form of
Exhibit G; and
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof) of
each Credit Party certified by its secretary or assistant secretary as
of the Closing Date, approving and adopting the Loan Documents to be
executed by such Person, and authorizing the execution and delivery
thereof; and
(iv) specimen signatures of officers of each Credit Party
executing the Loan Documents on behalf of such Credit Party, certified
by the secretary or assistant secretary of such Credit Party; and
(v) the charter documents of each Credit Party certified as of
a recent date by the Secretary of State of its state of organization;
and
(vi) the bylaws of each Credit Party certified as of the
Closing Date as true and correct by its secretary or assistant
secretary; and
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation of
each Credit Party as to the due existence and good standing of each
Credit Party; and
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of each Credit Party as
of a recent date by the Secretary of State or comparable official of
each jurisdiction in which the failure to be qualified to do business
or authorized so to conduct business could have a Material Adverse
Effect; and
(ix) a copy of the partnership agreement and certificate of
limited partnership of each Guarantor that is a Partnership together
with all necessary consents, certified as to its correctness by the
General Partner of such partnership; and
(x) notice of appointment of the initial Authorized
Representative(s); and
(xi) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial covenants
contained in Sections 9.1(a) through 9.1(c), the receivables covenant
contained in Section 9.3, the indebtedness covenant contained in
Section 9.5, and the Deferred Excess Compensation covenant contained in
Section 9.18 as of December 31, 1996, substantially in the form of
Exhibit H; and
40
<PAGE>
(xii) evidence of all insurance required by the Loan
Documents; and
(xiii) an initial Borrowing Notice, if any, and, if elected by
the Borrower, Interest Rate Selection Notice; and
(xiv) evidence of the filing of Uniform Commercial Code
financing statements reflecting the filing in all places required by
applicable law to perfect the Liens of the Agent under the Security
Instruments as a first priority Lien as to items of Collateral in which
a security interest may be perfected by the filing of financing
statements, and such other documents and/or evidence of other actions
as may be necessary under applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien in and to
such other Collateral as the Agent may require, including without
limitation:
(A)the delivery by the Borrower of all stock certificates
evidencing Pledged Stock and certificates, if any,
evidencing ownership of Pledged Partnership Interests,
accompanied in each case by duly executed stock powers (or
other appropriate transfer documents) in blank affixed
thereto; and
(B)the delivery by the Borrower of certificates of the
Registrar of each partnership Subsidiary and each
partnership Guarantor evidencing the due registration on the
registration books of such partnership of the Lien in favor
of the Agent conferred under the Security Instruments; and
(xv) evidence that all fees payable by the Borrower on the
Closing Date to the Agent and the Lenders have been paid in full; and
(xvi) Uniform Commercial Code search results showing only
those Liens as are acceptable to the Lenders; and
(xvii) the consolidated financial statements of the Borrower
and the Guarantors for the fiscal year 1995 and the nine month period
ended September 30, 1996, including balance sheets, statements of
operations, stockholders' equity, and cash flow statements, audited (in
the case of the fiscal year 1995 financial statements) by independent
public accountants of national standing and prepared in accordance with
GAAP and on a Consistent Basis; and
(xviii) a schedule of the current ownership of the Borrower;
and
(xix) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
41
<PAGE>
(xx) an accounts receivable aging report in form and detail as
is satisfactory to the Agent as of December 31, 1996; and
(xxi) a draft of the Borrower's audited financial statements
for the fiscal year ended December 31, 1996, as more fully described in
Section 8.1(a)(i); and
(b) In the good faith and reasonable judgment of the Agent and the
Lenders:
(i) Except as set forth on Schedule 6.1, there shall not have
occurred a material adverse change since September 30, 1996 in the
business, assets, operations, condition (financial or otherwise) or
prospects of the Borrower and the Guarantors, or in the facts and
information regarding such entities (including litigation) as
represented to date; and
(ii) the absence of any action, suit, investigation or
proceeding pending or threatened in any court or before any arbitrator
or governmental authority that purports to affect the Borrower or the
Guarantors (other than existing litigation which shall be disclosed to,
and in their discretion shall be acceptable to, the Agent and the
Lenders), or any transaction contemplated hereby, or that could have a
material adverse effect on the Borrower or the Guarantors or any
transaction contemplated hereby or on the ability of the Borrower and
the Guarantors to perform their obligations under the documents to be
executed in connection with the Revolving Credit Facility; and
(iii) the Borrower, the Guarantors and any other Credit Party
shall have received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the occurrence
of any default under, conflict with or violation of (A) any applicable
law, rule, regulation, order or decree of any Governmental Authority or
arbitral authority or (B) any agreement, document or instrument to
which any of the Borrower or any Guarantor is a party or by which any
of them or their properties is bound; and
(iv) the Borrower and the Guarantors shall be in compliance
with all existing financial obligations;
(v) the absence of any disruption or material adverse change
in market for syndicated bank credit facilities similar in nature to
the Revolving Credit Facility or a material disruption of, or a
material adverse change in, financial, banking, or capital market
conditions, in each case as determined by NationsBank in its sole
discretion based on reasonable judgment; and
(vi) the Borrower and the Guarantors shall be in compliance
with all terms and conditions set forth in the Prior Agreement.
42
<PAGE>
6.2. Conditions of Revolving Loans and Letter of Credit . The
obligations of the Lenders to make any Revolving Loans, and the Issuing Bank
to issue Letters of Credit, hereunder on or subsequent to the Closing Date
are subject to the satisfaction of the following conditions:
(a) the Agent shall have received a Borrowing Notice if required
by Article II; and
(b) the representations and warranties of the Borrower and the
Guarantors set forth in Article VII and in each of the other Loan
Documents shall be true and correct in all material respects on and as of
the date of such Advance or Letter of Credit issuance or renewal, with the
same effect as though such representations and warranties had been made on
and as of such date, except: (i) to the extent that such representations
and warranties expressly relate to an earlier date, and (ii) that the
financial statements referred to in Section 7.6(a) shall be deemed to be
those financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 8.1 from the date financial statements are
delivered to the Agent and the Lenders in accordance with such Section,
and (iii) with respect to transactions permitted hereunder; and
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request; and
(d) at the time of (and after giving effect to) each Advance or
the issuance of a Letter of Credit, no Default or Event of Default
specified in Article X shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance of all
outstanding Revolving Loans for each Lender shall not exceed such
Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations (or in the case ofthe
Issuing Bank, its remaining interest after deduction of all
Participations in Letters of Credit and Reimbursement Obligations
of other Lenders) for each Lender and in the aggregate shall not
exceed, respectively, (X) such Lender's Letter of Credit
Commitment or (Y) the Total Letter of Credit Commitment; and
(iii) a Revolving Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus Revolving
Credit Outstandings shall not exceed the Total Revolving Credit
Commitment.
43
<PAGE>
ARTICLE VII
Representations and Warranties
------------------------------
The Borrower represents and warrants with respect to itself and to the
Guarantors (which representations and warranties shall survive the delivery
of the documents mentioned herein and the making of Loans), that:
7.1. Organization and Authority.
(a) The Borrower and each Guarantor is a corporation or partnership
duly organized and validly existing under the laws of the jurisdiction
of its formation;
(b) The Borrower and each Guarantor (x) has the requisite power and
authority to own its properties and assets and to carry on its business
as now being conducted and as contemplated in the Loan Documents, and
(y) is qualified to do business in every jurisdiction in which failure
to so qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute, deliver
and perform this Agreement and the Notes, and to borrow hereunder, and
to execute, deliver and perform each of the other Loan Documents to
which it is a party;
(d) Each Guarantor has the power and authority to execute, deliver
and perform the Facility Guaranty and each of the other Loan Documents
to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which the Borrower or any other Credit Party is a party will be the
legal, valid and binding obligation or agreement, as the case may be, of
the Borrower or such Credit Party, enforceable against the Borrower or
such Credit Party in accordance with its terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights
generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity);
7.2 Loan Documents . The execution, delivery and performance by the
Borrower and each other Credit Party of each of the Loan Documents to which
it is a party:
(a) have been duly authorized by all requisite corporate action
(including any required shareholder approval) of the Borrower and each
other Credit Party required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on the Borrower or any Guarantor or its properties, or (iii) the
charter documents or bylaws of the Borrower or any other Credit Party;
44
<PAGE>
(c) does not and will not be in conflict with, result in a breach
of or constitute an event of default, or an event which, with notice or
lapse of time or both, would constitute an event of default, under any
contract, indenture, agreement or other instrument or document to which
Borrower or any Guarantor is a party, or by which the properties or
assets of Borrower or any Guarantor are bound; and
(d) does not and will not result in the creation or imposition of
any Lien upon any of the properties or assets of Borrower or any
Guarantor except any Liens in favor of the Agent and the Lenders created
by the Security Instruments;
7.3. Solvency . The Borrower and each other Credit Party is Solvent
after giving effect to the transactions contemplated by the Loan Documents;
7.4. Guarantors and Stockholders. The Borrower has no Guarantors other
than those Persons listed in Schedule 7.4 and additional Subsidiaries or
Guarantors created or acquired after the Closing Date in compliance with
Section 8.20; Schedule 7.4 states as of the date hereof the organizational
form of each entity, the authorized and issued capitalization of each
Guarantor listed thereon, the number of shares or other equity interests of
each class of capital stock or interest issued and outstanding of each such
Guarantor and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or other equity interest owned
by Borrower or officers of the Borrower; the outstanding shares or other
equity interests of each such Guarantor have been duly authorized and validly
issued and are fully paid and nonassessable; and Borrower and each such
Guarantor owns beneficially and of record all the shares and other interests
it is listed as owning in Schedule 7.4, free and clear of any Lien;
7.5. Ownership Interests . Borrower owns no interest in any Person other
than the Persons listed in Schedule 7.4, equity investments in Persons not
constituting Subsidiaries or Guarantors permitted under Section 9.7 and
additional Subsidiaries or Guarantors created or acquired after the Closing
Date in compliance with Section 8.20;
7.6. Financial Condition .
(a) The Borrower has heretofore furnished to each Lender an audited
consolidated balance sheet of the Borrower and the Guarantors as at
December 31, 1995 and the notes thereto and the related consolidated
statements of operation, stockholders' equity and cash flows for the
Fiscal Year then ended as examined and certified by Arthur Andersen LLP,
and unaudited consolidated interim financial statements of the Borrower
and the Guarantors consisting of a consolidated balance sheet and
related consolidated statements of operation, stockholders' equity and
cash flows, for and as of the end of the nine month period ended
September 30, 1996. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Borrower and the Guarantors as of the end of such
Fiscal Year and nine month period and results of their operations and
the changes in its stockholders' equity for the Fiscal Year and interim
period then ended, all in conformity with GAAP applied on a Consistent
45
<PAGE>
Basis, subject however, in the case of unaudited interim statements to
year end audit adjustments; and
(b) Except as set forth on Schedule 6.1, since September 30, 1996
there has been no material adverse change in the condition, financial or
otherwise, of the Borrower or any of the Guarantors or in the
businesses, properties, performance, prospects or operations of the
Borrower or the Guarantors, nor have such businesses or properties been
materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God; and
(c) except as set forth in the financial statements referred to in
Section 7.6(a) or in Schedule 9.5 or permitted by Section 9.5, neither
Borrower nor any Guarantor has incurred, other than in the ordinary
course of business, any material Indebtedness, Contingent Obligation or
other commitment or liability which remains outstanding or unsatisfied;
7.7. Title to Properties . The Borrower and each of the Guarantors has
good and marketable title to all its real properties and good title to all of
its material personal properties, subject to no transfer restrictions or
Liens of any kind, except for the transfer restrictions and Liens described
in Schedule 7.7 and Liens permitted by Section 9.4;
7.8. Taxes . Except as set forth in Schedule 7.8, the Borrower and each
of the Guarantors has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes
and assessments being contested in good faith by appropriate proceedings
diligently conducted and against which reserves reflected in the financial
statements described in Section 7.6(a) and satisfactory to the Borrower's
independent certified public accountants have been established, have paid or
caused to be paid all taxes as shown on said returns or on any assessment
received by it, to the extent that such taxes have become due;
7.9. Other Agreements . Neither the Borrower nor any Guarantor is:
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in (i) any
Medicaid Provider Agreement, Medicare Provider Agreement or other
agreement or instrument to which the Borrower or any Guarantor is a
party, which default has resulted in, or if not remedied within any
applicable grace period could result in, the revocation, termination,
cancellation or suspension of Medicaid Certification or Medicare
Certification of Borrower or any Guarantor or (ii) any other agreement
or instrument to which the Borrower or any Guarantor is a party, which
default has, or if not remedied within any applicable grace period could
reasonably be likely to have, a Material Adverse Effect;
46
<PAGE>
7.10. Litigation . Except as set forth in Schedule 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to
the knowledge of the Borrower, threatened by or against the Borrower, any
Guarantor or any Contract Provider, or affecting the Borrower or any
Guarantor or any Contract Provider or any properties or rights of the
Borrower or any Guarantor or any Contract Provider, which could reasonably be
expected (i) to result in the revocation, termination, cancellation or
suspension of Medicaid Certification or Medicare Certification of such
Person, or (ii) to have a Material Adverse Effect;
7.11. Margin Stock . The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation
U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor
any agent acting in its behalf has taken or will take any action which might
cause this Agreement or any of the documents or instruments delivered
pursuant hereto to violate any regulation of the Board or to violate the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended, or any state securities laws, in each case as in effect on the
date hereof;
7.12. Investment Company . Neither the Borrower nor any Guarantor is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C. ss.
