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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
STATEMENT ON
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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AMENDMENT NO. 3
SHERIDAN HEALTHCARE, INC.
(NAME OF SUBJECT COMPANY)
VESTAR/SHERIDAN, INC.
VESTAR/SHERIDAN HOLDINGS, INC.
VESTAR/SHERIDAN INVESTORS, LLC
(BIDDER)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLES OF CLASSES OF SECURITIES)
------------------------
823781109
823781208
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
------------------------
JAMES L. ELROD, JR.
VESTAR/SHERIDAN INVESTORS, LLC
245 PARK AVENUE, 41ST FLOOR
NEW YORK, NY 10167
TELEPHONE: (212) 351-1600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPY TO:
PETER J. GORDON, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
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This Amendment No. 3 amends and supplements the Tender Offer Statement on
Schedule 14D-1 and Statement on Schedule 13D (the "Schedule 14D-1/13D") filed on
March 31, 1999 relating to the offer by Vestar/Sheridan, Inc., (formerly known
as Vestar/Calvary, Inc.) a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Vestar/Sheridan Holdings, Inc.(formerly known as Vestar/Calvary
Holdings, Inc.), a Delaware corporation ("Parent") and a wholly owned subsidiary
of Vestar/Sheridan Investors, LLC (formerly known as Vestar/Calvary Investors,
LLC) ("Holdings"), a Delaware limited liability company, to purchase for cash
all of the outstanding shares of Common Stock, par value $0.01 per share, and
Class A Common Stock, par value $0.01 per share (collectively, the "Shares"), of
Sheridan Healthcare, Inc., a Delaware corporation (the "Company"), at a purchase
price of $9.25 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated as of March 31, 1999, as supplemented (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with the Offer to Purchase,
as amended from time to time, constitute the "Offer").
All capitalized terms used herein and not defined herein shall have the
meanings set forth in the Offer to Purchase.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1/13-D is hereby amended and supplemented as
follows:
<TABLE>
<S> <C>
(c)(18) Credit Agreement (Tender Offer Financing), dated as of April
26, 1999, by and among Vestar/ Sheridan, Inc.,
Vestar/Sheridan Holdings, Inc., the Lenders (as defined
therein) and NationsBank, N.A.
(c)(19) Credit Agreement (Permanent Financing), dated as of April
26, 1999, by and among Vestar/ Sheridan, Inc.,
Vestar/Sheridan Holdings, Inc., each Subsidiary Guarantor
(as defined therein), the Lenders (as defined therein) and
NationsBank, N.A.
</TABLE>
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
VESTAR/SHERIDAN INVESTORS, LLC
By: VESTAR CAPITAL PARTNERS III,
L.P.,
------------------------------------
its Sole Member
By: VESTAR ASSOCIATES III,
L.P.,
------------------------------------
its General Partner
By: VESTAR ASSOCIATES CORPORATION
III
------------------------------------
its General Partner
By: /s/ JAMES L. ELROD, JR.
------------------------------------
Name: James L. Elrod, Jr.
Title: Vice President
VESTAR/SHERIDAN HOLDINGS, INC.
By: /s/ JAMES L. ELROD, JR.
------------------------------------
Name: James L. Elrod, Jr.
Title: President
VESTAR/SHERIDAN, INC.
By: /s/ JAMES L. ELROD, JR.
------------------------------------
Name: James L. Elrod, Jr.
Title: President
Date: April 27, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
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<S> <C> <C>
(c)(18) Credit Agreement (Tender Offer Financing), dated as of April
26, 1999, by and among Vestar/Sheridan, Inc.,
Vestar/Sheridan Holdings, Inc., the Lenders (as defined
therein) and NationsBank, N.A.
(c)(19) Credit Agreement (Permanent Financing), dated as of April
26, 1999, by and among Vestar/Sheridan, Inc.,
Vestar/Sheridan Holdings, Inc., each Subsidiary Guarantor
(as defined therein), the Lenders (as defined therein) and
NationsBank, N.A.
</TABLE>
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CREDIT AGREEMENT
(TENDER OFFER FINANCING)
Dated as of April 26, 1999
among
VESTAR/SHERIDAN, INC.,
VESTAR/SHERIDAN HOLDINGS, INC.,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N. A., as Agent
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TABLE OF CONTENTS
SECTION 1 DEFINITIONS. 1
1.1 Definitions. 1
1.2 Computation of Time Periods. 12
1.3 Accounting Terms. 13
SECTION 2 CREDIT FACILITY. 13
2.1 Tender Loan. 13
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITY. 15
3.1 Default Rate. 15
3.2 Extension and Conversion. 15
3.3 Voluntary Prepayments. 16
3.4 Capital Adequacy. 16
3.5 Limitation on Eurodollar Loans. 16
3.6 Illegality. 17
3.7 Requirements of Law. 17
3.8 Treatment of Affected Loans. 18
3.9 Taxes. 19
3.10 Compensation. 21
3.11 Pro Rata Treatment. 21
3.12 Sharing of Payments. 22
3.13 Payments, Computations, Etc. 23
3.14 Evidence of Debt. 24
3.15 Replacement of Lenders. 25
SECTION 4 GUARANTY. 25
4.1 The Guaranty. 25
4.2 Obligations Unconditional. 25
4.3 Reinstatement. 26
4.4 Certain Additional Waivers. 27
4.5 Remedies. 27
4.6 Guarantee of Payment; Continuing Guarantee. 27
SECTION 5 CONDITIONS. 27
5.1 Closing Conditions. 27
5.2 Conditions to Extension of Credit. 28
5.3 Conditions to all Extensions of Credit. 30
SECTION 6 REPRESENTATIONS AND WARRANTIES. 31
6.1 Organization and Good Standing. 31
6.2 Power; Authorization; Enforceable Obligations. 31
6.3 No Conflicts. 32
6.4 No Default. 32
6.5 Ownership. 32
6.6 Indebtedness. 32
6.7 Litigation. 32
6.8 Taxes. 33
6.9 Compliance with Law. 33
6.10 Subsidiaries. 33
6.11 ERISA. 33
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6.12 Governmental Regulations, Etc. 33
6.13 Location of Chief Executive Office. 34
6.14 Disclosure. 34
6.15 Brokers' Fees. 34
SECTION 7 AFFIRMATIVE COVENANTS. 34
7.1 Information Covenants. 34
7.2 Preservation of Existence and Franchises. 35
7.3 Books and Records. 35
7.4 Compliance with Law. 35
7.5 Performance of Obligations. 35
7.6 Use of Proceeds. 35
7.7 Consummation of Merger. 35
SECTION 8 NEGATIVE COVENANTS. 35
8.1 Indebtedness. 36
8.2 Liens. 36
8.3 Consolidation, Merger, Dissolution, etc. 36
8.4 Asset Dispositions. 36
8.5 Investments. 36
8.6 Restricted Payments. 36
8.7 Limitations on Business Activities. 36
8.8 No Further Negative Pledges, etc. 37
8.9 ERISA. 37
8.10 Limitations on Business Activities. 37
SECTION 9 EVENTS OF DEFAULT. 37
9.1 Events of Default. 37
9.2 Acceleration; Remedies. 39
SECTION 10 AGENCY PROVISIONS. 40
10.1 Appointment, Powers and Immunities. 40
10.2 Reliance by Agent. 40
10.3 Defaults. 41
10.4 Rights as a Lender. 41
10.5 Indemnification. 41
10.6 Non-Reliance on Agent and Other Lenders. 42
10.7 Successor Agent. 42
SECTION 11 MISCELLANEOUS. 42
11.1 Notices. 42
11.2 Right of Set-Off; Adjustments. 44
11.3 Benefit of Agreement. 45
11.4 No Waiver; Remedies Cumulative. 46
11.5 Expenses; Indemnification. 47
11.6 Amendments, Waivers and Consents. 48
11.7 Counterparts. 49
11.8 Headings. 49
11.9 Survival. 49
11.10 Governing Law; Submission to Jurisdiction; Venue. 49
11.11 Severability. 50
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11.12 Entirety. 50
11.13 Binding Effect; Termination. 50
11.14 Confidentiality. 50
11.15 Conflict. 51
SCHEDULES
Schedule 2.1(a) Lenders
Schedule 6.7 Litigation
Schedule 6.13 Chief Executive Offices/Principal Places
of Business
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Tender Loan Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 11.3(b) Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (TENDER OFFER FINANCING), dated as of April 26, 1999
(as amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), is by and among VESTAR/SHERIDAN, INC., a Delaware corporation (the
"Borrower"), VESTAR/SHERIDAN HOLDINGS, INC., a Delaware corporation (the
"Parent"), the Lenders (as defined herein) and NATIONSBANK, N. A., as Agent for
the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide tender offer
credit facilities in an aggregate amount of $33.2 million (the "Credit
Facility") for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested Credit Facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition" means the acquisition by the Borrower of the Tendered
Shares pursuant to the Tender Offer.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agency Services Address" means NationsBank, N. A., NC1-001-15-04,
101 North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency
Services, or such other address as may be identified by written notice
from the Agent to the Borrower.
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"Agent" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
"Applicable Lending Office" means, for each Lender, the office of
such Lender (or of an Affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower by written notice as
the office by which its Eurodollar Loans are made and maintained.
"Asset Disposition", by any Person, means any disposition (including
pursuant to a sale and leaseback) by such Person of any or all of its
Property (including without limitation Capital Stock of a Subsidiary of
such Person), whether by sale, lease, transfer or otherwise.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary case under any such
law, or consent to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
make any general assignment for the benefit of creditors; or (iv) such
Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one
percent (0.5%) and (b) the Prime Rate for such day. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or
Federal Funds Rate.
"Base Rate Loan" means any portion of the Tender Loan bearing
interest at a rate determined by reference to the Base Rate.
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"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or New York,
New York are authorized or required by law to close, except that, when
used in connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in Dollar deposits in London,
England.
"Capital Stock" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership,
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, membership interests and (v) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means, as at any date, (a) securities issued or
directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of
not more than twelve months from the date of acquisition, (b) Dollar
denominated time deposits and certificates of deposit of (i) any Lender,
(ii) any domestic commercial bank of recognized standing having capital
and surplus in excess of $500,000,000 or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof
or from Moody's is at least P-1 or the equivalent thereof (any such bank
being an "Approved Bank"), in each case with maturities of not more than
360 days from the date of acquisition, (c) commercial paper and variable
or fixed rate notes issued by any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by
S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
entered into by any Person with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully
guaranteed by the United States in which such Person shall have a
perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least
100% of the amount of the repurchase obligations and (e) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Company Act of 1940,
as amended, which are administered by reputable financial institutions
having capital of at least $500,000,000 and the portfolios of which are
substantially limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"Change of Control" means any of the following events: (a) the
Parent shall fail to own directly 100% of the outstanding Capital Stock of
the Borrower, (b) the Investor Group shall fail to own directly 100% of
the outstanding Capital Stock of the Parent, (c) the failure of the
Sponsor to control, whether through ownership of Voting Stock, by
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contract or otherwise, a majority of the seats (excluding vacant seats) on
the Parent's Board of Directors or (d) the Borrower shall fail to own
directly at least a majority of the voting power (determined on a
fully-diluted basis) of all Voting Stock of Sheridan. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make its portion of the Tender Loan in a principal amount
equal to such Lender's Commitment Percentage of the lesser of (i) the
Committed Amount and (ii) 50% of the purchase price actually paid by the
Borrower for Tendered Shares. "Commitment Percentage" means, for any
Lender, the percentage identified as its Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"Committed Amount" means Thirty-three Million Two Hundred Thousand Dollars
($33,200,000).
"Common Stock" means the Common Stock, par value $0.01 per share, of
Sheridan.
"Common Stock Price" means, as of any date of determination, the
closing sale price of the Common Stock on the Stock Market on the last
full trading day immediately preceding such date of determination.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 3.2 or Sections 3.5 through 3.10, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this Credit
Agreement, the Tender Loan Notes, the Pledge Agreement and all other
related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each case as the same may be
amended, modified, restated, supplemented, extended, renewed or replaced
from time to time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the Borrower and
the Parent, and
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"Credit Party" means either one of them.
"Credit Party Obligations" means, without duplication, all of the
obligations of the Credit Parties to the Lenders and the Agent, whenever
arising, under this Credit Agreement, the Tender Loan Notes, the Pledge
Agreement or any of the other Credit Documents (including, but not limited
to, any interest accruing after the occurrence of a Bankruptcy Event with
respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code).
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has
failed to make its portion of the Tender Loan or purchase a Participation
Interest required pursuant to the term of this Credit Agreement within one
Business Day of when due, (b) other than as set forth in (a) above, has
failed to pay to the Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement within one Business Day of
when due, unless such amount is subject to a good faith dispute or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any of the assets
of which) a receiver, trustee or similar official has been appointed.
"Dollars" and "$" means dollars in lawful currency of the United
States.
"Effective Date" means the date on and after the Closing Date on
which the conditions set forth in Section 5.2 of the Credit Agreement
shall have been satisfied or waived in accordance with the introductory
paragraph of Section 5.2; provided, however, that the Effective Date shall
not be a date later than August 25, 1999.
"Eligible Assignee" means (i) a Lender; (ii) unless an assignment to
such Person would result in any increased cost to the Borrower under
Section 3.7 or 3.9, an Affiliate of a Lender or, with respect to any
Lender that is a fund that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor; and
(iii) any other Person approved by the Agent and, unless an Event of
Default under Section 9.1(a), 9.1(c)(i) or 9.1(f) has occurred and is
continuing at the time any assignment is effected in accordance with
Section 11.3, the Borrower (such approval by the Agent or the Borrower not
to be unreasonably withheld or delayed and such approval to be deemed
given by the Borrower if no objection is received by the assigning Lender
and the Agent from the Borrower within two Business Days after notice of
such proposed assignment has been provided by the assigning Lender to the
Borrower and has actually been received by an Executive Officer of the
Borrower); provided, however, that neither the Borrower nor an Affiliate
of the Borrower shall qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules
and regulations thereunder, all as the same may be in effect from time to
time. References to sections of
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ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common control with
either Credit Party within the meaning of Section 4001(a)(14) of ERISA, or
is a member of a group which includes either Credit Party and which is
treated as a single employer under Sections 414(b) or (c) of the Code.
"Eurodollar Loan" means any portion of the Tender Loan that bears
interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to the quotient
obtained by dividing (a) the Interbank Offered Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Eurodollar Reserve
Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum
rate at which reserves (including, without limitation, any marginal,
special, supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) by member banks
of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to
which the Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning assigned to such term in
Section 9.1.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by the Agent.
"GAAP" means generally accepted accounting principles in the United
States
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applied on a consistent basis and subject to the terms of Section 1.3.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the
payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease
or purchase Property, securities or services primarily for the purpose of
assuring the holder of such Indebtedness, or (iv) to otherwise assure or
hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to Property purchased by such Person (other
than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person (other than trade
debt incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds
of production from, Property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (f) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person,
(g) the principal portion of all obligations of such Person under leases
classified as capital leases under GAAP, (h) all net obligations of such
Person under any interest rate protection agreement or exposure under
foreign currency exchange agreement, (i) the maximum amount of all
performance and standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (j)
the principal portion of all obligations of such Person under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified
as an
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operating lease under GAAP and (k) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or
a joint venturer to the extent that such Person is liable for such
Indebtedness.
"Indemnified Party" shall have the meaning assigned to such term in
Section 11.5(b).
"Interbank Offered Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Page 3750 (or any
successor page) of the Dow Jones Markets Service as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Interbank Offered Rate" shall mean, for any
Eurodollar Loan for any Interest Period therefor, 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; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Interest Period" means, as to Eurodollar Loans, a period of one,
two, three or six months' duration, as the Borrower may elect, commencing,
in each case, on the date of the borrowing (including continuations and
conversions thereof); provided, however, (a) if any Interest Period would
end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (b) no Interest Period shall extend
beyond the Maturity Date and (c) where an Interest Period begins on a day
for which there is no numerically corresponding day in the calendar month
in which the Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets (other than equipment, inventory and supplies in the
ordinary course of business), Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of such other Person or (b) any deposit with, or advance, loan
or other extension of credit to, such Person (other than deposits made in
connection with the purchase of equipment inventory and supplies in the
ordinary course of business) or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit issued on behalf
of such Person) incurred for the benefit of such Person, but excluding any
Restricted Payment to such Person.
"Investor Group" means the Sponsor and the Management Investors.
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"Lender" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Lending Party" shall have the meaning assigned to such term in
Section 11.14.
"Lien" means, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such Property, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof and any option or other
agreement to sell or give a security interest).
"Loan" or "Loans" means the Tender Loan (or a portion of the Tender
Loan bearing interest at the Base Rate or the Eurodollar Rate and referred
to as a Base Rate Loan or a Eurodollar Loan), individually or
collectively, as appropriate.
"Management Investors" means Mitchell Eisenberg, Lewis Gold, Michael
Schundler, Jay Martus and other members of management party to the
Stockholders Agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets,
liabilities or results of operations of the Credit Parties, (ii) the
ability of any Credit Party to perform any material obligation under the
Credit Documents to which it is a party or (iii) the material rights and
remedies of the Agent and the Lenders under the Credit Documents.
"Maturity Date" means the earlier of (i) the date that the Merger is
consummated and (ii) August 31, 1999.
"Merger" means the merger of the Borrower into Sheridan (with
Sheridan as the surviving corporation) pursuant to the terms of the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as
of March 24, 1999, by and among the Borrower, the Parent and Sheridan, as
it may be amended on or prior to the Closing Date.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"NationsBank" means NationsBank, N. A. and its successors.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Exhibit 2.1(b)(i), as required by Section
2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Exhibit 3.2, as
required by Section 3.2.
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"Offer to Purchase" means the Offer to Purchase, dated as of March
31, 1999, pursuant to which the Borrower has offered to purchase for cash
all of the outstanding Shares at $9.25 net per share, as the same may be
amended, supplemented or modified on or prior to the Closing Date.
"Other Taxes" shall have the meaning assigned to such term in
Section 3.9(b).
"Parent" means the Person identified as such in the heading hereof,
together with any permitted successors and assigns.
"Participation Interest" means a purchase by a Lender of a
participation in any Loans as provided in Section 3.12.
"Permitted Investments" means Investments which are (i) cash and
Cash Equivalents; (ii) Investments of the Parent in the Capital Stock of
the Borrower; and (iii) Investments of the Borrower in the Capital Stock
of Sheridan pursuant to the Tender Offer and the Merger Agreement.
"Permitted Liens" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens for taxes, assessments or governmental charges or levies
not yet due;
(iii) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(iv) judgment liens in respect of judgments that do not constitute
and Event of Default under Section 9.1(b); and
(v) normal and customary rights of set-off upon deposits of cash in
favor of banks or other depository institutions.
"Permanent Credit Agreement" means that certain Credit Agreement
(Permanent Financing), dated as of the Closing Date, by and among the
Borrower, the Parent, the lenders parties thereto and NationsBank, as
agent for such lenders.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which either
Credit Party or any ERISA Affiliate is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement, dated as of the
Effective Date,
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in the form of Exhibit 1.1A to be executed in favor of the Agent by each
of the Credit Parties, as amended, modified, restated or supplemented from
time to time.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Charlotte, North Carolina.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchase Documents" shall have the meaning assigned to such term in
Section 5.2(g).
"Register" shall have the meaning assigned to such term in Section
11.3(c).
"Regulation D, T, U, or X" means Regulation D, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
"Required Lenders" means, at any time, Lenders other than Defaulting
Lenders which are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at least a majority
of the outstanding Loans and Participation Interests therein.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or to which any of its material
property is subject.
"Restricted Payment" means (i) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of either Credit Party, now or hereafter outstanding
(including without limitation any payment in connection with any
dissolution, merger, consolidation or disposition involving either Credit
Party), or to the holders, in their capacity as such, of any shares of any
class of Capital Stock of either Credit Party, now or hereafter
outstanding (other than dividends or distributions payable in the same
class of Capital Stock of the applicable Person or to any Credit Party
(directly or indirectly through Subsidiaries)), (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of Capital Stock
of either Credit Party, now or hereafter outstanding and (iii) 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 Capital Stock of
either Credit Party, now or hereafter outstanding.
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"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, Inc., or any successor or assignee of the business
of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended, and
all regulations issued pursuant thereto.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all regulations issued pursuant thereto.
"Shares" means all of the outstanding shares of Common Stock and
Class A Common Stock, par value $0.01 per share, of Sheridan.
"Sheridan" means Sheridan Healthcare, Inc., a Delaware corporation.
"Sponsor" means a collective reference to Vestar Capital Partners
III, L.P. and its Affiliates.
"Stock Market" shall have the meaning assigned to such term in
Section 5.2(u).
"Stockholders Agreement" means the Stockholders Agreement, dated as
of March 24, 1999, among the Parent, Sheridan, Vestar/Sheridan Investors,
LLC and certain members of management of Sheridan.
"Subsidiary" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at such
time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at such
time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity of which
such Person directly or indirectly through Subsidiaries owns at such time
more than 50% of the Capital Stock.
"Taxes" shall have the meaning assigned to such term in Section
3.9(a).
"Tender Loan" shall have the meaning assigned to such term in
Section 2.1(a). "Tender Loan Note" or "Tender Loan Notes" means the
promissory notes of the Borrower in favor of each Lender provided pursuant
to Section 2.1(e) and evidencing the Tender Loans of such Lender,
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, restated, supplemented, extended, renewed or
replaced from time to time.
"Tender Offer" means the offer by the Borrower made pursuant to the
Offer to Purchase and the related Letter of Transmittal to purchase all
outstanding Shares.
"Tendered Shares" means the Shares (and any options or other rights
to acquire
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shares of Common Stock) tendered by the holders thereof and accepted for
payment by the Borrower (including, without limitation, Tendered Shares
tendered pursuant to a Notice of Guaranteed Delivery), pursuant to the
Offer to Purchase.
"Transaction" means a collective reference to the Tender Offer, the
Acquisition, the Merger and the related financings and other transactions
contemplated by this Credit Agreement, the Purchase Documents and the
Permanent Credit Agreement.
"Voting Stock" means, with respect to any Person, Capital Stock
issued by such 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 though the
right so to vote has been suspended by the happening of such a
contingency.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis.
SECTION 2
CREDIT FACILITY
2.1 Tender Loan.
(a) Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein each
Lender severally agrees to make available to the Borrower as hereinafter
provided such Lender's Commitment Percentage of two (2) advances of a term
loan in Dollars (the "Tender Loan") in an aggregate principal amount for
both such advances equal to the lesser of (i) the Committed Amount and
(ii) 50% of the purchase price actually paid by the Borrower for Tendered
Shares. The first advance on the Tender Loan shall be made on the
Effective Date and shall be in an amount equal to 50% of the purchase
price paid by the Borrower for Tendered Shares other than Tendered Shares
which are tendered pursuant to a Notice of Guaranteed Delivery. Unless the
Commitments shall have been earlier terminated as provided herein, the
second and final advance on the Tender Loan shall (subject to and upon the
terms and conditions hereof (including without limitation the terms and
conditions set forth in Section 5)), be available on a Business Day prior
to the date five (5) Business Days after the Effective Date and shall be
in an amount equal to 50% of the
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purchase price paid by the Borrower for Tendered Shares which are tendered
pursuant to a Notice of Guaranteed Delivery. The Tender Loan may consist
of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrower may request; provided, however, that no more than 2 Eurodollar
Loans shall be outstanding hereunder at any time (it being understood
that, for purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they
begin on the same date, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period). Amounts repaid on the Tender Loan may not be
reborrowed.
(b) Tender Loan Advances.
(i) Notice of Borrowing. The Borrower shall submit an
appropriate Notice of Borrowing to the Agent not later than 11:00
A.M. (Charlotte, North Carolina time) on the Business Day of the
requested borrowing, with respect to Base Rate Loans, or on the
third Business Day prior to the Business Day of the requested
borrowing, with respect to Eurodollar Loans, which Notice of
Borrowing shall be irrevocable and shall specify (A) that a Tender
Loan advance is requested, (B) the date of the requested advance
(which shall be a Business Day and either the Effective Date or a
date prior to the date five (5) Business Days after the Effective
Date), (C) the aggregate principal amount to be advanced and (D)
whether the advance shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if Eurodollar Loans
are requested, the Interest Period(s) therefor. If the Borrower
shall fail to specify in any such Notice of Borrowing (x) an
applicable Interest Period, in the case of a requested Eurodollar
Loan, then such notice shall be deemed to be a request for an
Interest Period of one month or (y) the type of Loan advance
requested, then such notice shall be deemed to be a request for a
Base Rate Loan. The Agent shall give notice to each Lender promptly
upon receipt of each Notice of Borrowing pursuant to this Section
2.1(b)(i), the contents thereof and each such Lender's share of any
borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan
that is part of the Tender Loan shall be in an aggregate principal
amount that is not less than $5,000,000 and integral multiples of
$100,000 (or the then remaining principal balance of the Tender
Loan, if less).
(iii) Advances. Each Lender will make its Commitment
Percentage of each Tender Loan advance available to the Agent for
the account of the Borrower as specified in Section 3.15(a), or in
such other manner as the Agent may specify in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such advance will then be made available to
the Borrower by the Agent by crediting the account of the Borrower
on the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received
by the Agent.
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(c) Repayment of Tender Loan. The principal amount of the Tender
Loan shall be due and payable in full on the Maturity Date, unless
accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1, the Tender
Loan shall bear interest at a per annum rate equal to:
(i) Base Rate Loans. During such periods as the Tender Loan
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the Base
Rate plus 1%.
(ii) Eurodollar Loans. During such periods as the Tender Loan
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to
the Eurodollar Rate plus 2%.
Interest on the Tender Loan shall be payable in arrears on the Maturity
Date.
(e) Tender Loan Notes. The portion of the Tender Loan made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in an original principal amount equal to such
Lender's Commitment Percentage of the Tender Loan and substantially in the
form of Exhibit 2.1(e).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITY
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees or other amounts, then the Base Rate plus 2%).
3.2 Extension and Conversion.
The Borrower shall have the option, on any Business Day, to extend
existing Loans into a subsequent permissible Interest Period or to convert Loans
into Loans of another interest rate type; provided, however, that (i) except as
provided in Section 3.6, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) Loans extended as, or converted
into, Eurodollar Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such minimum amounts
as provided in Section 2.1(b)(ii), (iii) no more than 2 Eurodollar Loans shall
be outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
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separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period) and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the Borrower by
giving a Notice of Extension/Conversion (or telephonic notice promptly confirmed
in writing) to the office of the Agent specified in Schedule 2.1(a), or at such
other office as the Agent may designate in writing, prior to 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall be irrevocable. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this Section, or any such
conversion or extension is not permitted or required by this Section, then such
Eurodollar Loan shall be automatically converted into a Base Rate Loan at the
end of the Interest Period applicable thereto. The Agent shall give each Lender
notice as promptly as practicable of any such proposed extension or conversion
affecting any Loan.
3.3 Voluntary Prepayments.
The Borrower shall have the right to prepay the Tender Loan in whole or in
part from time to time; provided, however, that each partial prepayment of the
Tender Loan shall be in a minimum principal amount of $1,000,000 and integral
multiples of $100,000 in excess thereof (or the then remaining principal balance
of the Tender Loan, if less). Subject to the foregoing terms, amounts prepaid
under this Section 3.3(a) shall be applied as the Borrower may elect; provided
that if the Borrower fails to specify a voluntary prepayment then such
prepayment shall be applied first to Base Rate Loans and then to Eurodollar
Loans in direct order of Interest Period maturities. All prepayments under this
Section 3.3(a) shall be subject to Section 3.10, but otherwise without premium
or penalty.
3.4 Capital Adequacy.
(a) If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding
capital adequacy, or compliance by such Lender with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's
capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but
for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy),
then, upon notice from such Lender to the Borrower, specifying in
reasonable detail the basis for such claim, the Borrower shall
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be obligated to pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction. Each determination by any
such Lender of amounts owing under this Section shall, absent manifest
error, be conclusive and binding on the parties hereto.
(b) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.4 for any additional amounts incurred more than
180 days prior to the date that such Lender notifies the Borrower of the
change of law giving rise to such additional amounts and of such Lender's
intention to claim compensation therefor; provided that, if the change of
law giving rise to such additional amounts is retroactive, then such
180-day period referred to above shall be extended to include the period
of retroactive effect thereof.
3.5 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent, in writing, that the Eurodollar Rate
will not adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or Convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.
3.6 Illegality.
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.8 shall be
applicable).
3.7 Requirements of Law.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank, or
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comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office)
with any request or directive (whether or not having the force of law) of
any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to
such Lender (or its Applicable Lending Office) under this Credit
Agreement or its Notes in respect of any Eurodollar Loans (other
than taxes imposed on the overall net income of such Lender by the
jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Eurodollar Reserve Requirement utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or commitments
of, such Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition affecting
this Credit Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Eurodollar Loans or to reduce any sum
received or receivable by such Lender (or its Applicable Lending Office)
under this Credit Agreement or its Notes with respect to any Eurodollar
Loans, then the Borrower shall pay to such Lender on demand such amount or
amounts as will compensate such Lender for such increased cost or
reduction. If any Lender requests compensation by the Borrower under this
Section 3.7, the Borrower may, by notice to such Lender (with a copy to
the Agent), suspend the obligation of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in
effect (in which case the provisions of Section 3.8 shall be applicable);
provided that such suspension shall not affect the right of such Lender to
receive the compensation so requested. Each Lender shall promptly notify
the Borrower and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 3.7 and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 3.7 shall furnish to the Borrower and the
Agent a statement setting forth the additional amount or amounts to be
paid to it hereunder and showing the calculation thereof in reasonable
detail which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
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(b) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.7 for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the change of law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation therefor;
provided that, if the change of law giving rise to such increased costs or
reductions is retroactive, then such 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.
3.8 Treatment of Affected Loans.
If the obligation of any Lender to make any Eurodollar Loan or to
Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.5, 3.6 or 3.7 hereof, such Lender's Eurodollar
Loans shall be automatically Converted into Base Rate Loans on the last day(s)
of the then current Interest Period(s) for such Eurodollar Loans (or, in the
case of a Conversion, on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 3.5, 3.6 or
3.7 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.5, 3.6 or 3.7 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 3.8 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.9 Taxes.
(a) Any and all payments by any Credit Party to or for the account
of any Lender or the Agent hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
such Lender (or its Applicable Lending Office) or the Agent (as the case
may be) is organized or any
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political subdivision thereof (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If any Credit Party shall be required
by law to deduct any Taxes from or in respect of any sum payable under
this Credit Agreement or any other Credit Document to any Lender or the
Agent, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 3.9) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Credit Party shall make such deductions,
(iii) such Credit Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law,
and (iv) such Credit Party shall furnish to the Agent, at its address
referred to in Section 11.1, the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 3.9) paid by such Lender or the Agent
(as the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) Each Lender that is not a United States person under Section
7701(a)(30) of the Code, on or prior to the date of its execution and
delivery of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide the Borrower
and the Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to
zero the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this Credit Agreement is
effectively connected with the conduct of a trade or business in the
United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and/or (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and
881(c) of the Internal Revenue Code), certifying that such Lender is
entitled to an exemption from tax on payments pursuant to this Credit
Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to
Section 3.9(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
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indemnification under Section 3.9(a) or 3.9(b) with respect to Taxes
imposed by the United States; provided, however, that should a Lender,
which is otherwise exempt from withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request to assist
such Lender to recover such Taxes.
(f) If any Credit Party is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 3.9, then such
Lender will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such Lender.
(g) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 3.9 shall survive the repayment of the
Tender Loan and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
(i) If the Agent or any Lender receives a refund with respect to
Taxes paid by the Borrower, which in the good faith judgment of such
Lender is allocable to such payment, the Agent or Lender, respectively
shall promptly pay such refund, together with any other amounts paid by
the Borrower in connection with such refunded Taxes, to the Borrower, net
of all out-of-pocket expenses of such Lender incurred in obtaining such
refund, provided, however, that the Borrower agrees to promptly return
such refund to the Agent or the applicable Lender, as the case may be, if
it receives notice from the Agent or applicable Lender that such Agent or
Lender is required to repay such refund. Each of the Agent and each Lender
agrees that it will contest such Taxes or liabilities if the Agent or such
Lender determines, in its reasonable judgment, that it would not be
materially disadvantaged or prejudiced as a result of such contest.
3.10 Compensation.
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense (excluding loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Section 5
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation,
or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid,
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or not so borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, Convert
or Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, any margin included therein, if
any) over (b) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. The covenants of the Borrower set forth in this Section 3.10 shall
survive the repayment of the Tender Loan and other obligations under the Credit
Documents and the termination of the Commitments hereunder.
3.11 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal of any
Loan, each payment of interest on the Loans and each conversion or
extension of any Loan, shall be allocated pro rata among the Lenders in
accordance with the respective principal amounts of their outstanding
Loans and Participation Interests.
(b) Advances. No Lender shall be responsible for the failure or
delay by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of
its obligations hereunder. Unless the Agent shall have been notified by
any Lender prior to the date of any requested borrowing that such Lender
does not intend to make available to the Agent its ratable share of such
borrowing to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such borrowing,
and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate.
3.12 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan or any other obligation owing to
such Lender under this Credit Agreement through the exercise of a right of
setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or
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interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Loans and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation Interest theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a Participation Interest may, to the fullest extent permitted by
law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such Participation Interest as fully as if such
Lender were a holder of such Loan or other obligation in the amount of such
Participation Interest. Except as otherwise expressly provided in this Credit
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or the Agent to the Agent or such
other Lender pursuant to this Credit Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.12 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 3.12 to share in the benefits of any recovery on such secured
claim.
3.13 Payments, Computations, Etc.
(a) Generally. Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in Dollars in immediately
available funds, without setoff, deduction, counterclaim or withholding of
any kind, at the Agent's office specified in Schedule 2.1(a) not later
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have been received on
the next succeeding Business Day. The Borrower shall, at the time it makes
any payment under this Credit Agreement, specify to the Agent the Loans,
fees, interest or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails so to
specify, or if such application would be inconsistent with the terms
hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.11(a)). The Agent will distribute such payments to such Lenders,
if any such payment is received prior to 2:00 P.M. (Charlotte, North
Carolina time) on a Business Day in like funds as received prior to the
end of such Business Day and otherwise the Agent will distribute such
payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be
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extended to the next succeeding Business Day (subject to accrual of
interest for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in
the next following calendar month, then such payment shall instead be made
on the next preceding Business Day. Except as expressly provided otherwise
herein, all computations of interest and fees shall be made on the basis
of actual number of days elapsed over a year of 360 days, except with
respect to computation of interest on Base Rate Loans which shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest
shall accrue from and include the date of borrowing, but exclude the date
of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of the Credit
Party Obligations shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the
Agent in connection with enforcing its rights under the Credit Documents
or otherwise with respect to the Credit Party Obligations;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations;
SIXTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party Obligations
owing to such Lender;
SEVENTH, to all other Credit Party Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH"
above; and
EIGHTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category; and (ii)
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each of the Lenders shall receive an amount equal to its pro rata share
(based on the proportion that the then outstanding Loans held by such
Lender bears to the aggregate then outstanding Loans) of amounts available
to be applied pursuant to clauses "FOURTH", "FIFTH", "SIXTH" and "SEVENTH"
above.
3.14 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such Lender from
time to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder from or for the account of any Credit Party and each Lender's
share thereof. The Agent will make reasonable efforts to maintain the
accuracy of the subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.14 (and, if
consistent with the entries of the Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the
Credit Parties therein recorded; provided, however, that the failure of
any Lender or the Agent to maintain any such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any
manner affect the obligation of the Credit Parties to repay the Credit
Party Obligations owing to such Lender.
3.15 Replacement of Lenders.
If any Lender requests compensation under Sections 3.4 or 3.7, or if the
Borrower is required to pay any additional amount to any Lender or any authority
pursuant to Section 3.9, or if any Lender ceases making, maintaining or funding
any Eurodollar Loans pursuant to Section 3.6, or if any Lender shall become a
Defaulting Lender, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 11.3), all its interests, rights and obligations under this Credit
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Agent, which
consent shall not be unreasonably withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other
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amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Sections 3.4 or 3.7 or payments required to be made pursuant
to Section 3.9, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
SECTION 4
GUARANTY
4.1 The Guaranty.
The Parent hereby guarantees to each Lender and the Agent as hereinafter
provided, as primary obligor and not as surety, the prompt payment of the Credit
Party Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Parent hereby further agrees
that if any of the Credit Party Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise), the Parent will promptly pay the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Credit Party Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension
or renewal.
4.2 Obligations Unconditional.
The obligations of the Parent under Section 4.1 are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents, or any other agreement or
instrument referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the Credit Party
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of the Parent
hereunder shall be absolute and unconditional under any and all circumstances.
The Parent agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower for amounts paid under this
Section 4 until such time as the Lenders have been paid in full in respect of
all Credit Party Obligations and all Commitments under this Credit Agreement
have been terminated. Without limiting the generality of the foregoing, it is
agreed that, to the fullest extent permitted by law, the occurrence of any one
or more of the following shall not alter or impair the liability of the Parent
hereunder which shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to the Parent,
the time for any performance of or compliance with any of the Credit Party
Obligations shall be extended, or such performance or compliance shall be
waived;
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(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents or any other agreement or instrument referred to in the
Credit Documents shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall be
accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents or any other agreement or instrument referred to in the
Credit Documents shall be waived or any other guarantee of any of the
Credit Party Obligations or any security therefor shall be released,
impaired or exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of any
creditor of the Parent) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of the Parent).
With respect to its obligations hereunder, the Parent hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that the Agent or any Lender exhaust any right, power or
remedy or proceed against any Person under any of the Credit Documents or any
other agreement or instrument referred to in the Credit Documents, or against
any other Person under any other guarantee of, or security for, any of the
Credit Party Obligations.
4.3 Reinstatement.
The obligations of the Parent under this Section 4 shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Credit Party Obligations is rescinded or must be
otherwise restored by any holder of any of the Credit Party Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise, and
the Parent agrees that it will indemnify the Agent and each Lender on demand for
all reasonable costs and expenses (including, without limitation, fees and
expenses of counsel) incurred by the Agent or such Lender in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, the
Parent hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss. 26-7
through 26-9, inclusive, to the extent applicable. The Parent further agrees
that it shall have no right of recourse to security for the Credit Party
Obligations, except through the exercise of rights of subrogation pursuant to
Section 4.2.
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4.5 Remedies.
The Parent agrees that, to the fullest extent permitted by law, as between
the Parent, on the one hand, and the Agent and the Lenders, on the other hand,
the Credit Party Obligations may be declared to be forthwith due and payable as
provided in Section 9.2 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.2) for purposes of
Section 4.1 notwithstanding any stay, injunction or other prohibition preventing
such declaration (or preventing the Credit Party Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or the Credit Party Obligations being deemed to have
become automatically due and payable), the Credit Party Obligations (whether or
not due and payable by any other Person) shall forthwith become due and payable
by the Parent for purposes of Section 4.1. The Parent acknowledges and agrees
that its obligations hereunder are secured in accordance with the terms of the
Pledge Agreement and that the Lenders may exercise their remedies thereunder in
accordance with the terms thereof.
4.6 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
This Credit Agreement shall become effective, subject to the terms of
Section 11.3, upon satisfaction of each of the following conditions (in form and
substance satisfactory to the Agent) on or before the Closing Date:
(a) Executed Credit Agreement. Receipt by the Agent of a duly
executed copy of this Credit Agreement.
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(b) Other. Receipt by the Agent of such other documents,
instruments, agreements or information as reasonably requested by the
Agent in connection with the Borrower, the Parent or the Transaction.
5.2 Conditions to Extension of Credit.
The obligation of the Lenders to make the Tender Loan shall be subject to
satisfaction of the following conditions (in form and substance acceptable to
the Agent), in addition to satisfaction of each of the conditions set forth in
Section 5.1 as of the Closing Date:
(a) Executed Tender Loan Notes and Pledge Agreement. Receipt by the
Agent of duly executed copies of the Tender Loan Notes and the Pledge
Agreement.
(b) Corporate Documents. Receipt by the Agent of the following:
(i) Charter Documents. Copies of the articles or certificates
of incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by
a secretary or assistant secretary of such Credit Party to be true
and correct and in force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the State of Delaware and (B) to the extent
available, a certificate indicating payment of all corporate or
comparable franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and
correct as of the Effective Date.
(c) Legal Opinion. The Agent shall have received a legal opinion of
Simpson Thacher & Bartlett, dated as of the Effective Date, in form and
substance reasonably satisfactory to the Agent.
(d) Pledged Stock. The Agent shall have received all certificates
evidencing the Tendered Shares, together with duly executed in blank,
undated stock powers attached thereto, except for the certificates
representing Tendered Shares which were tendered pursuant to a Notice of
Guaranteed Delivery.