80a-1, et seq.). The application of the proceeds of the Loans and repayment
thereof by the Borrower and the performance by the Borrower and the other
Credit Parties of the transactions contemplated by the Loan Documents will
not violate any provision of said Act, or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder, in each case as
in effect on the date hereof;
7.13. Patents, Etc. The Borrower and each other Credit Party owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names,
trade name rights, trade secrets and copyrights necessary to or used in the
conduct of its businesses as now conducted and as contemplated by the Loan
Documents, without known conflict with any patent, license, franchise,
trademark, trade secret, trade name, copyright, other proprietary right of
any other Person;
7.14. No Untrue Statement . Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or any Guarantor in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to
the Agent in connection with the negotiation or preparation of the Loan
Documents contains any misrepresentation or untrue statement of material fact
or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation
or statement contained therein not misleading;
47
<PAGE>
7.15. No Consents, Etc. Except for certain service and payor contracts
which may require the parties' consent to assignment thereto which consent
has not been required and which assignment pursuant to Security Instruments
shall not be required to the extent prohibited by such contract, neither the
respective businesses or properties of the Borrower or any Guarantor, nor any
relationship between the Borrower or any Guarantor and any other Person, nor
any circumstance in connection with the execution, delivery and performance
of the Loan Documents and the transactions contemplated thereby, is such as
to require a consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority or any other Person on the
part of the Borrower or any Guarantor as a condition to the execution,
delivery and performance of, or consummation of the transactions contemplated
by the Loan Documents, which, if not obtained or effected, would be
reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be;
7.16. Employee Benefit Plans .
(a) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit
Laws with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under
Section 501(a) of the Code. No material liability has been incurred by
the Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in
a nonexempt prohibited transaction described in Section 4975 of the Code
or Section 406 of ERISA affecting any of the Employee Benefit Plans or
the trusts created thereunder which could subject any such Employee
Benefit Plan or trust to a material tax or penalty on prohibited
transactions imposed under Internal Revenue Code Section 4975 or ERISA,
(ii) incurred any accumulated funding deficiency with respect to any
Employee Benefit Plan, whether or not waived, or any other liability to
the PBGC which remains outstanding other than the payment of premiums
and there are no premium payments which are due and unpaid, (iii) failed
to make a required contribution or payment to a Multiemployer Plan, or
(iv) failed to make a required installment or other required payment
under Section 412 of the Code, Section 302 of ERISA or the terms of such
Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan or Multiemployer Plan, and
neither the Borrower nor any ERISA Affiliate has incurred any unpaid
withdrawal liability with respect to any Multiemployer Plan;
48
<PAGE>
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as
of the most recent valuation date for each such plan, exceed the then
current value of the assets of such Employee Benefit Plan allocable to
such benefits;
(e) To the best of the Borrower's knowledge, each Employee Benefit
Plan subject to Title IV of ERISA, maintained by the Borrower or any
ERISA Affiliate, has been administered in accordance with its terms in
all material respects and is in compliance in all material respects with
all applicable requirements of ERISA and other applicable laws,
regulations and rules;
(f) The consummation of the Loans and the issuance of the Letters
of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan;
7.17. No Default . As of the date hereof, there does not exist any
Default or Event of Default hereunder;
7.18. Hazardous Materials . The Borrower and each Guarantor is in
compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Guarantor has been notified of any action, suit,
proceeding or investigation which, and neither the Borrower nor any Guarantor
is aware of any facts which, (i) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any Guarantor
with any Environmental Laws, (ii) which seeks, or could reasonably be
expected to form the basis of a meritorious proceeding, to suspend, revoke or
terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Hazardous Material, or (iii)
seeks to cause, or could reasonably be expected to form the basis of a
meritorious proceeding to cause, any property of the Borrower or any
Guarantor to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law;
7.19. Employment Matters . (a) None of the employees of the Borrower or
any Guarantor is subject to any collective bargaining agreement and there are
no strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or other
material labor/employee related controversies or proceedings pending or, to
the best knowledge of the Borrower, threatened against the Borrower or any
Guarantor or between the Borrower or any Guarantor and any of its employees,
other than employee grievances arising in the ordinary course of business
which could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; and
49
<PAGE>
(b) Except to the extent a failure to maintain compliance would not have
a Material Adverse Effect, the Borrower and each Guarantor is in compliance
in all respects with all applicable laws, rules and regulations pertaining to
labor or employment matters, including without limitation those pertaining to
wages, hours, occupational safety and taxation and there is neither pending
or threatened any litigation, administrative proceeding nor, to the knowledge
of the Borrower, any investigation, in respect of such matters which, if
decided adversely, could reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect; and
7.20. RICO . Neither the Borrower nor any Guarantor is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or
other similar laws.
7.21. Reimbursement from Third Party Payors . The accounts receivable of
the Borrower and each Guarantor have been and will continue to be adjusted to
reflect the reimbursement policies (both those most recently published in
writing as well as those not in writing which have been verbally
communicated)of third party payors such as Medicare, Medicaid, Blue
Cross/Blue Shield, private insurance companies, health maintenance
organizations, preferred provider organizations, alternative delivery
systems, managed care systems, government contracting agencies and other
third party payors. In particular, accounts receivable relating to such third
party payors do not and shall not exceed amounts any obligee is entitled to
receive under any capitation arrangement, fee schedule, discount formula,
cost-based reimbursement or other adjustment or limitation to its usual
charges.
7.22. Fraud and Abuse . Neither the Borrower nor any Guarantor nor, to
the knowledge of Borrower's officers, any of its stockholders, officers or
directors, or any Contract Provider, have engaged in any activities which are
prohibited under federal Medicare and Medicaid statutes, 42 U.S.C.
ss.1320a-7b, or the regulations promulgated pursuant to such statutes or
related state or local statutes or regulations, or which are prohibited by
binding rules or professional conduct, including but not limited to the
following: (i) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any applications for any
benefit or payment; (ii) knowingly and willfully making or causing to be made
any false statement or representation of a material fact for use in
determining rights to any benefit or payment; (iii) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial
or continued right to any benefit or payment on its own behalf or on behalf
of another, with intent to secure such benefit or payment fraudulently; (iv)
knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe or rebate), directly or indirectly, overtly or covertly,
in cash or in kind or offering to pay such remuneration (a) in return for
referring an individual to a Person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or
in part by Medicare, Medicaid or other applicable third party payors, or (b)
in return for purchasing, leasing or ordering or arranging for or
recommending the purchasing, leasing or ordering of any good, facility,
service, or item for which payment may be made in whole or in part by
Medicare, Medicaid or other applicable third party payors.
50
<PAGE>
7.23. Licensing and Accreditation . Each of the Borrower and the
Guarantors and, to the knowledge of Borrower's officers, each Contract
Provider, has, to the extent applicable: (i) obtained (or been duly assigned)
all required certificates of need or determinations of need as required by
the relevant state Governmental Authority for the acquisition, construction,
expansion of, investment in or operation of its businesses as currently
operated; (ii) obtained and maintains in good standing all required licenses;
(iii) to the extent prudent and customary in the industry in which it is
engaged, obtained and maintains accreditation from all generally recognized
accrediting agencies; (iv) obtained and maintains Medicaid Certification and
Medicare Certification; and (v) entered into and maintains in good standing
its Medicare Provider Agreement and its Medicaid Provider Agreement. To the
knowledge of Borrower's officers, each Contract Provider is duly licensed
(where license is required) by each state or state agency or commission, or
any other Governmental Authority having jurisdiction over the provisions of
such services by such Person in the locations in which the Borrower or such
Guarantor conduct business, required to enable such Person to provide the
professional services provided by such Person and otherwise as is necessary
to enable the Borrower or such Guarantor to operate as currently operated and
as presently contemplated to be operated. To the knowledge of Borrower's
officers, all such required licenses are in full force and effect on the date
hereof and have not been revoked or suspended or otherwise limited.
ARTICLE VIII
Affirmative Covenants
---------------------
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Guarantor to:
8.1. Financial Reports, Etc.
(a) As soon as practical and in any event within 90 days after the
end of each Fiscal Year of the Borrower, deliver or cause to be
delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and the Guarantors as at
the end of such Fiscal Year, and the notes thereto, and the related
consolidated and consolidating statements of operations, stockholders'
equity and cash flows, and the respective notes thereto, for such Fiscal
Year, setting forth (other than for consolidating statements)
comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and
containing, with respect to the consolidated financial statements,
opinions of Arthur Andersen LLP, or other such independent certified
public accountants selected by the Borrower and approved by the Agent,
which are unqualified as to the scope of the audit performed and as to
the "going concern" status of the Borrower and without any exception not
acceptable to the Lenders, and (ii) a certificate of an Authorized
Representative demonstrating compliance with Sections 9.1(a) through
9.1(c), 9.3, 9.5, and 9.18 which certificate shall be in the form of
Exhibit H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal
Year), deliver to the Agent and each Lender (i) consolidated and
51
<PAGE>
consolidating balance sheets of the Borrower and the Guarantors as at
the end of such fiscal quarter, and the related consolidated and
consolidating statements of operations, stockholders' equity and cash
flows for such fiscal quarter and for the period from the beginning of
the then current Fiscal Year through the end of such reporting period,
and accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial
position of the Borrower and the Guarantors as of the end of such fiscal
period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with the
standards set forth in Section 7.6(a) with respect to interim financial
statements, and (ii) a certificate of an Authorized Representative
containing computations for such quarter comparable to that required
pursuant to Section 8.1(a)(ii);
(c) together with each delivery of the financial statements
required by Section 8.1(a)(i), deliver to the Agent and each Lender a
letter from the Borrower's accountants specified in Section 8.1(a)(i)
stating that in performing the audit necessary to render an opinion on
the financial statements delivered under Section 8.1(a)(i), they
obtained no knowledge of any Default or Event of Default by the Borrower
in the fulfillment of the terms and provisions of this Agreement insofar
as they relate to financial matters (which at the date of such statement
remains uncured); or if the accountants have obtained knowledge of such
Default or Event of Default, a statement specifying the nature and
period of existence thereof;
(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all
regular or special reports or effective registration statements which
Borrower or any Guarantor shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities exchange, (ii)
any proxy statement distributed by the Borrower or any Guarantor to its
shareholders, bondholders or the financial community in general, (iii)
any management letter or other report submitted to the Borrower orany
Guarantor by independent accountants in connection with any annual,
interim or special audit of the Borrower or any Guarantor; and (iv) all
material reports and other statements (other than routine reports and
other statements prepared in the ordinary course of business that would
not result in adverse action) that the Borrower or any Guarantor may
render to or file with any Governmental Authority, including without
limitation HCFA; and
(e) as soon as practicable and in any event within 45 days
following the end of each fiscal quarter of the Borrower, deliver to the
Agent and each Lender an accounts receivable aging report in form and
detail substantially similar to that furnished to the Agent prior to the
Closing Date and and which sets forth any exceptions to Section 10.(e)
of the Security Agreement;
(f) together with each delivery of the financial statements
required by Section 8.1(a)(i), deliver to the Agent and each Lender a
capital budget for the following twelve month period, together with
financial projections for the Borrower and the Guarantors, on a
consolidated basis, with respect to each fiscal year through the Stated
Termination Date, or budgets or related items as the Agent may
reasonably request including, without limitation, a breakdown of revenue
and direct expenses for each hospital-based contract and for each
practice; and
52
<PAGE>
(g) together with each delivery of the financial statements
received by Section 8.1(a) and (b) deliver to the Agent a then-current
listing of each Guarantor, indicating if such Guarantor is a Material
Subsidiary or a Material Partnership;
(h) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding Borrower's
and any Guarantor's operations, business affairs and financial condition
as the Agent or such Lender may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy
of any such financial or other information delivered hereunder to the
Lenders (or any affiliate of any Lender) or to the Agent, to any
Governmental Authority having jurisdiction over the Agent or any of the
Lenders pursuant to any written request therefor or in the ordinary
course of examination of loan files, or to any other Person who shall
acquire or consider the assignment of, or acquisition of any
participation interest in, any Obligation permitted by this Agreement;
8.2. Maintain Properties . Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens
all trademarks, trade names, patents, copyrights, trade secrets, know-how,
and other intellectual property and proprietary information (or adequate
licenses thereto), in each case as are reasonably necessary to conduct its
business as currently or hereafter conducted or as contemplated hereby, all
in accordance with customary and prudent business practices;
8.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material
rights and franchises, and maintain its license or qualification to do
business as a foreign corporation and good standing in each jurisdiction in
which its ownership or lease of property or the nature of its business makes
such license or qualification necessary and the failure to do so would have a
Material Adverse Effect;
8.4. Regulations and Taxes . Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent
and any other obligation which, if unpaid, would become a Lien against any of
its properties except liabilities being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves acceptable to the Borrower's independent certified public
accountants have been established unless and until any Lien resulting
therefrom attaches to any of its property and becomes enforceable against its
creditors;
8.5. Insurance . (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or
damage by fire and other hazards to the extent and in the manner as are
customarily insured against by similar businesses owning such properties
similarly situated, (b) maintain general public liability insurance at all
times with responsible insurance carriers against liability on account of
damage to persons and property, and (c) maintain insurance under all
53
<PAGE>
applicable workers' compensation laws (or in the alternative, maintain
required reserves if self-insured for workers' compensation purposes) such
policies of insurance to have such limits, deductibles, exclusions,
co-insurance and other provisions providing no less coverages than that
specified in Schedule 8.5, such insurance policies to be in form reasonably
satisfactory to the Agent. Each of the policies of insurance described in
this Section 8.5 shall provide that the insurer shall give the Agent not less
than thirty (30) days' prior written notice before any such policy shall be
terminated, lapse or be altered in any manner. Each insurance policy provided
to the Agent by the Borrower shall be written by an insurer having no less
than "A-X1" Best's Rating according to the most current edition of Best's Key
Rating Guide;
8.6. True Books . Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by
GAAP with respect to doubtful accounts and all taxes, assessments, charges,
levies and claims and with respect to its business in general, and include
such reserves in interim as well as year-end financial statements;
8.7. Right of Inspection . Permit any Person designated by any Lender or
the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Guarantor and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants, all at reasonable times, at reasonable
intervals, with reasonable prior notice, and without unreasonable
interference with the conduct of business operations;
8.8. Observe all Laws . Conform to and duly observe, and cause all
Contract Providers to conform to and duly observe, in all material respects
all laws, rules and regulations and all other valid requirements of any
regulatory authority with respect to the conduct of its business, including
without limitation Titles XVIII and XIX of the Social Security Act, Medicare
Regulations, Medicaid Regulations, and all laws, rules and regulations of
Governmental Authorities pertaining to the licensing of professional and
other health care providers; notwithstanding the foregoing, if a Contract
Provider fails to comply with this Section 8.8 and neither the Borrower nor
Guarantors are liable therefor, such violation of this Section 8.8 by such
Contract Provider shall not be a Default or Event of Default hereunder.