(e) Consents and Approvals, etc. Receipt by the Agent of evidence
that all governmental, shareholder and material third party consents
(including, but not limited to, the termination or expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvement Act and
including consent of the lenders under Sheridan's existing credit
facility) and approvals necessary or desirable in connection with the
Tender Offer and expiration of all applicable waiting periods without any
action being taken by any authority that could restrain, prevent or impose
any material adverse conditions on the
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Tender Offer or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the reasonable judgment of
the Agent could have such effect. The restrictions of Section 203 of the
Delaware General Corporation Law and any other impediment under the
Delaware General Corporation Law shall be inapplicable to the acquisition
of the Shares pursuant to the Offer to Purchase, and no legal impediment
(under Section 251 or Section 253 of the Delaware General Corporation Law
or otherwise) to the consummation of the Merger shall exist.
(f) Merger Agreement and Tender Offer. There shall not have been any
material modification, amendment, supplement or waiver to the Merger
Agreement, the Offer to Purchase or any other document executed or
delivered in connection with the Tender Offer (collectively, the "Purchase
Documents") and the contents of all disclosure schedules and exhibits
relating to the Purchase Documents without the prior written consent of
the Agent, including, but not limited to, any modification, amendment,
supplement or waiver relating to the amount or type of consideration
(i.e., $9.25 per Share) to be paid in connection with the acquisition of
Sheridan, and the Tender Offer shall have been consummated (other than
payment for the Tendered Shares) upon satisfaction of any material
conditions specified in the Offer to Purchase and there shall have been
validly tendered and not properly withdrawn prior to the expiration of the
Tender Offer a number of Shares that satisfies the Minimum Condition (as
defined in the Tender Offer to Purchase), in each case, for consideration
not to exceed $9.25 per Share. The Agent shall have received a fully
executed copy, certified by an Executive Officer of the Borrower as true
and complete, of each of the Purchase Documents, together with all
exhibits and schedules thereto.
(g) Cost of Transaction. The Agent shall have received satisfactory
evidence that (i) the total amount payable by the Borrower to consummate
the Tender Offer (excluding fees and expenses in connection therewith)
will not exceed $66.3 million and (ii) the Borrower has no reason to
believe that total amount paid or to be paid by the Borrower to consummate
the Transaction will exceed $165.0 million.
(h) Officer's Certificates. The Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Borrower as of the Effective Date, in form and substance satisfactory to
the Agent, stating that (A) all governmental, shareholder and third party
consents and approvals, if any, with respect to the Credit Documents and
the transactions contemplated thereby have been obtained, (B) except as
disclosed in Schedule 6.7, no action, suit, investigation or proceeding is
pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any Credit Party or
the consummation of the Transaction, (C) the transactions contemplated by
the Purchase Documents have been consummated in accordance with the terms
thereof (other than payment for the Tendered Shares), including, but not
limited to, the satisfaction of all conditions to the Borrower's
obligation to accept for payment, and to pay for, the Shares that are set
forth in Section 9 of the Offer to Purchase, (D) none of the conditions
set forth in clause (iii) of Section 9 of the Offer to Purchase has
occurred prior to the Effective Date and (E) immediately after giving
effect to consummation of the Tender Offer and the Acquisition on the
Effective Date, (1) no Default or Event of Default will exist and (2) all
representations and
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warranties contained herein and in the other Credit Documents will be true
and correct in all material respects.
(i) Material Adverse Change. No material adverse change shall have
occurred since December 31, 1998 in the condition (financial or
otherwise), business, results of operations or prospects of Sheridan.
(j) Compliance with Existing Obligations. After giving effect to the
consummation of the Tender Offer and the Acquisition, Sheridan and its
Subsidiaries shall be in compliance with all of their existing material
financial obligations.
(k) Permanent Credit Agreement. The Agent shall have received a
fully executed copy, certified by an Executive Officer of the Borrower as
true and complete, of the Permanent Credit Agreement, together with all
exhibits and schedules thereto.
(l) Other. Receipt by the Agent of such other documents,
instruments, agreements or information as reasonably requested by the
Agent in connection with the Borrower, the Parent or the Transaction.
3. Conditions to all Extensions of Credit.
The obligations of each Lender to make any Loan (including the initial
Loans) are subject to satisfaction of each of the following conditions (in
addition to satisfaction of each of the conditions set forth in Section 5.1 as
of the Closing Date and satisfaction on of each of the conditions set forth in
Section 5.2 as of the Effective Date):
(a) The Borrower shall have delivered an appropriate Notice of
Borrowing;
(b) The representations and warranties set forth in Section 6 shall,
subject to the limitations set forth therein, be true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date);
(c) There shall not have been commenced against either of the Credit
Parties or Sheridan an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or for the winding up
or liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded;
(d) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto;
(e) Immediately after giving effect to the making of such Loan, the
aggregate outstanding principal amount of Loans shall not exceed the
lesser of (i) the Committed Amount and (ii) 50% of the purchase price paid
by the Borrower for Tendered Shares;
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(f) In the case of the second advance on the Tender Loan, the Agent
shall have received all certificates evidencing the Tendered Shares which
were tendered pursuant to a Notice of Guaranteed Delivery; and
(g) The Agent shall have received evidence that the Investor Group
shall have made aggregate cash equity investments in the Borrower
(directly or indirectly through the Parent) on terms that are satisfactory
to the Agent and in an amount at least equal to 50% of the purchase price
actually paid by the Borrower for Tendered Shares plus all expenses
incurred by the Borrower in connection with the Tender Offer
The delivery of each Notice of Borrowing shall constitute a representation and
warranty by the Credit Parties of the correctness of the matters specified in
subsections (b), (c) and (d).
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Organization and Good Standing.
Each of the Credit Parties (a) is duly organized, validly existing and is
in good standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the corporate or other necessary power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except where failure to
do so could not reasonably be expected to have a Material Adverse Effect.
6.2 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate or other
necessary action to authorize the borrowings and other extensions of credit on
the terms and conditions of this Credit Agreement and to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of any Credit Party in
connection with (i) the borrowings or other extensions of credit hereunder, (ii)
the execution, delivery, performance, validity or enforceability of the Credit
Documents to which such Credit Party is a party or (iii) the consummation of the
Tender Offer. This Credit Agreement has been, and each other Credit Document to
which any Credit Party is a party will be, duly executed and delivered on behalf
of the Credit Parties. This Credit Agreement constitutes, and each other Credit
Document to which any Credit Party is a party when executed and delivered will
constitute, a
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legal, valid and binding obligation of such Credit Party enforceable against
such party in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyence, reorganization, moratorium or laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in proceedings in equity or at law and by an
implied covenant of good faith and fair dealing.
6.3 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any other
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound or (d) result in or require the
creation of any Lien (other than those contemplated in or created in connection
with the Credit Documents) upon or with respect to its properties.
6.4 No Default.
Neither of the Credit Parties is in default in any respect under any
contract, lease or other agreement or obligation to which it is a party or by
which any of its Property is bound. No Default or Event of Default has occurred
or exists as of the Effective Date.
6.5 Ownership.
Each Credit Party is the owner of, and has good and marketable title to,
all of its respective assets necessary for the conduct of its business and none
of such assets is subject to any Lien other than Permitted Liens.
6.6 Indebtedness.
Except as otherwise permitted under Section 8.1, neither of the Credit
Parties has any Indebtedness.
6.7 Litigation.
Except as disclosed in Schedule 6.7, there does not exist (i) any order,
decree, judgment, ruling or injunction which restrains the consummation of the
Transaction or (ii) pending or, to the knowledge of any Executive Officer of
either Credit Party, threatened any action, suit, investigation or legal,
equitable, arbitration or administrative proceedings, against either Credit
Party, which if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
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6.8 Taxes.
Each Credit Party has filed, or caused to be filed, all tax returns
(federal, state, local and foreign) required to be filed and paid (a) all
amounts of taxes shown thereon to be due (including interest and penalties) and
(b) all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes (i) which are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP. Neither of the
Credit Parties is aware as of the Effective Date of any proposed tax assessments
against either of the Credit Parties.
6.9 Compliance with Law.
Each of the Credit Parties is in compliance with all material Requirements
of Law and all other laws, rules, regulations, orders and decrees applicable to
it, or to its properties, unless such failure to comply could not reasonably be
expected to have a Material Adverse Effect.
6.10 Subsidiaries.
The Parent has no direct Subsidiaries other than the Borrower, and the
Borrower has no Subsidiaries other than Sheridan and the Subsidiaries of
Sheridan.
6.11 ERISA.
Neither of the Credit Parties maintains any Plan.
6.12 Governmental Regulations, Etc.
(a) None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the proceeds
of the Tender Loan) will violate or result in a violation of the
Securities Act, the Securities Exchange Act or any of Regulations T, U and
X.
(b) Neither of the Credit Parties is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or the
Investment Company Act of 1940, each as amended. In addition, neither of
the Credit Parties is (i) an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as amended, and
is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
6.13 Location of Chief Executive Office.
The location of the chief executive office and principal place of business
of each Credit Party as of the Effective Date is set forth on Schedule 6.13.
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6.14 Disclosure.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of either Credit Party in connection with the
transactions contemplated hereby, when taken as a whole, contains, on the
Effective Date, any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading in light of the circumstances under which they were made.
6.15 Brokers' Fees.
Neither of the Credit Parties has any obligation to any Person in respect
of any finder's, broker's, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit Documents.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the Agent:
(a) Reports. Promptly upon transmission or receipt thereof, copies
of any filings and registrations by either Credit Party with, and reports
to or from, the Securities and Exchange Commission, or any successor
agency.
(b) Notices. Upon any Executive Officer of a Credit Party obtaining
knowledge thereof, the Credit Parties will give written notice to the
Agent immediately of (i) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose to take with
respect thereto, and (ii) the occurrence of any of the following with
respect to either Credit Party (A) the pendency or commencement of any
litigation, arbitral or governmental proceeding against such Person or (B)
the institution of any proceedings against such Person with respect to, or
the receipt of notice by such Person of potential liability or
responsibility for violation, or alleged violation of any federal, state
or local law, rule or regulation, which, in the case of either (A) or (B),
could reasonably be expected to have a Material Adverse Effect.
(c) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of either Credit Party as the Agent or the Required
Lenders may reasonably request.
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7.2 Preservation of Existence and Franchises.
Each Credit Party will do all things necessary to preserve and keep in
full force and effect its existence and the rights and franchises material to
the conduct of its business.
7.3 Books and Records.
Each Credit Party will keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its Property, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
7.5 Performance of Obligations.
Each Credit Party will, and will cause each of its Subsidiaries to,
perform in all material respects all of its material obligations under the terms
of all material agreements to which it is a party or by which it is bound.
7.6 Use of Proceeds.
The Borrower will use the proceeds of the Tender Loan solely for the
purpose of financing the purchase of the Tendered Shares pursuant to the Tender
Offer.
7.7 Consummation of Merger.
Within five (5) Business Days after the Effective Date (or, if less than
90% of all of the Shares are acquired by the Borrower pursuant to the Tender
Offer, by August 31, 1999), (i) the Merger shall have been consummated pursuant
to and in accordance with the Merger Agreement and (ii) the Borrower shall be
merged into Sheridan.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1 Indebtedness.
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Neither of the Credit Parties will contract, create, incur, assume or
permit to exist any Indebtedness, except (i) Indebtedness arising under this
Credit Agreement and the other Credit Documents and (ii) fees and expenses of up
to $12 million incurred in connection with the Transaction.
8.2 Liens.
Neither of the Credit Parties will contract, create, incur, assume or
permit to exist any Lien with respect to any of its Property, whether now owned
or after acquired, except for Permitted Liens.
8.3 Consolidation, Merger, Dissolution, etc.
Neither of the Credit Parties will enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), except for the Merger.
8.4 Asset Dispositions.
Neither of the Credit Parties will make any Asset Disposition.
8.5 Investments.
Neither of the Credit Parties will make Investments in or to any Person,
except for Permitted Investments.
8.6 Restricted Payments.
Neither of the Credit Parties will, directly or indirectly, declare,
order, make or set apart any sum for or pay any Restricted Payment, except
loans, advances, dividends or distributions by the Borrower to the Parent to
enable the Parent to pay for corporate, administrative and operating expenses in
the ordinary course of business (including, without limitation, costs and
expenses in connection with the Transaction).
8.7 Limitations on Business Activities.
(a) The Borrower shall not (i) hold any assets other than Capital
Stock of Sheridan and cash, (ii) have any liabilities other than the
liabilities under the Credit Documents and fees and expenses in connection
with the Transaction or (iii) engage in any business other than (A) owning
Capital Stock of Sheridan and activities incidental or related thereto,
(B) acting as the Borrower hereunder and pledging the Capital Stock of
Sheridan owned by it to the Agent, for the benefit of the Lenders,
pursuant to the Pledge Agreement.
(b) The Parent shall not (i) hold any assets other than the Capital
Stock of the Borrower and, without limiting the terms of Section 8.6,
cash, (ii) have any liabilities other than the liabilities under the
Credit Documents and fees and expenses in connection
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with the Transaction or (iii) engage in any business other than (A) owning
the Capital Stock of the Borrower and activities incidental or related
thereto, (B) acting as a guarantor hereunder and pledging the Capital
Stock of the Borrower owned by it to the Agent, for the benefit of the
Lenders, pursuant to the Pledge Agreement.
8.8 No Further Negative Pledges, etc.
Neither of the Credit Parties will enter into, assume or become subject to
any agreement (other than the Credit Documents) prohibiting or otherwise
restricting (a) the creation or assumption of any Lien upon any of its Property
for the purpose of securing the Credit Party Obligations or requiring the grant
of any security for any obligation if security is given for the Credit Party
Obligations or (b) the ability of such Person to act as a Credit Party and
pledge its assets pursuant to the Credit Documents.
8.9 ERISA.
Neither of the Credit Parties will establish any Plan.
8.10 Limitations on Business Activities.
Neither of the Credit Parties will issue or have outstanding any shares of
preferred Capital Stock which by the terms thereof could be (at the request of
the holders thereof or otherwise) subject to mandatory sinking fund payments,
redemption or other acceleration (other than as a result of a Change of Control
or an Asset Disposition that does not in fact result in a redemption of such
preferred Capital Stock) at any time prior to the Maturity Date.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of the
Tender Loan, or
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans, or of any fees or other amounts owing hereunder, under any of
the other Credit Documents or in connection herewith or therewith;
or
(b) Representations. Any representation, warranty or statement made
or
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deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2 (as it relates to
corporate existence), 7.6, 7.7 or 8.1 through 8.9, inclusive; or
(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.1) contained in
this Credit Agreement or any other Credit Document and such default
shall continue unremedied for a period of at least 30 days after the
earlier of an Executive Officer of a Credit Party becoming aware of
such default or notice thereof by the Agent; or
(d) Other Credit Documents. Any Credit Document shall fail to be in
full force and effect or to give the Agent and/or the Lenders the Liens,
rights, powers and privileges purported to be created thereby (other than
as a result of the Agent's failure to maintain possession of the Stock
certificates delivered to it pursuant to the Pledge Agreement), or any
Credit Party shall so state in writing; or
(e) Guaranty. The guaranty given by the Parent hereunder or any
provision thereof shall cease to be in full force and effect, or the
Parent hereunder or any Person acting by or on behalf of the Parent shall
deny or disaffirm the Parent's obligations under such guaranty, or the
Parent shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed hereunder;
or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
to either Credit Party; or
(g) Defaults under Other Agreements. Either Credit Party shall
default in the performance or observance (beyond the applicable grace or
cure period with respect thereto, if any) of any material obligation or
condition of any material contract or lease to which such Credit Party is
a party; or
(h) Judgments. One or more judgments or decrees shall be entered
against one or both of the Credit Parties involving a liability of
$100,000 or more in the aggregate (to the extent not paid or fully covered
by insurance provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) Ownership. There shall occur a Change of Control; or
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(j) Approval of Merger. The board of directors of Sheridan shall
withdraw, modify or amend in a manner adverse to the Borrower its approval
of the Merger Agreement or its recommendation to the stockholders of
Sheridan that they vote in favor of the adoption of the Merger Agreement
(or announce publicly their intention to do so); or
(k) Stock Market Events. Except as a direct result of the
consummation of the Tender Offer or the Merger, the Common Stock for any
reason no longer shall be included in the Stock Market or trading in the
Common Stock on the Stock Market for any reason shall be halted; or
(l) Legal Proceedings. A court or governmental agency having
jurisdiction in the premises shall enter a decree or order restraining,
preventing or materially delaying the consummation of the Transaction.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. If the Tender Loan shall have been advanced
pursuant to Section 2.1(a), declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the Credit
Parties to the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Credit Parties.
(c) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Pledge Agreement,
all rights and remedies against the Parent as a guarantor of the Credit
Party Obligations and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then the Commitments shall
automatically terminate and all Loans, all accrued interest in respect thereof,
all accrued and unpaid fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall immediately become
due and payable without the giving of any notice or other action by the Agent or
the Lenders.
SECTION 10
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AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the Agent to act as
its agent under this Credit Agreement and the other Credit Documents with such
powers and discretion as are specifically delegated to the Agent by the terms of
this Credit Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agent (which term as used in
this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof
shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible
to the Lenders for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Credit Document, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Credit Party or the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Credit Document; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 11.3(b) hereof. As
to any matters not expressly provided for by this Credit Agreement, the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding on all of the Lenders; provided, however,
that the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to any Credit Document or applicable
law or unless 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 any such action.
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10.3 Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or a Credit Party specifying 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 of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders (or such other Lenders as required by Section 11.6), 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 Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Loans made by it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Agent, and NationsBank (and any successor acting as Agent) and its Affiliates
may accept fees and other consideration from any Credit Party or any of its
Subsidiaries or Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Credit
Parties under such Section) ratably (in accordance with their respective
outstanding Loans and Participation Interests therein) for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees), or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Agent (including by any Lender) in any way relating to or arising out of any
Credit Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Credit Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the Credit
Parties under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Credit Parties. The agreements in
this Section 10.5 shall survive the repayment of the Tender Loan and other
obligations under the Credit Documents and the termination of the Commitments
hereunder.
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10.6 Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Credit Agreement and 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 analysis and decisions in taking or not taking action
under the Credit Documents. Except for notices, reports, and other documents and
information 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 any Credit Party or any of its Subsidiaries or
Affiliates that may come into the possession of the Agent or any of its
Affiliates.
10.7 Successor Agent.
The Agent may resign at any time by giving notice thereof to the Lenders
and the Credit Parties. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent which, unless an Event of Default
under Section 9.1(f) has occurred and is continuing, shall have approved by the
Borrower (such approval not to be unreasonably withheld or delayed). If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Credit Parties and the
Agent, set forth below, and, in the case of the Lenders, set forth on Schedule
2.1(a), or at such other address as such party may specify by written notice to
the other parties hereto:
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if to any Credit Party:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, Florida 33021
Attn: Mitchell Eisenberg, M.D., President
Telephone: (954) 986-7550
Telecopy: (954) 987-8359
with a copy to:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, Florida 33021
Attn: Jay A. Martus, Esq., Vice President and General Counsel
Telephone: (954) 986-7770
Telecopy: (954) 987-8359
with a copy to:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, Florida 33021
Attn: Michael F. Schundler, Chief Financial Officer
Telephone: (954) 986-7506
Telecopy: (954) 987-8359
with a copy to:
Vestar Capital Partners III, L.P.
245 Park Avenue, 41st Floor
New York, New York 10167
Attn: James Elrod, Jr.
David Hooper
Telephone: (212) 351-1609
Telecopy: (212) 808-4922
and
Marissa C. Wesely, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Telephone: (212) 455-7173
Telecopy: (212) 455-2502
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if to the Agent:
NationsBank, N. A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services -- Kathy Mumpower
Telephone: (704) 386-6837
Telecopy: (704) 409-0021
with a copy to:
NationsBank, N.A. c/o Bank of America
Agency Management 10831, 12th Floor
1455 Market Street
San Francisco, California 94103
Attn: Charles Graber
Telephone: (415) 436-3495
Telecopy: (415) 436-3425
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 13th Floor
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: Bob Klawinski
Telephone: (704) 387-0467
Telecopy: (704) 386-9607
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender (or any
of its Affiliates) to or for the credit or the account of any Credit Party
against any and all of the obligations of such Person now or hereafter existing
under this Credit Agreement, under the Tender Loan Notes, under any other Credit
Document or otherwise, irrespective of whether such Lender shall have made any
demand under hereunder or thereunder and although such obligations may be
unmatured. Each Lender agrees promptly to notify any affected Credit Party after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Lender under this Section 11.2 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
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11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests and obligations without prior written
consent of each of the Lenders; provided further that the rights of each
Lender to transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender, an
Affiliate of an existing Lender or, with respect to any Lender that
is a fund that invests in bank loans, any other fund that invests in
bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor or an
assignment of all of a Lender's rights and obligations under this
Credit Agreement, any such partial assignment shall be in an amount
at least equal to $1,000,000 (or, if less, the remaining amount of
the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof; and
(iii) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit 11.3(b) hereto, together with any Note subject to
such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits of a
Lender hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Agent and the Credit
Parties shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
a United States person under Section 7701(a)(30) of the Code, it shall
deliver to the Credit Parties and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 3.9.
(c) The Agent shall maintain at its address referred to in Section
11.1 a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Credit Parties, the Agent and the Lenders may treat each
Person
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whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Credit Parties or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Any assignment of any Loan
or other Credit Party Obligations shall be effective only upon an entry
with respect thereto being made in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit
11.3(b) hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations
under this Credit Agreement (including all or a portion of its Commitment
or its Loans); provided, however, that (i) such Lender's obligations under
this Credit Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in Sections 3.5
through 3.10, inclusive, and the right of set-off contained in Section
11.2, provided that the participant shall not be entitled to receive any
greater payment under Sections 3.5 through 3.10 than the applicable Lender
would have been entitled to receive with respect to the participation sold
to such participant, and (iv) the Credit Parties shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Credit Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Credit Parties
relating to the Credit Party Obligations owing to such Lender and to
approve any amendment, modification, or waiver of any provision of this
Credit Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, extending any scheduled principal payment
date or date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Note) to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the Credit
Parties in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.14 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender in exercising
any right, power
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or privilege hereunder or under any other Credit Document and no course of
dealing between the Agent or any Lender and any of the Credit Parties shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies provided herein
are cumulative and not exclusive of any rights or remedies which the Agent or
any Lender would otherwise have. No notice to or demand on any Credit Party in
any case shall entitle the Credit Parties to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the Agent or the Lenders to any other or further action in any circumstances
without notice or demand.
11.5 Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all reasonable costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Credit Agreement, the other Credit Documents, and the other documents to
be delivered hereunder, including, without limitation, the reasonable fees
and expenses of counsel for the Agent (including the cost of internal
counsel) with respect thereto and with respect to advising the Agent as to
its rights and responsibilities under the Credit Documents. The Borrower
further agrees to pay on demand all reasonable costs and expenses of the
Agent and the Lenders, if any (including, without limitation, reasonable
attorneys' fees of one firm of outside counsel and expenses and the cost
of internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Credit Documents and
the other documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their respective officers,
directors, employees, agents, and advisors (each, an "Indemnified Party")
from and against any and all claims, damages, losses, liabilities, costs,
and expenses (including, without limitation, reasonable attorneys' fees)
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
(including, without limitation, in connection with any investigation,
litigation, or proceeding or preparation of defense in connection
therewith) the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans, except
to the extent such claim, damage, loss, liability, cost, or expense has
resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 11.5 applies, such
indemnity shall be effective whether or not such investigation, litigation
or proceeding is brought by any of the Credit Parties, their respective
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether
or not the transactions contemplated hereby are consummated. The Credit
Parties agree not to assert any claim against the Agent, any Lender, any
of their Affiliates, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of liability,
for special, indirect, consequential, or punitive damages arising out of
or otherwise relating to the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of
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the proceeds of the Tender Loan.
(c) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 11.5 shall survive the repayment of the
Tender Loan and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, neither
this Credit Agreement nor any other Credit Document may be amended to
(i) extend the final maturity of the Tender Loan or any
portion thereof,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder,
(iii) reduce or waive the principal amount of any Loan,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of
any Default or Event of Default or mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender),
(v) release any of the Capital Stock of the Borrower or of
Sheridan pledged to the Agent pursuant to the Pledge Agreement,
(vi) release either of the Credit Parties from its payment
obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section
11.6,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by either Credit
Party of its obligations under (or in respect of) the Credit
Documents except as permitted thereby; and
(b) without the consent of the Agent, no provision of Section 10 may
be amended.
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Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled
to vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 3.9, 3.10, 10.5 or 11.5 shall survive the execution and delivery of this
Credit Agreement, the making of the Tender Loan, the repayment of the Tender
Loan and other obligations under the Credit Documents and the termination of the
Commitments hereunder, and all representations and warranties made by the Credit
Parties herein shall survive delivery of the Tender Loan Notes and the making of
the Tender Loan hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State of New
York, or of the United States for the Southern District of New York, and,
by execution and delivery of this Credit Agreement, each of the Credit
Parties hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably consents to
the service of
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process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address set out for notices pursuant
to Section 11.1, such service to become effective three (3) days after
such mailing. Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Credit
Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by each Credit
Party and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures
of each Lender, and thereafter this Credit Agreement shall be binding upon
and inure to the benefit of each Credit Party, the Agent and each Lender
and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Credit Party
Obligations shall remain outstanding, all of the Credit Party Obligations
have been
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irrevocably satisfied in full and all of the Commitments hereunder shall
have expired or been terminated.
11.14 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the Credit
Parties pursuant to this Credit Agreement that is marked confidential; provided
that nothing herein shall prevent any Lending Party from disclosing such
information (a) to any other Lending Party or any Affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or Affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the Credit Facility, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Credit Agreement, (g) in connection with any litigation to
which such Lending Party or any of its Affiliates may be a party, (h) to the
extent necessary in connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, (i) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender, (j) to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty (i) has
been approved in writing by the Borrower and (ii) agrees in a writing
enforceable by the Borrower to be bound by the provisions of this Section 11.14)
and (k) subject to provisions substantially similar to those contained in this
Section 11.14, to any actual or proposed participant or assignee.
11.15 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: VESTAR/SHERIDAN, INC.
By: /s/ James L. Elrod
Name: James L. Elrod
Title: President
PARENT: VESTAR/SHERIDAN HOLDINGS, INC.
By: /s/ James L. Elrod
Name: James L. Elrod
Title: President
Signature Page to the
Tender Offer Financing Credit Agreement
<PAGE> 58
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By: /s/ Robert Klawinski
Name: Robert Klawinski
Title: Senior Vice President
Signature Page to the
Tender Offer Financing Credit Agreement
<PAGE> 59
Exhibit 1.1A
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
April ___, 1999 among VESTAR/SHERIDAN, INC., a Delaware corporation (the
"Borrower"), VESTAR/SHERIDAN HOLDINGS, INC., a Delaware corporation (the
"Parent"; together with the Borrower, individually a "Pledgor", and collectively
the "Pledgors") and NATIONSBANK, N.A., in its capacity as agent (in such
capacity, the "Agent") for the lenders from time to time party to the Credit
Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement (Tender Offer
Financing) dated as of April 26, 1999 (as amended, modified, extended, renewed
or replaced from time to time, the "Credit Agreement") among the Borrower, the
Parent, the Lenders and the Agent, the Lenders have agreed to make the Tender
Loan upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make the Tender Loan under the
Credit Agreement that the Pledgors shall have executed and delivered this Pledge
Agreement to the Agent for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement..
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Agent, for the benefit of the Lenders, and grants to
the Agent, for the benefit of the Lenders, a continuing security interest in any
and all right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. (i) 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding shares of capital stock owned
by such Pledgor of the Borrower set forth on Schedule 2(a) attached hereto
and (ii) 100% (or, if less, the full amount owned by such Pledgor) of the
issued and outstanding shares of capital stock owned by such Pledgor of
Sheridan Healthcare, Inc., a Delaware corporation, in each case together
with the certificates (or other agreements or instruments), if any,
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto
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(the "Pledged Shares").
(b) Proceeds. All proceeds and products of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of stock to the Agent as collateral security
for the Pledgor Obligations. Upon delivery to the Agent, such additional shares
of stock shall be deemed to be part of the Pledged Collateral of such Pledgor
and shall be subject to the terms of this Pledge Agreement whether or not
Schedule 2(a) is amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security interest created hereby
in the Pledged Collateral of each Pledgor constitutes continuing collateral
security for all of the Credit Party Obligations, now existing or hereafter
arising pursuant to the Credit Documents, owing from the Borrower or any other
Credit Party to any Lender or the Agent, howsoever evidenced, created, incurred
or acquired, whether primary, secondary, direct, contingent, or joint and
several, including, without limitation, all obligations and liabilities incurred
in connection with collecting and enforcing the foregoing (collectively, the
"Pledgor Obligations").
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i) simultaneously with
or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral of a Pledgor.
Prior to delivery to the Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by
such Pledgor for the benefit of the Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of transfer or
assignment in blank, substantially in the form provided in Exhibit 4(a)
attached hereto.
(b) Financing Statements. Each Pledgor shall execute and deliver to
the Agent such UCC or other applicable financing statements as may be
reasonably requested by the Agent in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such
Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Pledgor Obligations remain outstanding or any Credit Document is in effect,
and until all of the Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are duly
authorized and validly issued, are fully paid and nonassessable and are
not subject to the preemptive rights of any Person. All other shares of
stock constituting Pledged Collateral will be duly authorized and validly
issued, fully paid and nonassessable and not subject to the
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preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens. There exists no "adverse claim" within the
meaning of Section 8-302 of the Uniform Commercial Code as in effect in
the State of New York as of the date hereof (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent of its rights
and remedies hereunder will not violate any material law or governmental
regulation or any material contractual restriction binding on or affecting
a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action by,
and no notice or filing with any Governmental Authority or with the issuer
of any Pledged Stock is required either (i) for the pledge made by a
Pledgor or for the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the Agent or the
Lenders of their rights and remedies hereunder (except as may be required
by laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Agent of
the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will perfect
and establish the first priority of the Agent's security interest in the
Pledged Shares and, when properly perfected by filing or registration, in
all other Pledged Collateral represented by such Pledged Shares and
instruments securing the Pledgor Obligations. Except as set forth in this
Section 5(e), no action is necessary to perfect or otherwise protect such
security interest.
(f) No Other Shares. No Pledgor owns any shares of stock other than
as set forth on Schedule 2(a) attached hereto.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document is in effect, and
until all of the Commitments shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall cause
the issuer of the Pledged Shares of such Pledgor to mark its books and
records) to reflect the security interest granted to the Agent, for the
benefit of the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein, keep
the Pledged Collateral free from all Liens, except for Permitted Liens,
and not sell, exchange, transfer, assign, lease or
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otherwise dispose of Pledged Collateral of such Pledgor or any interest
therein, except as permitted under the Credit Agreement and the other
Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be reasonably necessary and desirable or that the Agent may reasonably
request in order to (i) perfect and protect the security interest created
hereby in the Pledged Collateral of such Pledgor (including without
limitation any and all action necessary to satisfy the Agent that the
Agent has obtained a first priority perfected security interest in any
capital stock); (ii) enable the Agent to exercise and enforce its rights
and remedies hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii) otherwise effect the purposes of this Pledge Agreement,
including, without limitation and if requested by the Agent, delivering to
the Agent irrevocable proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any restriction
with respect to any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit Agreement.
(e) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by such Pledgor with the
United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
covenants and agreements contained herein and upon written notice to such
Pledgor, the Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the payment
of any insurance premiums, the payment of any taxes, a payment to obtain a
release of a Lien or potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the Lenders may make
for the protection of the security hereof or which may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Pledgors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Pledgor Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 3.1 of the Credit Agreement for Loans that are Base Rate
Loans. No such performance of any covenant or agreement by the Agent or the
Lenders on behalf of any Pledgor, and no such advance or expenditure therefor,
shall relieve the Pledgors of any default under the terms of this Pledge
Agreement or the other Credit Documents. The Lenders may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by a Pledgor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
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8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, the Agent and the Lenders shall have, in
respect of the Pledged Collateral of any Pledgor, in addition to the
rights and remedies provided herein, in the Credit Documents or by law,
the rights and remedies of a secured party under the UCC or any other
applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section and without notice, the Agent may, in its sole
discretion, sell or otherwise dispose of or realize upon the Pledged
Collateral, or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as the Agent may deem commercially
reasonable, for cash, credit or for future delivery or otherwise in
accordance with applicable law. To the extent permitted by law, any Lender
may in such event, bid for the purchase of such securities. Each Pledgor
agrees that, to the extent notice of sale shall be required by law and has
not been waived by such Pledgor, any requirement of reasonable notice
shall be met if notice, specifying the place of any public sale or the
time after which any private sale is to be made, is personally served on
or mailed, postage prepaid, to such Pledgor, in accordance with the notice
provisions of Section 11.1 of the Credit Agreement at least 10 days before
the time of such sale. The Agent shall not be obligated to make any sale
of Pledged Collateral of such Pledgor regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the Agent may
deem it impracticable to effect a public sale of all or any part of the
Pledged Shares or any of the securities constituting Pledged Collateral
and that the Agent may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will
be obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution
or resale thereof. Each Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Agent shall have no obligation to delay sale of any such securities for
the period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act of 1933.
Each Pledgor further acknowledges and agrees that any offer to sell such
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securities which has been (i) publicly advertised on a bona fide basis in
a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933),
or (ii) made privately in the manner described above shall be deemed to
involve a "public sale" under the UCC, notwithstanding that such sale may
not constitute a "public offering" under the Securities Act of 1933, and
the Agent may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to the rights and
remedies hereunder, upon the occurrence and during the continuance of an
Event of Default, the Agent may, after providing the notices required by
Section 9-505(2) of the UCC or otherwise complying with the requirements
of applicable law of the relevant jurisdiction, retain all or any portion
of the Pledged Collateral in satisfaction of the Pledgor Obligations.
Unless and until the Agent shall have provided such notices, however, the
Agent shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Pledgors shall be jointly
and severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 3.1 of the Credit Agreement for
Loans that are Base Rate Loans, together with the costs of collection and
the reasonable fees of any attorneys employed by the Agent to collect such
deficiency. Any surplus remaining after the full payment and satisfaction
of the Pledgor Obligations shall be returned to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine to be
entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the Agent,
on behalf of the Lenders, and each of its designees or agents as
attorney-in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Pledged Collateral of such
Pledgor, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
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(iv) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment under any of
the Pledged Collateral to make payment of any and all monies due and
to become due thereunder directly to the Agent or as the Agent shall
direct;
(vi) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give
such discharges or releases as the Agent may deem reasonably
appropriate;
(ix) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may reasonably determine
necessary in order to perfect and maintain the security interests
and liens granted in this Pledge Agreement and in order to fully
consummate all of the transactions contemplated therein;
(x) to exchange any of the Pledged Collateral of such Pledgor
or other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged Collateral of such
Pledgor with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as the Agent may determine;
(xi) to vote for a shareholder resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the
Pledged Shares of such Pledgor into the name of the Agent or one or
more of the Lenders or into the name of any transferee to whom the
Pledged Shares of such Pledgor or any part thereof may be sold
pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient in
connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding or any Credit Document is
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in effect and (ii) until all of the Commitments shall have been
terminated. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Pledge Agreement, and shall not be
liable for any failure to do so or any delay in doing so. The Agent shall
not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Agent solely to protect, preserve and realize upon its security
interest in Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If any
Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Pledgors on a joint and several basis pursuant to
Section 13 hereof.
(c) Assignment by the Agent. In connection with the succession of
the Agent pursuant to Section 10.7 of the Credit Agreement, the Agent may
assign the Pledgor Obligations and any portion thereof and/or the Pledged
Collateral and any portion thereof, and the assignee shall be entitled to
all of the rights and remedies of the Agent under this Pledge Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held
by the Agent hereunder, the Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that
the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral of such Pledgor, and the Agent shall be relieved of all
responsibility for Pledged Collateral upon surrendering it or tendering
the surrender of it to the Pledgors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, which shall be no less than the treatment employed by a
reasonable and prudent agent in the industry, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the Agent
has or is deemed to have knowledge of such matters; or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral of such Pledgor or any part thereof for
any purpose not inconsistent with the terms of this Pledge Agreement
or the Credit Agreement; and
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(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of a Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of this Section shall cease and
all such rights shall thereupon become vested in the Agent which
shall then have the sole right to exercise such voting and other
consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing, each Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove) or
interest paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuance of an
Event of Default:
(A) all rights of a Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this Section,
upon written notice to such Pledgor, shall cease and all such
rights shall thereupon be vested in the Agent which shall then
have the sole right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(B) all dividends and interest payments which are
received by a Pledgor contrary to the provisions of paragraph
(A) of this Section shall be received in trust for the benefit
of the Agent, shall be segregated from other property or funds
of such Pledgor, and shall be forthwith paid over to the Agent
as Pledged Collateral in the exact form received, to be held
by the Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying
or diminishing in any way the force, effect, lien, pledge or security
interest of this Pledge Agreement as to any Pledged Collateral not
expressly released or substituted, and this Pledge Agreement shall
continue as a first priority lien on all Pledged Collateral not expressly
released or substituted.
11. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied in
reduction of the Pledgor Obligations in the order set forth in Section 3.13(b)
of the Credit Agreement, and each Pledgor irrevocably waives the right to direct
the application of
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such payments and proceeds and acknowledges and agrees that the Agent shall have
the continuing and exclusive right to apply and reapply any and all such
payments and proceeds in the Agent's sole discretion, notwithstanding any entry
to the contrary upon any of its books and records.
12. Costs of Counsel. At all times hereafter, the Pledgors agree to
promptly pay upon demand any and all reasonable documented costs and expenses of
(a) the Agent or the Lenders, as required under Section 11.5 of the Credit
Agreement and (b) the Agent as necessary to protect the Pledged Collateral or to
exercise any rights or remedies under this Pledge Agreement or with respect to
any Pledged Collateral. All of the foregoing costs and expenses shall constitute
Pledgor Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Pledgor Obligations remain outstanding or any Credit Document is in
effect, and until all of the Commitments thereunder shall have terminated
(other than any obligations with respect to the indemnities and the
representations and warranties set forth in the Credit Documents). Upon
such payment and termination, this Pledge Agreement shall be automatically
terminated and the Agent and the Lenders shall, upon the request and at
the expense of the Pledgors, forthwith release all of their liens and
security interests hereunder and shall promptly execute and deliver all
UCC termination statements and/or other documents reasonably requested by
the Pledgors evidencing such termination. Notwithstanding the foregoing
all releases and indemnities provided hereunder shall survive termination
of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Pledgor Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Pledgor
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Agent or any Lender in defending and
enforcing such reinstatement shall be deemed to be included as a part of
the Pledgor Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11.6 of the Credit Agreement.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Agent and the Lenders hereunder, to the benefit of
the Agent and the Lenders and their successors and permitted assigns;
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provided, however, that none of the Pledgors may assign its rights or delegate
its duties hereunder without the prior written consent of each Lender or the
Required Lenders, as required by the Credit Agreement. To the fullest extent
permitted by law, each Pledgor hereby releases the Agent and each Lender, and
its successors and assigns, from any liability for any act or omission relating
to this Pledge Agreement or the Pledged Collateral, except for any liability
arising from the gross negligence or willful misconduct of the Agent, or such
Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 11.1 of the Credit
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
19. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Pledge Agreement may be brought in the
courts of the State of New York in New York County, or of the United
States for the Southern District of New York, and, by execution and
delivery of this Pledge Agreement, each Pledgor hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each Pledgor further irrevocably consents
to the service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to it at the address for notices
pursuant to Section 11.1 of the Credit Agreement, such service to become
effective 30 days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted by law
or to commence legal proceedings or to otherwise proceed against any
Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Pledge
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
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LAW, EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
21. Severability. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Pledge Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated therein.
23. Survival. All representations and warranties of the Pledgors hereunder
shall survive the execution and delivery of this Pledge Agreement and the other
Credit Documents, the delivery of the Tender Loan Note and the making of the
Tender Loan under the Credit Agreement.
24. Other Security. To the extent that any of the Pledgor Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuance of any Event of Default, and the Agent and the Lenders have the
right, in their sole discretion, to determine which rights, security, liens,
security interests or remedies the Agent and the Lenders shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Agent's and the
Lenders' rights or the Pledgor Obligations under this Pledge Agreement or under
any other of the Credit Documents.
25. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Pledgors and in consideration of
the undertakings of each of the Pledgors to accept joint and several
liability for the obligations of each of them.
(b) Each of the Pledgors jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Pledgors with
respect to the payment and performance of all of the Pledgor Obligations
arising under this Pledge Agreement and the other Credit Documents, it
being the intention of the parties hereto that all the Pledgor Obligations
shall be the joint and several obligations of each of the Pledgors without
preferences or distinction among them.
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(c) Notwithstanding any provision to the contrary contained herein
or in any of the Credit Documents, the obligations of each Pledgor shall
be limited to an aggregate amount equal to the largest amount that would
not render such obligations subject to avoidance under Section 548 of the
Bankruptcy Code or any comparable provisions of any applicable state law.
[remainder of page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: VESTAR/SHERIDAN, INC.
By:
Name:
Title:
PARENT: VESTAR/SHERIDAN HOLDINGS, INC. ,
By:
Name:
Title:
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
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Exhibit 4(a)
to
Pledge Agreement
dated as of April ___, 1999
in favor of NationsBank, N.A.
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
No. of Shares Certificate No.
------------- ---------------
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
_________________________________
By:
Name:
Title:
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Exhibit 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N. A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, Vestar/Sheridan, Inc. (the "Borrower"), refers to the
Credit Agreement (Tender Offer Financing), dated as of April 26, 1999 (as
amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), among the Borrower, Vestar/Sheridan Holdings, Inc., the Lenders and
NationsBank, N. A., as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section 2.1 of the
Credit Agreement that it requests the Tender Loan under the Credit Agreement on
the Effective Date, and in connection therewith sets forth below the terms on
which such Tender Loan advance is requested to be made:
(A) Principal Amount of Borrowing _______________________
(B) Interest rate basis _______________________
(C) Interest Period and the last day thereof _______________________
VESTAR/SHERIDAN, INC.
By:
Name:
Title:
<PAGE> 75
Exhibit 2.1(e)
FORM OF TENDER LOAN NOTE
$33,200,000 April __, 1999
FOR VALUE RECEIVED, VESTAR/SHERIDAN, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N. A., as
Agent (the "Agent"), at 101 North Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the holder hereof may designate), at the times set forth in the Credit
Agreement (Tender Offer Financing) dated as of the date hereof among the
Borrower, Vestar/Sheridan Holdings, Inc., the Lenders and the Agent (as it may
be as amended, modified, restated or supplemented from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Maturity Date, in Dollars and in immediately available funds, the principal
amount of THIRTY THREE MILLION TWO HUNDRED THOUSAND DOLLARS ($33,200,000), or,
if less than such principal amount, the aggregate unpaid principal amount of the
Tender Loan made by the Lender to the Borrower pursuant to the Credit 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 selected in
accordance with Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default, the
balance outstanding hereunder shall bear interest as provided in Section 3.1 of
the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other indebtedness of the Borrower to the Lender shall become immediately
due and payable, without presentment, 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.
This Note and the Loans evidenced hereby may be transferred in whole or in
part only by registration of such transfer on the Register maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
VESTAR/SHERIDAN, INC.
By:
Name:
Title:
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79
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Exhibit 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N. A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, Vestar/Sheridan, Inc. (the "Borrower"), refers to the
Credit Agreement (Tender Offer Financing), dated as of April 26, 1999 (as
amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), among the Borrower, Vestar/Sheridan Holdings, Inc., the Lenders and
NationsBank, N. A., as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section 3.2 of the
Credit Agreement that it requests an extension or conversion of a Tender Loan
outstanding under the Credit Agreement, and in connection therewith sets forth
below the terms on which such extension or conversion is requested to be made:
(A) Loan Type _______________________
(B) Date of Extension or Conversion
(which is the last day of the the
applicable Interest Period) _______________________
(C) Principal Amount of Extension or Conversion _______________________
(D) Interest rate basis _______________________
(E) Interest Period and the last day thereof _______________________
VESTAR/SHERIDAN, INC.
By:
Name:
Title:
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<PAGE> 78
Exhibit 11.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement (Tender Offer Financing), dated
as of April 26, 1999, as amended and modified from time to time thereafter (the
"Credit Agreement"), among Vestar/Sheridan, Inc., the other Credit Parties party
thereto, the Lenders party thereto and NationsBank, N.A., as Agent. Terms
defined in the Credit Agreement are used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse
and without representation or warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement and the
other Credit Documents as of the date hereof equal to the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Credit Documents. After giving effect to such
sale and assignment, the Assignee's Commitment and the amount of the Loans owing
to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Credit Documents or any other instrument or document furnished
pursuant thereto; and (iv) attaches the Tender Loan Notes held by the Assignor
and requests that the Agent exchange such Tender Loan Notes for new Tender Loan
Notes payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and to the Assignor in an amount equal
to the Commitment retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor 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 the Credit Agreement;
(iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are
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reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service or other forms required under Section 3.9.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the "Effective Date") shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Tender Loan Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Tender
Loan Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date hereof.
____________________, as Assignor
By:
Name:
Title:
_____________________, as Assignee
By:
Name:
Title:
Notice address of Assignee:
<<Assignee>>
______________________________
______________________________
Attn: ________________________
Telephone: (___) ________
Telecopy: (___) ________
CONSENTED TO:
NATIONSBANK, N.A., *
as Agent
By:
Name:
Title:
VESTAR/SHERIDAN, INC.*
By:
Name:
Title:
- ----------
* Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee."
* Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee."
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[EXECUTION COPY]
CREDIT AGREEMENT
(PERMANENT FINANCING)
Dated as of April 26, 1999
among
VESTAR/SHERIDAN, INC.,
VESTAR/SHERIDAN HOLDINGS, INC.,
THE LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N. A.
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS 1
1.1 Definitions 1
1.2 Computation of Time Periods 31
1.3 Accounting Terms 31
SECTION 2 CREDIT FACILITIES 32
2.1 Revolving Loans 32
2.2 Letter of Credit Subfacility 34
2.3 Swingline Loan Subfacility 39
2.4 Term Loan 42
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES 43
3.1 Default Rate 43
3.2 Extension and Conversion 43
3.3 Prepayments 44
3.4 Termination and Reduction of Revolving Committed Amount 46
3.5 Fees 47
3.6 Capital Adequacy 48
3.7 Limitation on Eurodollar Loans 49
3.8 Illegality 49
3.9 Requirements of Law 49
3.10 Treatment of Affected Loans 51
3.11 Taxes 51
3.12 Compensation 53
3.13 Pro Rata Treatment 54
3.14 Sharing of Payments 55
3.15 Payments, Computations, Etc 56
3.16 Evidence of Debt 57
3.17 Replacement of Affected Lenders 58
SECTION 4 GUARANTY 59
4.1 The Guaranty 59
4.2 Obligations Unconditional 59
4.3 Reinstatement 60
4.4 Certain Additional Waivers 61
4.5 Remedies 61
4.6 Rights of Contribution 61
4.7 Guarantee of Payment; Continuing Guarantee 62
SECTION 5 CONDITIONS 62
5.1 Closing Conditions 62
5.2 Conditions to Initial Extensions of Credit 63
5.3 Conditions to all Extensions of Credit 67
SECTION 6 REPRESENTATIONS AND WARRANTIES 68
6.1 Financial Condition 68
6.2 No Material Change 68
6.3 Organization and Good Standing 68
6.4 Power; Authorization; Enforceable Obligations 69
6.5 No Conflicts 69
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<PAGE> 3
6.6 No Default 70
6.7 Ownership 70
6.8 Indebtedness 70
6.9 Litigation 70
6.10 Taxes 70
6.11 Compliance with Law 70
6.12 ERISA 71
6.13 Capital Stock, etc 72
6.14 Governmental Regulations, Etc 72
6.15 Purpose of Loans and Letters of Credit 72
6.16 Environmental Matters 73
6.17 Solvency 74
6.18 Investments 74
6.19 Business Locations 74
6.20 Disclosure 74
6.21 No Burdensome Restrictions 74
6.22 Brokers' Fees 74
6.23 Labor Matters 74
6.24 Nature of Business 75
6.25 Representations and Warranties from Merger Agreement 75
6.26 Year 2000 Compliance 75
6.27 Other Agreements 75
6.28 Reimbursement from Third Party Payors 75
6.29 Fraud and Abuse 76
6.30 Licensing and Accreditation 76
SECTION 7 AFFIRMATIVE COVENANTS 77
7.1 Information Covenants 77
7.2 Preservation of Existence and Franchises 79
7.3 Books and Records 79
7.4 Compliance with Law 80
7.5 Payment of Taxes and Other Indebtedness 80
7.6 Insurance 80
7.7 Maintenance of Property 81
7.8 Use of Proceeds 81
7.9 Audits/Inspections 81
7.10 Financial Covenants 82
7.11 Additional Guarantors 84
7.12 Pledged Assets 84
7.13 Year 2000 Compliance 84
7.14 Primedica Healthcare, Inc. Receivable 84
SECTION 8 NEGATIVE COVENANTS 85
8.1 Indebtedness 85
8.2 Liens 86
8.3 Nature of Business 86
8.4 Consolidation, Merger, Dissolution, etc 86
8.5 Asset Dispositions 87
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8.6 Investments 88
8.7 Restricted Payments 88
8.8 Other Indebtedness 89
8.9 Transactions with Affiliates 90
8.10 Fiscal Year; Organizational Documents 90
8.11 Limitation on Restricted Actions 90
8.12 Preferred Stock; Ownership of Subsidiaries; Limitations
on Parent 91
8.13 Sale Leasebacks 91
8.14 Capital Expenditures 91
8.15 No Further Negative Pledges 92
8.16 No Foreign Subsidiaries 92
SECTION 9 EVENTS OF DEFAULT 92
9.1 Events of Default 92
9.2 Acceleration; Remedies 94
SECTION 10 AGENCY PROVISIONS 95
10.1 Appointment, Powers and Immunities 95
10.2 Reliance by Agent 96
10.3 Defaults 96
10.4 Rights as a Lender 97
10.5 Indemnification 97
10.6 Non-Reliance on Agent and Other Lenders 97
10.7 Successor Agent 98
SECTION 11 MISCELLANEOUS 98
11.1 Notices 98
11.2 Right of Set-Off; Adjustments 100
11.3 Benefit of Agreement 101
11.4 No Waiver; Remedies Cumulative 103
11.5 Expenses; Indemnification 103
11.6 Amendments, Waivers and Consents 104
11.7 Counterparts 105
11.8 Headings 106
11.9 Survival 106
11.10 Governing Law; Submission to Jurisdiction; Venue 106
11.11 Severability 107
11.12 Entirety 107
11.13 Binding Effect; Termination 107
11.14 Confidentiality 107
11.15 Source of Funds 108
11.16 Conflict 108
SCHEDULES
Schedule 1.1A Scheduled Financial Information
Schedule 1.1B Investments
Schedule 1.1C Liens
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Schedule 2.1(a) Lenders
Schedule 5.2(a) Subsidiary Guarantors
Schedule 5.2(k) Corporate Structure
Schedule 6.1 Acquisitions/Material Liabilities
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.9 Litigation
Schedule 6.12 ERISA
Schedule 6.13 Subsidiaries
Schedule 6.16 Environmental Disclosures
Schedule 6.19(a) Collateral Locations
Schedule 6.19(b) Chief Executive Offices/Principal Places of Business
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
Schedule 8.5 Permitted Asset Dispositions
Schedule 8.9 Affiliate Transactions
EXHIBITS
Exhibit 1.1A Applicable Percentages
Exhibit 1.1B Form of Borrower Assignment and Assumption Agreement
Exhibit 1.1C Form of Pledge Agreement
Exhibit 1.1D Form of Security Agreement
Exhibit 1.1E Subordination Terms for Senior Subordinated Debt
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(d) Form of Swingline Note
Exhibit 2.4(f) Form of Term Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.11 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
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<PAGE> 6
CREDIT AGREEMENT
(PERMANENT FINANCING)
THIS CREDIT AGREEMENT (PERMANENT FINANCING), dated as of April 26, 1999
(as amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), is by and among VESTAR/SHERIDAN, INC., a Delaware corporation
("Mergersub"), VESTAR/SHERIDAN HOLDINGS, INC., a Delaware corporation (the
"Parent"), each Subsidiary Guarantor (as defined herein) which becomes a party
hereto after the date hereof by executing a Joinder Agreement (as defined
herein), the Lenders (as defined herein) and NATIONSBANK, N. A., as Agent for
the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, Mergersub has requested that the Lenders provide credit
facilities in an aggregate amount of up to $125,000,000 (the "Credit
Facilities") for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested Credit Facilities
available to Mergersub on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition", by any Person, means (i) the acquisition by such
Person of at least 90% of the Capital Stock or all or substantially all of
the Property of another Person or (ii) in the case of an acquisition by
such Person of a practice which will constitute a Controlled Physician
Affiliate, (a) the acquisition by such Person of a right to acquire, in
its own name or through a nominee, all of the Capital Stock of such
practice and (b) the entering into by such Person with the operators of
such practice of a long-term business agreement to provide management
services to such practice, whether or not such acquisition, in the case of
either clause (i) or (ii) above, involves a merger or consolidation by the
acquiring Person with or into the acquired Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable
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Percentage.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agency Services Address" means NationsBank, N. A., NC1-001-15-04,
101 North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency
Services, or such other address as may be identified by written notice
from the Agent to the Borrower.
"Agent" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement, dated as
of the Effective Date, between the Agent and Mergersub, as amended,
modified, restated or supplemented from time to time.
"Applicable Lending Office" means, for each Lender, the office of
such Lender (or of an Affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower by written notice as
the office by which its Eurodollar Loans are made and maintained.
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Loan, the applicable rate of
the Unused Fee for any day for purposes of Section 3.5(a), the applicable
rate of the Standby Letter of Credit Fee for any day for purposes of
Section 3.5(b)(i) or the applicable rate of the Trade Letter of Credit Fee
for any day for purposes of Section 3.5(b)(ii), the appropriate applicable
percentage corresponding to the Total Leverage Ratio and the Senior
Leverage Ratio in effect as of the most recent Calculation Date as set
forth in Exhibit 1.1A; provided, however, that if for any day the Total
Leverage Ratio and the Senior Leverage Ratio correspond to different
pricing levels on Exhibit 1.1A, the Applicable Percentages for such day
shall be determined by the lower pricing level (e.g. the pricing level
having the greater margins). The Applicable Percentages shall be
determined and adjusted quarterly on the date (each a "Calculation Date")
five Business Days after the date by which the Credit Parties are required
to provide the officer's certificate in accordance with the provisions of
Section 7.1(c) for the most recently ended fiscal quarter of the
Consolidated Parties; provided, however, that (i) the initial Applicable
Percentages shall be based on Pricing Level I (as shown on Exhibit 1.1A)
and shall remain at Pricing Level I until the first Calculation Date
occurring after the date that is 6 months following the Effective Date
and, at such Calculation Date and thereafter, the Pricing Level shall be
determined by the Total Leverage Ratio and the Senior Leverage as of the
last day of the most recently ended fiscal quarter of the Consolidated
Parties preceding the applicable Calculation Date, and
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(ii) if the Credit Parties fail to provide the officer's certificate to
the Agency Services Address as required by Section 7.1(c) for the last day
of the most recently ended fiscal quarter of the Consolidated Parties
preceding the applicable Calculation Date, the Applicable Percentage from
such Calculation Date shall be based on Pricing Level I until such time as
an appropriate officer's certificate is provided, whereupon the Pricing
Level shall be determined by the Total Leverage Ratio and the Senior
Leverage as of the last day of the most recently ended fiscal quarter of
the Consolidated Parties preceding such Calculation Date. Each Applicable
Percentage shall be effective from one Calculation Date until the next
Calculation Date. Any adjustment in the Applicable Percentages shall be
applicable to all existing Loans and Letters of Credit as well as any new
Loans and Letters of Credit made or issued.
"Application Period", in respect of any Asset Disposition, shall
have the meaning assigned to such term in Section 8.5.
"Asset Disposition" means any disposition, other than pursuant to an
Excluded Asset Disposition, of any or all of the Property (including
without limitation the Capital Stock of a Subsidiary) of any Consolidated
Party whether by sale, lease, transfer or otherwise, but other than
pursuant to any casualty or condemnation event; provided, however, that,
if the Subordinated Notes shall have been issued, the term "Asset
Disposition" shall include any "Asset Sale" as defined in the Subordinated
Note Indenture.
"Asset Disposition Prepayment Event" means, with respect to any
Asset Disposition, the failure of the Credit Parties to apply (or cause to
be applied) the Net Cash Proceeds of such Asset Disposition to Eligible
Reinvestments during the Application Period for such Asset Disposition.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary case
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<PAGE> 9
under any such law, or consent to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part of its
Property or make any general assignment for the benefit of creditors; or
(iv) such Person shall be unable to, or shall admit in writing its
inability to, pay its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one
percent (0.5%) and (b) the Prime Rate for such day. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or
Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means (i) prior to the Effective Date, Mergersub and (ii)
on and after the Effective Date, Sheridan.
"Borrower Assignment and Assumption Agreement" means the Assignment
and Assumption Agreement dated as of the Effective Date in the form of
Exhibit 1.1B to be executed by Mergersub and Sheridan and accepted by the
Agent.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or New York,
New York are authorized or required by law to close, except that, when
used in connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in Dollar deposits in London,
England.
"Calculation Date" shall have the meaning assigned to such term in
the definition of "Applicable Percentage" set forth in this Section 1.1.
"Capital Lease" means, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership,
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, membership interests and (v) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means, as at any date, (a) securities issued or
directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof)
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<PAGE> 10
having maturities of not more than twelve months from the date of
acquisition, (b) Dollar denominated time deposits and certificates of
deposit of (i) any Lender, (ii) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 or (iii) any
bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 360 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of
acquisition, (d) repurchase agreements entered into by any Person with a
bank or trust company (including any of the Lenders) or recognized
securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States in
which such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a
fair market value of at least 100% of the amount of the repurchase
obligations and (e) Investments, classified in accordance with GAAP as
current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by
reputable financial institutions having capital of at least $500,000,000
and the portfolios of which are substantially limited to Investments of
the character described in the foregoing subdivisions (a) through (d).
"Change of Control" means any of the following events: (a) the
failure of the Parent to own directly all of the Voting Stock of the
Borrower, (b) prior to a Qualifying IPO, (1) the failure of the Sponsor
(A) to own beneficially, directly or indirectly, a percentage of the
outstanding Capital Stock of the Parent at least equal to 2/3 of the
outstanding Capital Stock of the Parent initially acquired by the Sponsor
pursuant to the Transaction and (B) to have the right, directly or
indirectly, by beneficial ownership, contract or otherwise, to elect at
least a majority in number of the members of the Parent's Board of
Directors or (2) less than a majority in number of the sitting members of
the Parent's Board of Directors shall have been elected by the Sponsor,
(c) after a Qualifying IPO, (1) the failure of the Sponsor to own
beneficially, directly or indirectly, at least 30% of the outstanding
Voting Stock of the Parent or (2) a person or any group, and any affiliate
of any such person other than the Sponsor shall beneficially own, directly
or indirectly, an amount of the outstanding Voting Stock of the Parent
entitled to 20% or more of the voting power of all the outstanding Voting
Stock of the Parent, (d) during any period of up to 24 consecutive months,
commencing after the Effective Date, individuals who at the beginning of
such 24 month period were directors of the Parent (together with any new
director whose election by the Parent's Board of Directors or whose
nomination for election by the Parent's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the directors of the Parent then in office or
(e) if the Subordinated Notes shall have been issued, the occurrence of a
"Change of Control" under the Subordinated Note Indenture. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission
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under the Securities Exchange Act.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Documents" means a collective reference to the Security
Agreement, the Pledge Agreement and such other documents executed and
delivered in connection with the attachment and perfection of the Agent's
security interests and liens arising thereunder, including without
limitation, UCC financing statements and patent and trademark filings.
"Commitment" means (i) with respect to each Lender, the Revolving
Commitment of such Lender and the Term Loan Commitment of such Lender,
(ii) with respect to the Issuing Lender, the LOC Commitment and (iii) with
respect to the Swingline Lender, the Swingline Commitment.
"Commitment Percentage" means, for any Lender, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Consolidated Capital Expenditures" means, as of any date for the
four fiscal quarter period ending on such date with respect to the
Consolidated Parties on a consolidated basis, all capital expenditures
made during such period, as determined in accordance with GAAP; provided
that Consolidated Capital Expenditures shall not include any such
expenditures which constitute a Permitted Acquisition or an Eligible
Reinvestment of the proceeds of any Asset Disposition, Excluded Asset
Disposition or Equity Issuance.
"Consolidated Cash Interest Expense" means, as of any date for the
four fiscal quarter period ending on such date with respect to the
Consolidated Parties on a consolidated basis, interest expense (including
the amortization of debt discount and premium, the interest component
under Capital Leases and the implied interest component under Synthetic
Leases), as determined in accordance with GAAP, to the extent the same are
paid in cash during such period; provided, however, that Consolidated Cash
Interest Expense for each of the fiscal quarters ending on June 30, 1998,
September 30, 1998, December 31, 1998 and March 31, 1999 shall be equal to
the amount indicated for Consolidated Cash Interest Expense for such
quarter on Schedule 1.1A.
"Consolidated EBITDA" means, as of any date for the four fiscal
quarter period
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<PAGE> 12
ending on such date with respect to the Consolidated Parties on a
consolidated basis, the sum of (i) Consolidated Net Income, plus (ii) an
amount which, in the determination of Consolidated Net Income, has been
deducted for (A) interest expense, (B) total federal, state, local and
foreign income, value added and similar taxes, (C) depreciation and
amortization expense, (D) letter of credit fees, (E) non-cash expenses
resulting from the grant of stock and stock options to employees of the
Parent, the Borrower or any of the Restricted Subsidiaries pursuant to a
written plan or agreement, (F) all extraordinary charges and non-recurring
charges during such period, (G) non-cash amortization of financing costs
of the Borrower and the Restricted Subsidiaries during such period, (H)
one-time cash payments in connection with the Transaction or any Permitted
Acquisition, (I) to the extent actually incurred, compensation related to
physicians hired by Sheridan into existing Sheridan-owned practices within
the first twelve months of their hiring, in an aggregate amount not to
exceed $500,000 for any period of four consecutive fiscal quarters, (J)
any non-cash purchase accounting adjustment with respect to re-valuing
assets and liabilities in connection with the Transaction and any
Permitted Acquisition and (K) certain demonstrable adjustments in
connection with an Acquisition all determined on a consolidated basis in
conformity with GAAP (including, but not limited to, adjustments in
physician compensation to reflect ongoing physician compensation in
accordance with the terms of such Acquisition), or if not in conformity
with GAAP, such adjustments as are reasonably acceptable to the Required
Lenders, minus (iii) all extraordinary gains and non-recurring gains
during such period, all as determined in accordance with GAAP; provided,
however, that with respect to an Acquisition that is accounted for as a
"purchase," for the first four fiscal 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;" and provided, however, further, that Consolidated EBITDA for
each of the four fiscal quarter periods ending June 30, 1998, September
30, 1998, December 31, 1998 and March 31, 1999 shall be equal to the sum
of (i) the amount determined pursuant to the first clause of this
definition for such period plus (ii) the aggregate Consolidated EBITDA
Adjustment for each fiscal quarter occurring during such period.
"Consolidated EBITDA Adjustment" means, for each of the fiscal
quarters ended June 30, 1998, September 30, 1998, December 31, 1998 and
March 31, 1999, the amount indicated for the Consolidated EBITDA
Adjustment for such fiscal quarter on Schedule 1.1A.
"Consolidated Net Income" means, as of any date for the four fiscal
quarter period ending on such date with respect to the Consolidated
Parties on a consolidated basis, net income (excluding extraordinary items
and without any reduction on account of minority interests) after interest
expense, income taxes and depreciation and amortization, all as determined
in accordance with GAAP.
"Consolidated Parties" means a collective reference to the Parent,
the Borrower and the Restricted Subsidiaries.
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"Consolidated Scheduled Funded Debt Payments" means, as of any date
for the four fiscal quarter period ending on such date with respect to the
Consolidated Parties on a consolidated basis, the sum of all scheduled
payments of principal on Funded Indebtedness (including the principal
component of payments due on Capital Leases, but excluding voluntary
prepayments or mandatory prepayments required pursuant to Section 3.3), as
determined in accordance with GAAP.
"Consolidated Total Assets" mean, as of any date with respect to the
Consolidated Parties on a consolidated basis, total assets, as determined
in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"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 any Consolidated Party.
"Controlled Physician Affiliate" means any practice in the Line of
Business (i) as to which the Borrower has the option to acquire in its own
name, or through a nominee, the stock of such practice and (ii) with which
the Borrower has a long-term business agreement to provide management
services to such practice.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to (i) this Credit
Agreement, (ii) on and after Effective Date, the Borrower Assignment and
Assumption Agreement, the Notes, the LOC Documents, the Joinder
Agreements, the Agent's Fee Letter, the Collateral Documents and (iii) all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each case as the same may be
amended, modified, restated, supplemented, extended, renewed or replaced
from time to time).
"Credit Parties" means a collective reference to the Borrower and
the Guarantors.
"Credit Party Obligations" means, without duplication, (i) all of
the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited to, any interest accruing after the
occurrence of a Bankruptcy Event with respect to any Credit Party,
regardless of whether such interest is an allowed claim under the
Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from any Credit Party to any Lender, or any Affiliate of a
Lender, arising under any Hedging Agreement.
"Debt Issuance" means the issuance of any Indebtedness for borrowed
money by
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<PAGE> 14
any Consolidated Party other than Indebtedness permitted under Section
8.1(a), (b), (c), (d), (e), (f), (h), (i), (j) or (k).
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has
failed to make a Loan or purchase a Participation Interest required
pursuant to the term of this Credit Agreement within one Business Day of
when due, (b) other than as set forth in (a) above, has failed to pay to
the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement within one Business Day of when due, unless
such amount is subject to a good faith dispute or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency proceeding
or with respect to which (or with respect to any of the assets of which) a
receiver, trustee or similar official has been appointed.
"Dollars" and "$" means dollars in lawful currency of the United
States.
"Effective Date" means the date on and after the Closing Date on
which the conditions set forth in Section 5.2 of the Credit Agreement
shall have been satisfied or waived in accordance with the introductory
paragraph of Section 5.2; provided, however, that the Effective Date shall
not be a date later than (i) if at least 90% of all of the Shares are
acquired by Mergersub pursuant to the Tender Offer, five (5) Business Days
after the Effective Date under and as defined in the Tender Offer Credit
Agreement or (ii) if less than 90% of all of the Shares are acquired by
Mergersub pursuant to the Tender Offer, August 31, 1999.
"Eligible Assets" means any assets or any business (or any
substantial part thereof) used or useful in the same or a similar line of
business as Sheridan and its Subsidiaries were engaged in on the Closing
Date (or any reasonable extensions or expansions thereof).
"Eligible Assignee" means (i) a Lender; (ii) unless an assignment to
such Person would result in any increased cost to the Borrower under
Section 3.6, 3.9 or 3.11, an Affiliate of a Lender or, with respect to any
Lender that is a fund that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor; and
(iii) any other Person approved by the Agent and, unless an Event of
Default under Section 9.1(a), (c)(i) or (f) has occurred and is continuing
at the time any assignment is effected in accordance with Section 11.3,
the Borrower (such approval by the Agent or the Borrower not to be
unreasonably withheld or delayed and such approval to be deemed given by
the Borrower if no objection is received by the assigning Lender and the
Agent from the Borrower within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Borrower and has actually been received by an Executive Officer of the
Borrower); provided, however, that neither the Borrower nor an Affiliate
of the Borrower shall qualify as an Eligible Assignee.
"Eligible Reinvestment" means (i) any acquisition (whether or not
constituting a
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<PAGE> 15
capital expenditure, but not constituting an Acquisition) of Eligible
Assets and (ii) any Permitted Acquisition. If the Subordinated Notes shall
have been issued, the term "Eligible Reinvestment" shall not include any
item which is not a permitted application of proceeds of an "Asset Sale"
under the Subordinated Note Indenture.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions
relating to the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"Equity Issuance" means any issuance by any Consolidated Party to
any Person of (a) shares of its Capital Stock, (b) any shares of its
Capital Stock pursuant to the exercise of options or warrants, (c) any
shares of its Capital Stock pursuant to the conversion of any debt
securities to equity or (d) any options or warrants relating to its
Capital Stock. The term "Equity Issuance" shall not include any Asset
Disposition.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules
and regulations thereunder, all as the same may be in effect from time to
time. References to sections of ERISA shall be construed also to refer to
any successor sections.
"ERISA Affiliate" means an entity which is under common control with
any Consolidated Party within the meaning of Section 4001(a)(14) of ERISA,
or is a member of a group which includes any Consolidated Party and which
is treated as a single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of
a Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any
Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate
or the actual termination of a Plan pursuant to Section 4041(a)(2) or
4041A of ERISA; (iv) the institution of proceedings to terminate or the
actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v)
the complete or partial withdrawal of any Consolidated Party or any ERISA
Affiliate from a Multiemployer Plan; (vi) the conditions for imposition of
a lien under Section 302(f) of ERISA exist with respect to any Plan; or
(vii) the adoption of an amendment to any Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based
upon the Eurodollar Rate.
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"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to the quotient
obtained by dividing (a) the Interbank Offered Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Eurodollar Reserve
Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum
rate at which reserves (including, without limitation, any marginal,
special, supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) by member banks
of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to
which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar
Loans. The Adjusted Eurodollar Rate shall be adjusted automatically on and
as of the effective date of any change in the Eurodollar Reserve
Requirement.
"Event of Default" shall have the meaning assigned to such term in
Section 9.1.
"Excess Cash Flow" means, with respect to any fiscal year period of
the Consolidated Parties on a consolidated basis, an amount equal to (a)
Consolidated EBITDA minus (b) Consolidated Capital Expenditures minus (c)
Consolidated Cash Interest Expense minus (d) Federal, state and other
income taxes actually paid by the Consolidated Parties on a consolidated
basis minus (e) Consolidated Scheduled Funded Debt Payments minus (f) the
amount of any voluntary prepayments of the Term Loan or (to the extent
accompanied by a reduction in the Revolving Committed Amount) the
Revolving Loans minus (g) Restricted Payments permitted under Section 8.7.
"Excess Proceeds" shall have the meaning assigned to such term in
Section 7.6(b).
"Excluded Asset Disposition" means, with respect to any Consolidated
Party, (i) the sale of inventory in the ordinary course of such
Consolidated Party's business, (ii) the sale or disposition of machinery
and equipment no longer used or useful in the conduct of such Consolidated
Party's business, (iii) any Equity Issuance by such Consolidated Party,
(iv) any Involuntary Disposition by such Consolidated Party and (v) any
Asset Disposition by such Consolidated Party to any Credit Party other
than the Parent, provided that the Credit Parties shall cause to be
executed and delivered such documents, instruments and certificates as the
Agent may reasonably request so as to cause the Credit Parties to be in
compliance with the terms of Section 7.12 after giving effect to such
Asset Disposition.
"Excluded Equity Issuance" means (i) any Equity Issuance by any
Consolidated Party to any Credit Party or any member of the Investor
Group, (ii) any Equity Issuance by the Parent to the seller of a business
acquired in a Permitted Acquisition or (iii) any
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<PAGE> 17
Equity Issuance by the Parent the proceeds of which are used to finance a
Permitted Acquisition.
"Excluded Property" means, with respect to any Consolidated Party,
including any Person that becomes a Consolidated Party after the Effective
Date as contemplated by Section 7.11, any Property of such Consolidated
Party which (i) subject to the terms of Section 8.11 and Section 8.15, is
subject to a Lien of the type described in clause (vii) of the definition
of "Permitted Liens" set forth in Section 1.1 pursuant to documents which
prohibit such Consolidated Party from granting any other Liens in such
Property or (ii) consists of a license agreement and other like
arrangement requiring the consent of a third party to the granting of a
Lien in favor of the Agent therein, to the extent that such consent cannot
be obtained after such Consolidated Party has used commercially reasonable
efforts to obtain such consent.
"Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
"Existing Sheridan Credit Agreement" means that certain Second
Amended and Restated Credit Agreement, dated as of April 30, 1998, by and
among Sheridan, the lenders parties thereto and NationsBank, as agent for
such lenders, as amended prior to the Closing Date pursuant to Amendment
Agreement No. 1, dated as of September 23, 1998, and Amendment Agreement
No. 2, dated as of March 11, 1999, but without giving effect to any
amendments or modifications thereto or any waivers thereof on or after the
Closing Date to the extent not approved by the Required Lenders.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by the Agent.
"Fees" means all fees payable pursuant to Section 3.5.
"Fixed Charge Coverage Ratio" means, as of the end of any fiscal
quarter of the Consolidated Parties for the four fiscal quarter period
ending on such date with respect to the Consolidated Parties on a
consolidated basis, the ratio of (a) the difference of (i) Consolidated
EBITDA for such period minus (ii) Consolidated Capital Expenditures for
such period to (b) the sum of (i) Consolidated Cash Interest Expense for
such period plus (ii) Consolidated Scheduled Funded Debt Payments for such
period.
"Foreign Subsidiary", of any Person, means any direct or indirect
Subsidiary of
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such Person which is not incorporated or organized under the laws of any
State of the United States or the District of Columbia.
"Funded Indebtedness" means, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness
of the types referred to in clause (e), (f), (h) and (k) of the definition
of "Indebtedness" set forth in this Section 1.1, (b) all Funded
Indebtedness of others of the type referred to in clause (a) above secured
by (or for which the holder of such Funded Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable
out of the proceeds of production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(c) all Guaranty Obligations of such Person with respect to Funded
Indebtedness of the type referred to in clause (a) above of another Person
and (d) Funded Indebtedness of the type referred to in clause (a) above of
any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable
therefor.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantor" means a collective reference to (i) the Parent and (ii)
on and after the Effective Date, each of the Subsidiary Guarantors.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the
payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease
or purchase Property, securities or services primarily for the purpose of
assuring the holder of such Indebtedness, or (iv) to otherwise assure or
hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"HCFA" means the United States Health Care Financing Administration
and any successor thereto.
"Hedging Agreements" means any interest rate protection agreement or
foreign
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currency exchange agreement.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to Property purchased by such Person (other
than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person (other than trade
debt incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds
of production from, Property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (f) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person,
(g) the principal portion of all obligations of such Person under Capital
Leases, (h) all net obligations of such Person (or, if less, the exposure
of such Person) under Hedging Agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (j)
the principal portion of all obligations of such Person under Synthetic
Leases and (k) the Indebtedness of any partnership or unincorporated joint
venture in which such Person is a general partner or a joint venturer to
the extent such Person is liable therefor.
"Indemnified Party" shall have the meaning assigned to such term in
Section 11.5(b).
"Interbank Offered Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Page 3750 (or any
successor page) of the Dow Jones Markets Service as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Interbank Offered Rate" shall mean, for any
Eurodollar Loan for any Interest Period therefor, 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; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the
nearest 1/100 of 1%).
"Interest Coverage Ratio" means, as of the end of any fiscal quarter
of the Consolidated Parties for the four fiscal quarter period ending on
such date with respect to the Consolidated Parties on a consolidated
basis, the ratio of (a) Consolidated EBITDA
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<PAGE> 20
for such period to (b) Consolidated Cash Interest Expense for such period.
"Interest Payment Date" means (a) as to Base Rate Loans and
Swingline Loans, each March 31, June 30, September 30 and December 31, the
date of repayment of principal of such Loan and the Maturity Date, and (b)
as to Eurodollar Loans, the last day of each applicable Interest Period,
the date of repayment of principal of such Loan and the Maturity Date, and
in addition where the applicable Interest Period for a Eurodollar Loan is
greater than three months, then also the date three months from the
beginning of the Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of one,
two, three or six months' duration, as the Borrower may elect, commencing,
in each case, on the date of the borrowing (including continuations and
conversions thereof); provided, however, (a) if any Interest Period would
end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where the next
succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (b) no Interest Period shall extend
beyond the Maturity Date, (c) with regard to the Term Loans, no Interest
Period shall extend beyond any Principal Amortization Payment Date unless
the portion of Term Loans comprised of Base Rate Loans together with the
portion of Term Loans comprised of Eurodollar Loans with Interest Periods
expiring prior to the date such Principal Amortization Payment is due, is
at least equal to the amount of such Principal Amortization Payment due on
such date and (d) where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets (other than equipment, inventory and supplies in the
ordinary course of business and other than any acquisition of assets
constituting a Consolidated Capital Expenditure), Capital Stock, bonds,
notes, debentures, partnership, joint ventures or other ownership
interests or other securities of such other Person or (b) any deposit
with, or advance, loan or other extension of credit to, such Person (other
than deposits made in connection with the purchase of equipment inventory
and supplies in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including, without
limitation, any Guaranty Obligations (including any support for a letter
of credit issued on behalf of such Person) incurred for the benefit of
such Person, but excluding any Restricted Payment to such Person.
"Investor Group" means the Sponsor and the Management Investors.
"Involuntary Disposition" shall have the meaning assigned to such
term in Section 7.6(b).
"Issuing Lender" means NationsBank.
"Joinder Agreement" means a Joinder Agreement substantially in the
form of
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<PAGE> 21
Exhibit 7.11 hereto, executed and delivered by a new Guarantor in
accordance with the provisions of Section 7.11.
"Lender" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof.
"Lending Party" shall have the meaning assigned to such term in
Section 11.14.
"Letter of Credit" means any letter of credit issued by the Issuing
Lender for the account of the Borrower in accordance with the terms of
Section 2.2.
"Lien" means, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such Property, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof and any option or other
agreement to sell or give a security interest).
"Line of Business" means the business of operating office-based and
hospital-based physician practices and the provision of related medical
services.
"Loan" or "Loans" means the Revolving Loans, the Term Loans (or a
portion of any Revolving Loan or Term Loan bearing interest at the
Adjusted Base Rate or the Adjusted Eurodollar Rate and referred to as a
Base Rate Loan or a Eurodollar Loan) and/or the Swingline Loans (or any
Swingline Loan bearing interest at the Adjusted Base Rate or the Quoted
Rate and referred to as a Base Rate Loan or a Quoted Rate Swingline Loan),
individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue
Letters of Credit in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up to
the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such term
in Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for
(i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Lender but not theretofore reimbursed by the Borrower.
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"Management Investors" means Mitchell Eisenberg, Lewis Gold, Michael
Schundler, Jay Martus and other members of management party to the
Stockholders Agreement.
"Material Adverse Effect" means a material adverse effect on (i)(A)
prior to the Effective Date, the condition (financial or otherwise),
operations, business, assets or liabilities of Sheridan and its
Subsidiaries taken as a whole or (B) on and after the Effective Date, the
condition (financial or otherwise), operations, business, assets or
liabilities of the Borrower and the Restricted Subsidiaries taken as a
whole, (ii) the ability of any Credit Party to perform any material
obligation under the Credit Documents to which it is a party or (iii) the
material rights and remedies of the Agent and the Lenders under the Credit
Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" means (i) as to Revolving Loans, Letters of Credit
(and the related LOC Obligations) and Swingline Loans, the date which is
the fifth anniversary date of the Closing Date and (ii) as to the Term
Loan, the date which is the sixth anniversary date of the Closing Date.
"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 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
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<PAGE> 23
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.
"Merger" means the merger of Mergersub into Sheridan (with Sheridan
as the surviving corporation) pursuant to the terms of the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as
of March 24, 1999, by and among Mergersub, the Parent and Sheridan, as it
may be amended on or prior to the Closing Date.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer
Plan) which any Consolidated Party or any ERISA Affiliate and at least one
employer other than the Consolidated Parties or any ERISA Affiliate are
contributing sponsors.
"NationsBank" means NationsBank, N. A. and its successors.
"Net Cash Proceeds" means the aggregate proceeds paid in cash or
Cash Equivalents received by any Consolidated Party in respect of any
Asset Disposition, Equity Issuance, Debt Issuance or Involuntary
Disposition, net of (a) direct costs (including, without limitation,
legal, accounting and investment banking fees, and sales
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<PAGE> 24
commissions), (b) taxes paid or payable as a result thereof and (c) in the
case of an Asset Disposition, reorganization, shut-down and severance
costs incurred during the Application Period for such Asset Disposition;
it being understood that "Net Cash Proceeds" shall include, without
limitation, any cash or Cash Equivalents received upon the sale or other
disposition of any non-cash consideration received by any such
Consolidated Party in any Asset Disposition, Equity Issuance, Debt
Issuance or Involuntary Disposition. In addition, if the Subordinated
Notes shall have been issued, the "Net Cash Proceeds" of any Asset
Disposition shall include any other amounts defined as "Net Proceeds" of
such transaction under the Subordinated Note Indenture.
"Note" or "Notes" means the Revolving Notes, the Term Notes and/or
the Swingline Notes, individually or collectively, as appropriate.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Exhibit 2.1(b)(i), as required by Section
2.1(b)(i) or Section 2.4(b).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Exhibit 3.2, as
required by Section 3.2.
"Offer to Purchase" means the Offer to Purchase dated as of March
31, 1999 pursuant to which Mergersub has offered to purchase for cash all
of the outstanding Shares at $9.25 net per share, as the same may be
amended, supplemented or modified on or prior to the Closing Date.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Other Taxes" shall have the meaning assigned to such term in
Section 3.11(b).
"Parent" means the Person identified as such in the heading hereof.
"Parent Notes" means a collective reference to (i) the promissory
note issued by the Parent to NationsBank on the Effective Date in form and
substance reasonably satisfactory to the Agent and the Required Lenders
and (ii) any other promissory notes issued by the Parent on terms
substantially the same as the terms of the promissory note referred to in
clause (i) of this definition, as such promissory notes may be amended,
modified, restated or supplemented and in effect from time to time.