8.9. Governmental Licenses . Obtain and maintain, and cause all Contract
Providers during periods when performing services for the Borrower or a
Guarantor to obtain and maintain, all licenses, permits, certifications and
approvals of all applicable Governmental Authorities as are required for the
conduct of its business as currently conducted and herein contemplated,
including without limitation professional licenses, Medicaid Certifications
and Medicare Certifications and the failure to do so would have a Material
Adverse Effect;
8.10. Covenants Extending to Other Persons . Cause each of the
Guarantors to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 8.2 through 8.9, and 8.18
inclusive;
8.11. Knowledge of Default . Upon any officer of the Borrower obtaining
knowledge of any Default or Event of Default hereunder or under any other
obligation of the Borrower or any Guarantor to any Lender, or any event,
54
<PAGE>
development or occurrence which could reasonably be expected to have a
Material Adverse Effect, cause such officer or an Authorized Representative
to promptly notify the Agent of the nature thereof, the period of existence
thereof, and what action the Borrower or such Guarantor proposes to take with
respect thereto;
8.12. Suits or Other Proceedings . Upon any officer of the Borrower
obtaining knowledge of any actual or threatened litigation or other
proceedings being instituted (i) against the Borrower or any Guarantor, or
any attachment, levy, execution or other process being instituted against any
assets of the Borrower or any Guarantor or other Credit Party, in an
aggregate amount greater than $200,000 not otherwise covered by insurance, or
(ii) against the Borrower, any Guarantor or any Contract Provider to suspend,
revoke or terminate any Medicaid Provider Agreement, Medicaid Certification,
Medicare Provider Agreement, Medicare Certification or other federal or state
health care payor program, promptly deliver to the Agent written notice
thereof stating the nature and status of such litigation, dispute,
proceeding, levy, execution or other process;
8.13. Notice of Discharge of Hazardous Material or Environmental
Complaint . Promptly provide to the Agent true, accurate and complete copies
of any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Guarantor relating to any (a) violation or
alleged violation by the Borrower or any Guarantor of any applicable
Environmental Law, (b) release or threatened release by the Borrower or any
Guarantor, or at any facility or property owned or leased or operated by the
Borrower or any Guarantor, of any Hazardous Material, except where occurring
legally, or (c) liability or alleged liability of the Borrower or any
Guarantor for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials; provided that so long as there is no
suspension of operations, such notice is required only when the aggregate
cost of compliance or remedy exceeds $100,000 in the aggregate.
8.14. Environmental Compliance . If the Borrower or any Guarantor shall
receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or and Guarantor has violated any Environmental
Law or is liable for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials, the Borrower shall, within
the time period permitted by the applicable Environmental Law or the
Governmental Authority responsible for enforcing such Environmental Law,
remove or remedy, or cause the applicable Guarantor to remove or remedy, such
violation or release or satisfy such liability unless and only during the
period that theapplicability of the Environmental Law, the fact of such
violation or liability or what is required to remove or remedy such violation
is being contested by the Borrower or the applicable Guarantor by appropriate
proceedings diligently conducted and all reserves with respect thereto as may
be required under Generally Accepted Accounting Principles, if any, have been
made, and no Lien in connection therewith shall have attached to any property
of the Borrower or the applicable Guarantor which shall have become
enforceable against creditors of such Person;
8.15. Indemnification . Without limiting the generality of Section 12.9,
the Borrower hereby agrees to indemnify and hold the Agent and the Lenders,
and their respective officers, directors, employees and agents, harmless from
and against any and all claims, losses, penalties, liabilities, damages and
expenses (including assessment and cleanup costs and reasonable attorneys'
55
<PAGE>
fees and disbursements) arising directly or indirectly from, out of or by
reason of (a) the violation of any Environmental Law by the Borrower or any
Guarantor or with respect to any property owned, operated or leased by the
Borrower or any Guarantor or (b) the handling, storage, treatment, emission
or disposal of any Hazardous Materials by or on behalf of the Borrower or any
Guarantor or on or with respect to property owned or leased or operated by
the Borrower or any Guarantor. Notwithstanding the foregoing, this Section
8.15 shall not apply to violations caused by the Agent when the Collateral is
in the possession and control of the Agent. The provisions of this Section
8.15 shall survive the Facility Termination Date and expiration or
termination of this Agreement;
8.16. Assurances . At the Borrower's cost and expense, upon request of
the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such
further acts that may be reasonably necessary or advisable in the reasonable
opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement, the Security Instruments and the other Loan
Documents;
8.17. Employee Benefit Plans .
(a) With reasonable promptness, and in any event within thirty (30)
days thereof, give notice to the Agent of (a) the establishment of any
new Pension Plan (which notice shall include a copy of such plan), (b)
the commencement of contributions to any Employee Benefit Plan to which
the Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing
Employee Benefit Plan, (d) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications received or
sent by the Borrower or any ERISA Affiliate with respect to such request
and (e) the failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section
412 of the Code by the due date; and
(b) Promptly and in any event within fifteen (15) days of becoming
aware of the occurrence or forthcoming occurrence of any (a) Termination
Event or (b) nonexempt "prohibited transaction," as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, deliver to the Agent a
notice specifying the nature thereof, what action the Borrower or any
ERISA Affiliate has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect
thereto; and
(c) With reasonable promptness but in any event within fifteen (15)
days for purposes of clauses (a), (b) and (c), deliver to the Agent
copies of (a) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan
under Section 401(a) of the Code, (b) all notices received by the
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan, (c) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by the Borrower or any ERISA Affiliate with the
56
<PAGE>
Internal Revenue Service with respect to each Pension Plan and (d) all
notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Borrower
will notify the Agent in writing within five (5) Business Days of the
Borrower or any ERISA Affiliate obtaining knowledge or reason to know
that the Borrower or any ERISA Affiliate has filed or intends to file a
notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA;
8.18. Continued Operations . Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted;
8.19. Patents, Etc. Maintain at all times the right to use, under valid
license agreements or otherwise, all material patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets
and copyrights necessary to or used in the conduct of its businesses as now
conducted and as contemplated by the Loan Documents, without known conflict
with any patent, license, franchise, trademark, trade secret, trade name,
copyright, or other proprietary right of any other Person;
8.20. New Guarantors . Simultaneously with the acquisition or creation
of any Guarantor, cause to be delivered to the Agent for the benefit of the
Lenders each of the following:
(i) a Facility Guaranty executed by such Guarantor substantially in
the form of Exhibit I;
(ii) a Security Agreement of such Guarantor substantially in the
form of Exhibit J, together with such Uniform Commercial Code financing
statements on Form UCC-1 or otherwise duly executed by such Guarantor as
"Debtor" and naming the Agent for the benefit of the Lenders as "Secured
Party", in form, substance and number sufficient in the reasonable
opinion of the Agent and its special counsel to be filed in all Uniform
Commercial Code filing offices in all jurisdictions in which filing is
necessary or advisable to perfect in favor of the Agent for the benefit
of the Lenders the Lien on Collateral conferred under such Security
Instrument to the extent such Lien may be perfected by Uniform
Commercial Code filing;
(iii) if such Guarantor is a corporation or is a partnership that
has issued certificates evidencing ownership of Partnership Interests,
(A) the Pledged Stock or, if applicable, certificates of ownership of
such Partnership Interests, together with duly executed stock powers or
powers of assignment in blank affixed thereto, and (B) if such
Collateral shall be owned by a Guarantor who has not then executed and
delivered to the Agent a Security Instrument from the owner of such
Collateral granting a Lien to the Agent in such Collateral, a Security
Agreement or a Pledge Agreement (as appropriate) substantially similar
in form and content to that executed and delivered by the Borrower as of
the Closing Date, with appropriate revisions as to the identity of the
pledgor and securing the obligations of such pledgor under its Facility
Guaranty;
(iv) if such Guarantor is a partnership not described in clause
(iii) immediately above, (A) the certificate of the Registrar of such
57
<PAGE>
partnership with respect to the registration of the Lien on Partnership
Interests, which certificate shall be in the form of Exhibit K and (B)
if such Collateral shall be owned by a Guarantor who has not then
executed and delivered to the Agent a Security Instrument from the owner
of such Collateral granting a Lien to the Agent in such Collateral, a
Pledge Agreement substantially similar in form and content to that
executed and delivered by the Borrower as of the Closing Date, with
appropriate revisions as to the identity of the pledgor and securing the
obligations of such pledgor under its Facility Guaranty;
(v) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized Representative
(provided that the failure to deliver such supplement shall not impair
the rights conferred under the Security Instruments in after acquired
Collateral);
(vi) if the Guarantor is a Material Subsidiary or a Material
Partnership, an opinion of counsel to the Guarantor dated as of the date
of delivery of the Facility Guaranty and other Loan Documents provided
for in this Section 8.20 and addressed to the Agent and the Lenders, in
form and substance reasonably acceptable to the Agent (which opinion may
include assumptions and qualifications of similar effect to those
contained in the opinions of counsel delivered pursuant to Section
6.1(a)(ii)), to the effect that:
(A) such Guarantor is duly organized, validly existing and in
good standing in the jurisdiction of its formation, has the
requisite power and authority to own its properties and conduct its
business as then owned and then conducted and proposed to be
conducted, and is duly qualified to transact business and is in good
standing as a foreign corporation or partnership in each other
jurisdiction in which the character of the properties owned or
leased, or the business carried on by it, requires such
qualification and the failure to be so qualified would reasonably be
likely to result in a Material Adverse Effect;
(B) the execution, delivery and performance of the Facility
Guaranty and other Loan Documents described in this Section 8.20 to
which such Guarantor is a signatory have been duly authorized by all
requisite corporate or partnership action (including any required
shareholder or partner approval), each of such agreements has been
duly executed and delivered and constitutes the valid and binding
agreement of such Guarantor, enforceable against such Guarantor in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar
law affecting the enforceability of creditors' rights generally and
to the effect of general principles of equity (whether considered in
a proceeding at law or in equity); and
(C) the Uniform Commercial Code financing statements on Form
UCC-1 delivered to the Agent by the Guarantor in connection with the
delivery of the Security Instruments of such Guarantor have been
duly executed by the Guarantor and are in form, substance and number
58
<PAGE>
sufficient for filing in all Uniform Commercial Code filing offices
in all jurisdictions in which filing is necessary to perfect in
favor of the Agent for the benefit of the Lenders the Lien on
Collateral conferred under such Security Instruments to the extent
such Lien may be perfected by Uniform Commercial Code filing;
(vii) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Guarantor, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board
of Directors, partners, or appropriate committees thereof (and, if
required by such charter documents, bylaws or by applicable law, of
the shareholders) of such Guarantor authorizing the actions and the
execution and delivery of documents described in this Section 8.20.