"Participation Interest" means a purchase by a Lender of a
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2, in Swingline Loans as provided in Section 2.3 or in any Loans
as provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
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"Permitted Acquisition" means an Acquisition by the Borrower or any
Restricted Subsidiary, provided that (i) the Property acquired (or the
Property of the Person acquired) in such Acquisition is used or useful in
the Line of Business, (ii) the Agent shall have received all items in
respect of the Capital Stock or Property acquired in such Acquisition
required to be delivered by the terms of Section 7.11 and/or Section 7.12,
(iii) in the case of an Acquisition of the Capital Stock of another
Person, the board of directors (or other comparable governing body) of
such other Person shall have duly approved such Acquisition, (iv) the
Borrower shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect to such Acquisition on
a Pro Forma Basis, (a) the Credit Parties shall be in compliance with the
Interest Coverage Ratio, the Senior Leverage Ratio and, if applicable, the
Total Leverage Ratio and (b) either (1) if the Subordinated Notes shall
not have been issued, the Senior Leverage Ratio would not exceed 3.5 to
1.0 or (2) if the Subordinated Notes shall have been issued, the Senior
Leverage Ratio would not exceed 3.0 to 1.0 and the Total Leverage Ratio
would not exceed 4.5 to 1.0, (v) the representations and warranties made
by the Credit Parties in any Credit Document shall be true and correct in
all material respects at and as if made as of the date of such Acquisition
(after giving effect thereto) except to the extent such representations
and warranties expressly relate to an earlier date, (vi) if such
transaction involves the purchase of an interest in a partnership between
the Borrower (or a Restricted Subsidiary) as a general partner and
entities unaffiliated with the Borrower or such Restricted Subsidiary as
the other partners, such transaction shall be effected by having such
equity interest acquired by a corporate holding company directly or
indirectly wholly-owned by the Borrower newly formed for the sole purpose
of effecting such transaction, (vii) after giving effect to such
Acquisition, there shall be at least $5 million of availability existing
under the Revolving Committed Amount and (viii) the aggregate
consideration (including cash and non-cash consideration and any
assumption of Indebtedness, but excluding consideration consisting of any
Capital Stock of the Parent issued to the seller of the Capital Stock or
Property acquired in such Acquisition, consideration consisting of the
proceeds of any Equity Issuance by the Parent consummated subsequent to
the Closing Date and consideration consisting of the proceeds of an
issuance of any Parent Notes) paid by the Consolidated Parties for any
such Acquisition shall not exceed $20 million.
"Permitted Investments" means Investments which are (i) cash and
Cash Equivalents; (ii) accounts receivable created, acquired or made by
any Consolidated Party in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (iii) Investments
consisting of Capital Stock, obligations, securities or other property
received by any Consolidated Party in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors; (iv)
Investments existing as of the Closing Date and set forth in Schedule
1.1B; (vi) advances or loans to directors, officers, employees, agents,
customers or suppliers that do not exceed $1,000,000 in the aggregate at
any one time outstanding; (vii) Investments in any Credit Party other than
the Parent; (viii) Investments in Unrestricted Subsidiaries and joint
ventures in the Line of Business that do not exceed $5 million in the
aggregate at any one time outstanding; and (ix) Permitted Acquisitions.
"Permitted Liens" means:
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(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title
arising in the ordinary course of business, provided that such Liens
secure only amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same or are
being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is not yet subject
to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that either (i) the judgments secured
shall, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged
within 30 days after the expiration of any such stay or (ii) the judgments
secured thereby do not constitute an Event of Default under Section
9.1(h);
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(vii) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such
Person to the extent permitted under Section 8.1(c), provided that any
such Lien attaches to such Property concurrently with or within 90 days
after the acquisition thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of any Consolidated Party;
(ix) any interest of title of a lessor under, and Liens arising from
UCC
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financing statements (or equivalent filings, registrations or agreements
in foreign jurisdictions) relating to, leases permitted by this Credit
Agreement;
(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(xi) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xii) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection;
(xiii) Liens of sellers of goods arising under Article 2 of the
Uniform Commercial Code or similar provisions of applicable law in the
ordinary course of business, covering only the goods sold and securing
only the unpaid purchase price for such goods and related expenses;
(xiv) Liens existing as of the Closing Date and set forth on
Schedule 1.1C; provided that (a) no such Lien shall at any time be
extended to or cover any Property other than the Property subject thereto
on the Closing Date and (b) the principal amount of the Indebtedness
secured by such Liens shall not be extended, renewed, refunded or
refinanced; and
(xv) other Liens securing Indebtedness of up to $2.5 million in the
aggregate at any one time outstanding.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which any
Consolidated Party or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as of the
Effective Date in the form of Exhibit 1.1C to be executed in favor of the
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Amortization Payment" means a principal payment on the
Term Loans pursuant to and in accordance with Section 2.4(d).
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"Principal Amortization Payment Date" means the date a Principal
Amortization Payment is due.
"Principal Office" means the principal office of NationsBank,
presently located at Charlotte, North Carolina.
"Pro Forma Basis" means, for purposes of calculating (utilizing the
principles set forth in the second paragraph of Section 1.3) compliance
with each of the applicable financial covenants set forth in Section
7.10(a)(i)-(ii) or Section 7.10(b), as applicable, in respect of a
proposed transaction, that such transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending as
of the most recent fiscal quarter end preceding the date of such
transaction with respect to which the Agent has received the Required
Financial Information. As used herein, "transaction" shall mean (i) any
designation of a Restricted Subsidiary as an Unrestricted Subsidiary and
any designation of an Unrestricted Subsidiary as a Restricted Subsidiary,
(ii) any Asset Disposition as referred to in Section 8.5, (iii) any
Restricted Payment as referred to in Section 8.7(h) or (iv) any
Acquisition as referred to in the definition of "Permitted Acquisition"
set forth in this Section 1.1. In connection with any calculation of the
financial covenants set forth in Section 7.10(a)(i)-(ii) or Section
7.10(b), as applicable, upon giving effect to a transaction on a Pro Forma
Basis:
(A) for purposes of any designation of a Restricted Subsidiary
as an Unrestricted Subsidiary, (1) income statement items (whether
positive or negative) attributable to such Restricted Subsidiary
shall be excluded and (2) any Indebtedness of such Restricted
Subsidiary shall be excluded and deemed to have been retired as of
the first day of the applicable period (unless any other
Consolidated Parties remain obligated in respect of such
Indebtedness);
(B) for purposes of any designation of an Unrestricted
Subsidiary as a Restricted Subsidiary, (1) income statement items
(whether positive or negative) attributable to such Unrestricted
Subsidiary shall be included beginning as of the first day of the
applicable period and (2) any Indebtedness of such Unrestricted
Subsidiary (x) shall be deemed to have been incurred as of the first
day of the applicable period and (y) if such Indebtedness has a
floating or formula rate, shall have an implied rate of interest for
the applicable period for purposes of this definition determined by
utilizing the rate which is or would be in effect with respect to
such Indebtedness as at the relevant date of determination;
(C) for purposes of any such calculation in respect of any
Asset Disposition as referred to in Section 8.5, (1) income
statement items (whether positive or negative) attributable to the
Property disposed of in such Asset Disposition shall be excluded and
(2) any Indebtedness which is retired in connection with such Asset
Disposition shall be excluded and deemed to have been retired as of
the first day of the applicable period;
(D) for purposes of any Restricted Payment as referred to in
Section 8.7(h) or any Acquisition as referred to in the definition
of "Permitted
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Acquisition" set forth in this Section 1.1, any Indebtedness
incurred by any Consolidated Party in connection with such
transaction (x) shall be deemed to have been incurred as of the
first day of the applicable period and (y) if such Indebtedness has
a floating or formula rate, shall have an implied rate of interest
for the applicable period for purposes of this definition determined
by utilizing the rate which is or would be in effect with respect to
such Indebtedness as at the relevant date of determination; and
(E) for purposes of any Acquisition as referred to in the
definition of "Permitted Acquisition" set forth in this Section 1.1,
(1) income statement items (whether positive or negative)
attributable to the Property acquired in such transaction or to the
Acquisition comprising such transaction, as applicable, shall be
included beginning as of the first day of the applicable period and
(2) pro forma adjustments may be included to the extent that such
adjustments are consistent with the definition of "Consolidated
EBITDA" set forth in this Section 1.1 or are otherwise in conformity
with GAAP and give effect to events that are (x) directly
attributable to such transaction, (y) expected to have a continuing
impact on the Consolidated Parties and (z) factually supportable.
"Pro Forma Compliance Certificate" means a certificate of an
Executive Officer of the Borrower delivered to the Agent in connection
with (i) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary, (ii) any Asset Disposition as referred to in
Section 8.5, (iii) any Restricted Payment as referred to in Section 8.7(h)
or (iv) any Acquisition as referred to in the definition of "Permitted
Acquisition" set forth in this Section 1.1, as applicable, and containing
reasonably detailed calculations, upon giving effect to the applicable
transaction on a Pro Forma Basis, of the Interest Coverage Ratio, the
Senior Leverage Ratio and, if applicable, the Total Leverage Ratio as of
the most recent fiscal quarter end preceding the date of the applicable
transaction with respect to which the Agent shall have received the
Required Financial Information.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Qualifying IPO" means an underwritten primary public offering
(other than a public offering pursuant to a registration statement on Form
S-8) of the common Capital Stock of the Parent (i) pursuant to an
effective registration statement filed with the Securities and Exchange
Commission in accordance with the Securities Act (whether alone or in
connection with a secondary public offering) and (ii) resulting in
proceeds to the Parent of at least $30 million.
"Quoted Rate" means, with respect to any Quoted Rate Swingline Loan,
the fixed percentage rate per annum offered by the Swingline Lender and
accepted by the Borrower with respect to such Swingline Loan as provided
in accordance with the provisions of Section 2.3.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing interest
at a
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Quoted Rate.
"Register" shall have the meaning assigned to such term in Section
11.3(c).
"Regulation D, T, U, or X" means Regulation D, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"Required Financial Information" means, with respect to the
applicable Calculation Date, (i) the financial statements of the
Consolidated Parties required to be delivered pursuant to Section 7.1(a)
or (b) for the fiscal period or quarter ending as of such Calculation
Date, and (ii) the certificate of an Executive Officer of the Borrower
required by Section 7.1(c) to be delivered with the financial statements
described in clause (i) above.
"Required Lenders" means, at any time, Lenders other than Defaulting
Lenders which are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at least a majority
of (i) the Revolving Commitments (and Participation Interests therein) and
the outstanding Term Loans (and Participation Interests therein) or (ii)
if the Commitments have been terminated, the outstanding Loans and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit and the Participation Interests of
the Swingline Lender in any Swingline Loans).
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or to which any of its material
property is subject.
"Restricted Payment" means (i) any dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Consolidated Party, now or hereafter outstanding
(including without limitation any payment in connection with any
dissolution, merger, consolidation or disposition involving any
Consolidated Party), or to the holders, in their capacity as such, of any
shares of any class of Capital Stock of any Consolidated Party, now or
hereafter outstanding (other than dividends or distributions payable in
Capital Stock of the applicable Person or to any Credit Party (directly or
indirectly through Subsidiaries)), (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding, (iii) 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 Capital Stock of
any Consolidated Party, now or hereafter outstanding, (iv)
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any payment or prepayment of principal of, premium, if any, or interest
on, including any redemption, purchase, retirement, defeasance, sinking
fund or similar payment with respect to, any Subordinated Indebtedness and
(iv) any loan or advance to the Parent.
"Restricted Subsidiary" means any Subsidiary of the Borrower which
is designated by the Borrower as a Restricted Subsidiary; provided,
however, that, if the Subordinated Notes shall have been issued, no
Subsidiary of the Borrower shall be a Restricted Subsidiary for purposes
of this Credit Agreement unless such Subsidiary is also a Restricted
Subsidiary under the Subordinated Note Indenture; provided further,
however, that (i) subject to the terms of the definition of "Unrestricted
Subsidiary" set forth in this Section 1.1, any Restricted Subsidiary may
be designated an Unrestricted Subsidiary so long as (a) if the
Subordinated Notes shall have been issued, such Subsidiary is
contemporaneously designated an Unrestricted Subsidiary under the
Subordinated Note Indenture, (b) at the time of and immediately after
giving effect to such designation, no Default or Event of Default shall
exist hereunder and (c) the Borrower shall have delivered to the Agent a
Pro Forma Compliance Certificate demonstrating that, upon giving effect to
such designation on a Pro Forma Basis, no Default or Event of Default
would exist hereunder and (ii) any Restricted Subsidiary which has been
designated an Unrestricted Subsidiary in accordance with the provisions of
clause (i) above shall not at any time thereafter be designated a
Restricted Subsidiary without the prior written consent of the Required
Lenders.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance with the
provisions of Section 2.1(a), (ii) to purchase Participation Interests in
Letters of Credit in accordance with the provisions of Section 2.2(c) and
(iii) to purchase Participation Interests in the Swingline Loans in
accordance with the provisions of Section 2.3.
"Revolving Committed Amount" shall have the meaning assigned to such
term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term in
Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of
the Borrower in favor of each Lender provided pursuant to Section 2.1(e)
and evidencing the Revolving Loans of such Lender, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or replaced from time
to time.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, Inc., or any successor or assignee of the business
of such division in the business of rating securities.
"Sale and Leaseback Transaction" means any arrangement pursuant to
which any
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Consolidated Party, directly or indirectly, becomes liable as lessee,
guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any Property (a) which such Consolidated
Party has sold or transferred (or is to sell or transfer) to a Person
which is not a Consolidated Party or (b) which such Consolidated Party
intends to use for substantially the same purpose as any other Property
which has been sold or transferred (or is to be sold or transferred) by
such Consolidated Party to another Person which is not a Consolidated
Party in connection with such lease.
"Securities Act" means the Securities Act of 1933, as amended, and
all regulations issued pursuant thereto.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all regulations issued pursuant thereto.
"Security Agreement" means the security agreement dated as of the
Effective Date in the form of Exhibit 1.1D to be executed in favor of the
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"Senior Funded Indebtedness" means Funded Indebtedness of the
Consolidated Parties which is not Subordinated Indebtedness determined on
a consolidated basis in accordance with GAAP applied on a consistent
basis.
"Senior Leverage Ratio" means, as of the end of any fiscal quarter
of the Consolidated Parties with respect to the Consolidated Parties on a
consolidated basis, the ratio of (a) Senior Funded Indebtedness minus all
cash on hand and Investments consisting of Cash Equivalents on such date
to (b) Consolidated EBITDA for the four quarter period ending on such
date.
"Shares" means all of the outstanding shares of the Common Stock,
par value $0.01 per share, of Sheridan and Class A Common Stock, par value
$0.01 per share, of Sheridan.
"Sheridan" means Sheridan Healthcare, Inc., a Delaware corporation.
"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer
Plan.
"Social Security Act" means the Social Security Act as set forth in
Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in
each case as in effect from time to time. References to sections of the
Social Security Act shall be construed also to refer to any successor
sections.
"Solvent" or "Solvency" means, with respect to any Person as of a
particular date, that on such date (i) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe that it
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will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature in their ordinary course, (iii) such
Person is not engaged in a business or a transaction, and is not about to
engage in a business or a transaction, for which such Person's Property
would constitute unreasonably small capital after giving due consideration
to the prevailing practice in the industry in which such Person is engaged
or is to engage, (iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the present
fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person
on its debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Sponsor" means Vestar Capital Partners III, L.P. and its
Affiliates.
"Standby Letter of Credit Fee" shall have the meaning assigned to
such term in Section 3.5(b)(i).
"Stockholders Agreement" means the Stockholders Agreement, dated as
of March 24, 1999, among the Parent, Sheridan, Vestar/Sheridan Investors,
LLC and certain members of management of Sheridan.
"Subordinated Indebtedness" means Indebtedness under the Parent
Notes and, if the Subordinated Notes shall have been issued, under the
Subordinated Notes.
"Subordinated Note" means any one of the subordinated promissory
notes, issued by the Borrower pursuant to the Subordinated Note Indenture,
as such promissory notes may be amended, modified, restated or
supplemented and in effect from time to time.
"Subordinated Note Indenture" means a subordinated note indenture
entered into on or after Effective Date by the Borrower and a financial
institution reasonably acceptable to the Required Lenders and which shall
act as trustee for the holders of the Subordinated Notes, which indenture
shall provide that the Indebtedness governed thereby shall be specifically
subordinated in right of payment to the prior payment of the obligations
of the Credit Parties under this Credit Agreement and the other Credit
Documents on substantially the terms and conditions set forth on Exhibit
1.1E.
"Subsidiary" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of
the directors of such corporation (irrespective of whether or not at such
time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at such
time owned by such Person directly or indirectly through Subsidiaries, (b)
any partnership, association, joint venture or other entity of which such
Person directly or indirectly through Subsidiaries owns at such time more
than 50% of the Capital Stock and (c) in the case of the Borrower, any
Controlled Physician Affiliate.
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"Subsidiary Guarantor" means each of the Restricted Subsidiaries
identified as a "Subsidiary Guarantor" on Schedule 5.2(a) and each
Restricted Subsidiary which may hereafter execute a Joinder Agreement
pursuant to Section 7.11.
"Swingline Commitment" means the commitment of the Swingline Lender
to make Swingline Loans in an aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned to such
term in Section 2.3(a).
"Swingline Lender" means NationsBank.
"Swingline Loan" shall have the meaning assigned to such term in
Section 2.3(a).
"Swingline Note" means the promissory note of the Borrower in favor
of the Swingline Lender evidencing the Swingline Loans provided pursuant
to Section 2.3(d), as such promissory notes may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to time.
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an Operating Lease under GAAP.
"Taxes" shall have the meaning assigned to such term in Section
3.11(a).
"Tender Offer" means the offer by Mergersub made pursuant to the
Offer to Purchase and the related Letter of Transmittal to purchase all
outstanding Shares.
"Tender Offer Credit Agreement" means that certain Credit Agreement
(Tender Offer Financing), dated as of the Closing Date, by and among
Merger, the Parent, the lenders parties thereto and NationsBank, as agent
for such lenders.
"Term Loan" shall have the meaning assigned to such term in Section
2.4(a).
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make its portion of the Term Loan in a
principal amount equal to such Lender's Commitment Percentage of the Term
Loan Committed Amount.
"Term Loan Committed Amount" shall have the meaning assigned to such
term in Section 2.4(a).
"Term Note" or "Term Notes" means the promissory notes of the
Borrower in favor of each Lender provided pursuant to Section 2.4(f) and
evidencing the Term Loans of such Lender, individually or collectively, as
appropriate, as such promissory notes may
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be amended, modified, restated, supplemented, extended, renewed or
replaced from time to time.
"Total Leverage Ratio" means, as of the end of any fiscal quarter of
the Consolidated Parties with respect to the Consolidated Parties on a
consolidated basis, the ratio of (a) Funded Indebtedness (other than
Funded Indebtedness under the Parent Notes) minus all cash on hand and
Investments consisting of Cash Equivalents on such date to (b)
Consolidated EBITDA for the four fiscal quarter period ending on such
date.
"Trade Letter of Credit Fee" shall have the meaning assigned to such
term in Section 3.5(b)(ii).
"Transaction" means a collective reference to (i) the Tender Offer,
(ii) the acquisition by Mergersub of the Tendered Shares pursuant to the
Tender Offer, (iii) the entering into of this Credit Agreement by
Mergersub and the Parent, (iv) the Merger pursuant to the Merger
Agreement, (v) the assignment by Mergersub to Sheridan, and the assumption
by Sheridan from Mergersub, pursuant to the Borrower Assignment and
Assumption, the entering into of Joinder Agreements by the Subsidiary
Guarantors and the entering into of the other Credit Documents by the
Borrower and the Guarantors, (vi) the repayment, with proceeds of the
Loans hereunder, of all Indebtedness under the Tender Offer Credit
Agreement and the Existing Sheridan Credit Agreement and (vii) the related
financings (other than the issuance of the Subordinated Notes) and other
transactions contemplated by this Credit Agreement and the Merger
Agreement.
"Unrestricted Subsidiary" means (i) Primedica Healthcare, Inc.,
Mediserv, Inc., Children's Hospital Services, Inc., Felix A. Estrada,
M.D., Inc. Dr. Ian Jeffries Neonatology Associates, Inc., Andrew B.
Kairalla, M.D., Inc., Woman to Woman Obstetrics & Gynecology, Inc., Henry
U. Parl, M.D., Inc., each a Florida corporation, (ii) Sheridan Healthcare
of California Medical Group, Inc., a California professional corporation,
and (iii) any other Subsidiary of the Borrower which is not a Restricted
Subsidiary; provided, however, that, if the Subordinated Notes shall have
been issued, no Subsidiary of the Borrower shall be an Unrestricted
Subsidiary for purposes of this Credit Agreement unless such Subsidiary is
also an Unrestricted Subsidiary under the Subordinated Note Indenture;
provided further, however, that (a) subject to the terms of the definition
of "Restricted Subsidiary" set forth in this Section 1.1, any Unrestricted
Subsidiary may be designated a Restricted Subsidiary so long as (1) if the
Subordinated Notes shall have been issued, such Subsidiary is
contemporaneously designated a Restricted Subsidiary under the
Subordinated Note Indenture, (2) at the time of and immediately after
giving effect to such designation, no Default or Event of Default shall
exist hereunder, (3) the Borrower shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect to
such designation on a Pro Forma Basis, no Default or Event of Default
would exist hereunder and (4) the Credit Parties shall cause to be
executed and delivered such documents, instruments and certificates as the
Agent may reasonably request so as to cause the Credit Parties to be in
compliance with the terms of Sections 7.11 and 7.12 after giving effect to
such designation and (b) any Unrestricted Subsidiary which has been
designated a Restricted Subsidiary in accordance with the provisions of
clause (a) above shall not at any time
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thereafter be designated an Unrestricted Subsidiary without the prior
written consent of the Required Lenders.
"Unused Fee" shall have the meaning assigned to such term in Section
3.5(a).
"Unused Fee Calculation Period" shall have the meaning assigned to
such term in Section 3.5(a).
"Unused Revolving Committed Amount" means, for any period, the
amount by which (a) the then applicable Revolving Committed Amount exceeds
(b) the daily average sum for such period of (i) the outstanding aggregate
principal amount of all Revolving Loans (but not including any Swingline
Loans) plus (ii) the outstanding aggregate principal amount of all LOC
Obligations.
"Vestar Management Agreement" means the Management Agreement, dated
as of March 24, 1999, among Sheridan, the Parent and Vestar Capital
Partners, a New York general partnership.
"Voting Stock" means, with respect to any Person, Capital Stock
issued by such 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 though the
right so to vote has been suspended by the happening of such a
contingency.
"Wholly Owned Subsidiary" means any Restricted Subsidiary 100% of
whose Voting Stock is at the time owned by Borrower directly or indirectly
through other Wholly Owned Subsidiaries.
"Year 2000 Compliant" shall have the meaning assigned to such term
in Section 6.26.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements of Sheridan and its Subsidiaries as at
December 31, 1998); provided, however, if (a) the Credit Parties shall
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object to determining such compliance on such basis at the time of delivery of
such financial statements due to any change in GAAP or the rules promulgated
with respect thereto or (b) the Agent or the Required Lenders shall so object in
writing within 60 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Credit Parties to the Lenders as to which no such
objection shall have been made; provided further, however, that nothing
contained in this Section 1.3 shall be deemed to restrict the ability of the
Credit Parties to (i) make purchase accounting adjustments with respect to the
Transaction during the four-quarter period immediately succeeding the
consummation of the Transaction or (ii) make purchase accounting adjustments
with respect to any Permitted Acquisition during the four-quarter period
immediately succeeding the consummation of such transaction.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 7.10 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis" set forth in Section 1.1), (i) in
connection with any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, (1) income statement items (whether positive or negative)
attributable to such Restricted Subsidiary shall be excluded to the extent
relating to any period occurring prior to the date of such transaction and (2)
any Indebtedness of such Restricted Subsidiary shall be excluded and deemed to
have been retired as of the first day of the applicable period (unless any other
Consolidated Parties remain obligated in respect of such Indebtedness), (ii) in
connection with any designation of an Unrestricted Subsidiary as a Restricted
Subsidiary, (1) income statement items (whether positive or negative)
attributable to such Unrestricted Subsidiary shall, to the extent not otherwise
included in such income statement items for the Consolidated Parties in
accordance with GAAP or in accordance with any defined terms set forth in
Section 1.1, be included beginning as of the first day of the applicable period
and (2) any Indebtedness of such Unrestricted Subsidiary shall be deemed to have
been incurred as of the first day of the applicable period, (iii) in connection
with any Asset Disposition as contemplated by Section 8.5, (A) income statement
items (whether positive or negative) attributable to the Property disposed of
shall be excluded to the extent relating to any period occurring prior to the
date of such transaction and (B) Indebtedness which is retired shall be excluded
and deemed to have been retired as of the first day of the applicable period and
(iv) in connection with any Acquisition as referred to in the definition of
"Permitted Acquisition" set forth in Section 1.1, (A) income statement items
(whether positive or negative) attributable to any Person or Property acquired
in any Permitted Acquisition shall, to the extent not otherwise included in such
income statement items for the Consolidated Parties in accordance with GAAP or
in accordance with any defined terms set forth in Section 1.1, be included to
the extent relating to any period applicable in such calculations and (B) pro
forma adjustments may be included to the extent that such adjustments are
consistent with the definition of "Consolidated EBITDA" set forth in Section 1.1
or are otherwise in conformity with GAAP and give effect to items that are (x)
directly attributable to such transaction, (y) expected to have a continuing
impact on the Consolidated Parties and (z) factually supportable.
SECTION 2
CREDIT FACILITIES
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2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the
Effective Date until the Maturity Date, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein;
provided, however, that the sum of the aggregate outstanding principal
amount of Revolving Loans shall not exceed FIFTY MILLION DOLLARS
($50,000,000) (as such aggregate maximum amount may be reduced from time
to time as provided in Section 3.4, the "Revolving Committed Amount");
provided, further, (A) with regard to each Lender individually, such
Lender's outstanding Revolving Loans shall not exceed such Lender's
Commitment Percentage of the Revolving Committed Amount, and (B) the sum
of the aggregate outstanding principal amount of Revolving Loans plus LOC
Obligations plus Swingline Loans shall not exceed the Revolving Committed
Amount. Revolving Loans may consist of Base Rate Loans or Eurodollar
Loans, or a combination thereof, as the Borrower may request; provided,
however, that no more than 10 Eurodollar Loans shall be outstanding
hereunder at any time (it being understood that, for purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period). Revolving
Loans hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephonic notice
promptly confirmed in writing) to the Agent not later than 11:00
A.M. (Charlotte, North Carolina time) on the Business Day prior to
the date of the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such request for
borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate principal amount
to be borrowed, and (D) whether the borrowing shall be comprised of
Base Rate Loans, Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrower shall fail to specify in any such Notice of Borrowing
(I) an applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base Rate
Loan hereunder. The Agent shall give notice to each affected Lender
promptly upon receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such Lender's share
of any borrowing to be made pursuant
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thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan
that is a Revolving Loan shall be in a minimum aggregate principal
amount of $2,500,000 and integral multiples of $100,000 in excess
thereof (or the remaining amount of the Revolving Committed Amount,
if less).
(iii) Advances. Each Lender will make its Commitment
Percentage of each Revolving Loan borrowing available to the Agent
for the account of the Borrower as specified in Section 3.15(a), or
in such other manner as the Agent may specify in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent by crediting the account of the
Borrower on the books of such office with the aggregate of the
amounts made available to the Agent by the Lenders and in like funds
as received by the Agent.
(c) Repayment.
The principal amount of all Revolving Loans shall be due and payable
in full on the Maturity Date, unless accelerated sooner pursuant to
Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to
the Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each Lender shall
be evidenced by a duly executed promissory note of the Borrower to such
Lender in an original principal amount equal to such Lender's Commitment
Percentage of the Revolving Committed Amount and in substantially the form
of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender agrees
to issue, and each Lender severally agrees to participate in the issuance
by the Issuing Lender of, standby and trade Letters of Credit in Dollars
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from time to time from the Effective Date until the date thirty (30) days
prior to the Maturity Date as the Borrower may request, in a form
acceptable to the Issuing Lender; provided, however, that (i) the LOC
Obligations outstanding shall not at any time exceed FIVE MILLION DOLLARS
($5,000,000) (the "LOC Committed Amount") and (ii) the sum of the
aggregate outstanding principal amount of Revolving Loans plus LOC
Obligations plus Swingline Loans shall not at any time exceed the
Revolving Committed Amount. No Letter of Credit shall (x) have an original
expiry date more than one year from the date of issuance or (y) as
originally issued or as extended, have an expiry date extending beyond the
date five (5) days prior to the Maturity Date. Each Letter of Credit shall
comply with the related LOC Documents. The issuance and expiry dates of
each Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted by the Borrower to the Issuing Lender at least
three (3) Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon request,
disseminate to each of the Lenders a detailed report specifying the
Letters of Credit which are then issued and outstanding and any activity
with respect thereto which may have occurred since the date of the prior
report, and including therein, among other things, the beneficiary, the
face amount and the expiry date, as well as any payment or expirations
which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a Participation
Interest from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder and any collateral relating thereto, in
each case in an amount equal to its pro rata share of the obligations
under such Letter of Credit (based on the respective Commitment
Percentages of the Lenders) and shall absolutely, unconditionally and
irrevocably assume and be obligated to pay to the Issuing Lender and
discharge when due, its pro rata share of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each
Lender's Participation Interest in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or
under any such Letter of Credit, each such Lender shall pay to the Issuing
Lender its pro rata share of such unreimbursed drawing in same day funds
on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) below. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower
intends to otherwise reimburse the Issuing Lender for such drawing, the
Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan in the amount of the drawing as provided in subsection (e)
below on the related Letter of Credit, the proceeds of which will be used
to satisfy the related reimbursement obligations. The Borrower promises to
reimburse the
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Issuing Lender on the day of drawing under any Letter of Credit (either
with the proceeds of a Revolving Loan obtained hereunder or otherwise) in
same day funds. If the Borrower shall fail to reimburse the Issuing Lender
as provided hereinabove, the unreimbursed amount of such drawing shall
bear interest at a per annum rate equal to the Adjusted Base Rate plus 2%.
The Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
setoff, counterclaim or defense to payment the Borrower may claim or have
against the Issuing Lender (other than that the payment of such drawing by
the Issuing Lender constituted gross negligence or willful misconduct on
the part of the Issuing Lender), the Agent, the Lenders, the beneficiary
of the Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrower or any other
Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Lender
will promptly notify the other Lenders of the amount of any unreimbursed
drawing and each Lender shall promptly pay to the Agent for the account of
the Issuing Lender in Dollars and in immediately available funds, the
amount of such Lender's pro rata share of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender
from the Issuing Lender if such notice is received at or before 2:00 P.M.
(Charlotte, North Carolina time), and otherwise such payment shall be made
at or before 12:00 Noon (Charlotte, North Carolina time) on the Business
Day next succeeding the day such notice is received. If such Lender does
not pay such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the date of
such drawing until such Lender pays such amount to the Issuing Lender in
full at a rate per annum equal to, if paid within two (2) Business Days of
the date that such Lender is required to make payments of such amount
pursuant to the preceding sentence, the Federal Funds Rate and thereafter
at a rate equal to the Base Rate. Each Lender's obligation to make such
payment to the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations of the Borrower hereunder and shall be made without any
offset, abatement, withholding or reduction whatsoever. Simultaneously
with the making of each such payment by a Lender to the Issuing Lender,
such Lender shall, automatically and without any further action on the
part of the Issuing Lender or such Lender, acquire a Participation
Interest in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a claim against
the Borrower with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Lenders that a Revolving Loan has been requested or
deemed requested by the Borrower to be made in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan advance comprised
of Base Rate Loans (or Eurodollar Loans to the extent the Borrower has
complied with the procedures of Section 2.1(b)(i) with respect thereto)
shall
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be immediately made to the Borrower by all Lenders (notwithstanding any
termination of the Commitments pursuant to Section 9.2) pro rata based on
the respective Commitment Percentages of the Lenders (determined before
giving effect to any termination of the Commitments pursuant to Section
9.2) and the proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make its pro rata share of each such Revolving Loan
immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding
(i) the amount of such borrowing may not comply with the minimum amount
for advances of Revolving Loans otherwise required hereunder, (ii) whether
any conditions specified in Section 5.3 are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) failure for any such
request or deemed request for Revolving Loan to be made by the time
otherwise required hereunder, (v) whether the date of such borrowing is a
date on which Revolving Loans are otherwise permitted to be made hereunder
or (vi) any termination of the Commitments relating thereto immediately
prior to or contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any other Credit Party), then each such Lender hereby agrees
that it shall forthwith purchase (as of the date such borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the
Issuing Lender such Participation Interests in the outstanding LOC
Obligations as shall be necessary to cause each such Lender to share in
such LOC Obligations ratably (based upon the respective Commitment
Percentages of the Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 9.2)), provided that at
the time any purchase of Participation Interests pursuant to this sentence
is actually made, the purchasing Lender shall be required to pay to the
Issuing Lender, to the extent not paid to the Issuing Lender by the
Borrower in accordance with the terms of subsection (d) above, interest on
the principal amount of Participation Interests purchased for each day
from and including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such Participation
Interests, at the rate equal to, if paid within two (2) Business Days of
the date of the Revolving Loan advance, the Federal Funds Rate, and
thereafter at a rate equal to the Base Rate.
(f) Designation of Consolidated Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a), a Letter of Credit
issued hereunder may contain a statement to the effect that such Letter of
Credit is issued for the account of any Restricted Subsidiary of the
Borrower, provided that notwithstanding such statement, the Borrower shall
be the actual account party for all purposes of this Credit Agreement for
such Letter of Credit and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
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(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits (the "UCP") or the International Standby Practices
1998 (the "ISP98"), in either case as published as of the date of issue by
the International Chamber of Commerce, in which case the UCP or the ISP98,
as applicable, may be incorporated therein and deemed in all respects to
be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this Section
2.2, the Borrower hereby agrees to pay, and protect, indemnify and
save each Lender harmless from and against, any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that such Lender may incur or
be subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of such Lender
to honor a drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority (all such
acts or omissions, herein called "Government Acts").
(ii) As between the Borrower and the Lenders (including the
Issuing Lender), the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary
thereof. No Lender (including the Issuing Lender) shall be
responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party
in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason;
(C) for errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (D) for any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of such Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by any Lender (including the Issuing Lender), under or in
connection with any Letter of Credit or the related certificates, if
taken or omitted in good faith, shall not put such Lender under any
resulting liability to the Borrower or any other Credit Party. It is
the intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify each Lender
(including the Issuing Lender) against any
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and all risks involved in the issuance of the Letters of Credit, all
of which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. No Lender (including the
Issuing Lender) shall, in any way, be liable for any failure by such
Lender or anyone else to pay any drawing under any Letter of Credit
as a result of any Government Acts or any other cause beyond the
control of such Lender.
(iv) Nothing in this subsection (i) is intended to limit the
reimbursement obligations of the Borrower contained in subsection
(d) above. The obligations of the Borrower under this subsection (i)
shall survive the termination of this Credit Agreement. No act or
omission of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Lenders
(including the Issuing Lender) to enforce any right, power or
benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrower shall have no obligation to indemnify
any Lender (including the Issuing Lender) in respect of any
liability incurred by such Lender (A) arising solely out of the
gross negligence or willful misconduct of such Lender, or (B) caused
by such Lender's failure to pay under any Letter of Credit after
presentation to it of a request 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.
(j) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent
set forth in Section 5.3 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2 shall be
deemed to prejudice the right of any Lender to recover from the Issuing
Lender any amounts made available by such Lender to the Issuing Lender
pursuant to this Section 2.2 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the part of
the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any letter
of credit application), this Credit Agreement shall control.
2.3 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein,
the Swingline Lender, in its individual capacity, agrees to make certain
revolving credit loans requested by the Borrower in Dollars to the
Borrower (each a "Swingline Loan" and, collectively, the "Swingline
Loans") from time to time from the Effective Date until the Maturity Date
for
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the purposes hereinafter set forth; provided, however, (i) the aggregate
principal amount of Swingline Loans outstanding at any time shall not
exceed FIVE MILLION DOLLARS ($5,000,000) (the "Swingline Committed
Amount"), and (ii) the sum of the aggregate outstanding principal amount
of Revolving Loans plus LOC Obligations plus Swingline Loans shall not
exceed the Revolving Committed Amount. Swingline Loans hereunder shall be
made as Base Rate Loans or Quoted Rate Swingline Loans as the Borrower may
request in accordance with the provisions of this Section 2.3 and may be
repaid and reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower desires a
Swingline Loan advance hereunder it shall give written notice (or
telephonic notice promptly confirmed in writing) to the Swingline
Lender not later than 1:00 P.M. (Charlotte, North Carolina time) on
the Business Day of the requested Swingline Loan advance. Each such
notice shall be irrevocable and shall specify (A) that a Swingline
Loan advance is requested, (B) the date of the requested Swingline
Loan advance (which shall be a Business Day) and (C) the principal
amount of the Swingline Loan advance requested. Each Swingline Loan
shall be made as a Base Rate Loan or a Quoted Rate Swingline Loan
and shall have such maturity date as the Swingline Lender and the
Borrower shall agree upon receipt by the Swingline Lender of any
such notice from the Borrower. The Swingline Lender shall initiate
the transfer of funds representing the Swingline Loan advance to the
Borrower by 3:00 P.M. (Charlotte, North Carolina time) on the
Business Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall be in
a minimum principal amount of $100,000 and integral multiples of
$100,000 (or the remaining amount of the Swingline Committed Amount,
if less).
(iii) Repayment of Swingline Loans. The principal amount of
all Swingline Loans shall be due and payable on the earlier of (A)
the maturity date agreed to by the Swingline Lender and the Borrower
with respect to such Loan (which maturity date shall not be a date
more than seven (7) Business Days from the date of advance thereof)
or (B) the Maturity Date. The Swingline Lender may, at any time, in
its sole discretion, by written notice to the Borrower and the
Lenders, demand repayment of its Swingline Loans by way of a
Revolving Loan advance, in which case the Borrower shall be deemed
to have requested a Revolving Loan advance comprised solely of Base
Rate Loans in the amount of such Swingline Loans; provided, however,
that any such demand shall be deemed to have been given one Business
Day prior to the Maturity Date and on the date of the occurrence of
any Event of Default described in Section 9.1 and upon acceleration
of the indebtedness hereunder and the exercise of remedies in
accordance with the provisions of Section 9.2. Each Lender hereby
irrevocably agrees to make its pro rata share of each such Revolving
Loan in the amount, in the manner and on the date specified in the
preceding sentence notwithstanding (I) the amount of such borrowing
may not comply with the minimum amount for
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advances of Revolving Loans otherwise required hereunder, (II)
whether any conditions specified in Section 5.3 are then satisfied,
(III) whether a Default or an Event of Default then exists, (IV)
failure of any such request or deemed request for Revolving Loan to
be made by the time otherwise required hereunder, (V) whether the
date of such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder or (VI) any termination of
the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect
to the Borrower or any other Credit Party), then each Lender hereby
agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior
to such purchase) from the Swingline Lender such Participation
Interests in the outstanding Swingline Loans as shall be necessary
to cause each such Lender to share in such Swingline Loans ratably
based upon its Commitment Percentage of the Revolving Committed
Amount (determined before giving effect to any termination of the
Commitments pursuant to Section 3.4), provided that (A) all interest
payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective
Participation Interest is purchased and (B) at the time any purchase
of Participation Interests pursuant to this sentence is actually
made, the purchasing Lender shall be required to pay to the
Swingline Lender, to the extent not paid to the Swingline Lender by
the Borrower in accordance with the terms of subsection (c)(ii)
below, interest on the principal amount of Participation Interests
purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of
payment for such Participation Interests, at the rate equal to the
Federal Funds Rate.
(c) Interest on Swingline Loans.
(i) Rate of Interest . Subject to the provisions of Section
3.1, each Swingline Loan shall bear interest as follows:
(A) Base Rate Loans. If such Swingline Loan is a Base
Rate Loan, at a per annum rate equal to the Adjusted Base
Rate.
(B) Quoted Rate Swingline Loans. If such Swingline Loan
is a Quoted Rate Swingline Loan, at a per annum rate equal to
the Quoted Rate applicable thereto.
(ii) Payment of Interest. Interest on Swingline Loans shall be
payable in arrears on each applicable Interest Payment Date (or at
such other times as may be specified herein), unless accelerated
sooner pursuant to Section 9.2.
Notwithstanding any other provision to the contrary set forth in
this Credit Agreement, in the event that the principal amount of any
Quoted Rate Swingline
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Loan is not repaid on the last day of the Interest Period for such
Loan, then such Loan shall be automatically converted into a Base
Rate Loan at the end of such Interest Period.
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in an
original principal amount equal to the Swingline Committed Amount
substantially in the form of Exhibit 2.3(d).
2.4 Term Loan.
(a) Term Commitment. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein each
Lender severally agrees to make available to the Borrower on the Effective
Date such Lender's Commitment Percentage of a term loan in Dollars (the
"Term Loan") in the aggregate principal amount of SEVENTY-FIVE MILLION
DOLLARS ($75,000,000) (the "Term Loan Committed Amount"). The Term Loan
may consist of Base Rate Loans or Eurodollar Loans, or a combination
thereof, as the Borrower may request; provided, however, that no more than
10 Eurodollar Loans shall be outstanding hereunder at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar Loans, even if
they begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new Eurodollar Loan
with a single Interest Period). Amounts repaid on the Term Loan may not be
reborrowed.
(b) Borrowing Procedures. The Borrower shall submit an appropriate
Notice of Borrowing to the Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the Effective Date, with respect to the portion of
the Term Loan initially consisting of a Base Rate Loan, or on the third
Business Day prior to the Effective Date, with respect to the portion of
the Term Loan initially consisting of one or more Eurodollar Loans, which
Notice of Borrowing shall be irrevocable and shall specify (i) that the
funding of a Term Loan is requested and (ii) whether the funding of the
Term Loan shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested, the Interest
Period(s) therefor. Each Lender shall make its Commitment Percentage of
the Term Loan available to the Agent for the account of the Borrower at
the office of the Agent specified in Schedule 2.1(a), or at such other
office as the Agent may designate in writing, by 1:00 P.M. (Charlotte,
North Carolina time) on the Effective Date in Dollars and in funds
immediately available to the Agent.
(c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
part of the Term Loan shall be in an aggregate principal amount that is
not less than $2,500,000 and integral multiples of $100,000 (or the then
remaining principal balance of the Term Loan, if less).
(d) Repayment of Term Loan. Unless accelerated sooner pursuant to
Section 9.2, the principal amount of the Term Loan shall be repaid in
twelve (12) consecutive
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quarterly installments, the first eleven (11) of which shall be in the
amount of $6,250,000 and shall be payable on each March 31, June 30,
September 30 and December 31, commencing with the installment due and
payable on June 30, 2002, and the twelfth (12th) and final of which shall
be in an amount equal to the then remaining balance of the Term Loan and
shall be payable on the Maturity Date.
(e) Interest. Subject to the provisions of Section 3.1, the Term
Loan shall bear interest at a per annum rate equal to:
(i) Base Rate Loans. During such periods as the Term Loan
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as the Term Loan
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to
the Adjusted Eurodollar Rate.
Interest on the Term Loan shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(f) Term Notes. The portion of the Term Loan made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower to
such Lender in an original principal amount equal to such Lender's
Commitment Percentage of the Term Loan and substantially in the form of
Exhibit 2.4(f).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of default in the payment
of any amount hereunder, under the Notes or under any of the other Credit
Documents, such overdue amount shall bear interest, payable on demand, at a per
annum rate 2% greater than the rate which would otherwise be applicable (or if
no rate is applicable, whether in respect of interest, fees or other amounts,
then the Adjusted Base Rate plus 2%).
3.2 Extension and Conversion.
The Borrower shall have the option, on any Business Day, to extend
existing Loans into a subsequent permissible Interest Period or to convert Loans
into Loans of another interest rate type; provided, however, that (i) except as
provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) if the Required Lenders so notify
the Agent and the Borrower, Eurodollar Loans may not be extended, and Base Rate
Loans may not be converted into Eurodollar Loans, if the conditions precedent
set forth in Section 5.3 are
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satisfied on the date of extension or conversion, (iii) Loans extended as, or
converted into, Eurodollar Loans shall be subject to the terms of the definition
of "Interest Period" set forth in Section 1.1 and shall be in such minimum
amounts as provided in, with respect to Revolving Loans, Section 2.1(b)(ii) or,
with respect to the Term Loan, Section 2.4(c), (iv) no more than 10 Eurodollar
Loans shall be outstanding hereunder at any time (it being understood that, for
purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period), (v) any request
for extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month and (vi) Swingline Loans may not be extended or converted pursuant to this
Section 3.2. Each such extension or conversion shall be effected by the Borrower
by giving a Notice of Extension/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in Schedule 2.1(a),
or at such other office as the Agent may designate in writing, prior to 11:00
A.M. (Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall be irrevocable. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this Section, then such
Eurodollar Loan shall be automatically converted into a Base Rate Loan at the
end of the Interest Period applicable thereto. The Agent shall give each Lender
notice as promptly as practicable of any such proposed extension or conversion
affecting any Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however,
that each partial prepayment of Loans (other than Swingline Loans) shall
be in a minimum principal amount of $2,500,000 and integral multiples of
$100,000 in excess thereof (or the then remaining principal balance of the
Revolving Loans or the Term Loan, as applicable, if less). Subject to the
foregoing terms, amounts prepaid under this Section 3.3(a) shall be
applied as the Borrower may elect; provided that if the Borrower fails to
specify a voluntary prepayment then such prepayment shall be applied first
to Revolving Loans and then to the Term Loan (ratably to the remaining
Principal Amortization Payments thereof), in each case first to Base Rate
Loans and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(a) shall be subject to
Section 3.12, but otherwise without premium or penalty, and shall be
accompanied by interest on the principal amount prepaid through the date
of prepayment.
(b) Mandatory Prepayments.
(i) (A) Revolving Committed Amount. If at any time, the sum of
the aggregate outstanding principal amount of Revolving Loans
plus LOC
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Obligations plus Swingline Loans shall exceed the Revolving
Committed Amount, the Borrower immediately shall prepay the
Revolving Loans and (after all Revolving Loans have been
repaid) cash collateralize the LOC Obligations, in an amount
sufficient to eliminate such excess.
(B) LOC Committed Amount. If at any time, the sum of the
aggregate principal amount of LOC Obligations shall exceed the
LOC Committed Amount, the Borrower immediately shall cash
collateralize the LOC Obligations in an amount sufficient to
eliminate such excess.
(ii) Excess Cash Flow. Within 90 days after the end of each
fiscal year commencing after the third anniversary of the Effective
Date the Borrower shall prepay the Loans in an amount equal to (x)
50% of the Excess Cash Flow earned during such prior fiscal year
(such prepayment to be applied as set forth in clause (vi) below);
provided, however, that if either (1) the Subordinated Notes shall
have been issued or (2) the Senior Leverage Ratio as of the end of
the immediately preceding fiscal year is less than 2.5 to 1.0, no
prepayments shall be required under this clause (ii).
(iii) Asset Dispositions, etc.
(A) Voluntary Dispositions. Immediately upon the
occurrence of any Asset Disposition Prepayment Event, the
Borrower shall prepay the Loans in an aggregate amount equal
to 100% of the Net Cash Proceeds of the related Asset
Disposition not applied (or caused to be applied) by the
Credit Parties during the related Application Period to make
Eligible Reinvestments as contemplated by the terms of Section
8.5(f) (such prepayment to be applied as set forth in clause
(vi) below).
(B) Casualty and Condemnation Events. Immediately upon
the occurrence of any event requiring application of any
insurance proceeds to the prepayment of Loans (and cash
collateralization of LOC Obligations) pursuant to Section
7.6(b), the Borrower shall prepay the Loans in the amount
required by such Section 7.6(b) (such prepayment to be applied
as set forth in clause (vi) below).
(iv) Debt Issuances.
(A) Subordinated Notes. Immediately upon receipt by the
Borrower of proceeds from the issuance of the Subordinated
Notes, the Borrower shall apply 100% of the Net Cash Proceeds
thereof (1) subject to the terms of Section 8.7, to pay a
dividend to the Parent in an amount sufficient to prepay the
Parent Notes and (2) after the Parent Notes have been repaid,
to the prepayment of the Loans (such prepayment to be applied
as set forth in clause (vi) below).
(B) Other Debt Issuances. Immediately upon receipt by any
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Consolidated Party of proceeds from any Debt Issuance other
than in respect of the Subordinated Notes, the Borrower shall
prepay the Loans in an aggregate amount equal to 100% of the
Net Cash Proceeds of such Debt Issuance (such prepayment to be
applied as set forth in clause (vi) below); provided, however,
that if the Subordinated Notes shall have been issued, no
prepayments shall be required under this clause (iv)(B) in
connection with any Debt Issuance occurring prior to the third
anniversary of the Effective Date.
(v) Issuances of Equity. Immediately upon receipt by a
Consolidated Party of proceeds from any Equity Issuance other than
an Excluded Equity Issuance, the Borrower shall prepay the Loans in
an aggregate amount equal to 100% of the Net Cash Proceeds of such
Equity Issuance (such prepayment to be applied as set forth in
clause (vi) below); provided, however, that if the Subordinated
Notes shall have been issued, no prepayments shall be required under
this clause (v) in connection with any Equity Issuance occurring
prior to the third anniversary of the Effective Date.
(vi) Application of Mandatory Prepayments. All amounts
required to be paid pursuant to this Section 3.3(b) shall be applied
as follows: (A) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i)(A), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in respect of
LOC Obligations, (B) with respect to all amounts prepaid pursuant to
Section 3.3(b)(i)(B), to a cash collateral account in respect of LOC
Obligations and (C) with respect to all amounts prepaid pursuant to
Section 3.3(b)(ii), (iii), (iv) or (v), to the Term Loan (ratably to
the remaining Principal Amortization Payments thereof). Within the
parameters of the applications set forth above, prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Loans in
direct order of Interest Period maturities. All prepayments under
this Section 3.3(b) shall be subject to Section 3.12, but otherwise
without premium or penalty, and shall be accompanied by interest on
the principal amount prepaid through the date of prepayment.
(c) Escrow Account. If the Borrower is required to make a mandatory
prepayment under Section 3.3(b) that would result in a payment by the
Borrower under Section 3.12, the Borrower may, at its option, elect to
deposit funds constituting such prepayment with the Agent to be held by
the Agent in a cash collateral account and applied (including any income
or gains earned on amounts in the Escrow Account), upon the earliest to
occur of (A) the request of the Borrower, (B) the last day of any Interest
Period, (C) the occurrence of an Event of Default or (D) the Maturity
Date, to the Credit Party Obligations in accordance with the terms of
Section 3.3(b)(vi).
3.4 Termination and Reduction of Revolving Committed Amount.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole or
in part (in minimum aggregate amounts of $2,500,000 or in integral
multiples of $100,000 in excess thereof
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(or, if less, the full remaining amount of the then applicable Revolving
Committed Amount)) upon five Business Days' prior written notice to the
Agent; provided, however, no such termination or reduction shall be made
which would cause the sum of the aggregate outstanding principal amount of
Revolving Loans plus LOC Obligations plus Swingline Loans to exceed the
Revolving Committed Amount, unless, concurrently with such termination or
reduction, the Revolving Loans are repaid to the extent necessary to
eliminate such excess. The Agent shall promptly notify each affected
Lender of receipt by the Agent of any notice from the Borrower pursuant to
this Section 3.4(a).
(b) Term Loan Commitments. The Term Loan Commitment of each Lender
shall automatically terminate at such time on the Effective Date as such
Lender shall have made available to the Borrower its Commitment Percentage
of the Term Loan.
(c) Revolving Loan Commitments. The Revolving Commitments, the LOC
Commitment and the Swingline Commitment shall automatically terminate on
the Maturity Date.
(d) General. The Borrower shall pay to the Agent for the account of
the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Revolving Committed Amount, the
Unused Fee accrued through the date of such termination or reduction on
the amount of the Revolving Committed Amount so terminated or reduced.
3.5 Fees.
(a) Unused Fee. In consideration of the Revolving Commitments of the
Lenders hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "Unused Fee") on the Unused Revolving
Committed Amount computed at a per annum rate for each day during the
applicable Unused Fee Calculation Period (hereinafter defined) at a rate
equal to the Applicable Percentage in effect from time to time. The Unused
Fee shall commence to accrue on the Effective Date and shall be due and
payable in arrears on the last Business Day of each March, June, September
and December (and on any date that the Revolving Committed Amount is
reduced and on the Maturity Date) for the immediately preceding quarter
(or portion thereof) (each such quarter or portion thereof for which the
Unused Fee is payable hereunder being herein referred to as an "Unused Fee
Calculation Period"), beginning with the first of such dates to occur
after the Effective Date.
(b) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee. In consideration of
the issuance of standby Letters of Credit hereunder, the Borrower
promises to pay to the Agent for the account of each Lender a fee
(the "Standby Letter of Credit Fee") on such Lender's Commitment
Percentage of the average daily maximum amount available to be drawn
under each such standby Letter of Credit computed at a per annum
rate for each day from the date of issuance to the date of
expiration equal to the Applicable Percentage. The Standby Letter of
Credit Fee will be
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payable quarterly in arrears on the last Business Day of each March,
June, September and December for the immediately preceding quarter
(or a portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In consideration of
the issuance of trade Letters of Credit hereunder, the Borrower
promises to pay to the Agent for the account of each Lender a fee
(the "Trade Letter of Credit Fee") on such Lender's Commitment
Percentage of the average daily maximum amount available to be drawn
under each such trade Letter of Credit computed at a per annum rate
for each day from the date of issuance to the date of expiration
equal to the Applicable Percentage. The Trade Letter of Credit Fee
will be payable quarterly in arrears on the last Business Day of
each March, June, September and December for the immediately
preceding quarter (or a portion thereof).
(iii) Issuing Lender Fees. In addition to the Standby Letter
of Credit Fee payable pursuant to clause (i) above and the Trade
Letter of Credit Fee payable pursuant to clause (ii) above, the
Borrower promises to pay to the Agent for the account of the Issuing
Lender without sharing by the other Lenders (i) a letter of credit
fronting fee of 1/8% on the average daily maximum amount available
to be drawn under each Letter of Credit computed at a per annum rate
for each day from the date of issuance to the date of expiration and
(ii) the customary charges from time to time of the Issuing Lender
with respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of
Credit.
(c) Administrative Fees. The Borrower promises to pay to the Agent,
for its own account and for the account of NationsBanc Montgomery
Securities LLC, as applicable, the fees referred to in the Agent's Fee
Letter.
3.6 Capital Adequacy.
(a) If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding
capital adequacy, or compliance by such Lender with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's
capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but
for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then, upon notice from
such Lender through the Agent to the Borrower setting forth in reasonable
detail the change and the calculation of such reduced rate of return to
the Borrower, the Borrower shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under
this Section shall, absent
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demonstrable error, be conclusive and binding on the parties hereto.
(b) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.6 for any additional amounts incurred more than
180 days prior to the date that such Lender notifies the Borrower of the
change of law giving rise to such additional amounts and of such Lender's
intention to claim compensation therefor; provided that, if the change of
law giving rise to such additional amounts is retroactive, then such
180-day period referred to above shall be extended to include the period
of retroactive effect thereof.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent in writing that the Eurodollar Rate will
not adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or Convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement. The Agent or the
Required Lenders, as the case may be, will promptly withdraw any determination
pursuant to this Section 3.7 as soon as circumstances allow.
3.8 Illegality.
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
make, maintain or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 Requirements of Law.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any Governmental Authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or
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compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to
such Lender (or its Applicable Lending Office) under this Credit
Agreement or its Notes in respect of any Eurodollar Loans (other
than Taxes defined in Section 3.11(a) and taxes imposed on the
overall net income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Eurodollar Reserve Requirement utilized in the determination of the
Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition affecting
this Credit Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase, by an amount deemed
by such Lender (or its Applicable Lending Office) to be material, the cost
to such Lender (or its Applicable Lending Office) of making, Converting
into, Continuing, or maintaining any Eurodollar Loans or to reduce any sum
received or receivable by such Lender (or its Applicable Lending Office)
under this Credit Agreement or its Notes with respect to any Eurodollar
Loans, then the Borrower shall pay to such Lender on demand such amount or
amounts as will compensate such Lender for such increased cost or
reduction. If any Lender requests compensation by the Borrower under this
Section 3.9, the Borrower may, by notice to such Lender (with a copy to
the Agent), suspend the obligation of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in
effect (in which case the provisions of Section 3.10 shall be applicable);
provided that such suspension shall not affect the right of such Lender to
receive the compensation so requested. Each Lender shall promptly notify
the Borrower and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section 3.9 and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise materially disadvantageous to it. Any Lender
claiming compensation under this Section 3.9 shall furnish to the Borrower
and the Agent a statement setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to it hereunder
which shall be conclusive in the absence of demonstrable error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
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(b) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.9 for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the change of law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation therefor;
provided that, if the change of law giving rise to such increased costs or
reductions is retroactive, then such 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.
3.10 Treatment of Affected Loans.
If the obligation of any Lender to make any Eurodollar Loan or to
Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.7, 3.8 or 3.9 hereof, such Lender's Eurodollar
Loans shall be automatically Converted into Base Rate Loans on the last day(s)
of the then current Interest Period(s) for such Eurodollar Loans (or, in the
case of a Conversion required by Section 3.8 hereof, on such earlier date as
such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.7, 3.8 or 3.9 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.7, 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by any Credit Party to or for the account
of any Lender or the Agent hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on it as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the
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Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection
arising solely from the Agent or such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Credit Agreement or any other Credit Document) (all such non-excluded
taxes, duties, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Taxes"). If any Credit Party
shall be required by law to deduct any Taxes from or in respect of any sum
payable under this Credit Agreement or any other Credit Document to any
Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.11) such Lender
or the Agent receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Credit Party shall make such
deductions, (iii) such Credit Party shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law, and (iv) such Credit Party shall furnish to the Agent, at
its address referred to in Section 11.1, the original or a certified copy
of a receipt evidencing payment thereof. Notwithstanding the foregoing, no
additional sums shall be payable pursuant to Section 3.11(a)(i), 3.11(b)
or 3.11(c) with respect to Taxes (a) that are attributable to such
Lender's failure to comply with the requirements of Section 3.11(d), (b)
that are United States withholding taxes imposed on amounts payable to
such Lender at the time the Lender becomes a party to this Agreement or
(c) unless imposed as a result of a change in treaty, law or regulation.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 3.11) paid by such Lender or the Agent
(as the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) Each Lender that is not a United States person under Section
7701(a)(30) of the Code, on or prior to the date of its execution and
delivery of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide the Borrower
and the Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to
zero the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this Credit Agreement is
effectively connected with the conduct of a trade or business in the
United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and/or
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(iii) any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled to an
exemption from tax on payments pursuant to this Credit Agreement or any of
the other Credit Documents. In addition, each Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Lender. Each Lender shall promptly notify the Borrower
at any time it determines that it is no longer in a position to provide
any previously delivered form to the Borrower (or any other form adopted
by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this Section 3.11(d), a Lender shall not be required to
deliver any form pursuant to this Section 3.11(d) that such Lender is not
legally able to deliver.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to
Section 3.11(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under Section 3.11(a) or 3.11(b) with respect to Taxes
imposed by the United States; provided, however, that should a Lender,
which is otherwise exempt from withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrower
shall take such steps as such Lender shall reasonably request to assist
such Lender to recover such Taxes.
(f) If any Credit Party is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 3.11, then such
Lender will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
reasonable judgment of such Lender, is not otherwise materially
disadvantageous to such Lender.
(g) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 3.11 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
(i) If the Agent or any Lender receives a refund with respect to
Taxes paid by the Borrower, which in the good faith judgment of such
Lender is allocable to such payment, the Agent or Lender, respectively
shall promptly pay such refund, together with any other amounts paid by
the Borrower in connection with such refunded Taxes, to the Borrower, net
of all out-of-pocket expenses of such Lender incurred in obtaining such
refund, provided, however, that the Borrower agrees to promptly return
such refund to the Agent or the applicable Lender, as the case may be, if
it receives notice from the Agent or applicable Lender that such Agent or
Lender is required to repay such refund. Each of the Agent and each Lender
agrees that it will contest such Taxes or liabilities if the Agent or such
Lender determines, in its reasonable judgment, that it would not be
materially disadvantaged or prejudiced as a result of such contest.
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3.12 Compensation.
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense (excluding loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan or
Quoted Rate Swingline Loan for any reason (including, without limitation,
(i) in connection with any assignment by NationsBank pursuant to Section
11.3(b) as part of the primary syndication of the Loans during the 90-day
period immediately following the Closing Date (it being understood and
agreed by the Agent, however, that the Agent shall use commercially
reasonable efforts to minimize the incurrence of costs by the Borrower
pursuant to this clause (i)) and (ii) the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Section 5
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
or Quoted Rate Swingline Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of borrowing,
prepayment, Continuation, or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, Converted or Continued,
for the period from the date of such prepayment or of such failure to borrow,
Convert or Continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, Convert or Continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. Any Lender
claiming compensation under this Section 3.12 shall furnish to the Borrower and
the Agent a statement setting forth in reasonable detail the calculation of the
amounts to be paid to it hereunder which shall be conclusive in the absence of
demonstrable error. The covenants of the Borrower set forth in this Section 3.12
shall survive the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or (subject to the terms of
Section 3.3) prepayment of principal of any Loan or reimbursement
obligations arising from drawings under Letters of Credit, each payment of
interest on the Loans or reimbursement obligations arising from drawings
under Letters of Credit, each payment of Unused Fees, each payment of the
Standby Letter of Credit Fee, each payment of the Trade Letter of
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Credit Fee, each reduction of the Revolving Committed Amount and each
conversion or extension of any Loan, shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts of their
outstanding Loans of the applicable type and Participation Interests in
Loans of the applicable type and Letters of Credit.
(b) Advances. No Lender shall be responsible for the failure or delay by
any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of
its obligations hereunder. Unless the Agent shall have been notified by
any Lender prior to the date of any requested borrowing that such Lender
does not intend to make available to the Agent its ratable share of such
borrowing to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such borrowing,
and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate. A certificate of the Agent submitted to
any Lender with respect to any amounts owing under this subsection (b)
shall be conclusive in the absence of manifest error.
3.14 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
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The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
Participation Interest as fully as if such Lender were a holder of such Loan,
LOC Obligations or other obligation in the amount of such Participation
Interest. Except as otherwise expressly provided in this Credit Agreement, if
any Lender or the Agent shall fail to remit to the Agent or any other Lender an
amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.14 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.14 to share in the benefits of any recovery on such secured claim.
3.15 Payments, Computations, Etc.
(a) Generally. Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in Dollars in immediately
available funds, without setoff, deduction, counterclaim or withholding of
any kind, at the Agent's office specified in Schedule 2.1(a) not later
than 2:00 P.M. (Charlotte, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have been received on
the next succeeding Business Day. The Borrower shall, at the time it makes
any payment under this Credit Agreement, specify to the Agent the Loans,
LOC Obligations, Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall distribute such payment to the Lenders in
such manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.13(a)). The Agent will distribute such payments to such Lenders,
if any such payment is received prior to 2:00 P.M. (Charlotte, North
Carolina time) on a Business Day in like funds as received prior to the
end of such Business Day and otherwise the Agent will distribute such
payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the
period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans (unless the Base Rate is
determined by reference to the Federal Funds Rate) which shall be
calculated based on a year of 365 or 366 days, as appropriate. Interest
shall accrue from and include the date of borrowing, but exclude the date
of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during
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the continuance of an Event of Default, all amounts collected or received
by the Agent or any Lender on account of the Credit Party Obligations or
any other amounts outstanding under any of the Credit Documents or in
respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of the
Agent in connection with enforcing its rights under the Credit Documents
or otherwise with respect to the Credit Party Obligations;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations (including the payment or cash collateralization
of the outstanding LOC Obligations);
SIXTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party Obligations
owing to such Lender;
SEVENTH, to all other Credit Party Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH"
above; and
EIGHTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category; (ii) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then
outstanding Loans and LOC Obligations held by such Lender bears to the
aggregate then outstanding Loans and LOC Obligations) of amounts available
to be applied pursuant to clauses "FOURTH", "FIFTH", "SIXTH" and "SEVENTH"
above; and (iii) to the extent that any amounts available for distribution
pursuant to clause "SIXTH" above are attributable to the issued but
undrawn amount of outstanding Letters of Credit, such amounts shall be
held by the Agent in a cash collateral account and applied (A) first, to
reimburse the Issuing Lender from time to time for any drawings under such
Letters of
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Credit and (B) then, following the expiration of all Letters of Credit, to
all other obligations of the types described in clauses "SIXTH" and
"SEVENTH" above in the manner provided in this Section 3.15(b).
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such Lender from
time to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder from or for the account of any Credit Party and each Lender's
share thereof. The Agent will make reasonable efforts to maintain the
accuracy of the subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the
Credit Parties therein recorded; provided, however, that the failure of
any Lender or the Agent to maintain any such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any
manner affect the obligation of the Credit Parties to repay the Credit
Party Obligations owing to such Lender.
3.17 Replacement of Affected Lenders.
If any Lender having a Revolving Commitment becomes a Defaulting Lender or
otherwise defaults in its Revolving Commitment or if any Lender is owed
increased costs under Section 3.8, Section 3.9, or Section 3.6, or the Borrower
is required to make any payments under Section 3.11 to any Lender in excess of
those to the other Lenders, the Borrower shall have the right, if no Event of
Default then exists, to replace such Lender (the "Replaced Lender") with one or
more other Eligible Assignee or Eligible Assignees, none of whom shall
constitute a Defaulting Lender at the time of such replacement (collectively,
the "Replacement Lender") reasonably acceptable to the Agent, provided that (i)
at the time of any replacement pursuant to this Section 3.17, the Replaced
Lender and Replacement Lender shall enter into one or more assignment
agreements, in form and substance reasonably satisfactory to such parties and
the Agent, pursuant to which the Replacement Lender shall acquire all or a
portion, as the case may be, of the Commitments and outstanding Loans of, and
participation in Letters of Credit by, the Replaced Lender and (ii) all
obligations of the Borrower owing to the Replaced Lender relating to the Loans
so replaced (including, without limitation, such increased costs and excluding
those
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specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being paid) shall be paid in full to
such Replaced Lender concurrently with such replacement. Upon the execution of
the respective assignment documentation, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate Note or Notes executed by
the Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder with respect to
such replaced Loans, except with respect to indemnification provisions under
this Agreement, which shall survive as to such Replaced Lender. Notwithstanding
anything to the contrary contained above, (1) the Lender that acts as the
Issuing Lender may not be replaced hereunder at any time that it has Letters of
Credit outstanding hereunder unless arrangements satisfactory to the Issuing
Lender (including the furnishing of a back-up standby letter of credit in form
and substance, and issued by an issuer satisfactory to such Issuing Lender or
the depositing of cash collateral into a cash collateral account maintained with
the Agent in amounts and pursuant to arrangements satisfactory to such Issuing
Lender) have been made with respect to such outstanding Letters of Credit and
(2) the Lender that acts as the Agent may not be replaced hereunder except in
accordance with the terms of Section 10.7. The Replaced Lender shall be required
to deliver for cancellation its applicable Notes to be canceled on the date of
replacement, or if any such Note is lost or unavailable, such other assurances
or indemnification therefor as the Borrower may reasonably request.
SECTION 4
GUARANTY
4.1 The Guaranty.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter provided, as primary obligor and not as surety, the prompt
payment of the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
The Guarantors hereby further agree that if any of the Credit Party Obligations
are not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), the Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Credit Party Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor under this Credit Agreement and the other Credit Documents shall be
limited to an aggregate amount equal to the largest amount that would not render
such obligations subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.
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4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor for amounts paid under this Section 4 until
such time as the Lenders (and any Affiliates of Lenders entering into Hedging
Agreements) have been paid in full in respect of all Credit Party Obligations,
and all Commitments under this Credit Agreement have been terminated. Without
limiting the generality of the foregoing, it is agreed that, to the fullest
extent permitted by law, the occurrence of any one or more of the following
shall not alter or impair the liability of any Guarantor hereunder which shall
remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement between any Consolidated Party and
any Lender, or any Affiliate of a Lender, or any other agreement or
instrument referred to in the Credit Documents or such Hedging Agreements
shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall be
accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement between any Consolidated Party and
any Lender, or any Affiliate of a Lender, or any other agreement or
instrument referred to in the Credit Documents or such Hedging Agreements
shall be waived or any other guarantee of any of the Credit Party
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
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With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement between any Consolidated Party and any Lender, or any
Affiliate of a Lender, or any other agreement or instrument referred to in the
Credit Documents or such Hedging Agreements, or against any other Person under
any other guarantee of, or security for, any of the Credit Party Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss. 26-7
through 26-9, inclusive, to the extent applicable. Each Guarantor further agrees
that such Guarantor shall have no right of recourse to security for the Credit
Party Obligations, except through the exercise of rights of subrogation pursuant
to Section 4.2 and through the exercise of rights of contribution pursuant to
Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors acknowledge and agree that their obligations hereunder are
secured in accordance with the terms of the Security Agreements and the other
Collateral Documents and that the Lenders may exercise their remedies thereunder
in accordance with the terms thereof.
4.6 Rights of Contribution.
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The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the prior payment in full to the Agent and
the Lenders of the Guaranteed Obligations, and none of the Guarantors shall
exercise any right or remedy under this Section 4.6 against any other Guarantor
until payment and satisfaction in full of all of such Guaranteed Obligations.
For purposes of this Section 4.6, (a) "Guaranteed Obligations" shall mean any
obligations arising under the other provisions of this Section 4; (b) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of its Pro Rata
Share of any Guaranteed Obligations; (c) "Pro Rata Share" shall mean, for any
Guarantor in respect of any payment of Guaranteed Obligations, the ratio
(expressed as a percentage) as of the date of such payment of Guaranteed
Obligations of (i) the amount by which the aggregate present fair salable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of all of the Credit Parties exceeds the
amount of all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Credit Parties hereunder) of the Credit Parties; provided, however, that, for
purposes of calculating the Pro Rata Shares of the Guarantors in respect of any
payment of Guaranteed Obligations, any Guarantor that became a Guarantor
subsequent to the date of any such payment shall be deemed to have been a
Guarantor on the date of such payment and the financial information for such
Guarantor as of the date such Guarantor became a Guarantor shall be utilized for
such Guarantor in connection with such payment; and (d) "Contribution Share"
shall mean, for any Guarantor in respect of any Excess Payment made by any other
Guarantor, the ratio (expressed as a percentage) as of the date of such Excess
Payment of (i) the amount by which the aggregate present fair salable value of
all of its assets and properties exceeds the amount of all debts and liabilities
of such Guarantor (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of the Credit Parties other than the maker of
such Excess Payment exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of the Credit Parties) of the Credit Parties other
than the maker of such Excess Payment; provided, however, that, for purposes of
calculating the Contribution Shares of the Guarantors in respect of any Excess
Payment, any Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on the date of such
Excess Payment and the financial information for such Guarantor as of the date
such Guarantor became a Guarantor shall be utilized for such Guarantor in
connection with such Excess Payment. This Section 4.6 shall not be deemed to
affect any right of subrogation, indemnity, reimbursement or contribution that
any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights
of contribution against any Guarantor shall terminate from and after such time,
if ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.5.
4.7 Guarantee of Payment; Continuing Guarantee.
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The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
This Credit Agreement shall become effective, subject to the terms of
Section 11.3, upon satisfaction of each of the following conditions (in form and
substance satisfactory to the Lenders) on or before the Closing Date:
(a) Executed Credit Agreement. Receipt by the Agent of a duly
executed copy of this Credit Agreement.
(b) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by the
Agent.
5.2 Conditions to Initial Extensions of Credit.
The obligation of each Lender to make the initial Loans or the Issuing
Lender to issue the initial Letter of Credit, whichever shall occur first, are
subject to satisfaction of each of the following conditions (in addition to
satisfaction of each of the conditions set forth in Section 5.1 as of the
Closing Date):
(a) Executed Credit Documents. Receipt by the Agent of duly executed
copies of: (i) the Borrower Assignment and Assumption Agreement, (ii) the
Notes, (iii) a Joinder Agreement for each of the Subsidiary Guarantors
identified on Schedule 5.2(a), (iii) the Collateral Documents and (iv) the
Agent's Fee Letter.
(b) Corporate Documents. Receipt by the Agent of the following:
(i) Charter Documents. Copies of the articles or certificates
of incorporation or other charter documents of each of the
Mergersub, the Parent, Sheridan and the Subsidiary Guarantors
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each of the Mergersub,
the Parent, Sheridan and the Subsidiary Guarantors certified by a
secretary or assistant secretary to be true and
correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of each of the Mergersub, the Parent, Sheridan and the
Subsidiary Guarantors
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approving and adopting the Credit Documents to which it is a party
and the transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant
secretary of such Person to be true and correct and in force and
effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each of the
Mergersub, the Parent, Sheridan and the Subsidiary Guarantors
certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing could have a Material Adverse Effect and (B) to the
extent available, a certificate indicating payment of all corporate
or comparable franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each of the
Mergersub, the Parent, Sheridan and the Subsidiary Guarantors
certified by a secretary or assistant secretary to be true and
correct as of the Effective Date.
(c) Opinions of Counsel. The Agent shall have received, in each case
dated as of the Effective Date:
(i) a legal opinion of Simpson Thacher & Bartlett, in form and
substance reasonably satisfactory to the Agent; and
(ii) a legal opinion of special local regulatory counsel for
Florida, New York and Texas, in each case in form and substance
reasonably satisfactory to the Agent.
(d) Personal Property Collateral. The Agent shall have received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Agent's security
interest in the Collateral, copies of the financing statements on
file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(ii) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Agent's sole discretion, to
perfect the Agent's security interest in the Collateral;
(iii) all certificates evidencing any certificated Capital Stock
pledged to the Agent pursuant to the Pledge Agreement, together with
duly executed in blank, undated stock powers attached thereto;
(iv) such patent/trademark/copyright filings as requested by the
Agent
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in order to perfect the Agent's security interest in the Collateral;
(v) all instruments and chattel paper in the possession of any of
the Credit Parties having a value in excess of $50,000, together
with allonges or assignments as may be necessary or appropriate to
perfect the Agent's security interest in the Collateral; and
(vi) duly executed consents as are necessary, in the Agent's sole
discretion, to perfect the Agent's security interest in the
Collateral.
(e) Equity Investment. Receipt by the Agent of evidence that a cash
equity investment of at least $63.0 million (at least $60.0 million of
which shall have been contributed by the Sponsor) shall have been made in
the Parent by the Investor Group (and that immediately thereafter the
Parent shall have contributed such amount to the Borrower in exchange for
common Capital Stock of the Borrower) on terms reasonably satisfactory to
the Lenders.
(f) Parent Notes. The Borrower shall have received gross proceeds of
at least $20.0 million from the issuance by the Parent to NationsBank of a
Parent Note (the proceeds of which immediately shall have been contributed
by the Parent to the Borrower in exchange for Capital Stock of the
Borrower), all on terms reasonably satisfactory to the Lenders. The Agent
shall have received a copy, certified by an Executive Officer of the
Borrower as true and complete, of the Parent Note issued to NationsBank,
as originally executed and delivered.
(g) Merger. The Merger Agreement shall not have been altered,
amended or otherwise changed or supplemented in any material respect or
any material condition therein waived, without the prior written consent
of the Agent, and the Merger shall have been consummated in all material
respects in accordance with the terms of the Merger Agreement and in
compliance with applicable law and regulatory approvals, and all
conditions precedent to the obligations of Mergersub thereunder shall have
been satisfied. The Agent shall have received a copy, certified by an
Executive Officer of the Borrower as true and complete, of the Merger
Agreement as originally executed and delivered, together with all exhibits
and schedules.
(h) Government Consent. Receipt by the Agent of evidence that all
governmental, shareholder and material third party consents (including
Hart-Scott-Rodino clearance) and approvals necessary or desirable in
connection with the Transaction and expiration of all applicable waiting
periods without any action being taken by any authority that could
restrain, prevent or impose any material adverse conditions on the
Transaction or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the reasonable judgment of
the Agent could have such effect.
(i) Cost of Transaction. The Agent shall have received satisfactory
evidence that the total amount paid or to be paid by Mergersub to
consummate the Transaction will not exceed $165.0 million.
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(j) Other Indebtedness. Receipt by the Agent of evidence that, after
giving effect to the Transaction, the Consolidated Parties shall have no
Funded Indebtedness other than (i) Funded Indebtedness under the Credit
Documents, (ii) Funded Indebtedness under the Parent Notes (iii) if the
Subordinated Notes shall have been issued, Funded Indebtedness under the
Subordinated Notes and (iv) other Funded Indebtedness permitted under
Section 8.1.
(k) Corporate Structure. The corporate capital and ownership
structure of the Consolidated Parties (after giving effect to the
Transaction) shall be as described in Schedule 5.2(k).
(l) Availability. After giving effect to the Transaction, including
the initial Loans made and Letters of Credit issued hereunder on the
Effective Date, there shall be at least $48.0 million of availability
existing under the Revolving Committed Amount.
(m) Officer's Certificates. The Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Borrower as of the Effective Date, in form and substance satisfactory to
the Agent, stating that (A) each Credit Party is in compliance with all
existing material financial obligations, (B) all governmental, shareholder
and material third party consents and approvals, if any, with respect to
the Credit Documents and the transactions contemplated thereby have been
obtained, (C) no action, suit, investigation or proceeding is pending or
threatened in any court or before any arbitrator or governmental
instrumentality that purports to affect any Credit Party or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could have a Material Adverse Effect, (D) the
transactions contemplated by the Merger Agreement have been consummated in
all material respects in accordance with the terms thereof and (E)
immediately after giving effect to the Transaction, (1) no Default or
Event of Default exists, (2) all representations and warranties contained
herein and in the other Credit Documents are true and correct in all
material respects and (3) the Credit Parties are in compliance with each
of the applicable financial covenants set forth in Section 7.10 (assuming
for purposes hereof that such financial covenants were measured as of, and
for the 12-month period ending on, such date).
(n) Solvency Certificate. The Agent shall have received a
certificate executed by an Executive Officer of the Borrower as of the
Effective Date, in form and substance satisfactory to the Agent, regarding
the Solvency of each of the Credit Parties.
(o) Material Adverse Change. No material adverse change shall have
occurred since December 31, 1998 in the condition (financial or
otherwise), business, management or prospects of Sheridan and its
Subsidiaries taken as a whole.
(p) Litigation. There shall not exist (i) any order, decree,
judgment, ruling or injunction which restrains the consummation of the
Transaction in the manner contemplated by the Merger Agreement or (ii) any
pending or threatened action, suit, investigation or proceeding against
Sheridan or any its Subsidiaries that could reasonably be expected to have
a Material Adverse Effect.
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(q) Defaults under Tender Offer Credit Agreement. No event or
condition shall have occurred or exist which would constitute a "Default"
under and as defined in the Tender Offer Credit Agreement.
(r) Evidence of Insurance. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Consolidated
Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not limited
to, naming the Agent as additional insured (in the case of liability
insurance) or sole loss payee (in the case of hazard insurance) on behalf
of the Lenders.
(s) Fees and Expenses. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Agent's Fee
Letter.
(t) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by the
Agent in connection with the Credit Parties or the Transaction.
5.3 Conditions to all Extensions of Credit.
The obligations of each Lender to make any Loan and of the Issuing Lender
to issue or extend any Letter of Credit (including the initial Loans and the
initial Letter of Credit) are subject to satisfaction of each of the following
conditions (in addition to satisfaction of each of the conditions set forth in
Section 5.1 as of the Closing Date and satisfaction on of each of the conditions
set forth in Section 5.2 as of the Effective Date):
(a) The Borrower shall have delivered (i) in the case of any
Revolving Loan or any portion of the Term Loan, an appropriate Notice of
Borrowing or (ii) in the case of any Letter of Credit, the Issuing Lender
shall have received an appropriate request for issuance in accordance with
the provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6 shall,
subject to the limitations set forth therein, be true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date);
(c) There shall not have been commenced against any Credit Party an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or any case, proceeding or other
action for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation of
its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto; and
(e) Immediately after giving effect to the making of such Loan (and
the
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application of the proceeds thereof) or to the issuance of such Letter of
Credit, as the case may be, (i) the sum of the aggregate outstanding principal
amount of Revolving Loans plus LOC Obligations plus Swingline Loans shall not
exceed the Revolving Committed Amount, and (ii) the LOC Obligations shall not
exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing and each request for a Letter of Credit
pursuant to Section 2.2(b) shall constitute a representation and warranty by the
Credit Parties of the correctness of the matters specified in subsections (b),
(c) and (d).
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that, on
and after the Effective Date:
6.1 Financial Condition.
(a) The unaudited interim balance sheets of the Consolidated Parties
as at the end of, and the related unaudited interim statements of earnings
and of cash flows for, each fiscal month and quarterly period ended after
December 31, 1998 and at least 30 days prior to the Effective Date have
heretofore been furnished to each Lender. Such interim financial
statements for each such fiscal month, (i) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby and (ii) present fairly (on the basis disclosed in the footnotes
to such financial statements) the consolidated financial condition,
results of operations and cash flows of the Consolidated Parties as of
such date and for such periods. Except as disclosed on Schedule 6.1,
during the period from December 31, 1998 to and including the Effective
Date, there has been no sale, transfer or other disposition by any
Consolidated Party of any material part of the business or property of the
Consolidated Parties, taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any
capital stock of any other person) material in relation to the
consolidated financial condition of the Consolidated Parties, taken as a
whole, in each case, which is not reflected in the foregoing financial
statements or in the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date. As of the
Effective Date, the Borrower and its Restricted Subsidiaries have no
material liabilities (contingent or otherwise) that are not reflected in
the Borrower's 1998 report on Form 10-K, foregoing financial statements or
in the notes thereto or as set forth on Schedule 6.1.