ARTICLE IX
Negative Covenants
------------------
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not, nor will it permit any Guarantor
to:
9.1. Financial Covenants .
(a) Consolidated Net Worth. Permit Consolidated Net Worth to be
less than (i) $32,500,000 at the Closing Date and through March 30,
1997, and (ii) as at the last day of each succeeding fiscal quarter of
the Borrower and until (but excluding) the last day of the next
following fiscal quarter of the Borrower, the sum of (A) the amount of
Consolidated Net Worth required to be maintained pursuant to this
Section 9.1(a) as at the end of the immediately preceding fiscal
quarter, plus (B) 75% of Consolidated Net Income (with no reduction for
net losses during any period) for the fiscal quarter of the Borrower
ending on such day (including within "Consolidated Net Income" certain
items otherwise excluded, as provided for in the definition of
"Consolidated Net Income"), plus (c)100% of the aggregate amount of all
increases in the stated capital and additional paid-in capital accounts
of the Borrower resulting from the issuance of equity securities or
other capital investments.
(b) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as of the end of any Four-Quarter Period to be greater than 3.00
to 1.00.
(c) Consolidated Fixed Charge Ratio. Permit the Consolidated Fixed
Charge Ratio as of the end of any Four-Quarter Period to be less than
1.50 to 1.00.
9.2. Acquisitions . Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless:
59
<PAGE>
(a) the Person to be (or whose assets are to be) acquired does not
oppose such Acquisition and the line or lines of business of the Person
to be acquired are substantially the same as one or more line or lines
of business conducted by the Borrower and the Guarantors, and
(b) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving
effect to such Acquisition and the Borrower shall have furnished to the
Agent (A) pro forma historical financial statements as of the end of the
most recently completed Fiscal Year of the Borrower and most recent
interim fiscal quarter, if applicable, giving effect to such Acquisition
and (B) a certificate in the form of Exhibit H prepared on a historical
pro forma basis giving effect to such Acquisition, which certificate
shall demonstrate that no Default or Event of Default would exist
immediately after giving effect thereto,
(c) the Person acquired shall be a Guarantor, or be merged into the
Borrower or a Guarantor, immediately upon consummation of the
Acquisition (or if assets are being acquired, the acquiror shall be the
Borrower or a Guarantor), and
(d) if the Cost of Acquisition shall (A) exceed $3,000,000 in cash,
or (B) exceed $5,000,000 in the aggregate, or (C) cause the aggregate
Cost of Acquisitions incurred in any Fiscal Year to exceed $15,000,000,
the Required Lenders shall consent to such Acquisition in their
discretion;
9.3. Receivables . Permit the aggregate amount of net accounts
receivable which are included as an asset on the consolidated balance sheet
of the Borrower and the Guarantors which remain unpaid 180 or more days from
the date of invoice at any time to exceed 9% of total accounts receivable of
the Borrower and the Guarantors.
9.4. Liens . Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets
now owned or hereafter acquired by the Borrower or any Guarantor, other than
(a) Liens created under the Security Instruments in favor of the
Agent and the Lenders, and otherwise existing as of the date hereof and
as set forth in Schedule 7.7;
(b) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens
are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than 90
days from the date of creation thereof for amounts not yet due or which
are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP and
which Liens are not yet enforceable against other creditors;
60
<PAGE>
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower or
any Subsidiary and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to
the Borrower or any Guarantor;
(f) purchase money Liens to secure Indebtedness permitted under
Section 9.5(f) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such
assets as of the date of purchase thereof and no property other than the
assets so purchased secures such Indebtedness; and
(g) Liens arising in connection with Capital Leases permitted under
Section 9.5(g); provided that no such Lien shall extend to any
Collateral or to any other property other than the assets subject to
such Capital Leases;
9.5. Indebtedness . Incur, create, assume or permit to exist any
Indebtedness of the Borrower, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
Schedule 9.5; provided, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified or
supplemented after the Closing Date to change any terms of
subordination, repayment or rights of conversion, put, exchange or other
rights from such terms and rights as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in connection
with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) additional unsecured Indebtedness for Money Borrowed and not
otherwise covered by clauses (a) through (c) above; provided that the
61
<PAGE>
aggregate outstanding principal amount of all such other Indebtedness
permitted under this clause (d) and Sections 9.5(e), (f), (g), and (h)
shall in no event exceed $4,500,000 in the aggregate at any time;
(e) Indebtedness arising from Rate Hedging Obligations permitted
under Section 9.15; provided that the aggregate outstanding
risk-adjusted principal amount as determined by the Agent of all such
Rate Hedging Obligations and of all Indebtedness permitted under this
clause (e) and Sections 9.5(d), (f), (g), and (h) shall in no event
exceed $4,500,000 in the aggregate at any time;
(f) purchase money Indebtedness described in Section 9.4(f);
provided that the aggregate outstanding principal amount of all such
purchase money Indebtedness permitted under this clause (f) and of all
Indebtedness permitted under Sections 9.5(d), (e), (g), and (h) shall in
no event exceed $4,500,000 in the aggregate at any time;
(g) Indebtedness for Money Borrowed arising from Capital Leases
described in Section 9.4(g); provided that the aggregate outstanding
principal amount of such Indebtedness for Money Borrowed arising from
Capital Leases permitted under this clause (g) and of all Indebtedness
permitted under Sections 9.5(d), (e), (f), and (h) shall in no event
exceed $4,500,000 in the aggregate at any time;
(h) Indebtedness for Money Borrowed arising from insurance premium
financing plans that fully amortize within one year; provided that the
aggregate outstanding principal amount of such Indebtedness for Money
Borrowed arising from such insurance premium financing plans permitted
under this clause (h) and of all Indebtedness permitted under Sections
9.5(d), (e), (f), and (g) shall in no event exceed $4,500,000 in the
aggregate at any time; and provided further that the insurance premium
financing plan with Transamerica Insurance Finance Corporation listed on
Schedule 9.5 and permitted under Section 9.5(a) shall be included in and
aggregated under (but not in addition to) Indebtedness for Money
Borrowed arising from insurance premium financing plans permitted under
this clause (h);
(i) Deferred Excess Compensation permitted in Section 9.18.
9.6. Transfer of Assets . Sell, lease, transfer or otherwise dispose of
any assets of Borrower or any Guarantor in excess of $250,000 other than (a)
dispositions of inventory in the ordinary course of business, (b)
dispositions of property that is substantially worn, damaged, obsolete or, in
the judgment of the Borrower, no longer best used or useful in its business
or that of any Guarantor, (c) transfers of assets necessary to give effect to
merger, sale or consolidation transactions permitted by Section 9.8, (d) the
disposition of Eligible Securities in the ordinary course of management of
the investment portfolio of the Borrower and the Guarantors, and (e)
transfers of assets from one Guarantor to another or to the Borrower so long
as after giving effect thereto the Agent shall have a first priority
perfected security interest in such assets;
9.7. Investments . Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
62
<PAGE>
exist any interest whatsoever in any other Person or permit to exist any
loans or advances to any Person, except that Borrower may maintain
investments or invest in:
(a) securities of any Person acquired in an Acquisition permitted
hereunder;
(b) Securities;
(c) investments existing as of the date hereof and as set forth in
Schedule 7.4;
(d) receivable arising and trade credit granted in the ordinary
course of business and any securities received in satisfaction or
partial satisfaction thereof in connection with accounts of financially
troubled Persons to the extent reasonably necessary in order to prevent
or limit loss; and
(e) investments in or loans to Guarantors;
(f) other loans, advances and investments in an aggregate principal
amount at any time outstanding not to exceed $500,000;
9.8. Merger or Consolidation . (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise
dispose of all or a substantial part of its assets (other than sales
permitted under Section 9.6 (a), (b) and (d)); provided, however, (i) any
Guarantor may merge or transfer all or substantially all of its assets into
or consolidate with the Borrower or any Guarantor, and (ii) any other Person
may merge into or consolidate with the Borrower or any Guarantor and any
Guarantor may merge into or consolidate with any other Person in order to
consummate an Acquisition permitted by Section 9.2, provided further, that
any resulting or surviving entity shall execute and deliver such agreements
and other documents, including a Facility Guaranty, and take such other
action as the Agent may require to evidence or confirm its express assumption
of the obligations and liabilities of its predecessor entities under the Loan
Documents;
9.9. Restricted Payments . Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing
except;
(a) any Guarantor may make Restricted Payments to the Borrower; or
(b) any Guarantor may make Restricted Payments to another Guarantor; or
(c) those distributions set forth on Schedule 9.9;
9.10. Transactions with Affiliates . Other than transactions permitted
under Sections 9.7 and 9.8, and transactions with Guarantors, enter into any
transaction after the Closing Date, including, without limitation, the
purchase, sale, lease or exchange of property, real or personal, or the
63
<PAGE>
rendering of any service, with any Affiliate of the Borrower, except (a) that
such Persons may render services to the Borrower or the Guarantors for
compensation at the same rates generally paid by Persons engaged in the same
or similar businesses for the same or similar services, (b) that the Borrower
or any Guarantor may render services to such Persons for compensation at the
same rates generally charged by the Borrower or such Guarantor and (c) in
either case in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's (or any Guarantor's) business consistent with
past practice of the Borrower and the Guarantors and upon fair and reasonable
terms no less favorable to the Borrower (or any Guarantor) than would be
obtained in a comparable arm's-length transaction with a Person not an
Affiliate;
9.11. Compliance with ERISA . With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA Affiliate
to the PBGC; or
(b) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in liability
to the Borrower or any ERISA Affiliate or increase the obligation of the
Borrower or any ERISA Affiliate to a Multiemployer Plan which liability
or increase, individually or together with all similar liabilities and
increases, is in excess of $50,000; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance
in all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof;
64
<PAGE>
9.12. Fiscal Year . Change its Fiscal Year;
9.13. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 9.8;
9.14. Change in Control . Cause, suffer or permit to exist or occur any
Change of Control;
9.15. Rate Hedging Obligations . Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except for Rate Hedging Obligations incurred to
limit risks of currency or interest rate fluctuations to which the Borrower
and the Guarantors are subject by virtue of the Indebtedness evidenced by the
Notes.
9.16. Negative Pledge Clauses . Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or
limits the ability of any of the Borrower or any Guarantor to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, provided that the Borrower
and any Guarantor may enter into such an agreement in connection with
property subject to any Lien permitted by this Agreement and not released
after the date hereof, when such prohibition or limitation is by its terms
effective only against the assets subject to such Lien;
9.17. Change in Management . Suffer any change in management wherein
Mitchell Eisenberg fails to be actively involved in the management of
Borrower; provided, however, Borrower shall have a period of 120 days
thereafter to select a replacement which is acceptable to the Required
Lenders in their sole and absolute discretion.
9.18. Deferred Excess Compensation . Cause or permit the outstanding
liability for Deferred Excess Compensation in any event to exceed $3,000,000
in the aggregate at any time.