(b) The financial statements delivered from time to time to the
Lenders pursuant to Section 7.1(a) and (b)(i) will be prepared in
accordance with GAAP (except as may otherwise be permitted under Section
7.1(a) and (b)) and (ii) will present fairly in all material respects (on
the basis disclosed in the footnotes to such financial statements) the
consolidated financial condition, results of operations and cash flows of
the Consolidated Parties as of such date and for such periods.
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6.2 No Material Change.
Since December 31, 1998, there has been no development or event relating
to or affecting a Consolidated Party which has had or could reasonably be
expected to have a Material Adverse Effect.
6.3 Organization and Good Standing.
Each of the Consolidated Parties (a) is duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its incorporation
or organization, (b) has the corporate or other necessary power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate or other
necessary action to authorize the borrowings and other extensions of credit on
the terms and conditions of this Credit Agreement and to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of any Credit Party in
connection with the borrowings or other extensions of credit hereunder, with the
execution, delivery, performance, validity or enforceability of the Credit
Documents to which such Credit Party is a party or with the consummation of the
Transaction, except for (i) consents, authorizations, notices and filings
described in Schedule 6.4, all of which have been obtained or made or have the
status described in such Schedule 6.4, (ii) filings to perfect the Liens created
by the Collateral Documents and (iii) consents, authorizations, filings, notices
or other acts the failure to make or obtain could not reasonably be expected to
have a Material Adverse Effect. This Credit Agreement has been, and each other
Credit Document to which any Credit Party is a party will be, duly executed and
delivered on behalf of the Credit Parties. This Credit Agreement constitutes,
and each other Credit Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party enforceable against such party in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or laws affecting creditors' rights generally and
subject to general principles of equity, regardless of whether considered in
proceedings in equity or at law and by an implied covenant of good faith and
fair dealing.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and
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provisions thereof by such Credit Party will (a) violate or conflict with any
provision of its articles or certificate of incorporation or bylaws or other
organizational or governing documents of such Person, (b) violate, contravene or
materially conflict with any other material Requirement of Law or any other
material law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual provisions of, or cause
an event of default under, any indenture, loan agreement, mortgage, deed of
trust, contract or other agreement or instrument to which it is a party or by
which it may be bound, the violation of which could reasonably be expected to
have a Material Adverse Effect, or (d) result in or require the creation of any
Lien (other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 No Default.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.7 Ownership.
Each Consolidated Party is the owner of, and has good and marketable title
to, all of its assets owned by it necessary for the conduct of its business,
except for minor defects in title that do not interfere with its ability to
conduct its business or to utilize such assets for their intended purposes and
none of such assets is subject to any Lien other than Permitted Liens.
6.8 Indebtedness.
Except as otherwise permitted under Section 8.1, the Consolidated Parties
have no Indebtedness.
6.9 Litigation.
Except as disclosed in Schedule 6.9, there are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Executive Officer of any Credit Party, threatened against any
Consolidated Party which could reasonably be expected to have a Material Adverse
Effect.
6.10 Taxes.
Each Consolidated Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other material taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves
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are being maintained in accordance with GAAP. No Credit Party is aware as of the
Effective Date of any proposed tax assessments against it or any other
Consolidated Party that could reasonably be expected to have a Material Adverse
Effect.
6.11 Compliance with Law.
Each Consolidated Party is in compliance with all Requirements of Law and
all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, each
Consolidated Party represents that current billing policies, arrangements,
protocols and instructions comply with requirements of (i) Medicare, Medicaid,
and CHAMPUS programs and any other heath care program operated or financed in
whole or in part by and federal, state, or local government (each a "Medical
Reimbursement Program" and collectively, the "Medical Reimbursement Programs")
and are administered by properly trained personnel except where any such failure
to comply could not reasonably be expected to result in either (A) exclusion
from a Medical Reimbursement Program, or loss of 5% or more of annual
consolidated revenues of the Consolidated Parties; (ii) current compensation
arrangements with physicians comply with state and federal anti-kick back fraud
and abuse, and Stark I and II requirements except where any such failure to
comply could not reasonably be expected to result in either (A) an exclusion
from a Medial Reimbursement Program, or (B) loss of 5% or more of annual
consolidated revenues of the Consolidated Parties and (iii) there has not been,
nor is it reasonably anticipated that there will be, disruption in payments
under Medicare or other Medical Reimbursement Programs related to the
reorganization or the change of ownership contemplated in connection with the
Transaction.
6.12 ERISA.
Except as disclosed and described in Schedule 6.12 attached hereto or
except as could not reasonably be expected to result in a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Executive Officers of the Credit
Parties, no event or condition has occurred or exists as a result of which
any ERISA Event could reasonably be expected to occur, with respect to any
Plan; (ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived,
has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and in
material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC or
a Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to
the date on which this representation is made or deemed made (determined,
in each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's
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most recent actuarial valuation report), did not exceed as of such
valuation date the fair market value of the assets of such Plan by such
amount as shall cause or create a Material Adverse Effect.
(c) Neither any Consolidated Party nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the
meaning of Section 4245 of ERISA), or has been terminated (within the
meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Executive Officers of the Credit Parties, reasonably
expected to be in reorganization, insolvent, or terminated.
6.13 Capital Stock, etc.
Set forth on Schedule 6.13 is a complete and accurate list with respect to
the Borrower and each of the Restricted Subsidiaries of (i) jurisdiction of
incorporation, (ii) number of shares of each class of Capital Stock outstanding,
(iii) number and percentage of outstanding shares of each class owned (directly
or indirectly) by the Consolidated Parties and (iv) number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The outstanding
Capital Stock of all such Persons is validly issued, fully paid and
non-assessable and is owned by the Consolidated Parties, directly or indirectly,
in the manner set forth on Schedule 6.13, free and clear of all Liens (other
than those arising under or contemplated in connection with the Credit
Documents). Other than as set forth in Schedule 6.13, neither the Borrower nor
any of its Restricted Subsidiaries has outstanding any securities convertible
into or exchangeable for its Capital Stock nor does any such Person have
outstanding any rights to subscribe for or to purchase or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its Capital Stock.
6.14 Governmental Regulations, Etc.
(a) None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the proceeds
of the Loans) will violate or result in a violation of the Securities Act,
the Securities Exchange Act or any of Regulations T, U and X. If requested
by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement, in conformity with the requirements of FR Form
U-1 referred to in Regulation U.
(b) None of the Consolidated Parties is (i) an "investment company",
or a company "controlled" by "investment company", within the meaning of
the Investment Company Act of 1940, as amended, (ii) a "holding company"
as defined in, or otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended or (iii) subject to
regulation under any other federal or state statute or regulation which
limits its ability to incur Indebtedness.
6.15 Purpose of Loans and Letters of Credit.
The proceeds of the Loans hereunder shall be used solely by the Borrower
to: (i) on the
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Effective Date (A) to refinance existing Funded Indebtedness outstanding under
the Tender Offer Credit Agreement and the Existing Sheridan Credit Agreement and
(B) to provide a portion of the funds needed to consummate the Transaction
(including fees and expenses of up to $12 million) and (ii) on and after the
Effective Date, to provide for ongoing working capital and general corporate
purposes (including Permitted Acquisitions) of the Borrower and its Restricted
Subsidiaries. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions entered into
by the applicable account party in the ordinary course of business.
6.16 Environmental Matters.
Except as disclosed and described in Schedule 6.16 attached hereto or
except as could not reasonably be expected to result in a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated
by the Consolidated Parties (the "Real Properties") and all operations at
the Properties are in compliance with all applicable Environmental Laws,
and there is no violation of any Environmental Law with respect to the
Real Properties or the businesses operated by the Consolidated Parties
(the "Businesses"), and there are no conditions relating to the Businesses
or Real Properties that could give rise to liability under any applicable
Environmental Laws.
(b) None of the Real Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the Real
Properties in amounts or concentrations that constitute or constituted a
violation of, or could give rise to liability under, Environmental Laws.
(c) No Consolidated Party has received any written or verbal notice
of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Real Properties or the Businesses, nor does any
Executive Officer of any Credit Party have knowledge or reason to believe
that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Real Properties, or generated, treated, stored or
disposed of at, on or under any of the Real Properties or any other
location, in each case by or on behalf of any Consolidated Party in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of the Executive Officers of the
Credit Parties, threatened, under any Environmental Law to which any
Consolidated Party is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Consolidated Parties, the
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Real Properties or the Businesses.
(f) There has been no release, or threat of release, of Materials of
Environmental Concern at or from the Real Properties, or arising from or
related to the operations (including, without limitation, disposal) of any
Consolidated Party in connection with the Real Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
6.17 Solvency.
Each Credit Party is Solvent.
6.18 Investments.
All Investments of each Consolidated Party are Permitted Investments.
6.19 Business Locations.
Set forth on Schedule 6.19(a) is a list of all locations where any
tangible personal property of a Credit Party is located, including street
address and state where located. Set forth on Schedule 6.19(b) is the chief
executive office and principal place of business of each Credit Party.
6.20 Disclosure.
Neither this Credit Agreement nor any financial statements (other than
projections) delivered to the Lenders nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any Consolidated Party in
connection with the transactions contemplated hereby, when taken as a whole,
contains, as of the applicable date of delivery, any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading in light of the
circumstances under which such statements were made.
6.21 No Burdensome Restrictions.
No Consolidated Party is a party to any agreement or instrument or subject
to any other obligation or any charter or corporate restriction or any provision
of any applicable law, rule or regulation which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.22 Brokers' Fees.
No Consolidated Party has any obligation to any Person in respect of any
finder's, broker's, investment banking or other similar fee in connection with
any of the Credit Documents.
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6.23 Labor Matters.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of a Consolidated Party and none of the Consolidated
Parties has suffered any strikes, walkouts, work stoppages or other material
labor difficulty within the last five years, except, with respect to any of the
foregoing, which could not reasonably be expected to have a Material Adverse
Effect.
6.24 Nature of Business.
The Consolidated Parties are engaged in the Line of Business.
6.25 Representations and Warranties from Merger Agreement.
Each representation or warranty made in the Merger Agreement by Mergersub
and the Parent is true and correct in all material respects on the date as of
which such representation or warranty was made or deemed to have been made.
6.26 Year 2000 Compliance.
Each of the Credit Parties has conducted a review and assessment of its
computer applications with respect to the "year 2000 problem" (that is, the risk
that computer applications may not be able to properly perform date-sensitive
functions after December 31, 1999) and, based on that review and inquiry, the
Credit Parties believe that, except to the extent that non-Affiliate Persons
fail to address adequately their respective year 2000 problem, the year 2000
problem will not result in a material adverse change in the business, condition
(financial or otherwise), operations, business, assets or liabilities of the
Credit Parties taken as a whole, or on the ability of any Credit Party to
perform any material obligation under the Credit Documents to which it is a
party. Based on the foregoing, each Credit Party believes that all computer
applications (including those of its suppliers, vendors and customers) that are
material to its business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.27 Other Agreements.
No Consolidated Party is 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 a Consolidated Party 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 any Consolidated Party or (ii) any
other agreement or instrument to which any Consolidated Party 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.
6.28 Reimbursement from Third Party Payors.
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The accounts receivable of the Consolidated Parties 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.
6.29 Fraud and Abuse.
Neither the Consolidated Parties nor, to the knowledge of the officers of
the Consolidated Parties, any of their 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 42 U.S.C.
ss.1395nn 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.
6.30 Licensing and Accreditation.
Each of the Consolidated Parties and, to the knowledge of the officers of
the Consolidated Parties, 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 the officers of the Consolidated Parties, each
Contract
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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 Consolidated Parties conduct business, required to enable such Person to
provide the professional services provided by such Person and otherwise as is
necessary to enable the Consolidated Parties to operate as currently operated
and as presently contemplated to be operated. To the knowledge of the officers
of the Consolidated Parties, all such required licenses are in full force and
effect on the date hereof and have not been revoked or suspended or otherwise
limited.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, on and after the
Effective Date and so long as this Credit Agreement is in effect or any amounts
payable hereunder or under any other Credit Document shall remain outstanding or
any Letter of Credit is outstanding, and until all of the Commitments hereunder
shall have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the
Consolidated Parties, a consolidated balance sheet and income statement of
the Parent and all of its Subsidiaries (including the Restricted
Subsidiaries and Unrestricted Subsidiaries) as of the end of such fiscal
year, together with related consolidated statements of operations and
retained earnings and of cash flows for such fiscal year, in each case
setting forth in comparative form consolidated figures for the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and audited by independent certified public
accountants of recognized national standing reasonably acceptable to the
Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes
with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified as to the status of the Parent and its
Subsidiaries as a going concern or any other material qualifications or
exceptions. The financial statements delivered pursuant to this Section
7.1(a) shall be accompanied by a schedule reviewed by such accountants
providing, in form and substance reasonably satisfactory to the Agent, a
consolidating break-out of the Parent, the Borrower and the Restricted
Subsidiaries taken as a whole and the Unrestricted Subsidiaries taken as a
whole.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the
Consolidated Parties (other than the fourth fiscal quarter, in which case
90 days after the end thereof) a consolidated balance sheet and income
statement of the Parent and all of its Subsidiaries (including the
Restricted Subsidiaries and Unrestricted Subsidiaries) as of the end of
such fiscal quarter, together with related consolidated statements of
operations and retained earnings and of
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cash flows for such fiscal quarter, in each case setting forth in
comparative form consolidated figures for the corresponding period of the
preceding fiscal year, all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the Agent,
and accompanied by a certificate of an Executive Officer of the Borrower
to the effect that such quarterly financial statements fairly present in
all material respects the financial condition of the Parent and its
Subsidiaries (including the Restricted Subsidiaries and Unrestricted
Subsidiaries) and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end audit adjustments. The
financial statements delivered pursuant to this Section 7.1(b) shall be
accompanied by a schedule providing, in form and substance reasonably
satisfactory to the Agent, a consolidating break-out of the Parent, the
Borrower and the Restricted Subsidiaries taken as a whole and the
Unrestricted Subsidiaries taken as a whole.
(c) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of an Executive Officer of the Borrower substantially in the form of
Exhibit 7.1(c), (i) demonstrating compliance with the applicable financial
covenants contained in Section 7.10 by calculation thereof as of the end
of each such fiscal period and (ii) stating that no Default or Event of
Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Credit
Parties propose to take with respect thereto.
(d) Annual Business Plan and Budgets. No later than 90 days after
the end of each fiscal year of the Borrower, beginning with the fiscal
year ending December 31, 1999, an annual business plan and budget of the
Consolidated Parties containing, among other things, pro forma financial
statements for the next fiscal year and, if the Agent requests, a revenue
and direct expense summary for each hospital-based contract and for each
practice.
(e) Compliance With Certain Provisions of the Credit Agreement.
Within 90 days after the end of each fiscal year of the Credit Parties, a
certificate containing information regarding (i) the calculation of Excess
Cash Flow, if applicable, and (ii) the amount of all Asset Dispositions,
Debt Issuances and Equity Issuances that were made during the prior fiscal
year.
(f) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have
reviewed this Credit Agreement and stating further whether, in the course
of their audit, they have become aware of any Default or Event of Default
and, if any such Default or Event of Default exists, specifying the nature
and extent thereof.
(g) Reports. Promptly upon transmission or receipt thereof, (i)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as any
Consolidated Party shall send to its shareholders or to a holder of any
Indebtedness owed by any Consolidated Party in its capacity as such a
holder and (ii) all material reports and other statements (other than
routine reports and
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other statements prepared in the ordinary course of business that would
not result in adverse action) that any Consolidated Party may render to or
file with any Governmental Authority, including without limitation HCFA
and the Department of Health and Human Services Office of Inspector
General.
(h) Notices. Upon any Executive Officer of a Credit Party obtaining
knowledge thereof, the Credit Parties will give written notice to the
Agent immediately of (i) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose to take with
respect thereto, and (ii) the occurrence of any of the following with
respect to any Consolidated Party (A) the pendency or commencement of any
litigation, arbitral or governmental investigation or proceeding against
such Person which is reasonably likely to have a Material Adverse Effect
or (B) the institution of any investigation or proceedings against such
Person (or any Contract Provider) to suspend, revoke or terminate or which
may result in the termination of any Medicaid Provider Agreement, Medicaid
Certification, Medicare Provider Agreement, Medicare Certification or
exclusion from any Medical Reimbursement Program, promptly deliver to the
Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, investigation, levy, execution or other
process.
(i) ERISA. Upon any Executive Officer of a Credit Party obtaining
knowledge thereof, the Credit Parties will give written notice to the
Agent promptly (and in any event within thirty business days) of any of
any of the following which could reasonably be expected to result in a
Material Adverse Effect: (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes an ERISA Event; or (ii)
with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Credit Parties or any ERISA Affiliates, or of a determination
that any Multiemployer Plan is in reorganization or insolvent (both within
the meaning of Title IV of ERISA), together with a description of any such
event or condition or a copy of any such notice and a statement by an
Executive Officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which
has been or is being taken or is proposed to be taken by the Credit
Parties with respect thereto. Promptly upon request, the Credit Parties
shall furnish the Agent and the Lenders with such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as
well as all schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the meaning
of Section 3(39) of ERISA).
(j) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of any Consolidated Party as the Agent or the Required
Lenders may reasonably request.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution, merger or
disposition of a
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Subsidiary permitted under Section 8.4 or Section 8.5, each Credit Party will do
all things necessary to preserve and keep in full force and effect its
existence, rights, and franchises, except with respect to rights and franchises,
where failure to do so could not reasonably be expected to have a Material
Adverse Effect.
7.3 Books and Records.
Each Credit Party will keep complete and accurate books and records of its
transactions in accordance with good accounting practices on the basis of GAAP
(including the establishment and maintenance of appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will (a) comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its Property if noncompliance with any such law, rule,
regulation, order or restriction could reasonably be expected to have a Material
Adverse Effect, (b) conform to and duly observe, and take all reasonable action
to 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; provided, however, the failure of the Credit Parties to
cause a Contract Provider to comply with this Section 7.4 shall not constitute a
violation of this Section 7.4 so long as none of the Consolidated Parties is
liable therefor and (c) obtain and maintain, and take all reasonable action to
cause all Contract Providers during periods when performing services for any
Consolidated Party 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 if failure to do so would have a Material Adverse
Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will pay and discharge (a) all material taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (b) all material lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien upon any of
its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness in a principal amount in excess of $1,000,000 as it shall become
due; provided, however, that no Consolidated Party shall be required to pay any
such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) could give rise to an immediate right to
foreclose on a Lien securing such amounts or (ii) could reasonably be expected
to have a Material Adverse Effect.
7.6 Insurance.
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(a) Each Credit Party will at all times maintain in full force and
effect insurance (including medical malpractice, worker's compensation
insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are
in accordance with normal industry practice (or as otherwise required by
the Collateral Documents). The Agent shall be named as loss payee, as its
interest may appear, and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral, and each
provider of any such insurance shall agree, by endorsement upon the policy
or policies issued by it or by independent instruments furnished to the
Agent, that it will give the Agent thirty (30) days prior written notice
before any such policy or policies shall be altered or canceled, and that
no act or default of any Consolidated Party or any other Person shall
affect the rights of the Agent or the Lenders under such policy or
policies. The present insurance coverage of the Consolidated Parties is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 7.6.
(b) In the event that the Consolidated Parties receive Net Cash
Proceeds in excess of $500,000 in aggregate amount during any fiscal year
of the Consolidated Parties ("Excess Proceeds") on account of any loss of,
damage to or destruction of, or any condemnation or other taking for
public use of, any Property of the Consolidated Parties (with respect to
any Consolidated Party, an "Involuntary Disposition"), the Credit Parties
shall, within the period of 365 days following the date of receipt of such
Excess Proceeds, apply (or cause to be applied) an amount equal to such
Excess Proceeds to (i) make Eligible Reinvestments (including but not
limited to the repair or replacement of the related Property) or (ii)
prepay the Loans (and cash collateralize the LOC Obligations) in
accordance with the terms of Section 3.3(b)(iii)(B). All insurance
proceeds shall be subject to the security interest of the Agent (for the
ratable of the Lenders) under the Collateral Documents. Pending final
application of any Excess Proceeds, the Credit Parties may apply such
Excess Proceeds to temporarily reduce the Revolving Loans or to make
Permitted Investments.
7.7 Maintenance of Property.
Each Credit Party will maintain and preserve its properties and equipment
material to the conduct of its business in good repair, working order and
condition, normal wear and tear and casualty and condemnation excepted, and will
make, or cause to be made, in such properties and equipment from time to time
all repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent and in the manner
customary for companies in similar businesses.
7.8 Use of Proceeds.
The Borrower will use the proceeds of the Loans and will use the Letters
of Credit solely for the purposes set forth in Section 6.15.
7.9 Audits/Inspections.
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Upon reasonable notice and during normal business hours, each Credit Party
will permit representatives appointed by the Agent, including, without
limitation, independent accountants, agents, attorneys, and appraisers to visit
and inspect its property, including its books and records to the extent allowed
by applicable law and regulation, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representative obtains
and shall permit the Agent or its representatives to investigate and verify the
accuracy of information provided to the Lenders and to discuss all such matters
with the officers, employees and representatives of such Person. Notwithstanding
the foregoing, no material protected by an attorney-client privilege shall be
required to be disclosed pursuant to this Section 7.9; provided, however, that,
in the event that any Credit Party claims that any materials requested for
review, investigation or discussion by the Agent or any of its representatives
pursuant to this Section 7.9 is protected by an attorney-client privilege, then
such Credit Party shall (i) provide the Agent with a reasonably acceptable basis
for the assertion of the privilege, (ii) remove or redact only those portions of
the related materials deemed to be privileged and (iii) in good faith cooperate
with the Agent to determine a method by which the information which the Agent
deems necessary to review, investigate or discuss may be obtained by the Agent
in an alternative manner which will not jeopardize any attorney-client
privilege.
7.10 Financial Covenants.
(a) If the Subordinated Notes shall not have been issued, then:
(i) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last
day of each fiscal quarter of the Borrower, shall be less than or equal
to:
(A) for any fiscal quarter ending in the period from the
Effective Date to and including June 29, 2002, 4.0 to 1.0;
(B) for any fiscal quarter ending in the period from June 30,
2002 to and including June 29, 2003, 3.75 to 1.0; and
(C) for any fiscal quarter ending in the period from June 30,
2003 and at all times thereafter, 3.5 to 1.0.
(ii) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties, shall be
greater than or equal to:
(A) for any fiscal quarter ending in the period from the
Effective Date to and including June 29, 2002, 2.25 to 1.0;
(B) for any fiscal quarter ending in the period from June 30,
2002 to and including June 29, 2003, 2.5 to 1.0; and
(C) for any fiscal quarter ending in the period from June 30,
2003 and at all times thereafter, 2.75 to 1.0.
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(iii) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio,
as of the last day of each fiscal quarter of the Consolidated Parties,
shall be greater than or equal to 1.0 to 1.0.
(b) If the Subordinated Notes shall have been issued, then:
(i) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last
day of each fiscal quarter of the Borrower, shall be less than or equal
to:
(A) for any fiscal quarter ending in the period from the
Effective Date to and including June 29, 2002, 3.5 to 1.0;
(B) for any fiscal quarter ending in the period from June 30,
2002 to and including June 29, 2003, 3.25 to 1.0; and
(C) for any fiscal quarter ending in the period from June 30,
2003 and at all times thereafter, 3.0 to 1.0.
(ii) Total Leverage Ratio. The Total Leverage Ratio, as of the last
day of each fiscal quarter of the Borrower, shall be less than or equal
to:
(A) for any fiscal quarter ending in the period from the
Effective Date to and including June 29, 2002, 5.0 to 1.0;
(B) for any fiscal quarter ending in the period from June 30,
2002 to and including June 29, 2003, 4.75 to 1.0; and
(C) for any fiscal quarter ending in the period from June 30,
2003 and at all times thereafter, 4.5 to 1.0.
(iii) Interest Coverage Ratio. The Interest Coverage Ratio, as of
the last day of each fiscal quarter of the Consolidated Parties, shall be
greater than or equal to:
(A) for any fiscal quarter ending in the period from the
Effective Date to and including June 29, 2002, 1.75 to 1.0;
(B) for any fiscal quarter ending in the period from June 30,
2002 to and including June 29, 2003, 2.0 to 1.0; and
(C) for any fiscal quarter ending in the period from June 30,
2003 and at all times thereafter, 2.25 to 1.0.
7.11 Additional Guarantors.
As soon as practicable and in any event within 30 days after any Person
becomes a Restricted Subsidiary, the Borrower shall provide the Agent with
written notice thereof setting
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forth information in reasonable detail describing all of the assets of such
Person and shall (a) cause such Person to execute a Joinder Agreement in
substantially the same form as Exhibit 7.11, (b) unless such Person is a
Controlled Physician Affiliate, cause 100% of the issued and outstanding Capital
Stock of such Person to be delivered to the Agent (together with undated stock
powers signed in blank) and pledged to the Agent pursuant to an appropriate
pledge agreement(s) in substantially the form of the Pledge Agreement and
otherwise in form acceptable to the Agent and (c) cause such Person to deliver
such other documentation as the Agent may reasonably request in connection with
the foregoing, including, without limitation, appropriate UCC-1 financing
statements, landlord's waivers, certified resolutions and other organizational
and authorizing documents of such Person, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above and the
perfection of the Agent's liens thereunder) and other items of the types
required to be delivered pursuant to Section 5.2(b), (c) and (d), all in form,
content and scope reasonably satisfactory to the Agent.
7.12 Pledged Assets.
Each Credit Party will cause all of its personal property other than
Excluded Property to be subject at all times to first priority, perfected Liens
in favor of the Agent to secure the Credit Party Obligations pursuant to the
terms and conditions of the Collateral Documents or, with respect to any such
property acquired subsequent to the Effective Date, such other additional
security documents as the Agent shall reasonably request, subject in any case to
Permitted Liens. Without limiting the generality of the above, the Credit
Parties will cause (i) 100% of the issued and outstanding Capital Stock of the
Borrower and (ii) 100% of the issued and outstanding Capital Stock (whether or
not owned by a Credit Party) of each Restricted Subsidiary other than any
Restricted Subsidiary which is a Controlled Physician Affiliate, to be subject
at all times to a first priority, perfected Lien in favor of the Agent pursuant
to the terms and conditions of the Collateral Documents or such other security
documents as the Agent shall reasonably request.
7.13 Year 2000 Compliance.
The Credit Parties will promptly notify the Agent in the event any Credit
Party discovers or determines that any computer application (including those of
its suppliers, vendors and customers) that is material to its business and
operations will not be Year 2000 Compliant, except to the extent that such
failure could not reasonably be expected to have a Material Adverse Effect.
7.14 Primedica Healthcare, Inc. Receivable.
The Credit Parties will cause all proceeds (including sale proceeds) of
the promissory note due and owing from Metropolitan Healthcare Networks, Inc.
to Primedica Healthcare, Inc. ("Primedica") to be distributed to the Borrower
promptly upon receipt of any such proceeds by Primedica.
SECTION 8
NEGATIVE COVENANTS
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Each Credit Party hereby covenants and agrees that, on and after the
Effective Date and so long as this Credit Agreement is in effect or any amounts
payable hereunder or under any other Credit Document shall remain outstanding or
any Letter of Credit is outstanding, and until all of the Commitments hereunder
shall have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness of the Borrower set forth in Schedule 8.1 (and
renewals, refinancings and extensions thereof on terms and conditions no
less favorable to such Person than such existing Indebtedness);
(c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by the Borrower to
finance the purchase of fixed assets provided that (i) the total of all
such Indebtedness shall not exceed an aggregate principal amount of
$2,500,000 at any one time outstanding; (ii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of such
refinancing;
(d) obligations of the Borrower in respect of Hedging Agreements
entered into with any Lender, or any Affiliate of a Lender, in order to
manage existing or anticipated interest rate or exchange rate risks and
not for speculative purposes;
(e) intercompany Indebtedness arising out of loans, advances and
Guaranty Obligations permitted under Section 8.6;
(f) Indebtedness under the Parent Notes in an aggregate original
issuance principal amount of up to $37,500,000, plus additional
Indebtedness representing conversion of accrued interest into principal
under the Parent Notes;
(g) if the Subordinated Notes shall have been issued, Indebtedness
under the Subordinated Note Indenture and the Subordinated Notes in an
aggregate original issuance principal amount of at least $90,000,000;
(h) Indebtedness of the Parent (i) incurred in connection with the
repurchase, redemption or other acquisition or retirement for value of any
Capital Stock in the Parent held by members of senior management and other
key employers of the Parent and its Subsidiaries and (ii) which by its
terms is subordinated to the Credit Party Obligations in a manner and to
an extent acceptable to the Required Lenders;
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(i) Indebtedness representing deferred compensation to employees of
the Parent or any Consolidated Party not exceeding $1,000,000 in aggregate
principal amount at any one time outstanding;
(j) Guaranty Obligations of any Credit Party with respect to
Indebtedness permitted under this Section 8.1; and
(k) In addition to the Indebtedness otherwise permitted by this
Section 8.1, other Indebtedness hereafter incurred by the Borrower not
exceeding $2,500,000 in aggregate principal amount at any time
outstanding.
8.2 Liens.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
The Credit Parties will not permit any Consolidated Party to (i) engage in
any business outside of the Line of Business or (ii) enter into arrangements
involving full-risk capitation.
8.4 Consolidation, Merger, Dissolution, etc.
Except in connection with an Asset Disposition permitted by the terms of
Section 8.5, the Credit Parties will not permit any Consolidated Party to enter
into any transaction or merger or consolidation or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); provided that,
notwithstanding the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries provided that (i) the
Borrower shall be the continuing or surviving corporation and (ii) the Credit
Parties shall cause to be executed and delivered such documents, instruments and
certificates as the Agent may reasonably request so as to cause the Credit
Parties to be in compliance with the terms of Section 7.12 after giving effect
to such transaction, (b) any Credit Party other than the Parent or the Borrower
may merge or consolidate with any other Credit Party other than the Parent or
the Borrower provided that the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Agent may
reasonably request so as to cause the Credit Parties to be in compliance with
the terms of Section 7.12 after giving effect to such transaction, (c) any
Consolidated Party which is not a Credit Party may be merged or consolidated
with or into any Credit Party other than the Parent provided that (i) such
Credit Party shall be the continuing or surviving corporation and (ii) the
Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Agent may request so as to cause the Credit
Parties to be in compliance with the terms of Section 7.12 after giving effect
to such transaction, (d) any Consolidated Party which is not a Credit Party may
be merged or consolidated with or into any other Consolidated Party which is not
a Credit Party, (e) any Subsidiary of the Borrower may merge with any Person
that is not a Credit Party in connection with an Asset Disposition permitted
under Section 8.5, (f) the Borrower or any Restricted Subsidiary of the Borrower
may merge with any Person other than a Consolidated Party in connection with a
Permitted
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Acquisition provided that (i) if such transaction involves the Borrower, the
Borrower shall be the continuing or surviving corporation and (ii) the Credit
Parties shall cause to be executed and delivered such documents, instruments and
certificates as the Agent may reasonably request so as to cause the Credit
Parties to be in compliance with the terms of Section 7.12 after giving effect
to such transaction and (g) any Restricted Subsidiary of the Borrower may
dissolve, liquidate or wind up its affairs at any time provided that such
dissolution, liquidation or winding up, as applicable, could not have a Material
Adverse Effect.
8.5 Asset Dispositions.
Except for Asset Dispositions described on Schedule 8.5, the Credit
Parties will not permit any Consolidated Party to make any Asset Disposition
(including, without limitation, any Sale and Leaseback Transaction) unless (a)
the consideration paid in connection therewith is at least 75% cash or Cash
Equivalents, (b) if such transaction is a Sale and Leaseback Transaction, such
transaction is not prohibited by the terms of Section 8.13, (c) such transaction
does not involve a sale or other disposition of receivables other than
receivables owned by or attributable to other Property concurrently being
disposed of in a transaction otherwise permitted under this Section 8.5, (d) the
aggregate net book value of all of the assets sold or otherwise disposed of by
the Consolidated Parties in all such transactions after the Effective Date
(other than any such transaction to the extent that the Net Cash Proceeds
thereof are used to make Eligible Reinvestments as contemplated by clause (f)(i)
below) shall not exceed $1,000,000, (e) the Borrower shall have delivered to the
Agent a Pro Forma Compliance Certificate demonstrating that, upon giving effect
on a Pro Forma Basis to such transaction, no Default or Event of Default would
exist hereunder, and (f) no later than 15 days prior to such Asset Disposition,
the Agent and the Lenders shall have received a certificate of an Executive
Officer of the Borrower specifying the anticipated or actual date of such Asset
Disposition, briefly describing the assets to be sold or otherwise disposed of
and setting forth the net book value of such assets, the aggregate consideration
and the Net Cash Proceeds to be received for such assets in connection with such
Asset Disposition, and thereafter the Credit Parties shall, within the period of
365 days (or, if the Subordinated Notes shall have been issued, such earlier
date as provided for reinvestment of such proceeds under the Subordinated Note
Indenture) following the consummation of such Asset Disposition (with respect to
any such Asset Disposition, the "Application Period"), apply (or cause to be
applied) an amount equal to the Net Cash Proceeds of such Asset Disposition to
(i) make Eligible Reinvestments or (ii) prepay the Loans (and cash collateralize
the LOC Obligations) in accordance with the terms of Section 3.3(b)(iii)(A).
Pending final application of the Net Cash Proceeds of any Asset Disposition, the
Consolidated Parties may apply such Net Cash Proceeds to temporarily reduce the
Revolving Loans or to make Investments in Cash Equivalents.
Upon a sale of assets or the sale of Capital Stock of a Consolidated Party
permitted by this Section 8.5, the Agent shall (to the extent applicable)
deliver to the Credit Parties, upon the Credit Parties' request and at the
Credit Parties' expense, such documentation as is reasonably necessary to
evidence the release of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation, amendments or terminations of UCC
financing statements, if any, the return of stock certificates, if any, and the
release of such Consolidated Party from all of its obligations, if any, under
the Credit Documents.
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8.6 Investments.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for Permitted Investments.
8.7 Restricted Payments.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) payments and distributions on the Effective Date to
consummate the Transaction pursuant to the Merger Agreement, (b) dividends or
other distributions payable to any Credit Party other than the Parent (directly
or indirectly through Subsidiaries), (c) payments by any Consolidated Parties to
the Parent pursuant to a tax sharing agreement under which each such
Consolidated Party is allocated its proportionate share of the tax liability of
the affiliated group of corporations that file consolidated federal income tax
returns (or that file state or local income tax returns on a consolidated
basis), (d) loans, advances, dividends or distributions by any Consolidated
Party to the Parent not to exceed an amount necessary to enable the Parent to
pay its costs (including all professional fees and expenses) incurred to comply
with its reporting obligations under federal or state laws or in connection with
reporting or other obligations under this Credit Agreement and the Credit
Documents, (e) loans or advances by any Consolidated Party to the Parent not to
exceed an amount necessary to enable the Parent to pay its interim expenses
incurred in connection with any public offering of equity securities the net
proceeds of which are specifically intended to be received by or contributed or
loaned to the Borrower, which, unless such offering shall have been terminated
by the board of directors of the Parent, shall be repaid to the Borrower
promptly out of the proceeds of such offering, (f) loans, advances, dividends or
distributions by any Consolidated Party to the Parent to enable the Parent to
pay for corporate, administrative and operating expenses in the ordinary course
of business (including, without limitation, costs and expenses in connection
with the Transaction), (g) loans, advances, dividends or distributions by any
Consolidated Party to the Parent to enable the Parent to pay the additional cash
interest of the Parent permitted by clause (f) of this Section 8.7, (h) provided
that (i) no Default or Event of Default exists either before or after giving
effect to such Restricted Payment and (ii) the Borrower shall have delivered to
the Agent a Pro Forma Compliance Certificate demonstrating that, upon giving
effect on a Pro Forma Basis to such Restricted Payment, no Default or Event of
Default would exist hereunder, loans, advances, dividends or distributions by
any Consolidated Party to the Parent to enable the Parent (A) to pay the cash
portion of interest on the Parent Notes at a rate of not greater than 6%, (B) to
pay to NationsBank a cash prepayment penalty of not greater than 6% on the
Parent Notes upon any prepayment of Parent Notes held by NationsBank and (C) if
the Subordinated Notes shall have been issued, to repay the principal of the
Parent Notes in accordance with Section 3.3(b)(iv)(A), (i) the repurchase,
redemption or other acquisition or retirement for value of any Capital Stock in
the Parent held by members of senior management and other key employers of the
Parent and its Subsidiaries in an aggregate cash amount (including cash payments
in respect of any Indebtedness permitted under Section 8.1(j)) of up to
$2,500,000 and (j) as permitted by Section 8.8 or Section 8.9.
8.8 Other Indebtedness.
The Credit Parties will not permit any Consolidated Party to (a) if any
Default or Event of Default has occurred and is continuing or would be directly
or indirectly caused as a result
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thereof, (i) after the issuance thereof, amend or modify (or permit the
amendment or modification of) any of the terms of any Indebtedness of such
Consolidated Party if such amendment or modification would add or change any
terms in a manner adverse to such Consolidated Party, or shorten the final
maturity or average life to maturity or require any payment to be made sooner
than originally scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (ii) except, if the Subordinated
Notes shall have been issued, for the exchange of the Subordinated Notes for
notes with identical terms registered pursuant to the registration rights
agreement set forth in the Subordinated Note Indenture, respectively, make (or
give any notice with respect thereto) any voluntary or optional payment or
prepayment or redemption or acquisition for value of (including, without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness of such Consolidated Party, (b)
amend or modify (or permit the amendment or modification of) any of the
subordination provisions of the documents governing or evidencing any
Subordinated Indebtedness in any material respect which is adverse to the
Lenders, (c) make interest payments (including payment of accrued interest and
premium, if any, payable in connection with a redemption of any Subordinated
Indebtedness permitted under this Section 8.8) in respect of the any
Subordinated Indebtedness in violation of Section 8.7 or in violation of the
subordination provisions of the documents governing or evidencing such
Subordinated Indebtedness or (d) except as otherwise permitted under Section 8.7
with respect to the Parent Notes and except, if the Subordinated Notes shall
have been issued, for the exchange of the Subordinated Notes for notes with
identical terms registered pursuant to the registration rights agreement set
forth in the Subordinated Note Indenture, respectively, make (or give any notice
with respect thereto) any voluntary or optional payment or prepayment,
redemption, acquisition for value or defeasance of (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any Subordinated Indebtedness.
8.9 Transactions with Affiliates.
The Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary or Affiliate of such Person other than (a)
advances of working capital to any Credit Party other than the Parent, (b)
transfers of cash and assets to any Credit Party other than the Parent, (c)
transactions permitted by Section 8.1, Section 8.4, Section 8.5, Section 8.6, or
Section 8.7, (d) normal compensation and reimbursement of expenses of officers
and directors, (e) payments by the Borrower or the Parent to the Sponsor on the
Effective Date of an investment banking fee of up to $1,600,000, together with
transaction fees and other out-of-pocket expenses of the Sponsor and its
Affiliates on such date, (f) payments by the Borrower or the Parent to the
Sponsor or any of its Affiliates of (i) an annual management fee under the
Vestar Management Agreement in an amount not to exceed for any fiscal year the
greater of (A) $300,000 and (B) 1.5% of Consolidated EBITDA for such fiscal year
and (ii) the Sponsor's reasonable expenses from time to time, (g) the
arrangements listed on Schedule 8.9 hereto and (h) except as otherwise
specifically limited in this Credit Agreement, other transactions which are
entered into in the ordinary course of such Person's business on terms and
conditions substantially as favorable to such Person as would be obtainable by
it in a comparable arms-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
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8.10 Fiscal Year; Organizational Documents.
The Credit Parties will not permit any Consolidated Party to change its
fiscal year or amend, modify or change its articles of incorporation (or
corporate charter or other similar organizational document) or bylaws (or other
similar document) in any manner adverse to the Lenders, without the prior
written consent of the Required Lenders.
8.11 Limitation on Restricted Actions.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, or (e) act as a
Credit Party and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, (ii) if the Subordinated Notes shall
have been issued, the Subordinated Note Indenture and the Subordinated Notes,
(iii) applicable law, (iv) any document or instrument governing Indebtedness
permitted under Section 8.1, provided that the encumbrances and restrictions
relating to the Parent or any Consolidated Party in such document or instrument
are no more restrictive than the corresponding encumbrances and restrictions
contained in the Credit Documents, (v) the agreement for any lease by a
Consolidated Party permitted hereunder, (vi) any Permitted Lien or any document
or instrument governing any Permitted Lien, provided that any such restriction
contained therein relates only to the asset or assets subject to such Permitted
Lien or (vii) customary restrictions and conditions contained in any agreement
relating to the sale of a Subsidiary permitted under Section 8.5 pending the
consummation of such sale.
8.12 Preferred Stock; Ownership of Subsidiaries; Limitations on
Parent.
Notwithstanding any other provisions of this Credit Agreement to the
contrary:
(a) The Credit Parties will not permit any Consolidated Party to
issue or have outstanding any shares of preferred Capital Stock which by
the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration (other than as a result of a Change of Control or an Asset
Disposition that does not in fact result in a redemption of such preferred
Capital Stock) at any time prior to the Maturity Date.
(b) The Credit Parties will not permit any Consolidated Party to (i)
permit any Person (other than the Borrower or any Wholly Owned Subsidiary)
to own less than 90% of the Voting Stock of any Restricted Subsidiary
which is not a Controlled Physician Affiliate, except as a result of or in
connection with a dissolution, merger, consolidation or disposition of a
Subsidiary permitted under Section 8.4 or Section 8.5, (ii) permit any
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Restricted Subsidiary to issue or have outstanding any shares of preferred
Capital Stock, except (A) to the Borrower or a Wholly Owned Subsidiary and
(B) on terms reasonably satisfactory to the Required Lenders or (iii)
permit, create, incur, assume or suffer to exist any Lien on any Capital
Stock of any Restricted Subsidiary, except for Permitted Liens.
(c) The Parent shall not (i) hold any assets other than the Capital
Stock of the Borrower, (ii) have any liabilities other than (A) the
liabilities under and as permitted by the Credit Documents, (B) tax
liabilities in the ordinary course of business and (C) corporate,
administrative and operating expenses in the ordinary course of business
or (iii) engage in any business other than (A) owning the Capital Stock of
the Borrower and activities incidental or related thereto and (B) acting
as a Guarantor hereunder and pledging its assets to the Agent, for the
benefit of the Lenders, pursuant to the Collateral Documents to which it
is a party.
8.13 Sale Leasebacks.
The Credit Parties will not permit any Consolidated Party to enter into
any Sale and Leaseback Transaction.
8.14 Capital Expenditures.
The Credit Parties will not permit Consolidated Capital Expenditures,
excluding capital expenditures constituting, or made in connection with,
Permitted Acquisitions to exceed (i) during the period from the Effective Date
until the first anniversary of the Effective Date, $6,000,000 and (ii) during
each 12-month period thereafter, $4,500,000; provided, however, that the amount
of permitted Consolidated Capital Expenditures in any fiscal year shall be
increased by an amount equal to the total amount of unused permitted
Consolidated Capital Expenditures for the immediately preceding year.
8.15 No Further Negative Pledges.
The Credit Parties will not permit any Consolidated Party to enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets for the
purpose of securing the Credit Party Obligations, whether now owned or hereafter
acquired, or requiring the grant of any security for any obligation if security
is given for the Credit Party Obligations, except (a) pursuant to this Credit
Agreement and the other Credit Documents, (b) if the Subordinated Notes shall
have been issued, pursuant to the Subordinated Note Indenture and the
Subordinated Notes and (c) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith, (e) in connection with any Permitted Lien or
any document or instrument governing any Permitted Lien, provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien and (f) pursuant to customary restrictions and conditions
contained in any agreement relating to the sale of a Subsidiary permitted under
Section 8.5, pending the consummation of such sale.
8.16 No Foreign Subsidiaries.
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The Credit Parties will not create, acquire or permit to exist any Foreign
Subsidiary.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence and continuation of
any of the following specified events on and after the Effective Date (each an
"Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
(ii) default, and such default shall continue for five (5) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings
under Letters of Credit, or of any Fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection
herewith or therewith; or
(b) Representations. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was made or deemed to have
been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2 (with respect to
corporate existence), 7.8, 7.10, 7.11, 7.13 or 8.1 through 8.16,
inclusive; or
(ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.1) contained in
this Credit Agreement or any other Credit Document and such default
shall continue unremedied for a period of at least 30 days after the
earlier of an Executive Officer of a Credit Party becoming aware of
such default or notice thereof by the Agent; or
(d) Other Credit Documents. Except as a result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4 or Section
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8.5, any Credit Document shall fail to be in full force and effect or to
give the Agent and/or the Lenders the Liens, or material rights, powers
and privileges purported to be created thereby, or any Credit Party shall
so state in writing; or
(e) Guaranties. Except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under Section
8.4 or Section 8.5, the guaranty given by any Guarantor hereunder
(including any Person after the Effective Date in accordance with Section
7.11) shall cease to be in full force and effect, or any Guarantor
(including any Person after the Effective Date in accordance with Section
7.11) hereunder or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under such guaranty,
or any Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
to any Consolidated Party; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $2,000,000 in the aggregate for the Consolidated
Parties taken as a whole, (A) any Consolidated Party shall (1) default in
any payment (beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (2) the occurrence and
continuance of a default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be entered
against one or more of the Consolidated Parties involving a liability of
$2,000,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged coverage
and has the ability to perform) and any such judgments or decrees shall
not have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event
or condition could reasonably be expected to result in liability that
would have a Material Adverse Effect: (i) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, shall exist with respect to any
Plan, or any lien shall arise on the assets of any Consolidated Party or
any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (iii) an
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ERISA Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in (A) the termination of such Plan for purposes of Title IV of
ERISA, or (B) any Consolidated Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within
the meaning of Section 4241 of ERISA), or insolvency (within the meaning
of Section 4245 of ERISA) of such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code)
or breach of fiduciary responsibility shall occur which may subject any
Consolidated Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under
any agreement or other instrument pursuant to which any Consolidated Party
or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability; or
(j) Subordinated Indebtedness. (i) There shall occur and be
continuing any Event of Default under and as defined in any of the Parent
Notes or (ii) if the Subordinated Notes shall have been issued, (A) there
shall occur and be continuing any Event of Default under and as defined in
the Subordinated Note Indenture, (B) any of the Credit Party Obligations
for any reason shall cease to be "Designated Senior Indebtedness" under
and as defined in the Subordinated Note Indenture or (C) any Indebtedness
other the Credit Party Obligations shall constitute "Designated Senior
Indebtedness" under and as defined in under and as defined in the
Subordinated Note Indenture; or
(k) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness
or obligations of any and every kind owing by the Credit Parties to the
Agent and/or any of the Lenders hereunder to be due whereupon the same
shall be immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Credit
Parties.
(c) Cash Collateral. Direct the Credit Parties to pay (and the
Credit Parties agree that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), they will
immediately pay) to the Agent additional cash, to be held by the Agent,
for the benefit of the Lenders, in a cash collateral account as additional
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security for the LOC Obligations in respect of subsequent drawings under
all then outstanding Letters of Credit in an amount equal to the maximum
aggregate amount which may be drawn under all Letters of Credits then
outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations arising
from drawings under Letters of Credit, all accrued interest in respect thereof,
all accrued and unpaid Fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall immediately become
due and payable without the giving of any notice or other action by the Agent or
the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the Agent to act as
its agent under this Credit Agreement and the other Credit Documents with such
powers and discretion as are specifically delegated to the Agent by the terms of
this Credit Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agent (which term as used in
this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof
shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible
to the Lenders for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Credit Document, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Credit Party or the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Credit Document; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
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10.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 11.3(b) hereof. As
to any matters not expressly provided for by this Credit Agreement, the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding on all of the Lenders; provided, however,
that the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to any Credit Document or applicable
law or unless 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 any such action.
10.3 Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or a Credit Party specifying 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 of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders (or such other Lenders as required by Section 11.6), 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 Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Loans made by it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Agent, and NationsBank (and any successor acting as Agent) and its Affiliates
may accept fees and other consideration from any Credit Party or any of its
Subsidiaries or Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the Lenders.
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10.5 Indemnification.
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Credit
Parties under such Section) ratably (in accordance with their respective (i)
Revolving Commitments (or, if the Revolving Commitments have been terminated,
the outstanding Revolving Loans and Participation Interests in Letters of Credit
(including the Participation Interests of the Issuing Lender in Letters of
Credit)) and (ii) outstanding Term Loans (and Participation Interests therein)
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Lender) in any way relating to or
arising out of any Credit Document or the transactions contemplated thereby or
any action taken or omitted by the Agent under any Credit Document; provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or expenses payable by
the Credit Parties under Section 11.5, to the extent that the Agent is not
promptly reimbursed for such costs and expenses by the Credit Parties. The
agreements in this Section 10.5 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Credit Agreement and 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 analysis and decisions in taking or not taking action
under the Credit Documents. Except for notices, reports, and other documents and
information 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 any Credit Party or any of its Subsidiaries or
Affiliates that may come into the possession of the Agent or any of its
Affiliates.
10.7 Successor Agent.
The Agent may resign at any time by giving 30 days' prior notice thereof
to the Lenders and the Credit Parties. Upon any such resignation, the Required
Lenders shall have the right with the consent of the Borrower (not to be
unreasonably withheld) to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
United States having combined capital and surplus of at least $100,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor shall thereupon succeed to and become vested with all the rights,
powers, discretion, privileges, and duties of the retiring Agent, and the
retiring
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Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
10 shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent. If no successor Agent
has accepted appointment as Agent by the date which is 30 days following the
resigning Agent's notice of resignation, the resigning Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Agent as provided for above.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Credit Parties and the
Agent, set forth below, and, in the case of the Lenders, set forth on Schedule
2.1(a), or at such other address as such party may specify by written notice to
the other parties hereto:
if to any Credit Party:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, Florida 33021
Attn: Mitchell Eisenberg, M.D., President
Telephone: (954) 986-7550
Telecopy: (954) 987-8359
with a copy to:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
Hollywood, Florida 33021
Attn: Jay A. Martus, Esq., Vice President and General Counsel
Telephone: (954) 986-7770
Telecopy: (954) 987-8359
with a copy to:
Sheridan Healthcare, Inc.
4651 Sheridan Street, Suite 200
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Hollywood, Florida 33021
Attn: Michael F. Schundler, Chief Financial Officer
Telephone: (954) 986-7506
Telecopy: (954) 987-8359
with a copy to:
Vestar Capital Partners III, L.P.
245 Park Avenue, 41st Floor
New York, New York 10167
Attn: James Elrod, Jr.
David Hooper
Telephone: (212) 351-1609
Telecopy: (212) 808-4922
and
Marissa C. Wesely, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Telephone: (212) 455-7173
Telecopy: (212) 455-2502
if to the Agent:
NationsBank, N. A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services -- Kathy Mumpower
Telephone: (704) 386-6837
Telecopy: (704) 409-0021
with a copy to:
NationsBank, N.A. c/o Bank of America
Agency Management 10831, 12th Floor
1455 Market Street
San Francisco, California 94103
Attn: Charles Graber
Telephone: (415) 436-3495
Telecopy: (415) 436-3425
with a copy to:
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NationsBank, N.A.
NationsBank Corporate Center, 13th Floor
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: Bob Klawinski
Telephone: (704) 387-0467
Telecopy: (704) 386-9607
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event of Default
under Section 9.1(a), each Lender (and each of its Affiliates) is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender (or any of its Affiliates) to or for the credit or the
account of any Credit Party against any and all of the obligations of such
Person now or hereafter existing under this Credit Agreement, under the Notes,
under any other Credit Document or otherwise, irrespective of whether such
Lender shall have made any demand under hereunder or thereunder and although
such obligations may be unmatured. Each Lender agrees promptly to notify any
affected Credit Party after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each Lender under
this Section 11.2 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests and obligations without prior written
consent of each of the Lenders; provided further that the rights of each
Lender to transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender, an
Affiliate of an existing Lender or, with respect to any Lender that
is a fund that invests in bank loans, any other fund that invests in
bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor or an
assignment of all of a Lender's rights and obligations under this
Credit Agreement, any such partial assignment shall be in an amount
at least equal to $5,000,000 (or, if less, the remaining amount of
the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
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(iii) each such assignment by a Lender of any portion of its
Revolving Commitment and its Revolving Loans shall be accompanied by
an assignment of a constant, and not varying, percentage of all of
such Lender's Term Loans, and each such assignment by a Lender of
any portion of its Term Loans shall be accompanied by an assignment
of a constant, and not varying, percentage of all of such Lender's
Revolving Commitment and its Revolving Loans; and
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit 11.3(b) hereto, together with any Note subject to
such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits of a
Lender hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Agent and the Credit
Parties shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
a United States person under Section 7701(a)(30) of the Code, it shall
deliver to the Credit Parties and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 3.11.
(c) The Agent shall maintain at its address referred to in Section
11.1 a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Credit Parties, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Credit Agreement. The Register shall be available for
inspection by the Credit Parties or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Any assignment of any Loan
or other Credit Party Obligations shall be effective only upon an entry
with respect thereto being made in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit
11.3(b) hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations
under this Credit Agreement (including all or a portion of its Commitment
or its Loans); provided, however, that (i) such Lender's obligations under
this Credit Agreement shall remain unchanged, (ii) such
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Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled
to the benefit of the yield protection provisions contained in Sections
3.7 through 3.12, inclusive (but only to the extent its selling Lender is
so entitled), and the right of set-off contained in Section 11.2 (provided
that, in the case of Section 3.11, such participant shall have complied
with the provisions of said Section (except that any forms required to be
delivered pursuant to Section 3.11 will be delivered to the Lender from
whom the participation was purchased) and, provided, further, that no
participant shall be entitled to receive any greater amount pursuant to
Sections 3.9, 3.11 or 3.12 than the Lender from whom the participation was
purchased would have been entitled to receive in respect of the amount of
the participation transferred by such Lender to such participant had no
such transfer occurred) and (iv) the Credit Parties shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Credit Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Credit Parties
relating to the Credit Party Obligations owing to such Lender and to
approve any amendment, modification, or waiver of any provision of this
Credit Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, extending any scheduled principal payment
date or date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the
Consolidated Parties in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.14
hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Agent or any Lender and any of the Credit
Parties shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle the Credit Parties to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
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(a) The Credit Parties jointly and severally agree to pay on demand
all reasonable costs and expenses of the Agent in connection with the
syndication, preparation, execution, delivery, administration,
modification, and amendment of this Credit Agreement, the other Credit
Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for the
Agent (including the cost of internal counsel) with respect thereto and
with respect to advising the Agent as to its rights and responsibilities
under the Credit Documents. The Credit Parties further jointly and
severally agree to pay on demand all reasonable costs and expenses of the
Agent and one counsel to all of the Lenders, if any, in connection with
the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Credit Documents and the other documents to be delivered
hereunder.
(b) The Credit Parties jointly and severally agree to indemnify and
hold harmless the Agent and each Lender and each of their Affiliates and
their respective officers, directors, employees, agents, and advisors
(each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees and excluding taxes) 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 (including,
without limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the Credit
Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the extent such
claim, damage, loss, liability, cost, or expense shall have resulted from
such Indemnified Party's gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the
indemnity in this Section 11.5 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by
any of the Credit Parties, their respective directors, shareholders or
creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. The Credit Parties agree not to
assert any claim against the Agent, any Lender, any of their Affiliates,
or any of their respective directors, officers, employees, attorneys,
agents, and advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise relating to
the Credit Documents, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 11.5 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by,
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the Required Lenders and the Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, neither
this Credit Agreement nor any other Credit Document may be amended to
(i) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit, or extend or waive any Principal
Amortization Payment of any Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal amount of any Loan or of
any reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of
any Default or Event of Default or mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender),
(v) except as the result of or in connection with an Asset
Disposition permitted by Section 8.5, release all or substantially
all of the Collateral,
(vi) except as the result of or in connection with a
dissolution, merger or disposition of a Consolidated Party permitted
under Section 8.4 or Section 8.5, release the Borrower or
substantially all of the other Credit Parties from its or their
obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section
11.6,
(viii) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower or
all or substantially all of the other Credit Parties of any of its
or their rights and obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of Section 10 may
be amended;
(c) without the consent of the Issuing Lender, no provision of
Section 2.2 may be amended; and
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(d) without the consent of the Swingline Lender, no provision of
Section 2.3 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled
to vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and
delivery of this Credit Agreement, the making of the Loans, the issuance of the
Letters of Credit, the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Credit Agreement or any
other Credit Document may be brought in the courts of the State of New
York in New York County, or of the United States for the Southern District
of New York, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby
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irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. Each of
the Credit Parties further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section
11.1, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective as of the Closing
Date at such time when it shall have been executed by Mergersub, the
Parent and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures
of each Lender, and thereafter this Credit Agreement shall be binding upon
and inure to the benefit of each Credit Party, the Agent and each Lender
and their respective successors and assigns.
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(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts then payable hereunder or under any of
the other Credit Documents shall remain outstanding, no Letters of Credit
shall be outstanding, all of the Credit Party Obligations then outstanding
have been irrevocably satisfied in full and all of the Commitments
hereunder shall have expired or been terminated.
11.14 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by or on behalf
of the Credit Parties pursuant to this Credit Agreement that is marked
confidential, provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the Credit Facilities, (c) as
required by any law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Lending Party, (f) that is or becomes
available to the public or that is or becomes available to any Lending Party
other than as a result of a disclosure by any Lending Party prohibited by this
Credit Agreement, (g) in connection with any litigation to which such Lending
Party or any of its Affiliates may be a party, (h) to the extent necessary in
connection with the exercise of any remedy under this Credit Agreement or any
other Credit Document, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, (j) to any direct
or indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty (i) has been approved in
writing by the Borrower and (ii) agrees in a writing enforceable by the Borrower
to be bound by the provisions of this Section 11.14) and (k) subject to
provisions substantially similar to those contained in this Section 11.14, to
any actual or proposed participant or assignee.
11.15 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee benefit
plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such Lender
has disclosed to the Borrower the name of each employee benefit plan whose
assets in such account exceed 10% of the total assets of such account as
of the date of such purchase (and, for purposes of this subsection (b),
all employee benefit plans maintained by the same employer or employee
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organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets of
an insurance company's general account, such insurance company has
complied with all of the requirements of the regulations issued under
Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific benefit
plans which such Lender has identified in writing to the Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: VESTAR/SHERIDAN, INC.
By: /s/ James L. Elrod
---------------------
Name: James L. Elrod
Title: President
PARENT: VESTAR/SHERIDAN HOLDINGS, INC.
By: /s/ James L. Elrod
--------------------
Name: James L. Elrod
Title: President
<PAGE> 115
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By: /s/ Robert Klawinski
Name: Robert Klawinski
Title: Senior Vice President
<PAGE> 116
EXHIBIT 1.1A
APPLICABLE PERCENTAGES
<TABLE>
<CAPTION>
===================================================================================================
Applicable Percentages
-----------------------------------------------------------
Total Senior For For For Standby For Trade For
Pricing Leverage Leverage Eurodollar Base Rate Letter of Letter of Unused
Level Ratio Ratio Loans Loans Credit Fee Credit Fee Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
I >=4.0 to 1.0 >=3.0 to 1.0 3.00% 2.00% 3.00% 1.50% .50%
- ---------------------------------------------------------------------------------------------------
II < 4.0 to 1.0 < 3.0 to 1.0 2.75% 1.75% 2.75% 1.375% .50%
but > 3.5 to but > 2.5 to
1.0 1.0
- ---------------------------------------------------------------------------------------------------
III < 3.5 to 1.0 < 2.5 to 1.0 2.50% 1.50% 2.50% 1.25% .50%
but > 3.0 to but > 2.0 to
1.0 1.0
- ---------------------------------------------------------------------------------------------------
IV < 3.0 to 1.0 < 2.0 to 1.0 2.25% 1.25% 2.25% 1.125% .375%
===================================================================================================
</TABLE>
<PAGE> 117
Exhibit 1.1B
FORM OF BORROWER ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment"), dated as of
[Effective Date], is by and between VESTAR/SHERIDAN, INC., a Delaware
corporation, as assignor (the "Assignor"), and SHERIDAN HEALTHCARE, INC., a
Delaware corporation, as assignee (the "Assignee").
WHEREAS, the Assignor entered into that certain Credit Agreement
(Permanent Financing), dated as of April 26, 1999 (the "Credit Agreement"), by
and among the Assignor, the Guarantors party thereto, the Lenders party thereto
and NationsBank, N.A., as Agent for the Lenders (in such capacity, the "Agent");
WHEREAS, the Assignor has agreed to assign to the Assignee all of its
rights, interests, duties, obligations and liabilities in, to and under the
Credit Agreement;
WHEREAS, the Assignee desires to accept the assignment of all of the
Assignor's rights, interests, duties, obligations and liabilities in, to and
under the Credit Agreement; and
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. Assignment of Credit Agreement. The Assignor hereby assigns, transfers
and conveys to the Assignee all of its rights, interests, duties, obligations
and liabilities in, to and under the Credit Agreement.
2. Assumption of Credit Agreement. The Assignee hereby accepts the
assignment contained in Section 1 and assumes all of the duties, obligations and
liabilities of the Assignor in, to and under the Credit Agreement to the same
extent as if the Assignee had executed the Credit Agreement. The Assignee hereby
agrees to be bound by the terms and provisions of the Credit Agreement and
accepts all of the Assignor's rights, interests, duties, obligations and
liabilities thereunder.
3. No Modifications. Nothing contained in this Assignment shall amend or
modify, or be deemed to amend or modify, the Assignment Agreements.
4. Governing Law. This Assignment shall in all respects be governed by,
and construed in accordance with, the internal substantive laws of the State of
New York, including all matters of construction, validity or interpretation of
this Assignment.
5. Counterparts. This Assignment may be executed in several counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one and the same instrument.
6. Binding Nature. This Assignment shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
<PAGE> 118
IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment
as of the date set forth above.
ASSIGNOR: VESTAR/SHERIDAN, INC.,
a Delaware corporation
By:
Title:
ASSIGNEE: SHERIDAN HEALTHCARE, INC.,
a Delaware corporation
By:
Title:
ACCEPTED:
NATIONSBANK, N.A., as Agent
By: ________________________
Title:
136
<PAGE> 119
Exhibit 1.1C
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
April ___, 1999 among SHERIDAN HEALTHCARE, INC., a Delaware corporation (the
"Borrower"), VESTAR/SHERIDAN HOLDINGS, INC., a Delaware corporation (the
"Parent"), certain Subsidiaries of the Borrower (individually a "Guarantor", and
collectively with the Parent, the "Guarantors"; together with the Borrower,
individually a "Pledgor", and collectively the "Pledgors") and NATIONSBANK,
N.A., in its capacity as agent (in such capacity, the "Agent") for the lenders
from time to time party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement (Permanent Financing),
dated as of April 26, 1999 (as amended, modified, extended, renewed or replaced
from time to time, the "Credit Agreement"), among the Borrower (as successor to
Vestar/Sheridan, Inc. pursuant to the terms of that certain Borrower Assignment
and Assumption Agreement), the Parent, the Guarantors, the Lenders and the
Agent, the Lenders have agreed to make Loans and issue Letters of Credit upon
the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Pledgors shall
have executed and delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement.
For purposes of this Pledge Agreement, the term "Lender" shall include any
Affiliate of any Lender which has entered into a Hedging Agreement with any
Credit Party.
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Agent, for the benefit of the Lenders, and grants to
the Agent, for the benefit of the Lenders, a continuing security interest in any
and all right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. (A) 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding shares of capital stock owned
by such Pledgor of the Borrower set forth on Schedule 2(a) attached hereto
and (B) 100% (or, if less, the full
<PAGE> 120
amount owned by such Pledgor) of the issued and outstanding shares of
capital stock owned by such Pledgor of each Restricted Subsidiary set
forth on Schedule 2(a) attached hereto, in each case together with the
certificates (or other agreements or instruments), if any, representing
such shares, and all options and other rights, contractual or otherwise,
with respect thereto (collectively, together with the shares of capital
stock described in Section 2(b) and 2(c) below, the "Pledged Shares"),
including, but not limited to, the following:
(y) all shares or securities representing a dividend on any of
the Pledged Shares, or representing a distribution or return of
capital upon or in respect of the Pledged Shares, or resulting from
a stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options issued
to the holder of, or otherwise in respect of, the Pledged Shares;
and
(z) without affecting the obligations of the Pledgors under
any provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger involving the
issuer of any Pledged Shares and in which such issuer is not the
surviving corporation, all shares of each class of the capital stock
of the successor corporation formed by or resulting from such
consolidation or merger payable to or received by such Pledgor as
consideration for such merger.
(b) Additional Shares. 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding shares of capital stock owned
by such Pledgor of any Person which hereafter becomes a Restricted
Subsidiary (unless such Person is a Controlled Physician Affiliate),
including, without limitation, the certificates representing such shares.
(c) Proceeds. All proceeds and products of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of stock to the Agent as collateral security
for the Pledgor Obligations. Upon delivery to the Agent, such additional shares
of stock shall be deemed to be part of the Pledged Collateral of such Pledgor
and shall be subject to the terms of this Pledge Agreement whether or not
Schedule 2(a) is amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security interest created hereby
in the Pledged Collateral of each Pledgor constitutes continuing collateral
security for all of the Credit Party Obligations, now existing or hereafter
arising pursuant to the Credit Documents, owing from the Borrower or any other
Credit Party to any Lender or the Agent, howsoever evidenced, created, incurred
or acquired, whether primary, secondary, direct, contingent, or joint and
several, including, without limitation, all liabilities arising under Hedging
Agreements between any Pledgor and any Lender or Affiliate of a Lender and all
obligations and liabilities incurred in
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<PAGE> 121
connection with collecting and enforcing the foregoing (collectively, the
"Pledgor Obligations").
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i) simultaneously with
or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral of a Pledgor.
Prior to delivery to the Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by
such Pledgor for the benefit of the Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of transfer or
assignment in blank, substantially in the form provided in Exhibit 4(a)
attached hereto.
(b) Additional Securities. If such Pledgor shall receive by virtue
of its being or having been the owner of any Pledged Collateral, any (i)
stock certificate, including without limitation, any certificate
representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation,
sale of assets, combination of shares, stock splits, spin-off or
split-off, promissory notes or other instrument; (ii) option or right,
whether as an addition to, substitution for, or an exchange for, any
Pledged Collateral or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such stock certificate,
instrument, option, right or distribution in trust for the benefit of the
Agent, shall segregate it from such Pledgor's other property and shall
deliver it forthwith to the Agent in the exact form received together with
any necessary endorsement and/or appropriate stock power duly executed in
blank, substantially in the form provided in Exhibit 4(a), to be held by
the Agent as Pledged Collateral and as further collateral security for the
Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute and deliver to
the Agent such UCC or other applicable financing statements as may be
reasonably requested by the Agent in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such
Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Pledgor Obligations remain outstanding or any Credit Document or any Hedging
Agreement between any Pledgor and any Lender, or any Affiliate of a Lender, is
in effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are duly
authorized and validly issued, are fully paid and nonassessable and are
not subject to the preemptive rights of any Person. All other shares of
stock constituting Pledged Collateral will be duly authorized and validly
issued, fully paid and nonassessable and not subject to the preemptive
rights of any Person.
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<PAGE> 122
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens. There exists no "adverse claim" within the
meaning of Section 8-302 of the Uniform Commercial Code as in effect in
the State of New York as of the date hereof (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent of its rights
and remedies hereunder will not violate any material law or governmental
regulation or any material contractual restriction binding on or affecting
a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action by,
and no notice or filing with any Governmental Authority or with the issuer
of any Pledged Stock is required either (i) for the pledge made by a
Pledgor or for the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the Agent or the
Lenders of their rights and remedies hereunder (except as may be required
by laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Agent of
the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will perfect
and establish the first priority of the Agent's security interest in the
Pledged Shares and, when properly perfected by filing or registration, in
all other Pledged Collateral represented by such Pledged Shares and
instruments securing the Pledgor Obligations. Except as set forth in this
Section 5(e), no action is necessary to perfect or otherwise protect such
security interest.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document or Hedging
Agreement between any Pledgor and any Lender, or any Affiliate of a Lender, is
in effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall cause
the issuer of the Pledged Shares of such Pledgor to mark its books and
records) to reflect the security interest granted to the Agent, for the
benefit of the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein, keep
the Pledged Collateral free from all Liens, except for Permitted Liens,
and not sell, exchange, transfer, assign, lease or otherwise dispose of
Pledged Collateral of such Pledgor or any interest therein, except as
permitted under the Credit Agreement and the other Credit Documents.
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<PAGE> 123
(c) Further Assurances. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be reasonably necessary and desirable or that the Agent may reasonably
request in order to (i) perfect and protect the security interest created
hereby in the Pledged Collateral of such Pledgor (including without
limitation any and all action necessary to satisfy the Agent that the
Agent has obtained a first priority perfected security interest in any
capital stock); (ii) enable the Agent to exercise and enforce its rights
and remedies hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii) otherwise effect the purposes of this Pledge Agreement,
including, without limitation and if requested by the Agent, delivering to
the Agent irrevocable proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any restriction
with respect to any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit Agreement.
(e) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by such Pledgor with the
United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
covenants and agreements contained herein and upon written notice to such
Pledgor, the Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the payment
of any insurance premiums, the payment of any taxes, a payment to obtain a
release of a Lien or potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the Lenders may make
for the protection of the security hereof or which may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Pledgors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Pledgor Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 3.1 of the Credit Agreement for Revolving Loans that are
Base Rate Loans. No such performance of any covenant or agreement by the Agent
or the Lenders on behalf of any Pledgor, and no such advance or expenditure
therefor, shall relieve the Pledgors of any default under the terms of this
Pledge Agreement, the other Credit Documents or any Hedging Agreement between
any Pledgor and any Lender, or any Affiliate of a Lender. The Lenders may make
any payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by a
Pledgor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
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<PAGE> 124
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, the Agent and the Lenders shall have, in
respect of the Pledged Collateral of any Pledgor, in addition to the
rights and remedies provided herein, in the Credit Documents, in any
Hedging Agreements between any Pledgor and any Lender, or any Affiliate of
a Lender, or by law, the rights and remedies of a secured party under the
UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section and without notice, the Agent may, in its sole
discretion, sell or otherwise dispose of or realize upon the Pledged
Collateral, or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as the Agent may deem commercially
reasonable, for cash, credit or for future delivery or otherwise in
accordance with applicable law. To the extent permitted by law, any Lender
may in such event, bid for the purchase of such securities. Each Pledgor
agrees that, to the extent notice of sale shall be required by law and has
not been waived by such Pledgor, any requirement of reasonable notice
shall be met if notice, specifying the place of any public sale or the
time after which any private sale is to be made, is personally served on
or mailed, postage prepaid, to the Borrower and such Pledgor (if other
than the Borrower) in accordance with the notice provisions of Section
11.1 of the Credit Agreement at least 10 days before the time of such
sale. The Agent shall not be obligated to make any sale of Pledged
Collateral of such Pledgor regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the Agent may
deem it impracticable to effect a public sale of all or any part of the
Pledged Shares or any of the securities constituting Pledged Collateral
and that the Agent may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will
be obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution
or resale thereof. Each Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Agent shall have no obligation to delay sale of any such securities for
the period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act of 1933.
Each Pledgor further acknowledges and agrees that any offer to sell such
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<PAGE> 125
securities which has been (i) publicly advertised on a bona fide basis in
a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933),
or (ii) made privately in the manner described above shall be deemed to
involve a "public sale" under the UCC, notwithstanding that such sale may
not constitute a "public offering" under the Securities Act of 1933, and
the Agent may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to the rights and
remedies hereunder, upon the occurrence and during the continuance of an
Event of Default, the Agent may, after providing the notices required by
Section 9-505(2) of the UCC or otherwise complying with the requirements
of applicable law of the relevant jurisdiction, retain all or any portion
of the Pledged Collateral in satisfaction of the Pledgor Obligations.
Unless and until the Agent shall have provided such notices, however, the
Agent shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Pledgors shall be jointly
and severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 3.1 of the Credit Agreement for
Revolving Loans that are Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed by the Agent
to collect such deficiency. Any surplus remaining after the full payment
and satisfaction of the Pledgor Obligations shall be returned to the
Pledgors or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the Agent,
on behalf of the Lenders, and each of its designees or agents as
attorney-in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Pledged Collateral of such
Pledgor, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
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<PAGE> 126
(iv) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment under any of
the Pledged Collateral to make payment of any and all monies due and
to become due thereunder directly to the Agent or as the Agent shall
direct;
(vi) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give
such discharges or releases as the Agent may deem reasonably
appropriate;
(ix) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may reasonably determine
necessary in order to perfect and maintain the security interests
and liens granted in this Pledge Agreement and in order to fully
consummate all of the transactions contemplated therein;
(x) to exchange any of the Pledged Collateral of such Pledgor
or other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged Collateral of such
Pledgor with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as the Agent may determine;
(xi) to vote for a shareholder resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the
Pledged Shares of such Pledgor into the name of the Agent or one or
more of the Lenders or into the name of any transferee to whom the
Pledged Shares of such Pledgor or any part thereof may be sold
pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient in
connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document or
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<PAGE> 127
any Hedging Agreement between any Pledgor and any Lender, or any Affiliate
of a Lender, is in effect or any Letter of Credit shall remain outstanding
and (ii) until all of the Commitments shall have been terminated. The
Agent shall be under no duty to exercise or withhold the exercise of any
of the rights, powers, privileges and options expressly or implicitly
granted to the Agent in this Pledge Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be
liable for any act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Agent solely to protect, preserve and realize upon its security
interest in Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If any
Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Pledgors on a joint and several basis pursuant to
Section 13 hereof.
(c) Assignment by the Agent. In connection with the succession of
the Agent pursuant to Section 10.7 of the Credit Agreement, the Agent may
assign the Pledgor Obligations and any portion thereof and/or the Pledged
Collateral and any portion thereof, and the assignee shall be entitled to
all of the rights and remedies of the Agent under this Pledge Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held
by the Agent hereunder, the Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that
the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral of such Pledgor, and the Agent shall be relieved of all
responsibility for Pledged Collateral upon surrendering it or tendering
the surrender of it to the Pledgors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, which shall be no less than the treatment employed by a
reasonable and prudent agent in the industry, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the Agent
has or is deemed to have knowledge of such matters; or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral of such
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Pledgor or any part thereof for any purpose not inconsistent with
the terms of this Pledge Agreement or the Credit Agreement; and
(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of a Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of this Section shall cease and
all such rights shall thereupon become vested in the Agent which
shall then have the sole right to exercise such voting and other
consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing, each Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove) or
interest paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuance of an
Event of Default:
(A) all rights of a Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this Section,
upon written notice to the Borrower and such Pledgor (if other
than the Borrower), shall cease and all such rights shall
thereupon be vested in the Agent which shall then have the
sole right to receive and hold as Pledged Collateral such
dividends and interest payments; and
(B) all dividends and interest payments which are
received by a Pledgor contrary to the provisions of paragraph
(A) of this Section shall be received in trust for the benefit
of the Agent, shall be segregated from other property or funds
of such Pledgor, and shall be forthwith paid over to the Agent
as Pledged Collateral in the exact form received, to be held
by the Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying
or diminishing in any way the force, effect, lien, pledge or security
interest of this Pledge Agreement as to any Pledged Collateral not
expressly released or substituted, and this Pledge Agreement shall
continue as a first priority lien on all Pledged Collateral not expressly
released or substituted.
11. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
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<PAGE> 129
12. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied in
reduction of the Pledgor Obligations in the order set forth in Section 3.15(b)
of the Credit Agreement, and each Pledgor irrevocably waives the right to direct
the application of such payments and proceeds and acknowledges and agrees that
the Agent shall have the continuing and exclusive right to apply and reapply any
and all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
13. Costs of Counsel. At all times hereafter, the Pledgors agree to
promptly pay upon demand any and all reasonable documented costs and expenses of
(a) the Agent or the Lenders, as required under Section 11.5 of the Credit
Agreement and (b) the Agent as necessary to protect the Pledged Collateral or to
exercise any rights or remedies under this Pledge Agreement or with respect to
any Pledged Collateral. All of the foregoing costs and expenses shall constitute
Pledgor Obligations hereunder.
14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Pledgor Obligations remain outstanding or any Credit Document or Hedging
Agreement between any Pledgor and any Lender, or any Affiliate of a
Lender, is in effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments thereunder shall have terminated (other than
any obligations with respect to the indemnities and the representations
and warranties set forth in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically terminated and
the Agent and the Lenders shall, upon the request and at the expense of
the Pledgors, forthwith release all of their liens and security interests
hereunder and shall promptly execute and deliver all UCC termination
statements and/or other documents reasonably requested by the Pledgors
evidencing such termination. Notwithstanding the foregoing all releases
and indemnities provided hereunder shall survive termination of this
Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Pledgor Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Pledgor
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Agent or any Lender in defending and
enforcing such reinstatement shall be deemed to be included as a part of
the Pledgor Obligations.
15. Amendments; Waivers; Modifications. This Pledge Agreement and the
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provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11.6 of the Credit Agreement.
16. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Agent and the Lenders hereunder, to the benefit of
the Agent and the Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or delegate its duties
hereunder without the prior written consent of each Lender or the Required
Lenders, as required by the Credit Agreement. To the fullest extent permitted by
law, each Pledgor hereby releases the Agent and each Lender, and its successors
and assigns, from any liability for any act or omission relating to this Pledge
Agreement or the Pledged Collateral, except for any liability arising from the
gross negligence or willful misconduct of the Agent, or such Lender, or its
officers, employees or agents.
17. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 11.1 of the Credit
Agreement.
18. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Pledge Agreement may be brought in the
courts of the State of New York in New York County, or of the United
States for the Southern District of New York, and, by execution and
delivery of this Pledge Agreement, each Pledgor hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each Pledgor further irrevocably consents
to the service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to it at the address for notices
pursuant to Section 11.1 of the Credit Agreement, such service to become
effective 30 days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted by law
or to commence legal proceedings or to otherwise proceed against any
Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection which it
may now
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or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Pledge Agreement
brought in the courts referred to in subsection (a) hereof and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Pledge Agreement, the other Credit Documents and any
Hedging Agreements between any Pledgor and any Lender, or any Affiliate of a
Lender, represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents, any Hedging Agreements between any Pledgor and any Lender, or any
Affiliate of a Lender, or the transactions contemplated herein and therein.
24. Survival. All representations and warranties of the Pledgors hereunder
shall survive the execution and delivery of this Pledge Agreement, the other
Credit Documents and any Hedging Agreements between any Pledgor and any Lender,
or any Affiliate of a Lender, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
25. Other Security. To the extent that any of the Pledgor Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuance of any Event of Default, and the Agent and the Lenders have the
right, in their sole discretion, to determine which rights, security, liens,
security interests or remedies the Agent and the Lenders shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Agent's and the
Lenders' rights or the Pledgor Obligations under this Pledge Agreement, under
any other of the Credit Documents or under any Hedging Agreement between any
Pledgor and any Lender, or any Affiliate of a Lender.
26. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the
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Credit Agreement, for the mutual benefit, directly and indirectly, of each
of the Pledgors and in consideration of the undertakings of each of the
Pledgors to accept joint and several liability for the obligations of each
of them.
(b) Each of the Pledgors jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Pledgors with
respect to the payment and performance of all of the Pledgor Obligations
arising under this Pledge Agreement, the other Credit Documents and any
Hedging Agreements between any Pledgor and any Lender, or any Affiliate of
a Lender, it being the intention of the parties hereto that all the
Pledgor Obligations shall be the joint and several obligations of each of
the Pledgors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein,
in any other of the Credit Documents or in any Hedging Agreement between
any Pledgor and any Lender, or any Affiliate of a Lender, the obligations
of each Pledgor shall be limited to an aggregate amount equal to the
largest amount that would not render such obligations subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of
any applicable state law.
[remainder of page intentionally left blank]
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<PAGE> 133
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
PARENT: VESTAR/SHERIDAN HOLDINGS, INC.
By:
Name:
Title:
GUARANTORS: _______________________________
By:
Name:
Title:
_______________________________
By:
Name:
Title:
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
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<PAGE> 134
Exhibit 4(a)
to
Pledge Agreement
dated as of April ___, 1999
in favor of NationsBank, N.A.
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
<TABLE>
<CAPTION>
No. of Shares Certificate No.
------------- ---------------
<S> <C>
</TABLE>
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
_______________________________
By:
Name:
Title:
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<PAGE> 135
Exhibit 1.1D
FORM OF SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as of
April ___, 1999 among SHERIDAN HEALTHCARE, INC., a Delaware corporation (the
"Borrower"), VESTAR/SHERIDAN HOLDINGS, INC., a Delaware corporation (the
"Parent"), certain Subsidiaries of the Borrower (individually a "Guarantor" and
collectively with the Parent, the "Guarantors"; together with the Borrower,
individually an "Obligor", and collectively the "Obligors") and NATIONSBANK,
N.A., in its capacity as agent (in such capacity, the "Agent") for the lenders
from time to time party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement (Permanent Financing),
dated as of April 26, 1999 (as amended, modified, extended, renewed or replaced
from time to time, the "Credit Agreement"), among the Borrower (as successor to
Vestar/Sheridan, Inc. pursuant to the terms of that certain Borrower Assignment
and Assumption Agreement), the Parent, the Guarantors, the Lenders and the
Agent, the Lenders have agreed to make Loans and issue Letters of Credit upon
the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Obligors shall
have executed and delivered this Security Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms which are defined in the Uniform Commercial Code
in effect in the State of New York on the date hereof (the "UCC") are used
herein as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Farm Products, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property and Proceeds. For purposes of
this Security Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into a Hedging Agreement with any Credit
Party.