ARTICLE X
Events of Default and Acceleration
----------------------------------
10.1. Events of Default . If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of
any Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal of any Loan, Reimbursement Obligation or other Obligation,
when and as the same shall be due and payable whether pursuant to any
provision of Article II or Article III, at maturity, by acceleration or
otherwise; or
65
<PAGE>
(b) if default shall be made in the due and punctual payment of any
amount of interest on any Loan, Reimbursement Obligation or other
Obligation or of any fees or other amounts payable to any of the Lenders
or the Agent on the date on which the same shall be due and payable and
such default shall continue for four (4) or more days; or
(c) if default shall be made in the performance or observance of
any covenant set forth in Section 8.7, 8.11, 8.20, or Article IX;
(d) if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained in
this Agreement or the Notes (other than as described in clauses (a), (b)
or (c) above) and such default shall continue for 30 or more days after
the earlier of receipt of notice of such default by the Authorized
Representative from the Agent or an officer of the Borrower becomes
aware of such default, or if a default shall be made in the performance
or observance of, or shall occur under, any covenant, agreement or
provision contained in any of the other Loan Documents (beyond any
applicable grace period, if any, contained therein) or in any instrument
or document evidencing or creating any obligation, guaranty, or Lien in
favor of the Agent or any of the Lenders or delivered to the Agent or
any of the Lenders in connection with or pursuant to this Agreement or
any of the Obligations, or if any Loan Document ceases to be in full
force and effect (other than by reason of any action by the Agent), or
if without the written consent of the Lenders, this Agreement or any
other Loan Document shall be disaffirmed or shall terminate, be
terminable or be terminated or become void or unenforceable for any
reason whatsoever (other than in accordance with its terms in the
absence of default or by reason of any action by the Lenders or the
Agent); or
(e) if there shall occur (i) a default, which is not waived, in the
payment of any principal, interest, premium or other amount with respect
to any Indebtedness (other than the Loans and other Obligations) of the
Borrower or any Guarantor in an amount not less than $100,000 in the
aggregate outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant contained
in any agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any Guarantor, or (iii) any other event of
default as specified in any agreement or instrument under or pursuant to
which any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrower or any Guarantor, and such default
or event of default shall continue for more than the period of grace, if
any, therein specified, or such default or event of default shall permit
the holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any other Credit Party pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
66
<PAGE>
(g) if the Borrower or any Guarantor or other Credit Party shall be
unable to pay its debts generally as they become due; file a petition to
take advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole
or any substantial part of its property; file a petition or answer which
in either case seeks liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other applicable
law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of the Borrower or any Guarantor or of the whole or any
substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or any Guarantor seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
or stayed within sixty (60) days; or if, under the provisions of any
other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Borrower or any
Guarantor or of the whole or any substantial part of its properties,
which control is not relinquished within sixty (60) days; or if there is
commenced against the Borrower or any Guarantor any proceeding or
petition seeking reorganization, arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state which proceeding or petition
remains undismissed for a period of sixty (60) days; or if the Borrower
or any Guarantor takes any action to indicate its consent to or approval
of any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $100,000 is rendered against the Borrower or
any Guarantor, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or Guarantors' properties for any amount
in excess of $100,000 in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded
or undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Guarantor shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the
business of the Borrower and such Guarantor, taken as a whole, for a
period of more than 30 days; or
(k) if the Borrower or any Guarantor shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if the Borrower or any Guarantor shall
disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
67
<PAGE>
(l) if there shall occur and not be waived an Event of Default as
defined in any of the other Loan Documents;
(m) (i) cancellation, revocation, suspension or termination of any
Medicare Certification, Medicare Provider Agreement, Medicaid
Certification or Medicaid Provider Agreement affecting the Borrower, any
Guarantor or any Contract Provider, or (ii) the loss of any other
permits, licenses, authorizations, certifications or approvals from any
federal, state or local Governmental Authority or termination of any
contract with any such authority, in either case which cancellation,
revocation, suspension, termination or loss (X) in the case of any
suspension or temporary loss only, continues for a period greater than
60 days and (Y) results in the suspension or termination of operations
of the Borrower or any Guarantor or in the failure of the Borrower or
any Guarantors or any Contract Provider to be eligible to participate in
Medicare or Medicaid programs or to accept assignments of rights to
reimbursement under Medicaid Regulations or Medicare Regulations;
provided that any such events described in this Section 10.1(m) shall
result either singly or in the aggregate in the termination,
cancellation, suspension or material impairment of operations or rights
to reimbursement which produce 5% or more of the Borrower's gross
revenues (on an annualized basis);
(n) if there shall occur any Termination Event;
(o) any actual or asserted invalidity (other than by the Agent and
Lenders) of any of the Loan Documents;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent, with the consent of the Required
Lenders, may, and at the direction of the Required Lenders
shall, declare any obligation of the Lenders and the Issuing
Bank to make further Revolving Loans or to issue additional
Letters of Credit terminated, whereupon the obligation of
each Lender to make further Revolving Loans and of the
Issuing Bank to issue additional Letters of Credit,
hereunder shall terminate immediately, and (ii) the Agent
shall at the direction of the Required Lenders, at their
option, declare by notice to the Borrower any or all of the
Obligations to be immediately due and payable, and the same,
68
<PAGE>
including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of
any kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall
occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lenders to make Revolving Loans
and of the Issuing Bank to issue Letters of Credit hereunder
shall automatically terminate and any and all of the
Obligations shall be immediately due and payable without the
necessity of any action by the Agent or the Required Lenders
or notice to the Agent or the Lenders;
(B) the Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount
equal to the amount of any Letter of Credit Outstandings, as
collateral security for the repayment of any future drawings
or payments under such Letters of Credit, and such amounts
shall be held by the Agent pursuant to the terms of the LC
Account Agreement; and
(C) the Agent and each of the Lenders shall have all of
the rights and remedies available under the Loan Documents
or under any applicable law.
10.2. Agent to Act . In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement or other provision
contained herein or in any other Loan Document, or to enforce the payment of
the Obligations or any other legal or equitable right or remedy.
10.3. Cumulative Rights . No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right
or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at
law or in equity or by statute, or otherwise.
10.4. No Waiver . No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or
otherwise available to it shall operate as a waiver of any rights or remedies
and no single or partial exercise of any rights or remedies shall operate as
a waiver or preclude the exercise of any other rights or remedies hereunder
or of the same right or remedy on a future occasion.
10.5. Allocation of Proceeds . If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant
to Article X hereof, all payments received by the Agent hereunder, in respect
of any principal of or interest on the Obligations or any other amounts
payable by the Borrower hereunder, shall be applied by the Agent in the
following order:
(a) amounts due to the Lenders pursuant to Sections 2.10, 3.3, 3.4
and 12.5;
(b) amounts due to the Agent pursuant to Section 11.11;
69
<PAGE>
(c) payments of interest on Loans and Reimbursement Obligations, to
be applied for the ratable benefit of the Lenders;
(d) payments of principal of Loans and Reimbursement Obligations,
to be applied for the ratable benefit of the Lenders;
(e) payments of cash amounts to the Agent in respect of outstanding
Letters of Credit pursuant to Section 10.1(B);
(f) amounts due to the Lenders pursuant to Sections 3.2(g), 8.15
and 12.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
(h) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the
Lenders on a pro rata basis according to the amounts owed; and
(i) any other Indebtedness.
ARTICLE XI
The Agent
---------
11.1. Appointment . Each Lender hereby irrevocably designates and
appoints NationsBank as the Agent for the Lenders under this Agreement, and
each of the Lenders hereby irrevocably authorizes NationsBank as the Agent
for such Lender, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers as
are expressly delegated to the Agent by the terms of this Agreement and such
other Loan Documents, together with such other powers as are reasonably
incidental thereto. 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 any
other Loan Document or otherwise exist against the Agent. So long as
NationsBank shall be the sole Lender, the term Agent shall mean NationsBank
as sole Lender.
11.2. Attorneys-in-fact . The Agent may execute any of its duties under
the Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence, gross
negligence or willful misconduct of any agents or attorneys-in-fact selected
by it with reasonable care.
11.3. Limitation on Liability . Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact shall be liable
to the Lenders for any action lawfully taken or omitted to be taken by it or
70
<PAGE>
them under or in connection with the Loan Documents except for its or their
own gross negligence or willful misconduct. Neither the Agent nor any of its
affiliates shall be responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower, any
other Credit Party or any officer or representative thereof contained in any
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in or received by the Agent under or in
connection with any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Loan Document, or for any
failure of the Borrower or any other Credit Party to perform its obligations
under any Loan Document, or for any recitals, statements, representations or
warranties made, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any collateral. The Agent shall not be under
any obligation to any of the Lenders to ascertain or to inquire as to the
observance or performance of any of the terms, covenants or conditions of any
Loan Document on the part of the Borrower or any other Credit Party or to
inspect the properties, books or records of the Borrower or the Guarantors or
any other Credit Party.
11.4. Reliance . The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telefacsimile or telex
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless an Assignment and
Acceptance shall have been filed with and accepted by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under the
Loan Documents unless it shall first receive advice or concurrence of the
Lenders or the Required Lenders as provided in this Agreement or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents
in accordance with a request of the Required Lenders, and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all present and future holders of the Notes.
11.5. Notice of Default . The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Authorized
Representative or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable in the best
interests of the Lenders.
11.6. No Representations . Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
71
<PAGE>
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Borrower, the Guarantors or any other Credit
Party, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of the Borrower and each other
Credit Party and made its own decision to enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under the
Loan Documents and to make such investigation as it deems necessary to inform
itself as to the status and affairs, financial or otherwise, of the Borrower,
the Guarantors and any other Credit Party. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrower, its Subsidiaries
and any other Credit Party which may come into the possession of the Agent or
any of its affiliates.
11.7. Indemnification . Notwithstanding the amendment and restatement of
the Prior Agreement by this Agreement, the Borrower shall continue to be
liable to NationsBank with respect to agreements on the part of the Borrower
under the Prior Agreement to indemnify and hold harmless NationsBank from and
against all claims, demand, liabilities, damages, losses, costs, charges and
expenses to which NationsBank may be subject arising in connection with the
Prior Agreement. Each of the Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower or any other
Credit Party and without limiting any obligations of the Borrower or any
other Credit Party to do so), ratably according to the respective principal
amount of the Notes held by them (or, if no Notes are outstanding, ratably in
accordance with their respective Applicable Commitment Percentages as then in
effect) from and against any and all liabilities, obligations, losses
(excluding any losses suffered by the Agent as a result of Borrower's failure
to pay any fee owing to the Agent), damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may at any time (including without limitation at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of any Loan Document or any other
document contemplated by or referred to therein or the transactions
contemplated thereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any 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. The agreements in this subsection shall survive the Facility
Termination Date and the termination of this Agreement.
11.8. Lender . The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower
and the Guarantors as though it were not the Agent hereunder. With respect to
its Loans made or renewed by it and any Note issued to it, the Agent shall
72
<PAGE>
have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity.
11.9. Resignation . If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long
as there shall not have occurred and be continuing a Default or Event of
Default, of the Borrower, which consent shall not be unreasonably withheld, a
successor Agent forthe Lenders, which successor Agent shall be a commercial
bank organized under the laws of the United States or any state thereof,
having a combined surplus and capital of not less than $500,000,000,
whereupon such successor Agent shall succeed to the rights, powers and duties
of the former Agent and the obligations of the former Agent shall be
terminated and canceled, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement; provided,
however, that the former Agent's resignation shall not become effective until
such successor Agent has been appointed and has succeeded of record to all
right, title and interest in any collateral held by the Agent; provided,
further, that if the Required Lenders and, if applicable, the Borrower cannot
agree as to a successor Agent within ninety (90) days after such resignation,
the Agent shall appoint a successor Agent which satisfies the criteria set
forth above in this Section 11.9 for a successor Agent and the parties hereto
agree to execute whatever documents are necessary to effect such action under
this Agreement or any other document executed pursuant to this Agreement;
provided, however that in such event all provisions of the Loan Documents,
shall remain in full force and effect. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
11.10. Sharing of Payments, etc . Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than
pursuant to Article V) which results in its receiving more than its pro rata
share of the aggregate payments with respect to all of the Obligations (other
than any payment expressly provided hereunder to be distributed on other than
a pro rata basis and payments pursuant to Article V), then (a) such Lender
shall be deemed to have simultaneously purchased from the other Lenders a
share in their Obligations so that the amount of the Obligations held by each
of the Lenders shall be pro rata and (b) such other adjustments shall be made
from time to time as shall be equitable to insure that the Lenders share such
payments ratably; provided, however, that for purposes of this Section 11.10
the term "pro rata" shall be determined with respect to the Revolving Credit
Commitment of each Lender and to the Total Revolving Credit Commitments after
subtraction in each case of amounts, if any, by which any such Lender has not
funded its share of the outstanding Loans and Obligations. If all or any
portion of any such excess payment is thereafter recovered from the Lender
which received the same, the purchase provided in this Section 11.10 shall be
rescinded to the extent of such recovery, without interest. The Borrower
expressly consents to the foregoing arrangements and agrees that each Lender
so purchasing a portion ofthe other Lenders' Obligations may exercise all
rights of payment (including, without limitation, all rights of set-off,
banker's lien or counterclaim) with respect to such portion as fully as if
such Lender were the direct holder of such portion.