(b) In addition, the following terms shall have the following
meanings:
"Copyright Licenses": any written agreement, naming any Obligor as
licensor,
<PAGE> 136
granting any right under any Copyright.
"Copyrights": (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations
and recordings thereof, and all applications in connection therewith,
including, without limitation, registrations, recordings and applications
in the United States Copyright office.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to an Obligor of any right to manufacture, use or sell
any invention covered by a Patent.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof and (b) all applications
for letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof.
"Secured Obligations": the collective reference to all of the Credit
Party Obligations, now existing or hereafter arising pursuant to the
Credit Documents, owing from the Borrower or any other Credit Party to any
Lender or the Agent, howsoever evidenced, created, incurred or acquired,
whether primary, secondary, direct, contingent, or joint and several,
including, without limitation, all liabilities arising under Hedging
Agreements between any Obligor and any Lender, or any Affiliate of a
Lender, and all obligations and liabilities incurred in connection with
collecting and enforcing the foregoing.
"Trademark License": means any agreement, written or oral, providing
for the grant by or to an Obligor of any right to use any Trademark.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and (b) all renewals thereof.
"Work": any work which is subject to copyright protection pursuant
to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations, each Obligor hereby grants to the
Agent, for the benefit of the Lenders, a continuing security interest in, and a
right to set off against, any and all right, title and interest of such Obligor
in and to the following, whether now owned or existing or owned, acquired or
arising hereafter (collectively, the "Collateral"):
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<PAGE> 137
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses (provided the Agent shall not have a Lien on
any Copyright License that prohibits such Obligor from
granting a Lien or security interest in its rights thereunder
unless the consent of the licensor has been obtained);
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment (provided the Agent shall not have a Lien on any
Equipment subject to a Permitted Lien to the extent such
Permitted Lien prohibits such Obligor from granting a Lien or
security interest in its rights thereunder);
(h) all Fixtures (provided the Agent shall not have a Lien on any
Fixture subject to a Permitted Lien to the extent such
Permitted Lien prohibits such Obligor from granting a Lien or
security interest in its rights thereunder);
(j) all General Intangibles (provided the Agent shall not have a Lien on
any General Intangible that prohibits such Obligor from
granting a Lien or security interest in its rights thereunder
to the extent prohibited by such General Intangible);
(k) all Instruments;
(l) all Inventory;
(m) all Investment Property;
(n) all Patents;
(o) all Patent Licenses (provided the Agent shall not have a Lien on any
Patent License that prohibits such Obligor from granting a
Lien or security interest in its rights thereunder unless the
consent of the licensor has been obtained);
(p) all Trademarks;
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<PAGE> 138
(q) all Trademark Licenses (provided the Agent shall not have a Lien on
any Trademark License that prohibits such Obligor from
granting a Lien or security interest in its rights thereunder
unless the consent of the licensor has been obtained);
(r) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks, and related data processing software
(owned by such Obligor or in which it has an interest) that at
any time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and
(s) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby acknowledge
and agree that the security interest created hereby in the Collateral (i)
constitutes continuing collateral security for all of the Secured Obligations,
whether now existing or hereafter arising and (ii) is not to be construed as an
assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of the
Obligors shall remain liable under each of the Accounts to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender shall have any
obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Security Agreement or the
receipt by the Agent or any Lender of any payment relating to such Account
pursuant hereto, nor shall the Agent or any Lender be obligated in any
manner to perform any of the obligations of an Obligor under or pursuant
to any Account (or any agreement giving rise thereto), to make any
payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any
party under any Account (or any agreement giving rise thereto), to present
or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) At any time after the occurrence and during the continuance of
an Event of Default, (i) the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the
Obligors shall furnish all such assistance and information as the Agent
may reasonably require in connection with such test verifications, (ii)
upon the Agent's reasonable request and at the expense of the Obligors,
the Obligors shall cause independent public accountants or others
satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the
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Accounts and (iii) the Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Secured Obligations remain outstanding or any Credit Document or Hedging
Agreement between any Obligor and any Lender, or any Affiliate of a Lender, is
in effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each Obligor's chief
executive office and chief place of business is (and for the prior four
months have been) located at the locations set forth on Schedule 4(a)
hereto, and each Obligor keeps its books and records at such locations.
(b) Location of Collateral. The location of all Collateral owned by
each Obligor is as shown on Schedule 4(b) hereto.
(c) Ownership. Each Obligor is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign or transfer the same.
Each Obligor's legal name is as shown in this Security Agreement and no
Obligor has in the past four months changed its name, been party to a
merger, consolidation or other change in structure or used any tradename
except as set forth in Schedule 4(c) attached hereto.
(d) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Collateral of such Obligor and, when properly perfected by
filing, shall constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by filing under
the UCC, free and clear of all Liens except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and the papers and
documents relating thereto are genuine and in all material respects what
they purport to be, (ii) each Account arises out of (A) a bona fide sale
of goods sold and delivered by such Obligor (or is in the process of being
delivered) or (B) services theretofore actually rendered by such Obligor
to the account debtor named therein, (iii) no Account of an Obligor in
excess of $50,000 is evidenced by any Instrument or Chattel Paper unless
such Instrument or Chattel Paper has been theretofore endorsed over and
delivered to the Agent and (iv) no surety bond was required or given in
connection with any Account of an Obligor or the contracts or purchase
orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor pursuant to
consignment, sale or return, sale on approval or similar arrangement.
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5. Covenants. Each Obligor covenants that, so long as any of the Secured
Obligations remain outstanding or any Credit Document or Hedging Agreement
between any Obligor and any Lender, or any Affiliate of a Lender, is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral
or any interest therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good order,
condition and repair and not use the Collateral in violation of the
provisions of this Security Agreement or any other agreement relating to
the Collateral or any policy insuring the Collateral or any applicable
material statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable in excess of
$50,000 under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, immediately deliver
such Instrument or Chattel Paper to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this
Security Agreement.
(d) Change in Location. Not, without providing prior written notice
to the Agent, (a) change the location of its chief executive office and
chief place of business (as well as its books and records) from the
locations set forth on Schedule 4(a) hereto, (b) change the location of
its Collateral from the locations set forth for such Obligor on Schedule
4(b) hereto, or (c) change its name, be party to a merger, consolidation
or other change in structure or use any tradename other than as set forth
on Schedule 4(c) attached hereto; provided, that within 30 days of the
taking of any such actions, such Obligor shall deliver to the Agent such
amendments to previously filed financing statements as the Agent may
require.
(e) Inspection. Upon reasonable notice, and during reasonable hours,
at all times allow the Agent or its representatives to visit and inspect
the Collateral as set forth in Section 7.10 of the Credit Agreement.
(f) Perfection of Security Interest. Execute and deliver to the
Agent such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents, as the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or appropriate (i) to
assure to the Agent its security interests hereunder, including such
financing statements (including renewal statements) or amendments thereof
or supplements thereto or other instruments as the Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in
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accordance with the UCC, (ii) to consummate the transactions contemplated
hereby and (iii) to otherwise protect and assure the Agent of its rights
and interests hereunder. To that end, each Obligor agrees that the Agent
may file one or more financing statements disclosing the Agent's security
interest in any or all of the Collateral of such Obligor without, to the
extent permitted by law, such Obligor's signature thereon, and further
each Obligor also hereby irrevocably makes, constitutes and appoints the
Agent, its nominee or any other person whom the Agent may designate, as
such Obligor's attorney in fact with full power and for the limited
purpose to sign in the name of such Obligor any such financing statements,
or amendments and supplements to financing statements, renewal financing
statements, notices or any similar documents which in the Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and remaining
irrevocable so long as the Credit Agreement is in effect or any amounts
payable thereunder or under any other Credit Document, any Letter of
Credit or any Hedging Agreement between any Obligor and any Lender, or any
Affiliate of a Lender, shall remain outstanding, and until all of the
Commitments thereunder shall have terminated. Each Obligor hereby agrees
that a carbon, photographic or other reproduction of this Security
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Agent without notice thereof to such Obligor
wherever the Agent may in its sole discretion desire to file the same. In
the event for any reason the law of any jurisdiction other than New York
becomes or is applicable to the Collateral of any Obligor or any part
thereof, or to any of the Secured Obligations, such Obligor agrees to
execute and deliver all such instruments and to do all such other things
as the Agent in its sole discretion reasonably deems necessary or
appropriate to preserve, protect and enforce the security interests of the
Agent under the law of such other jurisdiction (and, if an Obligor shall
fail to do so promptly upon the request of the Agent, then the Agent may
execute any and all such requested documents on behalf of such Obligor
pursuant to the power of attorney granted hereinabove). If any Collateral
is in the possession or control of an Obligor's agents and the Agent so
requests, such Obligor agrees to notify such agents in writing of the
Agent's security interest therein and, upon the Agent's request, instruct
them to hold all such Collateral for the Lenders' account and subject to
the Agent's instructions. Each Obligor agrees to mark its books and
records to reflect the security interest of the Agent in the Collateral.
(g) Treatment of Accounts. Not grant or extend the time for payment
of any Account, or compromise or settle any Account for less than the full
amount thereof, or release any person or property, in whole or in part,
from payment thereof, or allow any credit or discount thereon, other than
as normal and customary in the ordinary course of an Obligor's business.
(k) Insurance. Insure, repair and replace the Collateral of such
Obligor as set forth in the Credit Agreement. All insurance proceeds shall
be subject to the security interest of the Agent hereunder.
6. Advances by Lenders. On failure of any Obligor to perform any of the
covenants
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and agreements contained herein and upon written notice to such Obligor, the
Agent may, at its sole option and in its sole discretion, perform the same and
in so doing may expend such sums as the Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by the Obligors
on a joint and several basis promptly upon timely notice thereof and demand
therefor, shall constitute additional Secured Obligations and shall bear
interest from the date said amounts are expended at the default rate specified
in Section 3.1 of the Credit Agreement for Revolving Loans that are Base Rate
Loans. No such performance of any covenant or agreement by the Agent or the
Lenders on behalf of any Obligor, and no such advance or expenditure therefor,
shall relieve the Obligors of any default under the terms of this Security
Agreement, the other Credit Documents or any Hedging Agreement between any
Obligor and any Lender, or any Affiliate of a Lender. The Lenders may make any
payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by an
Obligor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Lenders shall have, in addition to the
rights and remedies provided herein, in the Credit Documents, in any
Hedging Agreements between any Obligor and any Lender, or any Affiliate of
a Lender, or by law (including, but not limited to, the rights and
remedies set forth in the Uniform Commercial Code of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law of
the jurisdiction where the rights and remedies are asserted and regardless
of whether the UCC applies to the affected Collateral), and further, the
Agent may, with or without judicial process or the aid and assistance of
others, (i) enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any such
premises, (iii) require the Obligors to assemble and make available to the
Agent at the expense of the Obligors any Collateral at any place and time
designated by the Agent which is reasonably convenient to both parties,
(iv) remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof, and/or (v) without demand and
without advertisement,
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notice, hearing or process of law, all of which each of the Obligors
hereby waives to the fullest extent permitted by law, at any place and
time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more parcels,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). In addition to all other sums due the Agent
and the Lenders with respect to the Secured Obligations, the Obligors
shall pay the Agent and each of the Lenders all reasonable documented
costs and expenses incurred by the Agent or any such Lender, including,
but not limited to, reasonable attorneys' fees and court costs, in
obtaining or liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any action or
proceeding by or against the Agent or the Lenders or the Obligors
concerning any matter arising out of or connected with this Security
Agreement, any Collateral or the Secured Obligations, including, without
limitation, any of the foregoing arising in, arising under or related to a
case under the Bankruptcy Code. To the extent the rights of notice cannot
be legally waived hereunder, each Obligor agrees that any requirement of
reasonable notice shall be met if such notice is personally served on or
mailed, postage prepaid, to the Borrower and such Obligor (if other than
the Borrower) in accordance with the notice provisions of Section 11.1 of
the Credit Agreement at least 10 days before the time of sale or other
event giving rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. To the extent
permitted by law, any Lender may be a purchaser at any such sale. To the
extent permitted by applicable law, each of the Obligors hereby waives all
of its rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Agent and the Lenders may postpone or
cause the postponement of the sale of all or any portion of the Collateral
by announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Agent and the
Lenders may further postpone such sale by announcement made at such time
and place.
(b) Remedies relating to Accounts. Upon the occurrence of an Event
of Default and during the continuation thereof, whether or not the Agent
has exercised any or all of its rights and remedies hereunder, each
Obligor will promptly upon request of the Agent instruct all account
debtors to remit all payments in respect of Accounts to a mailing location
selected by the Agent. In addition, the Agent or its designee may notify
any Obligor's customers and account debtors that the Accounts of such
Obligor have been assigned to the Agent or of the Agent's security
interest therein, and may (either in its own name or in the name of an
Obligor or both) demand, collect (including without limitation by way of a
lockbox arrangement), receive, take receipt for, sell, sue for, compound,
settle, compromise and give acquittance for any and all amounts due or to
become due on any Account, and, in the Agent's discretion, file any claim
or take any other action or proceeding to protect and realize upon the
security interest of the Lenders in the Accounts. Each Obligor
acknowledges and agrees that the Proceeds of its Accounts remitted to or
on behalf of the Agent in accordance with the provisions hereof shall be
solely for the Agent's own convenience and that such Obligor shall not
have any right,
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title or interest in such Accounts or in any such other amounts except as
expressly provided herein. The Agent and the Lenders shall have no
liability or responsibility to any Obligor for acceptance of a check,
draft or other order for payment of money bearing the legend "payment in
full" or words of similar import or any other restrictive legend or
endorsement or be responsible for determining the correctness of any
remittance. Each Obligor hereby agrees to indemnify the Agent and the
Lenders from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Agent or the Lenders (each, an "Indemnified
Party") because of the maintenance of the foregoing arrangements except as
relating to or arising out of the gross negligence or willful misconduct
of an Indemnified Party or its officers, employees or agents. In the case
of any investigation, litigation or other proceeding, the foregoing
indemnity shall be effective whether or not such investigation, litigation
or proceeding is brought by an Obligor, its directors, shareholders or
creditors or an Indemnified Party or any other Person or any other
Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default and during the continuance thereof,
the Agent shall have the right to enter and remain upon the various
premises of the Obligors without cost or charge to the Agent, and use the
same, together with materials, supplies, books and records of the Obligors
for the purpose of collecting and liquidating the Collateral, or for
preparing for sale and conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Agent may remove
Collateral, or any part thereof, from such premises and/or any records
with respect thereto, in order to effectively collect or liquidate such
Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or the
Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document, any Hedging Agreement between any
Obligor and any Lender, or any Affiliate of a Lender, or as provided by
law, or any delay by the Agent or the Lenders in exercising the same,
shall not operate as a waiver of any such right, remedy or option. No
waiver hereunder shall be effective unless it is in writing, signed by the
party against whom such waiver is sought to be enforced and then only to
the extent specifically stated, which in the case of the Agent or the
Lenders shall only be granted as provided herein. To the extent permitted
by law, neither the Agent, the Lenders, nor any party acting as attorney
for the Agent or the Lenders, shall be liable hereunder for any acts or
omissions or for any error of judgment or mistake of fact or law other
than their gross negligence or willful misconduct hereunder. The rights
and remedies of the Agents and the Lenders under this Security Agreement
shall be cumulative and not exclusive of any other right or remedy which
the Agent or the Lenders may have.
(e) Retention of Collateral. Upon the occurrence and during the
continuance of an Event of Default, the Agent may, after providing the
notices required by Section 9-505(2) of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction, to
the extent the Agent is in possession of any of the Collateral,
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retain the Collateral in satisfaction of the Secured Obligations. Unless
and until the Agent shall have provided such notices, however, the Agent
shall not be deemed to have retained any Collateral in satisfaction of any
Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Obligors shall be jointly
and severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 3.1 of the Credit Agreement for
Revolving Loans that are Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed by the Agent
to collect such deficiency. Any surplus remaining after the full payment
and satisfaction of the Secured Obligations shall be returned to the
Obligors or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
9. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the Agent,
on behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust, give
discharges and releases concerning the Collateral of such Obligor,
all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Collateral of such Obligor and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to an Obligor
and endorse checks, notes, drafts, acceptances, money orders, bills
of lading, warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving rise to
the Collateral of such Obligor on behalf of and in the name of such
Obligor, or securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in respect of,
or otherwise deal with or exercise rights in respect of the
Collateral of such Obligor or the goods or services which have given
rise thereto, as fully and completely as though the Agent were the
absolute owner thereof for all
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purposes;
(vi) adjust and settle claims under any insurance policy
relating thereto;
(vii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may reasonably determine
necessary in order to perfect and maintain the security interests
and liens granted in this Security Agreement and in order to fully
consummate all of the transactions contemplated therein;
(viii) institute any foreclosure proceedings that the Agent
may deem appropriate; and
(ix) do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient in
connection with the Collateral of such Obligor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding, any Credit Document or any Hedging Agreement between any
Obligor and any Lender, or any Affiliate of a Lender, is in effect or any
Letter of Credit shall remain outstanding and (ii) until all of the
Commitments shall have been terminated. The Agent shall be under no duty
to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Agent in
this Security Agreement, and shall not be liable for any failure to do so
or any delay in doing so. The Agent shall not be liable for any act or
omission or for any error of judgment or any mistake of fact or law in its
individual capacity or its capacity as attorney-in-fact except acts or
omissions resulting from its gross negligence or willful misconduct. This
power of attorney is conferred on the Agent solely to protect, preserve
and realize upon its security interest in the Collateral.
(b) Performance by the Agent of Obligations. If any Obligor fails to
perform any agreement or obligation contained herein, the Agent itself may
perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by
the Obligors on a joint and several basis pursuant to Section 11 hereof.
(c) Assignment by the Agent. In connection with the succession of
the Agent pursuant to Section 10.7 of the Credit Agreement, the Agent may
assign the Secured Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to
all of the rights and remedies of the Agent under this Security Agreement
in relation thereto.
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(d) The Agent's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the
Agent hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the
Obligors shall be responsible for preservation of all rights in the
Collateral, and the Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Obligors. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Agent accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being
understood that the Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any
of the Collateral.
10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent or
any of the Lenders in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in Section 3.15(b) of the Credit
Agreement, and each Obligor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Agent shall have the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
11. Costs of Counsel. At all times hereafter, the Obligors agree to
promptly pay upon demand any and all reasonable documented costs and expenses of
(a) the Agent or the Lenders as required under Section 11.5 of the Credit
Agreement and (b) the Agent as necessary to protect the Collateral or to
exercise any rights or remedies under this Security Agreement or with respect to
any Collateral. All of the foregoing costs and expenses shall constitute Secured
Obligations hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Secured Obligations remain outstanding or any Credit Document or any
Hedging Agreement between any Obligor and any Lender, or any Affiliate of
a Lender, is in effect or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have terminated (other
than any obligations with respect to the indemnities and the
representations and warranties set forth in the Credit Documents). Upon
such payment and termination, this Security Agreement shall be
automatically terminated and the Agent and the Lenders shall, upon the
request and at the expense of the Obligors, forthwith release all of their
liens and security interests hereunder and shall promptly execute and
deliver all UCC termination statements and/or other documents reasonably
requested by the Obligors evidencing such termination. Notwithstanding the
foregoing all releases and indemnities provided hereunder shall survive
termination of this Security Agreement.
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(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Agent or any Lender in defending and
enforcing such reinstatement shall be deemed to be included as a part of
the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and permitted assigns; provided, however,
that none of the Obligors may assign its rights or delegate its duties hereunder
without the prior written consent of each Lender or the Required Lenders, as
required by the Credit Agreement. To the fullest extent permitted by law, each
Obligor hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to this Security
Agreement or the Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Agent, or such Lender, or its officers,
employees or agents.
15. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 11.1 of the Credit
Agreement.
16. Counterparts. This Security Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with
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respect to this Security Agreement may be brought in the courts of the
State of New York in New York County, or of the United States for the
Southern District of New York, and, by execution and delivery of this
Security Agreement, each Obligor hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the
jurisdiction of such courts. Each Obligor further irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address for notices pursuant
to Section 11.1 of the Credit Agreement, such service to become effective
30 days after such mailing. Nothing herein shall affect the right of the
Agent to serve process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against any Obligor in any other
jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Security
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit Documents and any
Hedging Agreements between any Obligor and any Lender, or any Affiliate of a
Lender, represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents, any Hedging Agreements between any Obligor and any Lender, or any
Affiliate of a Lender, or the transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Obligors hereunder
shall survive the execution and delivery of this Security Agreement, the other
Credit Documents and any Hedging Agreements between any Obligor and any Lender,
or any Affiliate of a Lender, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
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23. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence and during the continuance of any Event of
Default, and the Agent and the Lenders have the right, in their sole discretion,
to determine which rights, security, liens, security interests or remedies the
Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Secured Obligations
under this Security Agreement, under any other of the Credit Documents or under
any Hedging Agreement between any Obligor and any Lender, or any Affiliate of a
Lender.
24. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Obligors and in consideration of
the undertakings of each of the Obligors to accept joint and several
liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Obligors with
respect to the payment and performance of all of the Secured Obligations
arising under this Security Agreement, the other Credit Documents and any
Hedging Agreements between any Obligor and any Lender, or any Affiliate of
a Lender, it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each of the
Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein,
in any other of the Credit Documents or in any Hedging Agreement between
any Obligor and any Lender, or any Affiliate of a Lender, the obligations
of each Obligor and the other Credit Documents shall be limited to an
aggregate amount equal to the largest amount that would not render such
obligations subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.
25. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
[remainder of page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
PARENT: VESTAR/SHERIDAN HOLDINGS, INC.
By:
Name:
Title:
GUARANTORS: _______________________________
By:
Name:
Title:
_______________________________
By:
Name:
Title:
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
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Exhibit 1.1E
SUBORDINATION TERMS FOR SENIOR SUBORDINATED DEBT
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE
SECTION 8.03. COVENANT DEFEASANCE
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) ****
(b) ****
(c) ****
(d) ****
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full of all Senior Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Indebtedness.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the
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Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, in an assignment for the
benefit of creditors or any marshalling of the Company's assets and liabilities:
(1) holders of Senior Indebtedness shall be entitled to receive payment
in full of all Obligations due in respect of such Senior
Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior
Indebtedness) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes (except that Holders
may receive (i) Permitted Junior Securities and (ii) payments and
other distributions made from any defeasance trust created pursuant
to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Indebtedness (as
provided in subsection (1) above) are paid in full, any distribution
to which Holders would be entitled but for this Article 10 shall be
made to holders of Senior Indebtedness (except that Holders of Notes
may receive (i) Permitted Junior Securities and (ii) payments and
other distributions made from any defeasance trust created pursuant
to Section 8.01 hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or any
Holder in respect of Obligations with respect to the Notes and may not acquire
from the Trustee or any Holder any Notes for cash or property (other than (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof) until all
principal and other Obligations with respect to the Senior Indebtedness have
been paid in full if:
(i) a default in the payment of any principal of, premium, if any,
or interest on Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice
of the default (a "Payment Blockage Notice") from the holders (or a
Representative of the holders) of the Designated Senior Debt. If the
Trustee receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and
until (i) at least 360 days shall have elapsed since the effectiveness of
the immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
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The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.03(ii) hereof,
179 days pass after notice is received if the maturity of such
Designated Senior Debt has not been accelerated, if this Article 10
otherwise permits the payment, distribution or acquisition at the
time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof; such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Obligations with respect to
Senior Indebtedness remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of Holders
or the Company or any other Person money or assets to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article 10, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to Violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Indebtedness as
provided in this Article 10.
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SECTION 10.07. SUBROGATION.
After all Senior Indebtedness is paid in full and until the Notes are paid
in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the Holders of Notes have been
applied to the payment of Senior Indebtedness. A distribution made under this
Article 10 to holders of Senior Indebtedness the otherwise would have been made
to Holders of Notes is not, as between the Company and Holders, a payment by the
Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their
terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by
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any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of Notes for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07
[COMPENSATION AND INDEMNITY] hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof; authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 10 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives of the Designated Senior Debt are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10, Section 11.02 or Section 8.04(e) shall
not be amended or modified without the written consent of the holders of all
Senior Indebtedness.
SECTION 10.14. CERTAIN DEFINITIONS.
"Designated Senior Debt" means (i) any Senior Indebtedness in respect of
the Senior Credit Facility and (ii) any other Senior Indebtedness permitted
under this Indenture the principal amount of which is $25.0 million or more and
that has been designated by the Company as `Designated Senior Debt."
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"Senior Indebtedness" means (i) all Indebtedness outstanding under Credit
Facilities and all Hedging Obligations with respect thereto, (ii) any other
Indebtedness permitted to be incurred by the Company or a Guarantor under the
terms of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes and (iii) all Obligations with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (w) any liability for federal, state, local or other taxes owed
or owing by the Company, (x) any Indebtedness of the Company to any of its
Restricted Subsidiaries or other Affiliates, (y) any trade payables or (z) any
Indebtedness that is incurred in violation of this Indenture.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
shall be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in
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relation to either the Company or the Guarantors, any amount paid by either to
the Trustee or such Holder, this Note Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
[DEFAULTS AND REMEDIES] hereof for the purposes of this Note Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 [DEFAULTS AND REMEDIES] hereof, such obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Note Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 11 shall be junior and subordinated to the Senior Indebtedness
of such Guarantor on the same basis as the Notes are junior and subordinated to
Senior Indebtedness of the Company. For the purposes of the foregoing sentence,
the Trustee and the Holders shall have the right to receive and/or retain
payments by any of the Guarantors only at such times as they may receive and/or
retain payments in respect of the Notes pursuant to this Indenture, including
Article II [THE NOTES] hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
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To evidence its Subsidiary' Guarantee set forth in Section 11.01 hereof,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 hereof shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.17
[LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS] hereof, the Company
shall cause such Subsidiaries to execute supplemental indentures to this
Indenture and Subsidiary Guarantees in accordance with Section 4.17 hereof and
this Article ~ 1, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person) another corporation, Person or entity
whether or not affiliated with such Guarantor unless:
(1) subject to Section 11.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor)
assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory
to the Trustee, under the Notes, this Indenture and the Guarantee on
the terms set forth herein or therein; and
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the
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Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 [COVENANTS] and 5 [SUCCESSORS] hereof,
and notwithstanding clauses (a) and (b) above, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be released and
relieved of any obligations under its Subsidiary Guarantee; provided, that the
Net Proceeds of such sale or other disposition are applied in accordance with
the applicable provisions of this Indenture, including without limitation
Section 4.10 [ASSET SALES] hereof. Upon delivery by the Company to the Trustee
of an Officers' Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the
applicable provisions of this Indenture, including without limitation Section
4.10 hereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations under its
Subsidiary Guarantee.
Upon the designation of a Guarantor as an Unrestricted Subsidiary in
accordance with the terms of this Indenture, such Guarantor shall be released
and relieved of its obligations under its Guarantee and this Indenture. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel To the effect that such designation of such Guarantor as an
Unrestricted Subsidiary was made by the Company in accordance with the
provisions of this Indenture, also including without limitation Section 4.07
[RESTRICTED PAYMENTS] hereof, the Trustee shall execute any documents reasonably
required in order to evidence the release of such Guarantor from its obligations
under its Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
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Exhibit 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N. A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, SHERIDAN HEALTHCARE, INC. (the "Borrower"), refers to the
Credit Agreement (Permanent Financing), dated as of April 26, 1999 (as amended,
modified, restated or supplemented from time to time, the "Credit Agreement"),
among the Borrower (as successor to Vestar/Sheridan, Inc. pursuant to the terms
of that certain Borrower Assignment and Assumption Agreement), the Parent, the
Guarantors, the Lenders and NationsBank, N. A., as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. [The Borrower hereby gives notice pursuant to
Section 2.1 of the Credit Agreement that it requests a Revolving Loan advance
under the Credit Agreement, and in connection therewith sets forth below the
terms on which such Loan advance is requested to be made:]* [The Borrower hereby
gives notice pursuant to Section 2.4 of the Credit Agreement that it requests
the Term Loan under the Credit Agreement on the Effective Date, and in
connection therewith sets forth below the terms on which such Loan advance is
requested to be made:]**
[(A) Date of Borrowing (which is a Business Day) _______________________]*
[(B) Principal Amount of Borrowing _______________________]*
(C) Interest rate basis _______________________
(D) Interest Period and the last day thereof _______________________
In accordance with the requirements of Section 5.3, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d) and (e) of such Section are true and correct.
SHERIDAN HEALTHCARE, INC.
<PAGE> 162
By:
Name:
Title:
* For all Revolving Loans
** For the initial advance of the Term Loan on the Effective Date
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Exhibit 2.1(e)
FORM OF REVOLVING NOTE
$_________________ April 26, 1999
FOR VALUE RECEIVED, SHERIDAN HEALTHCARE, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of __________________________,
its successors and assigns (the "Lender"), at the office of NationsBank, N. A.,
as Agent (the "Agent"), at 101 North Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the holder hereof may designate), at the times set forth in the Credit
Agreement (Permanent Financing) dated as of the date hereof among the Borrower
(as successor to Vestar/Sheridan, Inc. pursuant to the terms of that certain
Borrower Assignment and Assumption Agreement), the Parent, the Guarantors, the
Lenders and the Agent (as it may be as amended, modified, restated or
supplemented from time to time, the "Credit Agreement"; all capitalized terms
not otherwise defined herein shall have the meanings set forth in the Credit
Agreement), but in no event later than the Maturity Date, in Dollars and in
immediately available funds, the principal amount of ________________________
DOLLARS ($____________) 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 Credit 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 selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of a default in the payment
of any amount hereunder, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in the event the
payment of all sums due hereunder is accelerated under the terms of the Credit
Agreement, this Note, and all other indebtedness of the Borrower to the Lender
shall become immediately due and payable, without presentment, 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.
This Note and the Loans evidenced hereby may be transferred in whole or in
part only by registration of such transfer on the Register maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
SHERIDAN HEALTHCARE, INC.
By:
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Name:
Title:
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Exhibit 2.3(d)
FORM OF SWINGLINE NOTE
$____________ April 26, 1999
FOR VALUE RECEIVED, SHERIDAN HEALTHCARE, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Swingline Lender"), at the office of NationsBank,
N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the holder hereof may designate), at the times set forth in the Credit
Agreement (Permanent Financing) dated as of the date hereof among the Borrower
(as successor to Vestar/Sheridan, Inc. pursuant to the terms of that certain
Borrower Assignment and Assumption Agreement), the Parent, the Guarantors, the
Swingline Lender and other Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Maturity Date, in
Dollars and in immediately available funds, the principal amount of
________________ MILLION DOLLARS ($________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Swingline Loans made by the
Swingline Lender to the Borrower pursuant to the Credit 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 rate specified in Section 2.3(c)
of the Credit Agreement.
Upon the occurrence and during the continuance of a default in the payment
of any amount hereunder, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in the event the
payment of all sums due hereunder is accelerated under the terms of the Credit
Agreement, this Note, and all other indebtedness of the Borrower to the Lender
shall become immediately due and payable, without presentment, 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.
This Note and the Loans evidenced hereby may be transferred in whole or in
part only by registration of such transfer on the Register maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.
<PAGE> 166
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
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Exhibit 2.4(f)
FORM OF TERM NOTE
$_________________ April 26, 1999
FOR VALUE RECEIVED, SHERIDAN HEALTHCARE, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________, its successors and assigns (the "Lender"), at the
office of NationsBank, N. A., as Agent (the "Agent"), at 101 North Tryon Street,
Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such
other place or places as the holder hereof may designate), at the times set
forth in the Credit Agreement (Permanent Financing) dated as of the date hereof
among the Borrower (as successor to Vestar/Sheridan, Inc. pursuant to the terms
of that certain Borrower Assignment and Assumption Agreement), the Parent, the
Guarantors, the Lenders and the Agent (as it may be as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Maturity Date, in
Dollars and in immediately available funds, the principal amount of
________________________ DOLLARS ($____________), 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 selected in accordance with Section 2.4(e)
of the Credit Agreement.
Upon the occurrence and during the continuance of a default in the payment
of any amount hereunder, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in the event the
payment of all sums due hereunder is accelerated under the terms of the Credit
Agreement, this Note, and all other indebtedness of the Borrower to the Lender
shall become immediately due and payable, without presentment, 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.
This Note and the Loans evidenced hereby may be transferred in whole or in
part only by registration of such transfer on the Register maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
<PAGE> 168
190
<PAGE> 169
Exhibit 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N. A.,
as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, SHERIDAN HEALTHCARE, INC. (the "Borrower"), refers to the
Credit Agreement (Permanent Financing), dated as of April 26, 1999 (as amended,
modified, restated or supplemented from time to time, the "Credit Agreement"),
among the Borrower (as successor to Vestar/Sheridan, Inc. pursuant to the terms
of that certain Borrower Assignment and Assumption Agreement), the Parent, the
Guarantors, the Lenders and NationsBank, N. A., as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrower hereby gives notice pursuant to
Section 3.2 of the Credit Agreement that it requests an extension or conversion
of a [Revolving Loan] [Term Loan] outstanding under the Credit Agreement, and in
connection therewith sets forth below the terms on which such extension or
conversion is requested to be made:
(A) Loan Type _______________________
(B) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period) _______________________
(C) Principal Amount of Extension or Conversion _______________________
(D) Interest rate basis _______________________
(E) Interest Period and the last day thereof _______________________
In accordance with the requirements of Section 5.3, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (b) of such Section, and confirms that the matters
referenced in subsections (c), (d) and (e) of such Section are true and correct.
SHERIDAN HEALTHCARE, INC.
<PAGE> 170
By:
Name:
Title:
192
<PAGE> 171
Exhibit 7.1(c)
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
For the fiscal quarter ended _________________, 19___.
I, ______________________, [Title] of SHERIDAN HEALTHCARE, INC. (the
"Borrower") hereby certify that, to the best of my knowledge and belief, with
respect to that certain Credit Agreement (Permanent Financing) dated as of April
26, 1999 (as amended, modified, restated or supplemented from time to time, the
"Credit Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower (as successor to
Vestar/Sheridan, Inc. pursuant to the terms of that certain Borrower Assignment
and Assumption Agreement), the Parent, the Guarantors, the Lenders and
NationsBank, N. A., as Agent:
a. The company-prepared financial statements which accompany this
certificate are true and correct in all material respects and have
been prepared in accordance with GAAP applied on a consistent basis,
subject to changes resulting from normal year-end audit adjustments;
and
b. Since ___________ (the date of the last similar certification, or,
if none, the Closing Date) no Default or Event of Default has
occurred under the Credit Agreement.
Delivered herewith are detailed calculations demonstrating compliance by
the Credit Parties with the financial covenants contained in Section 7.10 of the
Credit Agreement as of the end of the fiscal period referred to above.
This ______ day of ___________, 19__.
SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
<PAGE> 172
Attachment to Officer's Certificate
Computation of Financial Covenants
194
<PAGE> 173
Exhibit 7.11
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 19__,
is by and between _____________________, a ___________________ (the
"Subsidiary"), and NATIONSBANK, N. A., in its capacity as Agent under that
certain Credit Agreement (Permanent Financing) (as it may be amended, modified,
restated or supplemented from time to time, the "Credit Agreement"), dated as of
April 26, 1999, by and among Sheridan Healthcare, Inc., a Delaware corporation
(as successor to Vestar/Sheridan, Inc. pursuant to the terms of that certain
Borrower Assignment and Assumption Agreement) (the "Borrower"), the Guarantors,
the Lenders and NationsBank, N. A., as Agent. All of the defined terms in the
Credit Agreement are incorporated herein by reference.
The Credit Parties are required by Section 7.11 of the Credit Agreement to
cause the Subsidiary to become a "Guarantor".
Accordingly, the Subsidiary hereby agrees as follows with the Agent, for
the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement, and
shall have all of the obligations of a Guarantor thereunder as if it had
executed the Credit Agreement. The Subsidiary hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
applicable to the Guarantors contained in the Credit Agreement. Without limiting
the generality of the foregoing terms of this paragraph 1, the Subsidiary hereby
(i) jointly and severally together with the other Guarantors, guarantees to each
Lender and the Agent, as provided in Section 4 of the Credit Agreement, the
prompt payment and performance of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof.
2. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Security Agreement, and shall have all the obligations of an "Obligor" (as such
term is defined in the Security Agreement) thereunder as if it had executed the
Security Agreement. The Subsidiary hereby ratifies, as of the date hereof, and
agrees to be bound by, all of the terms, provisions and conditions contained in
the Security Agreement. Without limiting generality of the foregoing terms of
this paragraph 2, the Subsidiary hereby grants to the Agent, for the benefit of
the Lenders, a continuing security interest in, and a right of set off against
any and all right, title and interest of the Subsidiary in and to the Collateral
(as such term is defined in Section 2 of the Security Agreement) of the
Subsidiary. The Subsidiary hereby represents and warrants to the Agent that:
(i) The Subsidiary's chief executive office and chief place of
business are (and
<PAGE> 174
for the prior four months have been) located at the locations set forth on
Schedule 1 attached hereto and the Subsidiary keeps its books and records
at such locations.
(ii) The type of Collateral owned by the Subsidiary and the location
of all Collateral owned by the Subsidiary is as shown on Schedule 2
attached hereto.
(iii) The Subsidiary's legal name is as shown in this Agreement and
the Subsidiary has not in the past four months changed its name, been
party to a merger, consolidation or other change in structure or used any
tradename except as set forth in Schedule 3 attached hereto.
3. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Pledge Agreement, and shall have all the obligations of a "Pledgor" thereunder
as if it had executed the Pledge Agreement. The Subsidiary hereby ratifies, as
of the date hereof, and agrees to be bound by, all the terms, provisions and
conditions contained in the Pledge Agreement. Without limiting the generality of
the foregoing terms of this paragraph 3, the Subsidiary hereby pledges and
assigns to the Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in any and all
right, title and interest of the Subsidiary in and to the Pledged Shares (as
such term is defined in Section 2 of the Pledge Agreement) listed on Schedule 4
attached hereto and the other Pledged Collateral (as such term is defined in
Section 2 of the Pledge Agreement).
4. The address of the Subsidiary for purposes of all notices and other
communications is ____________________, ____________________________, Attention
of ______________ (Facsimile No. ____________).
5. The Subsidiary hereby waives acceptance by the Agent and the Lenders of
the guaranty by the Subsidiary under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Subsidiary.
6. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
7. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be
duly executed by its authorized officers, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.
[SUBSIDIARY]
By:
Name:
Title:
196
<PAGE> 175
Acknowledged and accepted:
NATIONSBANK, N. A., as Agent
By:
Name:
Title:
197
<PAGE> 176
Exhibit 11.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement (Permanent Financing), dated as
of April 26, 1999, as amended and modified from time to time thereafter (the
"Credit Agreement") among Sheridan Healthcare, Inc. (as successor to
Vestar/Sheridan, Inc. pursuant to the terms of that certain Borrower Assignment
and Assumption Agreement), the other Credit Parties party thereto, the Lenders
party thereto and NationsBank, N.A., as Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse
and without representation or warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement and the
other Credit Documents as of the date hereof equal to the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Credit Documents. After giving effect to such
sale and assignment, the Assignee's Commitment and the amount of the Loans owing
to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Credit Documents or any other instrument or document furnished
pursuant thereto; and (iv) attaches the Notes held by the Assignor and requests
that the Agent exchange such Notes for new Notes payable to the order of the
Assignee in an amount equal to the Commitment assumed by the Assignee pursuant
hereto and to the Assignor in an amount equal to the Commitment retained by the
Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 7.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor 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 the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to
<PAGE> 177
the Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service or other forms required under Section 3.11.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the "Effective Date") shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
203
<PAGE> 178
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date hereof.
____________________, as Assignor
By:
Name:
Title:
_____________________, as Assignee
By:
Name:
Title:
Notice address of Assignee:
<<Assignee>>
__________________________
Attn: _____________________
Telephone: (___) ________
Telecopy: (___) ________
CONSENTED TO:
NATIONSBANK, N.A., *
as Agent
By:
Name:
Title:
SHERIDAN HEALTHCARE, INC.
By:
Name:
Title:
- ----------
* Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee."
204
<PAGE> 179
(m) Term Loan Percentage of Assignor after giving effect to this
Assignment and Acceptance on the Effective Date (set forth to at
least 8 decimals)
%
(n) Outstanding Balance of Term Loan as of Effective Date $_____________
(o) Principal Amount of Assignor's portion of the Term Loan after giving
effect to this Assignment and Acceptance on Effective Date (the
amount set forth in (n) multiplied by the percentage set forth in
(m)) $_____________
(p) Principal Amount of Assignee's portion of the Term Loan after giving
effect to this Assignment and Acceptance on Effective Date (the
amount set forth in (n) multiplied by the percentage set forth in
(l)) $_____________
206