73
<PAGE>
11.11. Fees . The Borrower agrees to pay to the Agent, for its
individual account, an annual Administrative Agent's fee as from time to time
agreed to by the Borrower and Agent in writing.
ARTICLE XII
Miscellaneous
-------------
12.1. Assignments and Participations .
(a) At any time after the Closing Date each Lender may, with the prior
consent of the Agent and (so long as no Default or Event of Default shall
have occurred and be continuing) the Borrower, which consents shall not be
unreasonably withheld, assign to one or more banks or financial institutions
all or a portion of its rights and obligations under the Loan Documents
(including, without limitation, all or a portion of any Note payable to its
order); provided, that (i) each such assignment shall be of a constant and
not a varying percentage of all of the assigning Lender's rights and
obligations under the Revolving Credit Facility and Letter of Credit
Facility, (ii) for each assignment involving the issuance and transfer of a
Note, the assigning Lender shall execute an Assignment and Acceptance and the
Borrower hereby agrees to execute a replacement Note to give effect to the
assignment, (iii) the amount of Revolving Credit Commitment and Letter of
Credit Commitment which shall be assigned is a minimum of $5,000,000, and, if
greater, an amount which is an integral multiple of $1,000,000, or if such
Lender's Revolving Credit Commitment or Letter of Credit Commitment is less
than $5,000,000, the full amount of such Revolving Credit Commitment or
Letter of Credit Commitment, (iv) such assignee shall have an office located
in the United States, and (v) no consent of the Borrower or the Agent shall
be required in connection with any assignment by a Lender to another Lender
or to an affiliate of any Lender. Upon such execution, delivery, approval and
acceptance, from and after the effective date specified in each Assignment
and Acceptance, (x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder or under any such Note have
been assigned or negotiated to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and a holder of such
Note and (y) the assignor thereunder shall, to the extent that rights and
obligations hereunder or under such Note have been assigned or negotiated by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement. Any Lender who makes an
assignment shall pay to the Agent a one-time administrative fee of $3,500
which fee shall not be reimbursed by the Borrower.
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) the assignment made
under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the Guarantors or the performance or
observance by the Borrower or any other Credit Party of any of its
obligations under any Loan Document or any other instrument or Document
furnished pursuant hereto; (iii) such assignee confirms that it has received
a copy of this Agreement, together with copies of the financial statements
delivered pursuant to Section 7.6(a) or Section 8.1, as the case may be, and
such other Loan Documents and other documents and information as it has
74
<PAGE>
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under any Loan Document; (v) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender and a holder of such Notes.
(c) The Agent shall maintain at its address referred to herein a copy of
each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from pledging or assigning,
without notice to or consent of the Borrower and without the payment of the
administrative fee referred to in Section 12.1(a), any Note to any Federal
Reserve Bank in accordance with applicable law.
(f) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; provided, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any Note issued to
it for the purpose of this Agreement, (iv) such participations shall be in a
minimum amount of $5,000,000 and, if greater, an amount which is an integral
multiple of $1,000,000, or if such Lender's Revolving Credit Commitment or
Letter of Credit Commitment is less than $5,000,000, the full amount of such
Revolving Credit Commitment or Letter of Credit Commitment, and shall include
an allocable portion of such Lender's Participation, (v) Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and with regard to any and all payments to be made under this
Agreement; provided, that the participation agreement between a Lender and
its participants may provide that such Lender will obtain the approval of
such participant prior to such Lender's agreeing to any amendment or waiver
of any provisions of any Loan Document which would (A) extend the maturity of
any Note, (B) reduce the interest rates hereunder or (C) increase the
Revolving Credit Commitment or Letter of Credit Commitment of the Lender
granting the participation, and (vi) the sale of any such participations
which require Borrower to file a registration statement with the United
States Securities and Exchange Commission or under the securities regulations
or laws of any state shall not be permitted.
75
<PAGE>
(g) The Borrower may not assign, nor shall it cause, suffer or permit
any other Credit Party to assign any rights, powers, duties or obligations
under this Agreement or the other Loan Documents without the prior written
consent of all the Lenders.
12.2. Notices . Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which
delivered (including hand delivery by commercial courier service) to such
party (against receipt therefor), (ii) on the date of receipt at such
address, telefacsimile number or telex number as may from time to time be
specified by such party in written notice to the other parties hereto or
otherwise received), in the case of notice by telegram, telefacsimile or
telex, respectively (where the receipt of such message is verified by
return), or (iii) on the fifth Business Day after the day on which mailed, if
sent prepaid by certified or registered mail, return receipt requested, in
each case delivered, transmitted or mailed, as the case may be, to the
address, telex number or telefacsimile number, as appropriate, set forth
below or such other address or number as such party shall specify by notice
hereunder:
(a) if to the Borrower:
Sheridan Healthcare, Inc.
4561 Sheridan Street, Suite 400
Hollywood, Florida 33021
Attn: Mitchell Eisenberg, M.D., President
Telephone: (954) 986-7550
Telefacsimile: (954) 987-8359
with a copy to:
Jay A. Martus, Esquire, Vice President and General Counsel
(b)if to the Agent:
NationsBank, National Association (South)
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-3916
Telefacsimile: (704) 386-9923
(c)if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
76
<PAGE>
(d)if to any Guarantor, at the address set forth on
the signature page of the Facility Guaranty or
Security Instrument executed by such Guarantor, as
the case may be.
12.3. Setoff . The Borrower agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Borrower upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or
assigned to the Agent or such Lender or otherwise in the possession or
control of the Agent or such Lender (other than for safekeeping) for any
purpose for the account or benefit of the Borrower and including any balance
of any deposit account or of any credit of the Borrower with the Agent or
such Lender, whether now existing or hereafter established, hereby
authorizing the Agent (and each of its affiliates) and each Lender (and each
of its affiliates) at any time or times with or without prior notice to apply
such balances or any part thereof to such of the Obligations of the Borrower
to the Lenders then past due and in such amounts as they may elect, and
whether or not the collateral or the responsibility of other Persons
primarily, secondarily or otherwise liable may be deemed adequate. For the
purposes of this paragraph, all remittances and property shall be deemed to
be in the possession of the Agent or such Lender as soon as the same may be
put in transit to it by mail or carrier or by other bailee.
12.4. Survival . All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans
and the issuance of the Letters of Credit and the execution and delivery to
the Lenders of this Agreement and the Notes and shall continue in full force
and effect so long as any of Obligations remain outstanding or any Lender has
any commitment hereunder or the Borrower has continuing obligations hereunder
unless otherwise provided herein. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants, provisions
and agreements by or on behalf of the Borrower which are contained in the
Loan Documents shall inure to the benefit of the successors and permitted
assigns of the Lenders or any of them.
12.5. Expenses . The Borrower agrees (a) to pay or reimburse the Agent
for all its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents
(including due diligence expenses and travel expenses), and the consummation
of the transactions contemplated thereby, including the reasonable fees (not
to exceed $50,000) and disbursements of counsel to the Agent, (b) to pay or
reimburse the Agent and the Lenders for all their costs and expenses incurred
in connection with the enforcement or preservation of any rights under the
Loan Documents, including the reasonable fees and disbursements of their
counsel and any payments in indemnification or otherwise payable by the
Lenders to the Agent pursuant to the Loan Documents, and (c) to pay,
77
<PAGE>
indemnify and hold the Agent and the Lenders harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any failure to pay or delay in paying, documentary, stamp,
excise and other similar taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of any of the Loan
Documents, or consummation of any amendment, supplement or modification of,
or any waiver or consent under or in respect of, any Loan Document.
12.6. Amendments . No amendment, modification or waiver of any provision
of any Loan Document and no consent by the Lenders to any departure therefrom
by the Borrower or any Guarantor shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Agent and
Borrower, shall have been approved by the Required Lenders through their
written consent, and the same shall then be effective only for the period and
on the conditions and for the specific instances and purposes specified in
such writing; provided, however, that, no such amendment, modification or
waiver
(i) which changes, extends or waives any provision of
Section 2.6, Section 11.9 or this Section 12.6, the amount
of or the due date of any scheduled installment of any
Obligation, which decreases the rate of interest payable on
any Obligation, which changes the definition of "Required
Lenders", which permits an assignment by any Credit Party of
its Obligations under any Loan Document, which reduces the
required consent of Lenders provided hereunder, which
increases, decreases (other than pursuant to the express
terms hereof) or extends (other than pursuant to the express
terms hereof) the Revolving Credit Commitment or Letter of
Credit Commitment of any Lender, or which waives any
condition to the making of any Loan, shall be effective
unless in writing and signed by each of the Lenders;
(ii) which releases Collateral or the guaranty
obligation under any Facility Guaranty (other than pursuant
to the express terms hereof or thereof) shall be effective
unless with the written consent of each of the Lenders; or
(iv) which affects the rights, privileges or
obligations of the Issuing Bank as issuer of Letters of
Credit, shall be effective unless signed in writing by the
Issuing Bank;
(v) which affects the rights, privileges, immunities or
indemnities of the Agent shall be effective unless in
writing and signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the
contrary, as between the Agent and the Lenders, execution by the Agent shall
not be deemed conclusive evidence that the Agent has obtained the written
consent of the Required Lenders. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances, except as otherwise expressly provided
herein. No delay or omission on any Lender's or the Agent's part in
exercising any right, remedy or option shall operate as a waiver of such or
any other right, remedy or option or of any Default or Event of Default.
12.7. Counterparts . This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
78
<PAGE>
12.8. Termination . The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of
such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into or rights created or
obligations incurred prior to such termination have been fully disposed of,
concluded or liquidated and the Obligations arising prior to or after such
termination have been irrevocably paid in full. The rights granted to the
Agent for the benefit of the Lenders under the Loan Documents shall continue
in full force and effect, notwithstanding the termination of this Agreement,
until all of the Obligations have been paid in full after the termination
hereof (other than Obligations in the nature of continuing indemnities or
expense reimbursement obligations not yet due and payable, which shall
continue) or the Borrower has furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect
thereto. All representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until payment in full of
the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment
to any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Agent or such Lender harmless
for, the amount of such payment surrendered until the Agent or such Lender
shall have been finally and irrevocably paid in full. The provisions of the
foregoing sentence shall be and remain effective notwithstanding any contrary
action which may have been taken by the Agent or the Lenders in reliance upon
such payment, and any such contrary action so taken shall be without
prejudice to the Agent or the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment having become final and
irrevocable.
12.9. Indemnification; Limitation of Liability . In consideration of the
execution and delivery of this Agreement by the Agent and each Lender and the
extension of credit under the Loans, the Borrower hereby indemnifies,
exonerates and holds the Agent and each Lender and each of their respective
affiliates, officers, directors, employees, agents and advisors
(collectively, the "Indemnified Parties") free and harmless from and against
any and all claims, actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities") that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the execution, delivery, enforcement,
performance or administration of this Agreement and the other Loan Documents,
or any transaction financed or to be financed in whole or in part, directly
79
<PAGE>
or indirectly, with the proceeds of any Loan or Letter of Credit, whether or
not such action is brought against the Agent or any Lender, the shareholders
or creditors of the Agent or any Lender or an Indemnified Party or an
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated herein are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. The Borrower agrees that no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to it, any of the Guarantors, any Credit Party, or any security
holders or creditors thereof arising out of, related to or in connection with
the transactions contemplated herein, except to the extent that such
liability is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence
or willful misconduct; provided, however, in no event shall any Indemnified
Party be liable for consequential, indirect or special, as opposed to direct,
damages.
12.10. Severability . If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither illegal
nor invalid, and in any event all other provisions hereof shall remain
effective and binding on the parties hereto.
12.11. Entire Agreement . This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between
or among the parties, both oral and written, with respect thereto.
12.12. Agreement Controls . In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of
this Agreement, the terms and provisions of this Agreement shall control to
the extent of such conflict.
12.13. Usury Savings Clause . Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term
is defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest
Lawful Rate (as defined below), the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total
amount of interest due hereunder equals the amount of interest which would
have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if when the Loans
made hereunder are repaid in full the total interest due hereunder (taking
into account the increase provided for above) is less than the total amount
of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
80
<PAGE>
the extent permitted by law, the Borrower shall pay to the Agent an amount
equal to the difference between the amount of interest paid and the amount of
interest which wouldhave been paid if the Highest Lawful Rate had at all
times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Borrower to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or receives any
consideration which constitutes interest in excess of the Highest Lawful
Rate, then any such excess shall be cancelled automatically and, if
previously paid, shall at such Lender's option be applied to the outstanding
amount of the Loans made hereunder or be refunded to theBorrower. As used in
this paragraph, the term "Highest Lawful Rate" means the maximum lawful
interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
12.14. Governing Law; Waiver of Jury Trial .
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF BROWARD, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY HEREBY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER
PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED
FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
(D) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
81
<PAGE>
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE
LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
12.15. Confidentiality. Each Lender shall hold all non-public
information obtained pursuant to the requirements of this Agreement, which
has been identified as confidential by the Borrower or which is known by such
Lender to be confidential, in accordance with such Lender's customary
procedures for handling confidential information of such nature and in
accordace with customary banking practices, provided that this Section 12.15
is subject to Section 8.1(h) and in any event it is understood and agreed
that each lender may make disclosure of such information (a) to its examiners
and Affiliates, auditors and counsel, and to other professional advisors in
connection with this Agreement, provided they shall likewise hold such
information confidential, (b) as reasonably required by any bona fide
prospective participant or actual participant in connection with the
contemplated transfer of any Commitment, Loan or Note or any participation
therein provided they shall likewise hold such information confidential, or
(c) as required or requested by any Governmental Authority or pursuant to
legal process; provided, further, that in no event shall any Lender be
obligated or required to return any material furnished by the borrower or any
Guarantor. In the foregoing events the Lenders shall upon request return and
use its best efforts to cause any other person to whom the Lenders shall have
furnished information to return or destroy, all confidential information
furnished to it or them by the borrower or any Guarantor. In the event the
Borrower or a Guarantor shall furnish to the Agent or a Lender information
which the Borrower or Guarantor shall have received from another Person and
which information is subject to a confidentiality agreement, then, in such
event, so long as the Agent shall have been advised of the terms of such
confidentiality agreement by the Borrower, then the Agent and the Lenders
receiving such information shall likewise be bound by the terms of such
confidentiality agreement.
82
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day
and year first above written.
SHERIDAN HEALTHCARE INC.
WITNESS:
- ------------------------- By:
-------------------------------------------
Name:
- ------------------------- -----------------------------------------
Title:
----------------------------------------
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION (SOUTH),
AS AGENT FOR THE LENDERS
- ------------------------- By:
-------------------------------------------
- ------------------------- Name:
-----------------------------------------
Title:
----------------------------------------
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
By:
------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
Lending Office:
NationsBank, National Association (South)
Independence Center, 15th Floor
NCI-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-3916
Telefacsimile (704) 386-9923
Wire Transfer Instructions:
NationsBank, Natioinal Association (South)
ABA#
--------------------------------------
Account No.:
------------------------------
Reference:
--------------------------------
Attention:
--------------------------------
83
<PAGE>
EXHIBIT F
Form of Note
Promissory Note
(Revolving Loan)
$35,000,000 ----------,------------
--------, 199-
FOR VALUE RECEIVED, SHERIDAN HEALTHCARE, INC., a Delaware corporation
haveing its principal place of business located in Hollywood, Florida (the
"Borrower"), hereby promises to pay to the order of
______________________________________ (the "Lender"), in its individual
capacity, in care of NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as agent for
the Lender (the "Agent"), at One Independence Center, 101 North Tryon Stree,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the Agent may designate in writing) at the times set forth in the
Amended and Restated Credit Agreement dated as of ____________________, 1997
among the Borrower, the financial institutions party thereto (collectively,
the "Lenders") and the Agent (the "Agreement"-- all capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Agreement), in lawful money of the United States of America, in immediately
available funds, the principal amount of _______________________ DOLLARS
($_____________________) or, if less than such principal amount, the
aggregate unpaid principal amount of all Revolving Loans made by the Lender
to the Borrower pursuant to the Agreement on the Revolving Credit Termination
Date or such earlier date as may be required pursuant to the terms of the
Agreement, and to pay interest from the date hereof on the unpaid principal
amount hereof, in like money, at said office, on the dates and at the rates
provided in Article II of the Agreement. All or any portion of the principal
amount of Loans may be prepaid or required to be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand at the rates
per annum set forth in the proviso to Section 2.2 (a) of the Agreement.
Further, in the event of such acceleration, this Note shall become
immediately due and payable, without presentation, demand, protest or notice
of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and
interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
1
<PAGE>
This Note is one of the Notes referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Revolving Loans evidenced hereby were or are made
and are to be repaid. This Note is subject to certain restrictions on
transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, Guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of
law for stay or delay of execution or sale of property or other satisfaction
of judgement against any of them on account of liability hereon until
judgement be obtained and execution issues against any other of them and
returned satisfied or until it can be shown that the maker or any other party
hereto had no property available for the satisfaction of the debt eveidenced
by this instrument, or until any other proceedings can be had against any of
them, also their right, if any, to require the holder hereof to hold as
security for this Note any collateral deposited by any of said Persons as
security. Protest, notice of protest, notice of dishonor, diligence or any
other formality are hereby waived by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
SHERIDN HEALTHCARE, INC.
WITNESS:
- ------------------------ By:
- ------------------------ ---------------------------
Name:
-------------------------
Title:
------------------------
SHERIDAN HEALTHCARE, INC.
SECOND AMENDED AND RESTATED 1995 STOCK OPTION PLAN
--------------------------------------------------
1. PURPOSE
-------
This Second Amended and Restated 1995 Stock Option Plan (the "Plan"),
which was first adopted as the SAMA Holdings, Inc. 1995 Stock Option Plan
effective as of April 27, 1995 and first amended and restated on July 27, 1995,
is intended as a performance incentive for officers, employees, consultants,
directors and other key persons of Sheridan Healthcare, Inc. (the "Company"),
its Subsidiaries (as hereinafter defined) or their Affiliates (as hereinafter
defined) to enable the persons to whom options are granted (the "Optionees") to
acquire or increase a proprietary interest in the success of the Company. The
Company intends that this purpose will be effected by the granting of "incentive
stock options" ("Incentive Options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("Nonqualified Options"). The term "Subsidiaries" includes any corporations in
which stock possessing fifty percent or more of the total combined voting power
of all classes of stock is owned directly or indirectly by the Company. The term
"Affiliates" includes all corporations or other entities controlling, controlled
by or under common control with the Company or any of its Subsidiaries and
includes any physician, professional corporation or other person to whom or
which the Company or any of its Subsidiaries provides services pursuant to a
management services agreement or similar arrangements.
2. OPTIONS TO BE GRANTED; ADMINISTRATION OF THE PLAN
-------------------------------------------------
(a) Options granted under the Plan may be either Incentive
Options or Nonqualified Options, and shall be designated as such at the
time of grant. To the extent that any option intended to be an
Incentive Option shall fail to qualify as an "incentive stock option"
under the Code, such option shall be deemed to be a Nonqualified
Option. Each option granted hereunder shall be embodied in a written
agreement, as described in Section 4 hereof, that is signed by the
Optionee and an authorized officer of the Company.
(b) The Plan shall be administered either by the Board of
Directors of the Company (the "Board of Directors") or by a committee
(the "Option Committee") of not fewer than two directors of the Company
appointed by the Board of Directors (in either case, the
"Administrator"). None of the members of the Option Committee shall be
an officer or other full-time employee of the Company. It is the
intention of the Company that each member of the Option Committee shall
be a "Non-Employee Director" as that term is defined and interpreted
pursuant to Rule 16b-3(b)(3)(i) or any successor rule thereto
promulgated under the Securities Exchange Act of 1934, as amended (the
"Act"), and that, on and after the date the Plan becomes subject to
Section 162(m) of the Code, each member of the Option Committee shall
be an "outside director" as that term is defined and interpreted
pursuant to Section 162(m) of the Code and the regulations promulgated
thereunder. Subject to the foregoing requirements of Section 2(b), the
<PAGE>
Compensation Committee of the Board of Directors may serve as the
Option Committee. Action by the Option Committee shall require the
affirmative vote of a majority of all its members.
(c) Subject to the terms and conditions of the Plan, the
Administrator shall have the power:
(i) To determine from time to time the options to be
granted to eligible persons under the Plan and to prescribe
the terms and provisions (which need not be identical) of
options (including without limitation, the number of shares
subject to each such option, the effects upon such options of
any change in control of the Company and any vesting
provisions with respect to such options) granted under the
Plan to such persons;
(ii) To construe and interpret the Plan and grants
thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan (including to
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any option agreement, or in any
related agreements, in the manner and to the extent the
Administrator shall deem necessary or expedient to make the
Plan fully effective);
(iii) To amend from time to time, as the
Administrator may determine is in the best interests of the
Company, the terms of any outstanding options, including
without limitation, to modify the vesting schedule, exercise
price or expiration date thereof in a manner not inconsistent
with the terms of the Plan; and
(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to
promote the best interests of the Company with respect to the
Plan.
All decisions and determinations by the Administrator in the exercise
of these powers shall be final and binding upon the Company and the
Optionees.
(d) Delegation of Authority to Grant Options. The
Administrator, in its discretion, may delegate to the Chief Executive
Officer of the Company or any Subsidiary all or part of the
Administrator's authority and duties with respect to Options, including
the granting thereof, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act and, on and
after the date the Plan becomes subject to Section 162(m) of the Code,
who also are not "covered employees" within the meaning of Section
162(m) of the Code. The Administrator may revoke or amend the terms of
a delegation at any time, but such action shall not invalidate any
prior actions of the Administrator's delegate or delegates that were
consistent with the terms of the Plan.
<PAGE>
3. STOCK SUBJECT TO THE OPTIONS
----------------------------
The stock granted under the Plan, or subject to the options granted
under the Plan, shall be shares of the Company's authorized but unissued Common
Stock, par value $.01 per share (the "Common Stock"), which may either be
authorized but unissued shares or treasury shares or shares previously reserved
for issuance upon exercise of options under the Plan, and allocable to one or
more options (or portions of options) which have expired or been canceled or
terminated (other than by exercise). The total number of shares that may be
issued under the Plan shall not exceed an aggregate of 750,000 hares of Common
Stock. Options with respect to no more than 250,000 shares of Common Stock may
be granted to any one individual during any one calendar year period. Such
number of shares shall be subject to adjustment as provided in Section 7 hereof.
4. ELIGIBILITY
-----------
(a) Incentive Options may be granted only to employees of the
Company or its Subsidiaries, including members of the Board of
Directors who are also employees of the Company or its Subsidiaries,
who are eligible to receive an Incentive Stock Option under the Code.
Nonqualified Options may be granted to officers, other employees and
directors of the Company or its Subsidiaries, and to consultants and
other key persons who provide services to the Company or its
Subsidiaries or their Affiliates (regardless of whether they are also
employees) and to such other persons as the Administrator may select
from time to time, provided, however, that no Nonqualified Options may
be granted under the Plan to any person while serving as a member of
the Option Committee except as provided in Section 4(d) hereof.
(b) No person shall be eligible to receive any Incentive
Option under the Plan if, at the date of grant, such person
beneficially owns stock representing in excess of ten percent of the
voting power of all outstanding capital stock of the Company, unless
notwithstanding anything in this Plan to the contrary (i) the purchase
price for Common Stock subject to such option is at least 110% of the
fair market value of such Common Stock at the time of the grant and
(ii) the option by its terms is not exercisable more than five years
from the date of grant thereof.
(c) Notwithstanding any other provision of the Plan, the
aggregate fair market value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Options
are exercisable for the first time by any individual during any
calendar year (under all plans of the Company and its parent and
Subsidiaries) shall not exceed $100,000. Any option granted under the
Plan in excess of the foregoing limitations shall be deemed to be a
Nonqualified Option.
(d) (i) (A) Each non-employee member of the Board of
Directors of the Company serving in such
capacity upon consummation of the Company's
initial public offering shall automatically
be granted on such date a Nonqualified
Option to purchase 7,500 shares of Common
Stock.
(B)Each person who first becomes a non-
employee member of the Board of Directors
of the Company after the consummation of
the Company's initial public offering
shall automatically be granted on the date
such person first becomes a director a
Nonqualified Option to purchase 7,500
shares of Common Stock.
(C)Each non-employee member of the Board of
Directors of the Company serving in such
capacity on the fifth business day after
each annual meeting of stockholders ,
beginning with the 1996 annual meeting,
shall automatically be granted on such day
a Nonqualified Option to purchase 2,500
shares of Common Stock.
<PAGE>
(ii) The purchase price per share of Common Stock of
each Nonqualified Option granted to a member of the
Board of Directors pursuant to this Section 4(d) shall be the
fair market value of the Common Stock on the date the option
is granted.
(iii) Options granted under this Section 4(d) shall
become exercisable in three equal installments, with one-third
becoming exercisable on the date of grant and an additional
one-third on each of the two successive anniversaries thereof
and shall expire no later than the tenth anniversary of the
grant date.
(iv) The provisions of this Section 4(d) shall apply
only to automatic grants of Nonqualified Options to
non-employee directors, and shall not be deemed to modify,
limit or otherwise apply to any other provisions of the Plan
or to any option granted thereunder to any other person,
including options granted to non-employee directors otherwise
than pursuant to this Section 4(d).
5. TERMS OF THE OPTION AGREEMENTS
------------------------------
Subject to the terms and conditions of the Plan, each option agreement
shall contain such provisions as the Administrator shall from time to time deem
appropriate. Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions:
(a) Expiration; Termination of Employment. Notwithstanding any
other provision of the Plan or of any option agreement, each option
shall expire not later than the date specified in the option agreement,
which date in the case of any Incentive Option shall not be later than
the tenth anniversary of the date on which the option was granted. If
an Optionee's employment with the Company and its Subsidiaries
terminates for any reason, the Administrator may in its discretion
provide, at any time, that any outstanding option granted to such
Optionee under the Plan shall be exercisable for such period following
termination of employment as may be specified by the Administrator,
subject to the expiration date of such option.
<PAGE>
(b) Exercise. Each option shall be exercisable in such
installments (which need not be equal) and at such times as may be
designated by the Administrator. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part,
at any time after becoming exercisable, but not later than the date the
option expires.
(c) Purchase Price. The purchase price per share of Common
Stock subject to each option shall be determined by the Administrator;
provided, however, that the purchase price per share of Common Stock
subject to each Incentive Option shall be not less than the fair market
value of the Common Stock on the date such Incentive Option is granted.
For the purposes of the Plan, the fair market value of the Common Stock
shall be determined in good faith by the Administrator; provided,
however, that (i) if the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") Small-Cap Market on the date the option is granted, the fair
market value shall not be less than the average of the highest bid and
lowest asked prices of the Common Stock on NASDAQ reported for such
date, (ii) if the Common Stock is admitted to trading on a national
securities exchange or the NASDAQ National Market on the date the
option is granted, the fair market value shall not be less than the
closing price reported for the Common Stock on such exchange or system
for such date or, if no sales were reported for such date, for the last
date preceding such date for which a sale was reported, and (iii) the
fair market value of the Common Stock on the effective date of the
registration statement for the Company's initial public offering shall
be the initial offering price.
(d) Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any
option unless and until (i) the option shall have been exercised
pursuant to the terms thereof, (ii) all requirements under applicable
law and regulations shall have been complied with to the satisfaction
of the Company, (iii) the Company shall have issued and delivered the
shares to the Optionee, and (iv) the Optionee's name shall have been
entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such shares of Common Stock.
(e) Transfer. No option granted hereunder shall be
transferable by the Optionee other than by will or by the laws of
descent and distribution, and such option may be exercised during the
Optionee's lifetime only by the Optionee, or his or her guardian or
legal representative. Notwithstanding the foregoing, the Administrator
may permit an optionee to transfer, without consideration for the
<PAGE>
transfer, a Nonqualified Option to members of his immediate family, to
trusts for the benefit of such family members, to partnerships in which
such family members are the only partners, or to charitable
organizations, provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and
the applicable option agreement.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
---------------------------------------------
(a) Any option granted under the Plan may be exercised by the
Optionee in whole or in part by delivering to the Company on any
business day a written notice specifying the number of shares of Common
Stock the Optionee then desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant
to the exercise of an option shall be made either: (i) in cash, or by
certified or bank check or other payment acceptable to the Company,
equal to the option exercise price for the number of shares specified
in the Notice (the "Total Option Price"); (ii) if authorized by the
applicable option agreement and if permitted by law, by delivery of
shares of Common Stock that the optionee may freely transfer having a
fair market value, determined by reference to the provisions of Section
5(c) hereof, equal to or less than the Total Option Price, plus cash in
an amount equal to the excess, if any, of the Total Option Price over
the fair market value of such shares of Common Stock; or (iii) by the
Optionee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to
the Company in cash or by other method of payment acceptable to the
Company; provided, however, that the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity
or other agreements as the Company shall prescribe as a condition of
payment under this clause (iii).
(c) The delivery of certificates representing shares of Common
Stock to be purchased pursuant to the exercise of an option will be
contingent upon the Company's receipt of the Total Option Price and of
any written representations from the Optionee required by the
Administrator, and the fulfillment of any other requirements contained
in the option agreement or applicable provisions of law (including
payment of any amount required to be withheld by the Company pursuant
to applicable law).
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
-----------------------------------------
(a) If the shares of the Company's Common Stock as a whole are
increased, decreased, changed into or exchanged for a different number
or kind of shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization, reclassification,
stock dividend, stock split, combination of shares, exchange of shares,
change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares
subject to the Plan, and in the number, kind, and per share exercise
price of shares subject to unexercised options or portions thereof
granted prior to any such change. In the event of any such adjustment
<PAGE>
in an outstanding option, the Optionee thereafter shall have the right
to purchase the number of shares under such option at the per share
price, as so adjusted, which the Optionee could purchase at the total
purchase price applicable to the option immediately prior to such
adjustment.
(b) Adjustments under this Section 7 shall be determined by
the Administrator and such determinations shall be conclusive. The
Administrator shall have the discretion and power in any such event to
determine and to make effective provision for acceleration of the time
or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under
the Plan on account of any adjustment specified above.
8. EFFECT OF CERTAIN TRANSACTIONS
------------------------------
(a) In the case of a Change of Control (as defined below), all
outstanding options shall automatically become fully exercisable
whether or not such options were exercisable immediately prior thereto.
Unless provision is made in connection with such Change of Control for
the assumption of options theretofore granted, or the substitution for
such options of new options of the successor entity or parent thereof
(with appropriate adjustment as to the number and kind of shares and
the per share exercise prices, as provided in Section 7), the Plan and
the options issued hereunder shall terminate upon the effectiveness of
such Change of Control. In the event of such termination, all
outstanding options shall be exercisable in full for at least fifteen
days prior to the date of such termination whether or not otherwise
exercisable during such period.
(b) "Change of Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Act (other than the Company, any of its
Subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or
trust of the Company of any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Act) of such person, shall
become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of
the Company representing in excess of 50% of either (A) the
combined voting power of the Company's then outstanding
securities having the right to vote in an election of the
Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Common Stock of the Company (in
either such case other than as a result of an acquisition of
securities directly from the Company); or
(ii) persons who, as of the effective date of the
Plan, constitute the Company's Board of Directors (the
"Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least
<PAGE>
a majority of the Board, provided that any person becoming a
director of the Company subsequent to the Effective Date whose
election or nomination for election was approved by a vote of
at least a majority of the Incumbent Directors shall, for
purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve
(A) any consolidation or merger of the Company or any
Subsidiary where the stockholders of the Company immediately
prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate 80% or more
of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any), (B) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all
or substantially all of the assets of the Company or (C) any
plan or proposal for the liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities outstanding,
increases (x) the proportionate number of shares of Common Stock beneficially
owned by any person in excess of 50% or more of the shares of Common Stock then
outstanding or (y) the proportionate voting power represented by the Voting
Securities beneficially owned by any person in excess of 50% or more of the
combined voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in clause (x) or (y) of this sentence
shall thereafter become the beneficial owner of any additional shares of Common
Stock or other Voting Securities (other than pursuant to a stock split, stock
dividend, or similar transaction), then a "Change of Control" shall be deemed to
have occurred for purposes of the foregoing clause (i).
9. TAX WITHHOLDING
---------------
(a) Payment by Optionee. Each Optionee shall, no later than
the date as of which the value of any option granted hereunder or of
any Common Stock issued upon the exercise of such option first becomes
includible in the gross income of the Optionee for federal income tax
purposes (the "Tax Date"), pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of any federal,
state, or local taxes of any kind required by law to be withheld with
respect to such income. In the event that an Optionee has not made the
arrangements described in this Section 9(a) and has not made an
election under this Section 9(b) on or before the Tax Date, the Company
is hereby authorized to withhold the amount of any federal, state or
local taxes of any kind required by law with respect to such income
from any payment otherwise due to the Optionee.
<PAGE>
(b) Payment in Shares. Subject to approval by the
Administrator, an Optionee may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant
to an option exercise a number of shares with an aggregate fair market
value (determined by the Administrator in accordance with Section 5(c)
as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of
Common Stock owned by the Optionee with an aggregate fair market value
(determined by the Administrator in accordance with Section 5(c) as of
the date the withholding is effected) that would satisfy the
withholding amount due.
10. AMENDMENT OF THE PLAN
---------------------
The Board of Directors may discontinue the Plan or amend the Plan at
any time, and from time to time, subject to any required regulatory approval,
provided that any such amendment is also approved by the stockholders of the
Company if it would materially increase the benefits accruing to Optionees under
the Plan, or to the extent required by the Code to ensure that Incentive Options
granted under the Plan are qualified under Section 422 of the Code or if
determined by the Administrator to be necessary or advisable for purposes of the
Act or otherwise. Except as otherwise provided, an amendment shall be binding
upon options previously granted under the Plan unless the amendment adversely
affects the rights of an Optionee, in which event the consent of the Optionee
shall be required with respect to any portion of such amendment having such
effect.
11. NONEXCLUSIVITY OF THE PLAN
--------------------------
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock or stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any option granted hereunder shall be
deemed to confer upon any employee any right to continued employment with the
Company or its Subsidiaries or their Affiliates.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
-----------------------------------------------
(a) The obligation of the Company to sell and deliver shares
of Common Stock with respect to options granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all
such approvals by governmental agencies as may be deemed necessary or
appropriate by the Administrator.
(b) The Plan shall be governed by Delaware law, except to the
extent that such law is preempted by federal law.
<PAGE>
13. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL
------------------------------------------------
The Plan shall become effective upon the date that it is approved by
the Board of Directors of the Company; provided, however, that the Plan shall be
subject to the approval of the Company's stockholders in accordance with
applicable laws and regulations within twelve months of such effective date. No
options granted under the Plan prior to such stockholder approval may be
exercised until such approval has been obtained. No options may be granted under
the Plan after the tenth anniversary of the effective date of the Plan.
* * *
APPROVED BY BOARD OF DIRECTORS: JULY 27, 1995
APPROVED BY STOCKHOLDERS: AUGUST 17, 1995
AMENDED BY BOARD OF DIRECTORS: FEBRUARY 26, 1997
<TABLE>
Exhibit 11.1
SHERIDAN HEALTHCARE, INC.
Computation of Earnings per Share of Common Stock
(in thousands, except per share amounts)
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
Primary Earnings Per Share:
- ---------------------------
<S> <C> <C>
Weighted average shares outstanding............................................ 6,715 6,193
Dilutive effect of outstanding stock options................................... 182 84
----------- -----------
Primary weighted average shares of common stock and
common stock equivalents outstanding........................................ 6,897 6,277
=========== ===========
Net income..................................................................... $ 1,188 $ 853
Net income per share - primary................................................. $ .17 $ .14
Fully Diluted Earnings Per Share:
- ---------------------------------
Weighted average shares outstanding............................................ 6,715 6,193
Dilutive effect of outstanding stock options................................... 227 84
----------- -----------
Fully diluted weighted average shares of common stock and
common stock equivalents outstanding........................................ 6,942 6,277
=========== ===========
Net income..................................................................... $ 1,188 $ 853
Net income per share - fully diluted........................................... $ .17 $ .14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SHERIDAN HEALTHCARE, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AN DIS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 51,850
<ALLOWANCES> 31,063
<INVENTORY> 0
<CURRENT-ASSETS> 23,958
<PP&E> 6,558
<DEPRECIATION> 2,780
<TOTAL-ASSETS> 78,116
<CURRENT-LIABILITIES> 12,093
<BONDS> 0
0
0
<COMMON> 67
<OTHER-SE> 37,079
<TOTAL-LIABILITY-AND-EQUITY> 78,116
<SALES> 0
<TOTAL-REVENUES> 22,905
<CGS> 0
<TOTAL-COSTS> 15,999
<OTHER-EXPENSES> 3,530
<LOSS-PROVISION> 925
<INTEREST-EXPENSE> 601
<INCOME-PRETAX> 1,850
<INCOME-TAX> 662
<INCOME-CONTINUING> 1,188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,188
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
